Booker v. American General Life and Accident Ins., No. CIV.A.3:02-CV-1653BN.

• Decision Date: 15 April 2003
• Docket Number: No. CIV.A.3:02-CV-1653BN.
• Citation: 257 F.Supp.2d 850
• Parties: Ida Mae BOOKER, et al. v. AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY, et al.
• Court: U.S. District Court — Southern District of Mississippi

257 F.Supp.2d 850

Ida Mae BOOKER, et al. v. AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY, et al.

No. CIV.A.3:02-CV-1653BN.

United States District Court, S.D. Mississippi, Jackson Division.

April 15, 2003.

COPYRIGHT MATERIAL OMITTED

Don John W. Barrett, Barrett Law Offices, Lexington, MS, Michael D. Hickman, Taylor, Martino & Hedge, P.C., Mobile, AL, for Ida Mae Booker, Denise Boyd, Dennis Cage, Mary Cage, Mamie Gooden, Elizabeth Green, Frances Hayes, Irene Smith, Louis Smith, Carrilla Stallings, Chandra Winters, plaintiffs.

Michael Douglas Mulvaney, Thomas Julian Butler, Edward M. Holt, Maynard, Cooper & Gales, PC, Birmingham, AL, for american General Life and Acc. Ins. Co., defendant.

Robert M. Frey, Malissa Wilson, Butler, Snow, O'Mara, Stevens & Cannada, Jackson, for Mitchell Acey, Cascille Baker, Carl Bloomquist, Jerry Chandler, Earline Christopher, Wallace Cunningham, Franklin Floyd, Lanny Haley, Sr., Benjamin May, Laney O'Briant, Wyomman A. Reeves, Jr., William Robinson, Willie Spells, Norman Stafford, Candice Swindle, Danny Tharp, John Does, A-Z the person, firm, or legal entity who sold or serviced the policies made the basis of this suit to the plaintiffs, all of whose true names are otherwise unknown at this time, but will be added by amendment when ascertianed, individually and jointly, defendants.

OPINION AND ORDER

BARBOUR, District Judge.

Before the Court is the Motion of Plaintiffs to Remand.¹ Having considered the Motion, Response, Rebuttal, attachments to each, and supporting and opposing authority, the Court finds that the Motion is not well taken and should be denied.

I. BACKGROUND AND PROCEDURAL HISTORY

Each Plaintiff purchased a life insurance policy issued by American General Life and Accident Insurance Company ("American General"). In conjunction with the purchase of the policies, each Plaintiff paid a separate premium for a waiver of premium benefit provision, which provided that in the event that the insured becomes disabled, payment of future premiums shall be waived upon the receipt by the insurer of proof of disability. The waiver of premium includes an exclusion whereby premiums are not waived if the insured was disabled when the policy was issued, or if the insured becomes disabled while the benefit is not in force, or if the insured becomes disabled due to preexisting conditions.

Plaintiffs have sued American General and several individual agents of American General ("Agent Defendants"), alleging that Defendants have collected premiums from them in violation of the premium waiver benefit. Some Plaintiffs allege that they were disabled when they purchased their policies, so that they have been paying premiums for a benefit for which they were ineligible because of the policy exclusion. Other Plaintiffs allege that they became disabled after they purchased their policies, that they were entitled to have their future premiums waived, but that Defendants continued to require the payment of premiums. Plaintiffs further allege that the Agent Defendants either knew that Plaintiffs were disabled when they purchased their policies, or knew that Plaintiffs became disabled after their policies were issued. Plaintiffs further allege that despite knowledge of the Plaintiffs' disabilities, the Agent Defendants collected premium payments from Plaintiffs on a monthly basis.

Plaintiffs seek to hold Defendants liable for breach of fiduciary duty, fraudulent misrepresentation, and fraud by suppression and/or concealment. Plaintiffs who were disabled when they purchased their policies allege that the Agent Defendants failed to disclose that Plaintiffs were paying premiums for a benefit that would not be honored because of a policy exclusion. Plaintiffs who became disabled after their policies were issued allege that the Agent Defendants failed to disclose that Plaintiffs could invoke the premium waiver benefit. All Plaintiffs also claim that the Agent Defendants represented to them each month when they collected the premium payments that Plaintiffs must continue to make their premium payments to keep the policies in force. In summary, Plaintiffs allege that Defendants wrongfully charged and collected unnecessary payments of premiums from them.

All Plaintiffs to this suit are citizens of the State of Mississippi. Plaintiffs have brought suit against American General, which is a corporate citizen of a state other than Mississippi, and against several individual Agent Defendants, who are each citizens of the State of Mississippi. The amount in controversy exceeds $75,000. Defendants have removed the suit to this Court on the basis of diversity jurisdiction, arguing that Plaintiffs have fraudulently joined the Agent Defendants in order to defeat diversity jurisdiction, and also arguing that the claims against the Agent Defendants have been misjoined with the claims against American General. Plaintiffs have filed the present Motion to Remand, arguing that they have stated valid claims under Mississippi law against the non-diverse individual Agent Defendants.

II. FRAUDULENT JOINDER STANDARD

Under 28 U.S.C. § 1441(a), "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed ... to the district court of the United States for the district and division embracing the place where such action is pending." The removing party has the burden of proving that the federal court has jurisdiction to hear the case. See Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir.1993), cert. denied, 510 U.S. 868, 114 S.Ct. 192, 126 L.Ed.2d 150 (1993); Laughlin v. Prudential Ins. Co., 882 F.2d 187, 190 (5th Cir.1989) (holding that the "removing party bears the burden of establishing federal jurisdiction."). In cases in which the removing party alleges diversity of citizenship jurisdiction on the basis of fraudulent joinder, "it has the burden of proving the fraud." Laughlin, 882 F.2d at 190; Carriere v. Sears, Roebuck & Co., 893 F.2d 98, 100 (5th Cir.1990), cert. denied 498 U.S. 817, 111 S.Ct. 60, 112 L.Ed.2d 35 (1990). To establish fraudulent joinder, the removing party must prove: (1) that there was actual fraud in the plaintiffs pleading of the jurisdictional facts or (2) that the plaintiff has no possibility of establishing a cause of action against the non-diverse defendant in state court. Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir.1999) (citations omitted); Burden v. General Dynamics Corp., 60 F.3d 213, 217 (5th Cir.1995); Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 259 (5th Cir.1995).

When considering whether a non-diverse defendant has been fraudulently joined to defeat diversity of citizenship jurisdiction, courts should "pierce the pleadings" and consider "summary judgment-type evidence such as affidavits and deposition testimony." See e.g. Cavallini, 44 F.3d at 256. See also LeJeune v. Shell Oil Co., 950 F.2d 267, 271 (5th Cir. 1992) (holding that "a removing party's claim of fraudulent joinder to destroy diversity is viewed as similar to a motion for summary judgment.... A court is to pierce the pleadings to determine whether, under controlling state law, the non-removing party has a valid claim against the nondiverse parties."). Under this standard, plaintiffs "may not rest upon the mere allegations or denials of [their] pleadings." Beck v. Texas State Bd. of Dental Examiners, 204 F.3d 629, 633 (5th Cir.2000). See also Badon v. RJR Nabisco, Inc., 236 F.3d 282, 286 n. 4 (5th Cir.2000) (finding that the "mere theoretical possibility of recovery under local law" does not preclude removal. "[T]here must at least be arguably a reasonable basis for predicting that state law would allow recovery in order to preclude a finding of fraudulent joinder."). Further, conclusory or generic allegations of wrongdoing on the part of the non-diverse defendant are not sufficient to show that the defendant was not fraudulently joined. See Badon v. RJR Nabisco, Inc., 224 F.3d 382, 392-93 (5th Cir.2000); Peters v. Metropolitan Life Ins. Co., 164 F.Supp.2d 830, 834 (S.D.Miss. 2001) (J. Bramlette) (holding that the allegations against non-diverse defendants "must be factual, not conclusory, because conclusory allegations do not state a claim."). Therefore, removal is not precluded merely because the state court complaint, on its face, sets forth a state law claim against a non-diverse defendant. See Badon, 224 F.3d at 390. Removal is proper "if the plaintiffs pleading is pierced and it is shown that as a matter of law there is no reasonable basis for predicting that the plaintiff might establish liability on that claim against the in-state defendant." Id.

When conducting a fraudulent joinder analysis, a court must resolve all disputed questions of fact and ambiguities of law in favor of the non-removing party, see Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir.1992), but "only when there exists an actual controversy i.e. when both parties have submitted evidence of contradictory facts." Badon, 224 F.3d at 394 (alteration in original). A court should not, "in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts" to support his claims against the non-diverse defendant. Id. (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994)). In the event the court, after resolving all disputed questions of fact and ambiguities of law in favor of the nonremoving party, finds that there is "arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no fraudulent joinder" and hence no basis for asserting diversity of citizenship jurisdiction. Jernigan, 989 F.2d at 816.

III. ANALYSIS

Although Plaintiffs have asserted several theories of recovery, the Motion to Remand focuses only on whether Plaintiffs have stated a valid claim of breach of fiduciary duty. Additionally, the Rebuttal in...