Bristoe v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 12 March 2021
• Docket Number: CASE NO. 5:20-CV-106-TBR
• Parties: JIMMIE BRISTOE PLAINTIFF v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, et al. DEFENDANTS
• Court: U.S. District Court — Western District of Kentucky

JIMMIE BRISTOE PLAINTIFF v. STATE FARM MUTUAL AUTOMOBILEINSURANCE COMPANY, et al. DEFENDANTS

CASE NO. 5:20-CV-106-TBR

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY PADUCAH DIVISION

March 12, 2021

MEMORANDUM OPINION & ORDER

Before the Court is Plaintiff Jimmie Bristoe's Motion to Remand. [DN 8]. Defendants responded [DN 13], and Plaintiff replied [DN 14]. Accordingly, the motion is ripe for adjudication. For the reasons stated below, the motion is DENIED.

I. Background

Plaintiff Jimmie Bristoe originally brought this action in the McCracken County, Kentucky Circuit Court. [See DN 1-1]. Defendants removed the action to this federal district court, asserting diversity jurisdiction under 28 U.S.C. § 1332. [DN 1 at 3]. The Plaintiff has moved to remand the action to state court on the grounds that this Court lacks subject matter jurisdiction because diversity of citizenship does not exist between the parties. [DN 8]. Defendants admit that one of the named defendants, Agent Waldon-Denton, is a Kentucky citizen, as is Plaintiff. [DN 1 at 2]. However, Defendants claim that the Kentucky defendant's citizenship "should be ignored for purposes of determining diversity jurisdiction" because she was fraudulently joined to the action to defeat this Court's jurisdiction. Id. at 2.

II. Standards

The burden to establish federal subject matter jurisdiction lies with the party seeking removal. Vill. Of Oakwood v. State Bank & Trust Co., 539 F.3d 373, 377 (6th Cir. 2008) (citing Ahearn v. Charter Township of Bloomfield, 100 F.3d 451, 453-54 (6th Cir. 1996)). Generally, a defendant may remove a civil case to federal court only if the action is one over which the federal court could have exercised original jurisdiction. See 28 U.S.C. § 1441, 1446. Because Plaintiff's complaint does not raise a federal question, the exclusive basis for federal subject matter jurisdiction is 28 U.S.C. § 1332, which requires the citizenship of each plaintiff to be diverse from the citizenship of each defendant. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 67-68, (1996) (explaining the principle of complete diversity).

Defendants bear the burden of proving fraudulent joinder. "To prove fraudulent joinder, the removing party must present sufficient evidence that a plaintiff could not have established a cause of action against non-diverse defendants under state law." Chambers v. HSBC Bank USA, N.A., 796 F.3d 560, 564-65 (6th Cir. 2015) (quoting Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999)). "If there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, [the district] Court must remand the action to state court." Taco Bell Corp. v. Dairy Farmers of Am., Inc., 727 F. Supp. 2d 604, 607 (W.D. Ky. 2010) (citing Coyne, 183 F.3d at 493). In other words, if Plaintiff's claims have even "a 'glimmer of hope,' there is no fraudulent joinder." Murriel-Don Coal Co. v. Aspen Ins. UK Ltd., 790 F. Supp. 2d 590, 597 (E.D. Ky. 2011) (quoting Hartley v. CSX Transp., Inc., 187 F.3d 422, 426 (4th Cir. 1999)). This is a "heavy burden," Mayes v. Rapoport, 198 F.3d 457, 463 (4th Cir. 1999), as Defendants must demonstrate that there is no genuine basis upon which Plaintiff may be able to recover against Agent Waldon-Denton. Coyne, 183 F.3d at 493.

The standard for a defendant to successfully show fraudulent joinder is even higher than the standard a defendant must meet to succeed on a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Anderson v. Merck & Co. Inc., 417 F. Supp. 2d 842, 845(E.D. Ky. 2006) (citing Little v. Purdue Pharma, L.P., 227 F. Supp. 2d 838, 845-46 (S.D. Ohio 2002)). "[T]he benefit of the doubt given a plaintiff as part of the fraudulent joinder inquiry should be more deferential than even that given under Rule 12(b)(6) . . . [A] decision overruling a motion for remand where the defendant is claiming fraudulent joinder connotes that a plaintiff's claim, as to the non-diverse defendant, has no basis in law or reason." Little, 227 F. Supp. 2d at 846-47; See also Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 433 (6th Cir. 2012).

In matters concerning comity and federalism, any ambiguity must be resolved against removal. See Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534 (6th Cir. 1999) (explaining that "the statutes conferring removal jurisdiction are to be construed strictly because removal jurisdiction encroaches on a state court's jurisdiction" and that ambiguities regarding the scope of removal "should be resolved in favor of remand to the state courts"). Furthermore, any ambiguities in the relevant state law must be resolved in the light most favorable to the plaintiff. Walker v. Philip Morris USA, Inc., 443 F. App'x 946, 951 (6th Cir. 2011) (citing Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 949 (6th Cir. 1994)); See also Coyne, 183 F.3d at 493 ("All doubts as to the propriety of removal are resolved in favor of remand.").

III. Discussion

Plaintiff wants the action to go back to state court. Defendants want the action to stay in federal court. Because Defendants removed the action, they have the burden of proving that the action should stay here. To successfully carry that burden, Defendants must prove there is no genuine basis upon which Bristoe may be able to recover against Agent Waldon-Denton.

a. Facts

The following facts are set out in Bristoe's Complaint [DN 1-1] and Motion to Remand [DN 8]. Defendants accept the allegations as true for the purposes of the motion. [DN 13 at 2]. OnJune 15, 2018, Bristoe was involved in a car accident while driving a 2000 Chevy Silverado insured by State Farm. The driver of the other vehicle was uninsured. In addition to the Chevy Silverado, Bristoe also had two other vehicles at the time, both of which were also insured by State Farm. None of Bristoe's policies included coverage for uninsured motorists ("UM Coverage"). Bristoe claims that as an older man with "a limited educational background," he "did not have knowledge as to coverage issues concerning his insurance policies" and did not know "the meaning of uninsured and underinsured." In rejecting UM Coverage, Bristoe claims that he "relied on the advice, expertise, and guidance of [Agent Waldon-Denton]," and that "throughout the years that he was insured through State Farm, [he] did not know the meaning of uninsured and he was never explained the meaning of uninsured." Bristoe says that he relied on the advice of Agent Waldon-Denton, and her predecessor in the business, her father, for his insurance needs for about thirty years. In short, Bristoe claims Agent Waldon-Denton failed to properly inform and advise Bristoe about UM coverage, and in doing so, breached a common law duty of care and violated the Kentucky Consumer Protection Act ("KCPA").

b. Kentucky Consumer Protection Act Claim

The KCPA prohibits "[u]nfair, false, misleading, or deceptive acts or practices in the conduct of any trade or commerce." K.R.S. § 367.170(1). To maintain an action alleging a violation of the KCPA, an individual must fit within the protected class of persons, which includes "any person who purchases or leases goods or services primarily for personal, family or household purposes." K.R.S. § 367.220; see also Skilcraft Sheetmetal, Inc. v. Kentucky Mach., Inc., 836 S.W.2d 907 (Ky. Ct. App. 1992). Therefore, generally, there must be privity of contract between the parties in a suit where a violation of the KCPA is alleged. See id. at 909 ("The legislature intended that privity of contract exist between the parties in a suit alleging a violation of the[Kentucky] Consumer Protection Act."); Tallon v. Lloyd & McDaniel, 497 F.Supp.2d 847, 854-55 (W.D. Ky. 2007) (holding a plaintiff lacked standing under KCPA where defendant was "several steps removed from privity of contract with the [plaintiff]"); Brewer v. Portfolio Recovery Assocs., No. 1:07-cv-113-M, 2007 WL 3025077 (Oct. 15, 2007) (granting motion to dismiss on KCPA claims where plaintiff failed to allege a qualifying purchase or privity of contract with defendant).

Count II of Bristoe's Complaint alleges that Agent Waldon-Denton violated the KCPA by using the "unfair," "confusing," "deceptive," and "misleading" policy and practice of "having each vehicle issued under a separate policy." [DN 1-1 at 16-18]. Bristoe alleges this practice led him "to believe that he had insurance coverage that would cover him for all events, including, but not limited to, accidents involving uninsured motorist[s]." Id. at 17. Bristoe agrees that his insurance policies existed pursuant to a contract issued by Defendant State Farm. [DN 14 at 7-8]. Bristoe states, "[a]dmittedly, based upon privity of contract, Defendant, State Farm, not [Agent Waldon-Denton], was a party to the contract with . . . Bristoe." Id. at 8. However, Bristoe argues that a claim may still lie against Agent Waldon-Denton under the KCPA because the Kentucky Court of Appeals "appear[ed] to extend the [KCPA] to an agent" in Morton v. Bank of the Bluegrass and Trust Co., 18 S.W.3d 353 (Ky. Ct. App. 1999).

Defendants argue, "Kentucky law is clear that an insurance agent cannot be liable under the KCPA because there is no privity of contract between the agent and the policyholder." [DN 13 at 10]. Further, "[b]ecause insurance agents are not parties to the insurance contract, Kentucky courts have also held that insurance agents cannot be held liable for a KCPA claim as a matter of law." Id. Defendants cite two of this Court's recent opinions¹ to support their argument that Bristoe has no colorable claim against Agent Waldon-Denton under the KCPA.

Indeed, this Court recently faced a motion to remand in a case nearly identical to this one in Wright v. State Farm Mut. Auto. Ins. Co., 443 F.Supp.3d 789 (W.D. Ky. 2020). The plaintiff in Wright also argued that Morton extended liability under the KCPA to insurance agents. 443 F.Supp.3d at 795-96. However,...