Growth Opporutnity Connection, Inc. v. Philadelphia Indem. Ins. Co.
| Decision Date | 09 December 2011 |
| Docket Number | Case. No. 11-00601-CV-W-DGK |
| Parties | GROWTH OPPORUTNITY CONNECTION, INC., Plaintiff v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Western District of Missouri |
GROWTH OPPORUTNITY CONNECTION, INC., Plaintiff
v.
PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant.
Case. No. 11-00601-CV-W-DGK
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION
Date: December 9, 2011
This case arises out of an insurance agreement between Defendant Philadelphia Indemnity Insurance Company ("Philadelphia") and Plaintiff Growth Opportunity Connection, Inc. ("GOC"). Currently pending before the Court are "Motions to Remand" on behalf of Missouri's Attorney General ("the Attorney General") (Doc. 8), GOC's Appointed Receiver ("the Receiver") (Doc. 10), and Greater Kansas City Community Foundation ("GKCCF") (Doc. 27) who all argue that Defendant's removal of this action pursuant to the Court's diversity jurisdiction is inappropriate because there is not diversity of citizenship and the amount in controversy does not exceed $75,000. The Court has fully reviewed all three motions to remand and Philadelphia's response to these motions. Because the Court finds that there is complete diversity of citizenship and the amount in controversy exceeds $75,000, the "Motions to Remand" on behalf of the Attorney General, the Receiver, and GKCCF are denied.
Philadelphia also moves the Court to dismiss GOC's Third-Party Petition against it pursuant to Federal Rules of Civil Procedure 12(b)(2), (4) & (5) (Doc. 3) for lack of personal jurisdiction, insufficient process, and insufficient service of process. The Court, after carefully
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considering this Motion and GOC's response to it, finds that service of process was insufficient and grants Philadelphia's "Motion to Dismiss" (Doc. 3).
Finally, the Court considers GOC's "Motion to Dismiss" GKCCF's Third-Party Complaint against it for lack of personal jurisdiction pursuant to 12(b)(2) (Doc. 26). Because the Court finds that GKCCF's intervention was improper, GKCCF's claim is dismissed without prejudice.
In 2008, Growth Opportunity Connection, Inc. was a non-profit corporation providing loans to small start-up businesses. At that time, Philadelphia Indemnity Insurance Company provided insurance to GOC which included coverage for employee theft. In late 2008 and early 2009, GOC discovered employee theft in the amount of $158,715.82, as valued by Heanchan Valuation Services, Inc., ("Heanchen") an independent forensic accountant hired by GOC. In January 2009, GOC submitted a claim to Philadelphia under its policy for that amount. Finding that the theft of GOC's three employees constituted only one act of theft, Philadelphia adjusted GOC's claim to $85,194. Pursuant to a court order, Philadelphia then remitted $31,749.52 to Heanchen as payment for its services to GOC.
On June 29, 2009, GOC's Board of Directors resigned, abandoning the corporation and leaving no one to govern or manage GOC's affairs or to accept Philadelphia's remaining insurance payment of $53,444.48. On October 21, 2009, the Missouri Secretary of State administratively dissolved GOC. Consequently, on November 24, 2010, Philadelphia filed a Petition for Dissolution and for Appointment of Receiver in the Circuit Court of Jackson County, Missouri ("Missouri State Court"). On January 14, 2011, Missouri Attorney General Chris Koster, on behalf of the State of Missouri, intervened in the Missouri State Court action under
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his authority to oversee and protect charitable assets pursuant to RSMo. § 355.731(4). At that time, the Attorney General also filed his own petition for dissolution and appointment of a receiver.
On March 14, 2011, the Missouri State Court appointed David V. Kenner as the Receiver for GOC, authorizing him to collect all funds due to GOC from Philadelphia. On or about April 27, 2011, the Receiver made written demand to Philadelphia to pay GOC the remaining $53,444.48 plus the additional policy proceeds of at least $90,000. On May 2, 2011, Philadelphia dismissed its state court Petition, and on May 27, 2011, the Receiver accepted a check from Philadelphia in the amount of $53,444.48, expressly reserving the right to seek additional policy proceeds.
On June 6, 2011, the Receiver filed a Third-Party Petition against Philadelphia, alleging a breach of contract claim and demanding the additional insurance amounts not yet paid. This claim was filed in Missouri State Court in the same Receivership action originally initiated by Philadelphia and the Attorney General. Philadelphia filed a Notice of Removal on June 10, 2011, seeking to remove the case from the Missouri State Court to the United States District Court for the Western District of Missouri based on diversity jurisdiction (Doc. 1). On July 13, 2011, The Greater Kansas City Community Foundation moved to intervene as a plaintiff pursuant to Fed. R. Civ. P. 24(a); this Court granted the motion on August 9, 2011. Subsequently, the Attorney General, joined by the Receiver, moved to remand the case to Missouri State Court, arguing that there was no diversity of citizenship and the action did not meet the amount in controversy requirement. GKCCF also moved to remand, arguing that its entrance into the case defeats the requirements of complete diversity of citizenship between the parties.
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An action may be removed by the defendant where the case falls within the original jurisdiction of the district courts. 28 U.S.C. § 1441(a). If the case is not within the original subject matter jurisdiction of the district court, the court must remand the case to the state court from which it was removed. 28 U.S.C. § 1447(c). The burden of establishing federal jurisdiction is on the party seeking removal. In re Bus. Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993). "Removal statutes are strictly construed, and any doubts about the propriety of removal are to be resolved in favor of state court jurisdiction and remand." Transit Cas. Co. v. Certain Underwriters at Lloyd's of London, 119 F.3d 619, 625 (8th Cir. 1997). In addition, the Supreme Court has suggested that there is a higher hurdle for the removal of actions brought by a state. Franchise Tax Bd. of State of California v. Constr. Laborers Vacation Trust for S. California et al., 463 U.S. 1, 22, n. 22 (1983). "[C]onsiderations of comity make us reluctant to snatch cases which a State has brought from the courts of that State, unless some clear rule demands it." Id.
To invoke original diversity jurisdiction, the parties must be citizens of different states and the amount in controversy must exceed $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). Complete diversity between the parties is required; the presence of a single plaintiff from the same state as a single defendant destroys diversity and extinguishes a federal court's jurisdiction to hear the matter. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005).
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A. The present action is separate and independent from the state court Receivership action initiated by Philadelphia and the Attorney General.
The Attorney General argues that the Third-Party Petition for additional damages filed by the Receiver in this case is within the scope of the original state Receivership action and resolves issues with which the Attorney General has a legitimate interest. Specifically, the Attorney General maintains that "[b]y requesting a receiver to collect all funds due to [GOC], the Attorney General intended the receiver to collect these funds by filing this third-party petition in this suit" (Doc. 8, p. 5). If the Court allows Philadelphia to remove only the Third Party Petition and not the Receivership action, the Attorney General argues it will "split one case into two" (Doc. 8-1, p. 6).
The Court finds that the insurance claim in this case is separate and independent from the GOC Receivership action such that adjudication of the insurance claim will not split what should be one case into two. First, this case does not interfere with the GOC Receivership action because it is seeking the adjudication of in personam rights only. Second, this is not a proper third-party petition under the Missouri Rules of Civil Procedure; in fact, if it were consolidated in the GOC Receivership action, the Missouri State Court would be compelled to strike it. Accordingly, the present claim is separate and independent from the Missouri State Receivership action.
1. This case seeks the adjudication of in personam rights, and, therefore, adjudication in federal court is proper.
The general rule is that if "two suits are in rem, or quasi in rem, so that the court, or its officer, has possession or must have control of the property which is the subject of the litigation
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in order to proceed with the cause and grant the relief sought the jurisdiction of the one court must yield to that of the other." Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 466 (1939). The Supreme Court in Princess Lida, however, held that when a party seeks to adjudicate an in personam right in federal court, the adjudication does not interfere with preexisting state receivership actions. Id. In fact, the Court stated that "it is settled that where the judgment sought is strictly in personam, both the state court and the federal court, having concurrent jurisdiction, may...
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