Hare v. Allstate Prop. & Cas. Ins. Co.

• Decision Date: 22 September 2020
• Docket Number: CIVIL ACTION NO. 1:20-CV-209-JB-C
• Parties: SABRINA HARE, et al., Plaintiffs, v. ALLSTATE PROPERTY and CASUALTY INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Southern District of Alabama

SABRINA HARE, et al., Plaintiffs, v. ALLSTATE PROPERTY and CASUALTY INSURANCE COMPANY, et al., Defendants.

CIVIL ACTION NO. 1:20-CV-209-JB-C

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

September 22, 2020

ORDER

This matter is before the Court on Plaintiffs Sabrina Hare (individually and as mother and next friend of C.F., a minor) and Robert Fell's (collectively "Plaintiffs") Motion to Remand (Doc. 9). The parties have briefed the issue and appeared for oral argument. The Motion to Remand is ripe for review.

I. FACTUAL BACKGROUND

This cause of action stems from an automobile accident that occurred in Baldwin County, Alabama. (Doc. 1-1, ¶10 at PageID.24). On August 4, 2019, Plaintiff Sabrina Hare ("Hare") was driving a 2009 Mercury Grand Marquis owned by her grandparents, Lemuel and Debbie McGlothren ("policyholders" or "McGlothrens"), which was insured under a policy held by the McGlothrens and underwritten by Defendant Allstate Property and Casualty Insurance Company ("Allstate"). (Doc. 1-1, ¶4 at PageID.23; Doc. 1-3 at PageID.59 - 101). The policy classified Hare as a "listed driver." (Doc. 1-3 at PageID.68). At the time of the accident, Hare was pregnant with C.F. and Plaintiff Robert Fell ("Fell") was in the front passenger seat of the vehicle. (Doc. 1-1, ¶12 at PageID.24). When Hare reached a stop sign at Greeno Road, another driver ("tortfeasor") collided with the rear end of the Grand Marquis, injuring Hare and Fell. Hare went into premature labor due to this accident. (Doc. 1-1. ¶14 at PageID.24).

On November 7, 2019, Plaintiffs' counsel sent a letter of representation to Allstate requesting a copy of the declarations page of the McGlothrens' policy. (Doc. 1-1, ¶15 at Page ID.24). Four days later, on November 11, 2019, Plaintiffs' counsel sent Allstate a letter notifying the company that tortfeasor's insurance carrier offered Plaintiffs a policy limits settlement and requested approval to accept the settlement offer. (Id. at ¶¶16, 18). Plaintiffs also sought the policy limits offered in the McGlothrens' policy. On November 15, 2019, Allstate insurance adjuster David Hill ("Hill") contacted Plaintiffs' counsel and informed counsel's employee, Stacie Thornbill, that the McGlothrens' policy provided no medical coverage for automobile accidents. (Doc. 1, ¶24 at PageID.9). During the conversation, Hill stated the following regarding the McGlothrens' declaration page:

Thornbill: "She [Plaintiffs' counsel] was looking for the declaration page as well."

Hill: "Yes, it generally takes me about five business days, so she could probably have it printed - it would probably be more efficient for her to just call the agent and he could just fax that over to her immediately. And the agent is John Holleman. And that's H-O-L-L-E-M-A-N, Holleman. His telephone number is [redacted]. Yeah, he could get that declaration page to you a whole lot faster. We have to put in a task and add it to the file and document it and mail it. They could probably just fax it a little quicker.

(Doc. 8).

On November 20, five days after Hill's phone call, Plaintiffs' counsel sent Holleman an email requesting a copy of the McGlothrens' declarations page. (Doc. 1, ¶27 at PageID.25). Holleman did not sell the McGlothrens their policy; the record reveals he had no prior dealingswith them. (Doc. 1-3, ¶2 PageID.56). Rather, Holleman purchased a book of business from another agent which contained the McGlothrens' policy. (Id.). Similarly, Holleman had no contact from Plaintiffs before November 20, 2019. Plaintiffs' counsel provided no form of authorization from the McGlothrens acquiescing to Plaintiffs' request for the declarations page. (Id., ¶4). The next day, Holleman contacted his Allstate advocate, Tiffany Currie, who assured Holleman she would handle Plaintiffs' request. (Id.). Holleman never provided the declarations page to Plaintiffs or contacted Plaintiffs' counsel. (Doc, 1-1, ¶35 at PageID.26). One month after contacting Holleman, Plaintiffs received the declarations page from Hill. (Doc. 1-1, ¶34 at PageID.26).

Plaintiffs sued in the Baldwin County Circuit Court in March 2020, alleging four causes of action against Allstate, Hill and Holleman. Plaintiffs allege Holleman fraudulently suppressed the declarations page Plaintiffs sought from Allstate. Specifically, Plaintiffs allege: "John Holleman, acting within the line and scope of his employment as an agent, employee, and/or servant for Allstate, assisted in the fraudulent scheme by concealing the documents needed by Plaintiffs to see they had substantial UIM coverage for the accident made the basis of this litigation." (Doc. 1-1, ¶ 61 at PageID.31).

Allstate removed this action on April 6, 2020, contending this Court has subject matter jurisdiction under 28 U.S.C. §§ 1332, 1441, and 1446. (See Doc. 1). Allstate contends Holleman is fraudulently joined, as Plaintiffs have no reasonably possible claim against him because Holleman owed Plaintiffs no duty to disclose the McGlothrens' declaration page as they had no relationship to one another. (Doc. 1, PageID.13 - 17; Doc. 13, PageID.171 - 173).

Plaintiffs contend Holleman owed Plaintiffs a duty and raise various theories which they allege bound Holleman to disclose the McGlothrens' declarations page. Plaintiffs argue: (1) Hare and Holleman had a relationship which necessitated disclosure because she was a "listed driver" under the McGlothrens' policy; (2) Plaintiffs qualified as insureds under the policy which created a relationship with Holleman and imposed upon him a duty to disclose; (3) Plaintiffs specifically requested the declarations page from Holleman which imposed upon him a duty to disclose; (4) Allstate specifically delegated its duty to disclose to Holleman; and (5) Holleman had the apparent authority to disclose the declarations page based on Allstate's representations. (Doc. 9, PageID.139 - 142; Doc. 14, PageID.184 - 188). Considering Plaintiffs have a reasonably possible claim, they contend, Holleman was not fraudulently joined and remand is proper. The ultimate issue before the Court is whether Holleman is fraudulently joined.

II. STANDARD OF REVIEW

"In a removal case alleging fraudulent joinder, the removing party has the burden of proving that . . . there is no possibility the plaintiff can establish a cause of action against the resident defendant." Pacheco de Perez v. AT& T Co., 139 F.3d 1368, 1380 (11th Cir. 1998) (citation omitted); see also Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th Cir. 2011) ("To establish fraudulent joinder, the removing party has the burden of proving by clear and convincing evidence that . . . there is no possibility the plaintiff can establish a cause of action against the resident defendant") (citation and internal quotation marks omitted).

The party alleging fraudulent joinder shoulders a heavy burden. See Pacheco de Perez, 139 F.3d at 1380. "If there is even a possibility that a state court would find that the complaint states a cause of action against . . the resident defendant[], the federal court must find that thejoinder was proper and remand the case to the state court." Stillwell, 663 F.3d at 1333 (citations omitted). The fraudulent joinder standard differs significantly from, and is less stringent than, the Twombly/Iqbal plausibility test that governs motions to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See McKenzie v. Janssen Biotech Inc., 2017 WL 2670738, *4 (S.D. June 21, 2017). While Twombly "asks for more than a sheer possibility that a defendant has acted unlawfully, . . . all that is required to defeat a fraudulent joinder claim is a possibility of stating a valid cause of action." Stillwell, 663 F.3d at 1333 (citations omitted).

Where the Court sits in diversity jurisdiction, courts apply state substantive law. See Martin Marietta Materials, Inc. v. Limestone Redbay, Inc., 2017 WL 3444738, *4 (N.D. Ala. June 30, 2017) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 74 - 77 (1938)); Vacation Break U.S.A., Inc. v. Mktg. Response Grp., 189 F.R.D. 474, 478 (M.D. Fla. 1999) (citing Cohen v. Office Depot, Inc., 184 F.3d 1292, 1296 (11th Cir. 1999)), distinguished on other grounds. Where a plaintiff fails to satisfy an essential element of her prima facie case, there can be no possible claim against that defendant and a finding of fraudulent joinder is appropriate. See, e.g., Clemmons v. Twin City Fire Ins. Co., 2013 WL 12156033, *3 (N.D. Ala. December 3, 2013) (finding fraudulent joinder where the plaintiff could not establish an essential element of her tortious interference with a business relationship claim).

III. DISCUSSION

A. Holleman did not owe Plaintiffs a duty under the Walden test.

The statute giving rise to Plaintiffs' fraudulent suppression claim provides: "Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from theparticular circumstances of the case." Ala. Code § 6-5-102; see also Ex parte Walden, 785 So. 2d 335, 338 (Ala. 2000). Alabama law provides a fraudulent suppression claim lies only where a plaintiff can demonstrate: (1) that the defendant had a duty to disclose material facts; (2) that the defendant concealed or failed to disclose those facts; (3) that the concealment or failure to disclose induced the plaintiff to act; and (4) that the defendant's action resulted in harm to the plaintiff. See Ex parte Walden, 785 So. 2d at 338; Booker v. United Am. Ins. Co., 700 So. 2d 1333, 1339, (Ala. 1997) (citing Interstate Truck Leasing, Inc. v. Bender, 608 So. 2d 716 (Ala. 1992)).

Generally, an insurance agent's duty does not exceed the procurement of requested insurance unless a plaintiff can show a confidential relationship or special circumstances giving rise to more. See Goostree v. Liberty Nat'l Life Ins. Co., 2019 WL 2501888, *5 (N.D. Ala. June...