Hart v. Travelers Prop. Cas. Co. of Am.

Decision Date08 July 2022
Docket Number5:21-CV-466-FL
Citation610 F.Supp.3d 785
Parties Walter L. HART, IV as Guardian Ad Litem for Dominique D. Northcutt, an incompetent adult, Plaintiff, v. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA; Educational Data Systems Incorporated; Cape Fear Aviation Maintenance, LLC, d/b/a Cape Fear Aviation ; Cape Fear Aviation Services, LLC, d/b/a Cape Fear Aviation ; Cape Fear Aviation Fayetteville, LLC, d/b/a Cape Fear Aviation ; Roger Dale Smith, individually and as owner, member, and manager of Cape Fear Aviation Fayetteville, LLC; Cynthia B. Smith, individually and as owner of Cape Fear Aviation ; Jacob Jake Parsons; Scot Smith, individually and as owner, member, and manager of Cape Fear Aviation Maintenance, LLC, Defendants.
CourtU.S. District Court — Eastern District of North Carolina

Charles G. Monnett, III, Charles G. Monnett III & Associates, Charlotte, NC, for Plaintiff.

Matthew J. Lavisky, Butler Weihmuller Katz Craig, LLP, Tampa, FL, Theodore Nicholas Goanos, Butler Weihmuller Katz Craig, LLP, Charlotte, NC, for Defendant Travelers Property Casualty Company of America.

Andrew L. Fitzgerald, Fitzgerald Hanna & Sullivan, PLLC, Winston-Salem, NC, for Defendant Educational Data Systems Incorporated.


LOUISE W. FLANAGAN, United States District Judge

This matter is before the court on the following motions:

1) Plaintiff's motion to remand (DE 12);

2) Defendant Educational Data Systems Incorporated's ("EDSI") motion to remand (DE 18);

3) Defendant Travelers Property Casualty Company of America's ("Travelers") motion to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) (DE 16);

4) Defendant Travelers's motion to realign all other parties as plaintiffs (DE 24); and

5) Defendant Travelers's motion to dismiss defendant EDSI's counterclaim as duplicative of a complaint and counterclaim in another case also pending before this court (DE 29).

These motions have been briefed fully, and in this posture, are ripe for ruling. For the following reasons, plaintiff's and defendant EDSI's motions to remand are denied and defendant Travelers's motions to dismiss the complaint, realign the parties, and dismiss defendant EDSI's counterclaim are granted.


Plaintiff initiated this declaratory judgment action in Cumberland County Superior Court on November 5, 2021, seeking judicial determination that defendant Travelers, an insurance company, is obligated to provide coverage to defendant EDSI for damages that may be awarded in an underlying tort action pending in Cumberland County Superior Court. See Case No. 20-CVS-5121 (hereinafter, the "underlying tort action"). In the underlying tort action, plaintiff alleges that Dominique Northcutt, for whom plaintiff serves as guardian ad litem, was severely injured in an airplane crash and that each of the defendants in this declaratory judgment action are jointly and severally liable for her injuries. Plaintiff seeks costs and attorneys' fees.

Defendant Travelers removed this declaratory judgment action to this court November 11, 2021, asserting defendants Cape Fear Aviation Maintenance, LLC; Cape Fear Aviation Services, LLC; Cape Fear Aviation Fayetteville, LLC; Scot Smith; Roger Dale Smith; Cynthia B. Smith; and Jacob "Jake" Parsons (collectively "Cape Fear defendants") were fraudulently joined and thus could be disregarded for jurisdictional purposes. Amongst the remaining parties, defendant Travelers asserted there was complete diversity and the requirements of 28 U.S.C. § 1332 were thus satisfied.

Plaintiff filed the instant motion remand the case December 10, 2021, on the basis that the Cape Fear defendants were not fraudulently joined and complete diversity was accordingly lacking. Shortly thereafter, defendant EDSI filed its instant motion to remand, relying upon the sworn written testimony of Robert Dancer, on the basis that defendant Travelers had not sought its consent for removal and EDSI has the power to veto removal as a co-defendant. Defendant Travelers filed the instant motion to realign the parties and motion to dismiss plaintiff's complaint for failure to state a claim.

Defendant EDSI filed its answer December 29, 2021, and asserted a crossclaim against defendant Travelers for judgment declaring defendant Travelers owes EDSI insurance coverage. Defendant Travelers subsequently moved to dismiss defendant EDSI's counterclaim with reliance upon an email exchange between counsel.

Also pending in this Court is a separate declaratory judgment action filed by defendant Travelers against defendant EDSI seeking declaration that it does not owe coverage to EDSI. See Case No. 5:21-CV-468-FL.


The facts alleged in plaintiff's complaint may be summarized as follows. Dominique D. Northcutt ("Northcutt") attended an "aviation career day" at Gray's Creek Airport on February 17, 2020. (Compl. (DE 1-1) ¶¶ 22, 25). The career day was a "partnership or joint enterprise" between defendant EDSI, the Cape Fear defendants, and others not party to this action. (Id. ¶ 25). As part of the career day activities, Northcutt was flown in an airplane owned and operated by the Cape Fear defendants. (Id. ¶ 23). That airplane crashed, and Northcutt suffered a traumatic brain injury

so severe that she has since been declared incompetent. (Id. ).

Prior to that accident, defendant Travelers issued an "Excess Follow-Form and Umbrella Liability Insurance Policy" (hereinafter, the "insurance policy") to defendant EDSI. (Id. ¶ 32). Plaintiff asserts that policy provides coverage to EDSI for the injuries sustained by Northcutt and has demanded that Travelers tender such coverage in settlement of the underlying tort action. (Id. ¶¶ 32-34).

A. Motions to Remand and to Realign the Parties
1. Standard of Review

In any case removed from state court, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).1 "The burden of establishing federal jurisdiction is placed upon the party seeking removal." Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). "Because removal jurisdiction raises significant federalism concerns, [the court] must strictly construe removal jurisdiction." Id. "If federal jurisdiction is doubtful, a remand is necessary." Id.; see Palisades Collections LLC v. Shorts, 552 F.3d 327, 336 (4th Cir. 2008) (recognizing the court's "duty to construe removal jurisdiction strictly and resolve doubts in favor of remand").

2. Analysis

In its notice of removal, defendant Travelers invoked the court's diversity jurisdiction. This court has diversity jurisdiction over civil actions "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... citizens of different States[.]" 28 U.S.C. § 1332(a)(1). " Section 1332 requires complete diversity among parties, meaning that the citizenship of every plaintiff must be different from the citizenship of every defendant." Cent. W. Virginia Energy Co. v. Mountain State Carbon, LLC, 636 F.3d 101, 103 (4th Cir. 2011). A corporation is a citizen of the state in which it is incorporated and of the state in which it maintains its principal place of business. See 28 U.S.C. § 1332(c)(1) ; Hertz Corp. v. Friend, 559 U.S. 77, 80-81, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010).

Plaintiff and the Cape Fear defendants are all citizen of North Carolina, (see Compl. (DE 1-1) ¶¶ 6,8; Not. of Rem. (DE 1) ¶¶ 9, 12), and thus, complete diversity is lacking. Defendant Travelers argues, however, that the citizenship of Cape Fear defendants must be disregarded for diversity purposes because they were fraudulently joined in this action. Defendant EDSI urges remand on the basis that it did not consent to removal, to which defendant Travelers counters that defendant EDSI, citizen of Michigan, (see Compl. (DE 1-1) ¶ 15; Not. of Rem. (DE 1) ¶ 11), must instead be realigned as a plaintiff. The court considers these arguments in turn below.

a. Fraudulent Joinder

Defendant Travelers argues there is no possibility that plaintiff can establish a cause of action against the Cape Fear defendants and thus they were fraudulently joined. The court agrees.

"[T]he fraudulent joinder doctrine provides that diversity jurisdiction is not automatically defeated by naming non-diverse defendants." Weidman v. Exxon Mobil Corp., 776 F.3d 214, 218 (4th Cir. 2015). The doctrine "effectively permits a district court to disregard, for jurisdictional purposes, the citizenship of certain nondiverse defendants, assume jurisdiction over a case, dismiss the nondiverse defendants, and thereby retain jurisdiction." Johnson v. Am. Towers, LLC, 781 F.3d 693, 704 (4th Cir. 2015).

Invocation of the fraudulent joinder doctrine is appropriate only where "there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court; or ... there has been outright fraud in the plaintiff's pleading of jurisdictional facts." Marshall v. Manville Sales Corp., 6 F.3d 229, 232-33 (4th Cir. 1993) (emphasis in original). "[U]ltimate success is not required to defeat removal. Rather, there need be only a slight possibility of a right to relief. Once the court identifies this glimmer of hope for the plaintiff, the jurisdictional inquiry ends." Hartley v. CSX Transp., Inc., 187 F.3d 422, 426 (4th Cir. 1999).

"The party alleging fraudulent joinder bears a heavy burden—it must show that the plaintiff cannot establish a claim even after resolving all issues of law and fact in the plaintiff's favor." Id. at 424. "In order to determine whether an attempted joinder is fraudulent, the court is not bound by the allegations of the pleadings, but may instead consider the entire record, and determine the basis of joinder by any means available." AIDS Counseling & Testing Ctrs. v. Grp. W Television, Inc., 903 F.2d 1000,...

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