Jakoubek v. Fortis Benefits Ins. Co.

• Decision Date: 29 October 2003
• Docket Number: No. 8:03CV290.,8:03CV290.
• Citation: 301 F.Supp.2d 1045
• Parties: Mona R. JAKOUBEK, Plaintiff, v. FORTIS BENEFITS INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Nebraska

301 F.Supp.2d 1045

Mona R. JAKOUBEK, Plaintiff, v. FORTIS BENEFITS INSURANCE COMPANY, et al., Defendants.

No. 8:03CV290.

United States District Court, D. Nebraska.

October 29, 2003.

Allan J. Eurek, Lincoln, NE, for Plaintiff.

Harvey B. Cooper, Abrahams, Kaslow Law Firm, Omaha, NE, Richard N. Bien, Robyn L. Turner, Lathrop, Gage Law Firm, Kansas City, MO, Tyler P. McLeod, Abrahams, Kaslow Law Firm, Omaha, NE, for Defendants.

Charles E. Lowe, Attorney General's Office, Melanie J. Whittamore-Mantzios, Wolfe, Snowden Law Firm, Lincoln, NE, for Nebraska Department of Administrative Services.

MEMORANDUM AND ORDER

PIESTER, United States Magistrate Judge.

The plaintiff, Mona R. Jakoubek ("Jakoubek") filed suit against Fortis Benefits Insurance Company ("Fortis"), a Minnesota Corporation, and the State of Nebraska and its Department of Administrative Services ("State defendants"). The plaintiff seeks a declaration that she is totally disabled and entitled to payments under a Fortis long term disability insurance policy she obtained through her employment with the Department of Administrative Services ("DAS"), an agency of the State of Nebraska ("State"). Fortis removed the case to federal court on the basis of diversity jurisdiction. See filing 1. Arguing lack of federal subject matter jurisdiction, the plaintiff has filed a motion for remand. Filing 14. For the reasons discussed herein, I shall deny plaintiff's motion.

The parties' respective arguments are based solely on the allegations set forth in plaintiff's complaint. No additional evidence was submitted for the court's determination of subject matter jurisdiction.¹ The factual statements in plaintiff's complaint, as more fully discussed hereafter, are therefore considered undisputed for the purpose of determining this motion for remand.

The plaintiff was employed within DAS beginning prior to 1995 and until June of 2000. Before 1995 the State was the policyholder of a group long term disability policy available to state employees through Hartford Insurance Company. In 1995 Fortis became the insurer of the State's group long term disability policy. Filing 1, complaint ¶¶ 3-5. Through the Nebraska State Insurance Program, Neb.Rev.Stat. §§ 84-1601 through 84-1617, the plaintiff was permitted to and did purchase long term disability coverage, the premiums of which were deducted from her wages. Filing 1, complaint ¶¶ 5, 6, & 9.

When the insurer for the group disability policy changed from Hartford to Fortis in 1995, the plaintiff selected Option 1 of the plan insured through Fortis. Option 1 of the Fortis policy provided benefits of sixty percent of a covered employee's monthly salary up to a maximum of $5000 with an elimination period of six months. Filing 1, complaint ¶¶ 6-7. The 1995 Fortis policy (filing 1, complaint ¶ 5; filing 27, exhibit A) was amended in 1999. Filing 1, complaint ¶ 8; filing 27, exhibit B.

The plaintiff has been medically unable to perform her employment duties since September 24, 1999. On that date she developed symptoms which were ultimately diagnosed as thoracic outlet syndrome caused by work-related repetitive motion. She was later diagnosed with myofascial pain syndrome. Jakoubek became clinically depressed and in February 2000, her doctor stated she was unable to perform the essential functions of her job. In May 2000, the State defendants informed the plaintiff that steps were underway to terminate her employment because she could not perform her job. (Filing 1, complaint ¶ 14; filing 27, Exhibit C). Plaintiff's state employment was terminated in June of 2000. (Filing 1, complaint ¶ 15).

Plaintiff submitted claims for disability benefits to both the Social Security Administration and Fortis. She has been found totally disabled and entitled to Social Security benefits. (Filing 1, complaint ¶¶ 19-20). Fortis initially denied plaintiff's claim and determined she was not entitled to long term disability coverage. Upon appeal of that decision, Fortis determined plaintiff was totally disabled due to mental illness and therefore limited her coverage to two years beginning September 24, 1999. The plaintiff challenged this determination, claiming she was physically disabled and therefore entitled to disability coverage for a longer period of time. Fortis denied that claim. Filing 1, complaint ¶ 21.

Under the terms of the Fortis long term disability policy, as amended in 1999 by Exhibit B, Fortis has "the sole discretionary authority to determine eligibility for participation or benefits and to interpret the terms of the Policy. All determinations and interpretations made by [Fortis] are conclusive and binding on all parties." Filing 27, exhibit B, p. 25 "Authority". The plaintiff asserts that a "genuine controversy exists between Plaintiff and Defendants concerning whether or not Plaintiff is entitled to additional long term disability benefits under the Policy and the amount thereof...." Filing 1, complaint ¶ 22. The plaintiff, who is currently forty-five years old, requests a judgment declaring she is totally and physically disabled, and therefore entitled to long term disability benefits until she reaches at least sixty-five years of age. She requests a monetary judgment against the defendants and in addition to the $5,922.00 already owed to the date of filing, states she is entitled to receive approximately $1360 ($2,344.60 minus social security payments of $984.10 (subject to cost of living increases)) in monthly long term disability benefits. Filing 1, complaint §§ 23-27. See also, filing 1, removal notice ¶ 8. Plaintiff's total claim significantly exceeds $75,000. The plaintiff further claims a right to recover attorney fees and costs pursuant to Neb.Rev.Stat. § 44-359 and 25-1803. Filing 1, complaint §§ 28-29.

Fortis removed this case to federal court on the basis of diversity jurisdiction.² Fortis asserts the federal court has diversity jurisdiction over this action because the amount in controversy exceeds $75,000, and complete diversity exists between the plaintiff and defendants. Filing 1, removal notice ¶ 4. Fortis claims that since the State defendants are not citizens of any state for the purpose of diversity, they and the plaintiff are not citizens of the same state and diversity therefore exists. In the alternative, Fortis claims plaintiff cannot obtain the relief requested from anyone other than Fortis, the State defendants are only nominal defendants, and plaintiff fraudulently joined them to deprive the federal court of jurisdiction. Filing 1, removal notice ¶¶ 5-6. The plaintiff asserts this case must be remanded because the plaintiff and the State defendants are not citizens of different states, the State defendants are necessary and indispensable parties which cannot be sued in federal court on the basis of diversity, and the Eleventh Amendment precludes this court from granting the requested monetary relief against the State defendants. Filing 14, motion for remand and filing 15, remand brief at p. 2.

As the party opposing remand to state court, Fortis has the burden of establishing federal subject matter jurisdiction. Green v. Ameritrade, Inc., 279 F.3d 590 (8th Cir.2002); Quality Refrig. Services, Inc. v. City of Spencer, 908 F.Supp. 1471, 1483 (N.D.Ia.1995). Fortis contends that since the State defendants are not citizens, their existence as named defendants must be disregarded in determining complete diversity. In other words, the court can ignore the existence of these defendants and determine that complete diversity between the plaintiff and Fortis is sufficient to establish federal jurisdiction over the case. See Filing 25, Fortis brief at p. 3-4. The law is to the contrary.

When a suit is filed against more than one defendant, the requirements of the diversity statute must be met for each defendant. Complete diversity of citizenship must exist. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989). The state and its agencies are not citizens and no diversity of citizenship, as defined by 28 U.S.C. § 1332, can therefore exist between Jakoubek and the State defendants. Illinois v. City of Milwaukee, Wis., 406 U.S 91, 98 n. 1, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972); State Highway Commission in Arkansas v. Kansas City Bridge Co., 81 F.2d 689, 691 (8th Cir.1936)(citing State Highway Commission of Wyoming v. Utah Construction Co., 278 U.S. 194, 199, 49 S.Ct. 104, 73 L.Ed. 262 (1929); Postal Telegraph Cable Co. v. State of Alabama, 155 U.S. 482, 487, 15 S.Ct. 192, 39 L.Ed. 231 (1894); State of Minnesota v. Northern Securities Co., 194 U.S. 48, 63, 24 S.Ct. 598, 48 L.Ed. 870 (1904); Stone v. South Carolina, 117 U.S. 430, 6 S.Ct. 799, 29 L.Ed. 962 (1886); Germania Insurance Co. v. Wisconsin, 119 U.S. 473, 7 S.Ct. 260, 30 L.Ed. 461 (1886); Hertz et al. v. Knudson, 6 F.2d 812, 815 (8th Cir.1925); Cargile et al. v. New York Trust Co., 67 F.2d 585, 589 (8th Cir.1933)).

Fortis argues that since the plaintiff is a citizen of Nebraska, and neither defendant is a Nebraska citizen, complete diversity exists. However, 28 U.S.C. § 1332(a)(1) grants federal diversity jurisdiction only when plaintiffs and defendants are citizens of different states. Since the State defendants are not citizens, they and the plaintiff cannot be citizens of different states. "If a party is not a citizen of a state at all, then it is not a citizen of a different state and it would be inappropriate to allow that party to bring a case or be subject to federal jurisdiction based only on diversity of citizenship." Batton v. Georgia Gulf, 261 F.Supp.2d 575, 582 (M.D.La.2003)(presence of state agency as a codefendant destroyed complete diversity). Assuming the State and DAS were properly named as defendants, complete diversity and federal subject matter jurisdiction is lacking. Long v. District of Columbia, 820 F.2d 409, 416 (D.C.Cir.1987)(absent dismissal of District of Columbia as a "noncitizen...