James v. Mejia, CASE NO. 2:20-CV-298-WKW

• Decision Date: 07 January 2021
• Docket Number: CASE NO. 2:20-CV-298-WKW
• Citation: 512 F.Supp.3d 1255
• Parties: Melvin JAMES, Plaintiff, v. Bernardino MEJIA, et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

512 F.Supp.3d 1255

Melvin JAMES, Plaintiff,

v.Bernardino MEJIA, et al., Defendants.

CASE NO. 2:20-CV-298-WKW

United States District Court, M.D. Alabama, Northern Division.

Signed January 7, 2021

Darron C. Hendley, Law Office of Darron C. Hendley, Montgomery, AL, for Plaintiff.

Christoffer Peter Bolvig, III, Mudd Bolvig Luke & Wells, LLC, Birmingham, AL, for Defendant Bernardino Mejia.

Stanley Scott Sasser, Webster Henry Lyons White Bradwell Cohan and Black, Montgomery, AL, for Defendant Alfa Mutual Insurance Company.

William Christopher Waller, Jr., Ball, Ball, Matthews & Novak, P.A., Montgomery, AL, for Defendant USAA Casualty Insurance Company.

MEMORANDUM OPINION AND ORDER

W. Keith Watkins, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

On April 30, 2019, Melvin James ("Plaintiff"), an Alabama citizen, filed a complaint in the Circuit Court of Montgomery County, Alabama, against Bernardino Mejia ("Mejia"), Alfa Mutual Insurance Company ("ALFA"), also an Alabama citizen, USAA Casualty Insurance Company ("USAA"), a Texas citizen, and certain fictitious defendants. (Doc. # 2-3.) On February 26, 2020, Plaintiff amended his complaint to include an additional claim against a new defendant—Gonzalez Mario Mejia ("Mario Mejia"). (Doc. # 2-11.) All told, Plaintiff's complaint contains three causes of action: (1) negligence/wantonness and negligence per se against Mejia; (2) breach of contract against ALFA and USAA; and (3) negligence/wanton entrustment against Mario Mejia. On April 30, 2020, USAA removed the case, with consent from all properly served Defendants, to federal court based on diversity jurisdiction. 28 U.S.C. §§ 1332(a), 1441, and 1446(b)(3).¹

Now before the court is Plaintiff's Motion to Remand. (Doc. # 1.) In his motion, Plaintiff also requests an award of costs and attorney's fees pursuant to 28 U.S.C. § 1447(c). The primary issue is whether the Alabama citizenship of ALFA (Plaintiff's uninsured motorist carrier) should be considered in determining whether complete diversity exists. As explained more fully below, the motion to remand is due to be granted because ALFA is not a nominal party and its Alabama citizenship must be considered for jurisdictional purposes. As a result, complete diversity does not exist in this case. However, Plaintiff is not entitled to an award of costs and attorney's fees.

II. STANDARD OF REVIEW

"[F]ederal courts have a strict duty to exercise the jurisdiction that is conferred upon them by Congress." Quackenbush v. Allstate Ins. Co. , 517 U.S. 706, 716, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). However, "[f]ederal courts are courts of limited jurisdiction." Burns v. Windsor Ins. Co. , 31 F.3d 1092, 1095 (11th Cir. 1994) ; see also Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 379, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Thus, with respect to cases removed to this court pursuant to 28 U.S.C. § 1441, the law of the Eleventh Circuit favors remand where federal jurisdiction is not absolutely clear. "[R]emoval statutes are construed narrowly; where plaintiff and defendant clash about jurisdiction, uncertainties are resolved in favor of remand." Burns , 31 F.3d at 1095.

III. BACKGROUND

Plaintiff's claims arise out of a two-car collision, in which Plaintiff and Mejia were drivers, that took place at the intersection of Eastern Boulevard and Buckboard Road in Montgomery, Alabama. Specifically, Plaintiff alleges that Mejia's negligent and/or wanton conduct caused his vehicle to collide with Plaintiff's vehicle, resulting in significant injuries to Plaintiff. In addition to suing Mejia, Plaintiff exercised his right under Alabama law to bring suit against his own uninsured² motorist carriers—USAA and ALFA. See Lowe v. Nationwide Ins. Co. , 521 So. 2d 1309, 1310 (Ala. 1988) (holding that "[a] plaintiff is allowed either to join as a party defendant his own liability insurer in a suit against the underinsured motorist or merely to give it notice of the filing of the action against the motorist and the possibility of a claim under the underinsured motorist coverage at the conclusion of the trial") (emphasis in original) (alteration added). As named parties in the litigation, USAA and ALFA had "the right, within a reasonable time after service of process, to elect either to participate in trial ... or not to participate in the trial ...." Id. (emphasis in original). To date, neither USAA nor ALFA has opted out of this lawsuit.

According to USAA, "[t]he case stated in Plaintiff's initial complaint, First Amended Complaint, and Second Amended Complaint [was] not removable because, in each Plaintiff alleg[ed] ... that [Mejia was] a citizen of the State of Alabama." (Doc. # 2, at 4.) USAA claims that the case only became removable once its counsel received a letter on April 15, 2020, from a non-party insurance company (who initiated a separate declaratory judgment action against Plaintiff concerning insurance coverage issues arising out of the same events as this case) that indicated Mejia was "a citizen of Mexico, and [was] not a citizen of the State of Alabama as alleged in [Plaintiff's]" state court pleadings. (Doc. # 2, at 5.) While the face of the letter does not discuss Mejia's citizenship, it does contain attachments from Plaintiff's answer to the non-party's declaratory judgment complaint, wherein Plaintiff responds that Mejia "is believed to be from Mexico." (Doc. # 2-2, at 532.) USAA contends that this letter "constitutes ‘other paper’ ... from which [it] could first ascertain that [Mejia] was not in fact a citizen of Alabama and that this case was removable on diversity jurisdiction grounds." (Doc. # 2, at 5 (emphasis in original).)

IV. DISCUSSION

A. ALFA is not a Nominal Party

Mejia's citizenship is of no moment because Plaintiff persuasively asserts that ALFA is not a nominal party in this lawsuit and that, as a result, its Alabama citizenship must be considered for jurisdictional purposes.³ To be sure, "federal courts must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy." Thermoset Corp. v. Bldg. Materials Corp of Am. , 849 F.3d 1313, 1317 (11th Cir. 2017) (quotations and citation omitted). The Eleventh Circuit's decision in Broyles v. Bayless , 878 F.2d 1400 (11th Cir. 1989) provides the framework for determining whether ALFA qualifies as a real party to this controversy.

In Broyles , the Eleventh Circuit addressed a question similar to the one at issue here: "Should a federal court consider the residence of an uninsured motorist carrier, served with process pursuant to Tennessee's uninsured motorist statute, when determining diversity for federal jurisdiction purposes?" Id. at 1401. Ultimately, the Broyles court held that the citizenship of the plaintiff's uninsured motorist carrier should not have been considered in determining diversity jurisdiction because "of the law's unique treatment of insurance companies as parties in tort litigation and because [the uninsured motorist carrier] was not the primary defender of [the] lawsuit." Id. at 1402. The court reasoned that "[a]lthough liability insurance companies often have a real and substantial stake in their insured's litigation, they are usually not treated as parties to an action involving their insured" due to their "indirect and invisible roles" in a traditional tort case. Id. at 1404. For instance, the court noted that "in a typical scenario, insurance companies defend the insured ‘in cognito’ so as to preserve its anonymity and remain undetected by the jury." Id. Thus, it made "little sense to allow the company to proceed ‘in cognito’ and yet consider its phantom presence in determining diversity." Id. at 1405.

Importantly, the Broyles court outlined three exceptions to the general rule that an uninsured motorist carrier's citizenship should not be considered for federal jurisdiction purposes: (1) the carrier has "become subrogated to the rights of the insured after payment of the loss;" (2) it is "defending actions brought directly against [it]"; or (3) "for some reason [it] must assume primary and visible control of the litigation." Id. at 1404 (citations omitted).

A decision from this district, Summerlin v. Nelson , No. 3:17-CV-36-CDL-WC, 2017 WL 2177361 (M.D. Ala. Apr. 21, 2017), report and recommendation adopted , No. 3:17-CV-36-CDL, 2017 WL 2177337 (M.D. Ala. May 5, 2017), applied the Broyles framework and concluded that ALFA, also the uninsured motorist carrier in that case, was not a nominal party to the lawsuit because the company was defending an action brought directly against it. Consequently, the court considered ALFA's Alabama citizenship for jurisdictional purposes, thus destroying complete diversity among the parties. To support its finding, the Summerlin court highlighted that ALFA had not opted out of the lawsuit and had engaged "in the litigation process, albeit minimally, by requesting discovery from Plaintiff, seeking a protective order for Plaintiff's medical records, and answering Plaintiff's complaint in state court." Id. at *4. The court continued

Further, Plaintiff has not stated that he named Defendant ALFA as a party Defendant solely for the purpose of satisfying the notice requirement in Alabama insurance law. Indeed, Plaintiff's opposition to Defendant Nelson's removal based upon the argument that Defendant ALFA is not a nominal party cuts against such a presumption. So does the wording of Plaintiff's complaint. Plaintiff's complaint specifically states that "Defendant ALFA Insurance has breached its contract with Plaintiff by failing to make payments to the Plaintiff under the under-insured motorist provision of the Plaintiff's policy." Clearly, that statement indicates that there is a live controversy between Defendant ALFA and Plaintiff.

Id. at *5 (citations omitted); see also Parker v. Morton , No. 18-00234-KD-B, 2019 WL 1645207, at *4 (S.D. Ala. Apr. 16, 2019) (rejecting uninsured motorist carrier's argument that it was a...