Nguyen v. Regions Bank
| Decision Date | 07 December 2010 |
| Docket Number | Civil No. 1:10cv253-HSO-JMR |
| Parties | BINH VAN NGUYEN PLAINTIFF v. REGIONS BANK and THOMAS REYNOLDS, JR. DEFENDANTS |
| Court | U.S. District Court — Southern District of Mississippi |
This cause comes before the Court upon Plaintiffs Motion to Remand [7] this case to the Circuit Court of Harrison County, Mississippi, Second Judicial District. Defendants have filed a Response [10], and Plaintiff has filed a Reply [13]. The Court, having considered the pleadings on file, the briefs and arguments of the parties, and the relevant legal authorities, finds that Plaintiff's Motion to Remand should be granted, and that this case should be remanded to state court.
Plaintiff filed his Complaint [6-4] in the Circuit Court of Harrison County, Mississippi, Second Judicial District, on or about August 28, 2008, naming as Defendants Allstate Insurance Company, Mississippi Windstorm Underwriting Association ["MWUA"], Regions Bank ["Regions"], and Thomas Reynolds, Jr. ["Reynolds"]. Compl., at p.1. Plaintiff filed an Amended Complaint [6-1] on or about May 10, 2010, naming only Regions and Reynolds as Defendants [collectively, "Defendants"], and asserting a claim against them for detrimental reliance. Am. Compl. This claim stems from the non-renewal of Plaintiffs wind and hail coverage based upon his failure to pay the premium. Id. at ¶ 10. Plaintiff alleges that he reasonably relied on Defendants' representation that Regions would pay the real property taxes and insurance premiums from an escrow account for Plaintiffs mortgage loan. Id. at ¶ 14. Defendants removed the case to this Court on June 4, 2010. Notice of Removal. Defendants invoke this Court's jurisdiction based upon both diversity of citizenship and federal question. Id. They assert that Defendant Thomas Reynolds, Jr. ["Reynolds"], was fraudulently joined to defeat diversity jurisdiction. Id. Plaintiff now seeks remand to state court.
28 U.S.C. § 1441 provides for the removal of civil actions brought in a state court of which the district courts have original jurisdiction. 28 U.S.C. § 1441. Section 1331 provides that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Section 1332 provides that "[t]he district courts shall have original jurisdiction of all 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.
Federal courts are courts of limited jurisdiction, having subject matter jurisdiction only over those matters specifically designated by the Constitution or Congress. Epps v. Bexar-Medina-Atascosa Counties Water Improvement Dist. No. 1, 665 F.2d 594, 595 (5th Cir. 1982). For this reason, removal statutes are subject to strict construction. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988).
Doubts about whether federal jurisdiction exists following removal must be resolved against a finding of jurisdiction. Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000) (citing Willy, 855 F.2d at 1164). The party or parties seeking removal, Defendants in this case, bear the burden of establishing federal jurisdiction over the state court suit. Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005); Willy, 855 F.2d at 1164.
The parties do not dispute that the amount in controversy exceeds the $75,000.00 jurisdictional minimum. See 28 U.S.C. § 1332(a); Pl.'s Mot. to Remand (maintaining that "there is no federal question, there is not complete diversity of citizenship and there has been no fraudulent joinder," but not asserting that the amount in controversy is insufficient to confer federal jurisdiction).1 The question presented is whether there is complete diversity of citizenship. See 28 U.S.C. § 1332(a). The determinative issue is whether Defendant Reynolds was fraudulently or improperly joined as a Defendant in order to defeat this Court's diversity jurisdiction.
As the removing parties, Defendants bear the burden of demonstrating fraudulent or improper joinder. This burden is a heavy one. Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003). Improper joinder can be established by demonstrating either "(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc). Here, there is no allegation or evidence of fraud in pleading jurisdictional facts, so the Court focuses on the second method of establishing improper joinder. Under this method,
[t]he court determines whether that party has any possibility of recovery against the party whose joinder is questioned. If there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no [improper] joinder. This possibility, however, must be reasonable, not merely theoretical.
"[T]he threshold question for [the Court] is whether 'there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant.'" Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (quoting Smallwood, 385 F.3d at 573). If a court finds, after resolving all disputed questions of fact and ambiguities of law in favor of the non-removing party, that there is "arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no fraudulent joinder and hence no basis for asserting diversity of citizenship jurisdiction." Jabour v. Life Ins. Co. of North America, 362 F. Supp. 2d 736, 740 (S.D. Miss. 2005) (quoting Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993)).
Plaintiff initially purchased homeowner's and windstorm insurance policies in 1998 through his Allstate insurance agent, Defendant Reynolds. See Am. Compl. [1-3], at 1 5; Aff. of Thomas Reynolds, Jr., attached as Ex. "A" to Defs.' Resp. According to Plaintiff, Reynolds told him that "he [Reynolds] would personally be responsible for setting up the payments of the insurance premiums through Regions Bank, [Plaintiff's] mortgage company...." Id. at ¶ 6. Plaintiff states that he supplied Reynolds with the necessary information, and that he relied on and trusted Reynolds to "carry out his promise that [Reynolds] would see to it that the premiums would be paid as and when due from [Plaintiff's] escrow account, which had sufficient funds to pay the insurance premiums." Id. Plaintiff claims that Reynolds collected his initial insurance premium, and told him that, subsequently, Plaintiff would make insurance payments with his monthly house payment to Regions Bank, who "would pay subsequent annual premiums from Plaintiff's escrow account as and when the premium notices were received by the bank annually." Id.
Plaintiff acknowledges that Reynolds "made the arrangements with Regions Bank for the payment of insurance premiums for Homeowners insurance and wind insurance through Plaintiff's mortgage escrow account, and Regions began paying the premiums." Id. at ¶ 8. A problem apparently arose in January 2005, when Plaintiff received a renewal notice from Allstate. After Plaintiff suffered a loss to his home during Hurricane Katrina on August 29, 2005, he claims that he was notified that he no longer had wind and hail coverage, as the policy had expired on March 27, 2005. Id. at ¶¶ 10, 13. Plaintiff avers that Allstate/Mississippi Windstorm Underwriting Association sent a Notice of Expiration of the policy to both Reynolds and Regions Bank on April 11, 2005. Id. at ¶ 13. Plaintiff claims that he never received this Notice. See Pl.'s Mem. in Supp. of Mot. to Remand, at p. 3.
In his Amended Complaint, Plaintiff advances a claim for detrimental reliance against both Defendants. Am. Compl., at ¶ 14. With respect to Reynolds, Plaintiff maintains that he reasonably relied, to his detriment, upon Reynolds' representation that Regions Bank would pay real property taxes and insurance premiums from the escrow account for Plaintiff's mortgage loan. Id. Plaintiff contends that Reynolds received notice that Regions Bank failed to make these payments, but took no action. Id. at ¶ 15. Plaintiff maintains that "Reynolds knew or should have known that Plaintiff continued to rely on his prior representations, and took no action whatsoever to prevent the policy from lapsing or to notify Plaintiff of same." Id. at ¶ 21. Plaintiff argues that Defendants' actions constitute a breach of the duties owed Plaintiff, and that "Reynolds acted with negligence or gross negligence" warranting imposition of extra-contractual and punitive damages under Mississippi law. Id. at ¶ 23.
Defendants respond that Plaintiff's allegations as to his purported detrimental reliance upon Reynolds' representation that Regions would pay real property taxes and insurance premiums from the escrow account for Plaintiff's mortgage loan are insufficient to sustain a viable cause of action against Reynolds. Mem. in Opp'n to Mot. for Remand, at p. 7. They contend that, after the MWUA issued the wind policy to Plaintiff, "Regions would then pay subsequent annual premiums from Plaintiff's escrow account as and when the premium notices were received by Regions." Id. at p. 8. Defendants maintain that "Reynolds had no role whatsoever in the escrowing of monies and/or payment of the annual premium of the wind-policy by Regions to MWUA." Id. Defendants therefore assert that "it is nonsensical for Plaintiff to allege that Reynolds was negligent in any manner with...
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