Steed v. Hartford Underwriters Ins. Carrier

Decision Date28 May 2015
Docket NumberNO. 4:14-CV-00147-DMB-JMV,4:14-CV-00147-DMB-JMV
CourtU.S. District Court — Northern District of Mississippi

This personal injury and insurance dispute arises from a parking lot collision between Plaintiff Sandra Steed and an automobile driven by Defendant Emma Bassett. Doc. #2. Plaintiff seeks to recover compensatory damages from her insurance carrier, Defendant Hartford Underwriters Insurance Carrier ("Hartford"), and from Bassett. Id. The case was removed on October 15, 2014, and is before the Court on Plaintiff's motion to remand. Doc. #1; Doc. #5.

IProcedural History

On October 9, 2013, Plaintiff filed a complaint against Hartford and Bassett in the Circuit Court of Humphreys County, Mississippi. Doc. #2. In her complaint, Plaintiff alleges that Bassett, "an under insured motorist," negligently struck Plaintiff in a parking lot and that Hartford, Plaintiff's insurance carrier, is liable to her for uninsured driver benefits.1 Id. at ¶¶ 10, 15. According to the complaint: (1) Hartford has its principal place of business in Connecticut; (2) Plaintiff is a resident of Mississippi; and (3) Bassett is a resident and citizen of Mississippi. Id. at ¶¶ 1-3.

Both Defendants were served with a summons and copy of the complaint on November 5, 2013. Doc. #3-6; Doc. #3-7. Hartford answered the complaint on February 10, 2014. Doc. #3-10. Bassett never answered or otherwise responded to the complaint. Despite Bassett's failure to respond, Plaintiff has not sought default against Bassett.

On October 15, 2014, Hartford removed the state action to this Court. Doc. #1. The notice of removal contains no jurisdictional allegation as to Hartford,2 but alleges that Plaintiff3 and Bassett4 are Mississippi "resident[s]." Id. at ¶ 6.

In its notice of removal, Hartford "acknowledge[]d that technically ... diversity of citizenship does not ... exist in this case to satisfy removal to federal court." Id. at 4. However, Hartford stated that "[t]his Notice, in essence, is based on fraudulent joinder grounds in that it is obvious at this point that Plaintiff never intended on pursuing Defendant Bassett as evidenced by Bassett taking no action in this lawsuit [and] Plaintiff [having] failed to timely pursue default proceedings ...." Id.

On November 7, 2014, Plaintiff filed a motion to remand. Doc. #5. In her motion, Plaintiff argues that Basset was properly joined and, therefore, remand is required. Id. Plaintiff also seeks recovery of costs and expenses related to the motion to remand. Id.

IIRemoval and Improper Joinder

Diversity jurisdiction requires that there be: (1) complete diversity between the parties; and (2) an amount in controversy in excess of $75,000. 28 U.S.C. § 1332. "Complete diversity requires that all persons on one side of the controversy be citizens of different states than all persons on the other side." Harvey, 542 F.3d at 1079 (internal quotation marks omitted).

Pursuant to the forum-defendant rule of 28 U.S.C. § 1441(b)(2), "[a] civil action otherwise removable solely on the basis of [diversity] jurisdiction ... may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." The requirement of proper joinder is reflective of the rule that "[t]he Federal courts should not sanction devices intended to prevent the removal to a Federal court where one has that right...." Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004). "The doctrine of improper joinder rests on these statutory underpinnings, which entitle a defendant to remove to a federal forum unless an in-state defendant has been 'properly joined.'" Id. Thus, under the improper joinder rule, "a court may disregard the citizenship ofparties that have been improperly joined." Gavelston Bay Biodiesel, L.P. v. Ace American Ins. Co., 719 F.Supp.2d 736, 738 (S.D. Tex. 2010) (citing Smallwood, 385 F.3d at 572-73).

In support of her motion to remand, Plaintiff argues that remand is required under the forum-defendant rule.5 Doc. #8 at 2. There is no dispute that Bassett is a citizen of Mississippi. Accordingly, unless Bassett's citizenship may be disregarded under the improper joinder doctrine, removal of this matter is barred by § 1441(b)(2).

The Fifth Circuit has recognized two distinct ways to establish improper joinder: "(1) [demonstrate] actual fraud in the pleading of jurisdictional facts;" or (2) "demonstrate[] that there is no possibility of recovery by the plaintiff against an in-state defendant." Smallwood, 385 F.3d at 573. Under either of these methods, the "heavy" burden of showing improper joinder rests with the removing party. Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011) (citation omitted).

In its response to the motion to remand Hartford concedes that it cannot establish actual fraud in the pleading of jurisdictional facts. Doc. #11 at 4. Rather, Hartford argues that "Plaintiff has no possibility of establishing a cause of action against ... Bassett." Id. at 5.

The second improper joinder inquiry centers on "whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." Smallwood, 385 F.3d at 573 (citation omitted). In resolving this question, "[a] district court should ordinarily ... conduct[] a Rule 12(b)(6)-type analysis. However, in cases where the plaintiff has stated a claim, but 'misstated or omitted discrete facts' the district court has the discretion to pierce the pleadings and conducta summary inquiry." McDonal v. Abbott Labs., 408 F.3d 177, 183 n.6 (5th Cir. 2005). The party asserting improper joinder bears the burden of showing no possibility of recovery under both inquiries. See Barbee v. Scott, No. H-10-1797, 2010 WL 3257477, at *7 (S.D. Tex. Aug. 17, 2010) ("The court concludes, therefore, that under a Rule 12(b)(6)-type analysis the defendants have failed to meet their burden of establishing improper joinder."); see also Veritas Consulting Grp. Inc. v. Gasbuddy Org., Inc., No. C-10-147, 2010 WL 2598386, at *3 n.3 (S.D. Tex. June 24, 2010) ("[E]ven if this Court were to pierce the pleadings and consider the summary judgment type evidence, removing Defendants have not met their burden of proving improper joinder.").

A. 12(b)(6) Inquiry

As with motions to dismiss for failure to state a claim, under the improper joinder inquiry, "[a] plaintiff fails to state a claim for relief under Rule 12(b)(6) when the complaint does not contain enough facts to state a claim to relief that is plausible on its face." Harried v. Forman Perry Watkins Krutz & Tardy, 813 F.Supp.2d 835, 840 (S.D. Miss. 2011) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "Such analysis must be done in the context of Rule 8's notice pleading standard, which requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief in order to give defendant fair notice of what the ... claim is and the grounds upon which it rests.'" Id. (quoting Twombly, 550 U.S. at 554-55).

Here, Defendant does not argue that Plaintiff's complaint is deficient in any way. Accordingly, the Court concludes that there is no improper joinder under the 12(b)(6) inquiry.

B. Piercing the Pleadings

As explained above, a Court has discretion to pierce the pleadings and conduct a summary judgment-type analysis if: (1) the plaintiff has stated a claim under the 12(b)(6) inquiry; and (2) in stating the claim, plaintiff has misstated or omitted discrete facts. McDonal,408 F.3d at 183 n.6. When the court elects to pierce the pleadings, it may consider summary judgment-type evidence, such as affidavits. Toney v. Lowery Woodyards and Employer's Ins. of Wausau, 278 F.Supp.2d 786, 790 (S.D. Miss. 2003) (citing Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256 (5th Cir. 1995)). In so doing, the court must "take into account all unchallenged factual allegations, including those alleged in the complaint, in the light most favorable to the plaintiff." Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003). Furthermore, "[a]ny contested issues of fact and any ambiguities of state law must be resolved in [the plaintiff's] favor." Id.

While the piercing step is normally applied to determine the merits of a plaintiff's claim, it may also be used to determine whether the plaintiff actually intends to pursue her claims against the in-state defendant. See Morris v. P & S Transp., Inc., No. 4:07-cv-153, 2008 WL 607195, at *2 (N.D. Miss. Feb. 29, 2008) ("Moreover, a court may find an improperly joined defendant based on 'whether the plaintiff really intended to obtain a judgment against both defendants.'") (quoting Parks v. New York Times Co., 308 F.2d 474, 478 (5th Cir. 1962)); see also Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999) (finding improper joinder where "the pleadings, standing alone, [did] not set forth actionable claims against [defendant and] the record [did] not support any inference that [plaintiff] intended to actively pursue claims against [defendant]"). Although not stated explicitly, this rule appears to rest on the very reasonable assumption that there can be no possibility of recovery against a defendant where a plaintiff does not intend to actively pursue a claim against that defendant. See Ample Business Investments, L.P. v. American States Ins. Co., No. H-10-0802, 2010 WL 1737114, at *3 (S.D. Tex. Apr. 28, 2010) ("[T]he proper test for improper joinder is ... whether the defendant has shown that there is no reasonable possibility that the plaintiff will be able to establish a cause ofaction against the defendant in state court. Whether the...

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