Wright v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 10 March 2020
• Docket Number: CIVIL ACTION NO. 5:19-CV-104
• Parties: Trina WRIGHT, as Executor and personal Representative of the Estate of Thomas R. Davis, Plaintiff v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Sherri Morrill, Defendants
• Court: U.S. District Court — Western District of Kentucky

443 F.Supp.3d 789

Trina WRIGHT, as Executor and personal Representative of the Estate of Thomas R. Davis, Plaintiff

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Sherri Morrill, Defendants

CIVIL ACTION NO. 5:19-CV-104

United States District Court, W.D. Kentucky, Paducah Division.

Signed March 10, 2020

Filed March 11, 2020

Jeffrey L. Freeman, Jonathan B. Hollan, Sam Aguiar, Sam Aguiar Injury Lawyers, PLLC, Louisville, KY, Mark P. Bryant, Nicholas A. Kennady, Bryant Law Center, PSC, Paducah, KY, for Plaintiff.

David T. Klapheke, Boehl Stopher & Graves, LLP, Louisville, KY, for Defendant State Farm Mutual Automobile Insurance Company.

Darrin W. Banks, Porter Banks Baldwin & Shaw, Paintsville, KY, for Defendant Sherri Morrill.

MEMORANDUM OPINION & ORDER

Thomas B. Russell, Senior Judge

This matter is before the Court upon a motion by Plaintiff, Trina Wright, to remand this action to state court where it was originally filed. (DN 9). Defendants, State Farm Mutual Automobile Insurance Company and Sherri Morrill, have responded (DN 12; DN 14) and Plaintiff has filed a reply. (DN 15). Also before the Court is a motion by the Defendant, Sherri Morrill, to dismiss Plaintiff's claims against her. (DN 10). Finally, Plaintiff's Motion to Stay and Hold in Abeyance the Motion to Dismiss is also before the Court. Fully briefed and being otherwise sufficiently advised, these matters are ripe for review and for the following reasons, Plaintiff's Motion to Remand is DENIED , Plaintiff's Motion to Hold in Abeyance is DENIED , and Defendant Morrill's Motion to Dismiss is GRANTED.

Background

On April 28, 2016, Thomas Davis was injured in a car accident. Mr. Davis has since passed away. Tina Wright, the executrix of Mr. Davis's estate, now pursues Mr. Davis's claim on behalf of the estate.¹ Mr. Davis held an insurance policy with Defendant State Farm. Defendant Sherri Morrill is the agent who sold the policy to Mr. Davis. Plaintiff alleges that she asked State Farm to disclose the total amount of underinsured motorist insurance coverage ("UIM" coverage) available to Mr. Davis's estate under his policy. Plaintiff further alleges that, although Mr. Davis had purchased $200,000.00 in UIM benefits, State Farm informed her that only $100,000.00 was available under the policy.

Regarding Agent Morrill, Plaintiff claims:

Despite being placed on notice of the accident, the claims, and the settlement, at no time did Defendant Morrill advise State Farm, Davis, Davis's counsel, or the Davis Estate that there was an additional $100,000 in UIM coverage which she sold and serviced, and which would afford coverage for the accident.[ ] Defendant Morrill is one of many State Farm agents statewide who engaged in this practice of withholding from their customers information that stacked UIM coverage was available and payable for an accident.

(DN 9 at 2) (footnote omitted).

Plaintiff claims that, in May 2019, "State Farm finally disclosed to counsel for Davis' Estate that the company (and therefore Agent Morrill as well) had withheld the existence of $100,000 in coverage available for the accident. State Farm has since paid the coverage." Id. at 3. Plaintiff originally filed this action in state court. State Farm subsequently removed the Action to this Court. Plaintiff claims that Agent Morrill violated the Kentucky Consumer Protection Act ("KCPA"), breached her fiduciary duties, and defrauded Plaintiff by failing to disclose available UIM coverage. In the notice of removal, State Farm contends that the citizenship of Agent Morrill—who is not diverse from Plaintiff—should be ignored under fraudulent joinder because Plaintiff fails to assert a colorable claim against her. Now before the Court are Plaintiff's Motion to Remand, Plaintiff's Motion to Hold in Abeyance, and Defendant Morrill's Motion to Dismiss. Because Plaintiff does not state a colorable claim against Agent Morrill, the Plaintiff's Motion to Remand is DENIED , Plaintiff's Motion to Hold in Abeyance is DENIED , and Defendant Morrill's Motion to Dismiss is GRANTED.

Standard

The burden to establish federal subject matter jurisdiction lies with the party seeking removal. Vill. Of Oakwood v. State Bank & Trust Co. , 539 F.3d 373, 377 (6th Cir. 2008) (citing Ahearn v. Charter Township of Bloomfield , 100 F.3d 451, 453-54 (6th Cir. 1996) ). Generally, a defendant may remove a civil case to federal court only if the action is one over which the federal court could have exercised original jurisdiction. See 28 U.S.C. § 1441, 1446. Because Plaintiff's complaint does not raise a federal question, the exclusive basis for federal subject matter jurisdiction is 28 U.S.C. § 1332, which requires the citizenship of each plaintiff to be diverse from the citizenship of each defendant. See Caterpillar Inc. v. Lewis , 519 U.S. 61, 67-68, 117 S. Ct. 467, 136 L Ed. 2d 437 (1996) (explaining the principle of complete diversity). While Plaintiff, a citizen of the Commonwealth of Kentucky, is diverse from State Farm, a company that is incorporated and maintains its principal place of business in Illinois, she is not diverse from Sherri Morrill. Therefore, complete diversity is lacking based on the face of Plaintiff's complaint. However, the Defendants insist that Plaintiff fraudulently joined Sherri Morrill in an effort to defeat diversity jurisdiction and confine the case to state court.

Defendants bear the burden of proving fraudulent joinder. "To prove fraudulent joinder, the removing party must present sufficient evidence that a plaintiff could not have established a cause of action against non-diverse defendants under state law." Chambers v. HSBC Bank USA, N.A. , 796 F.3d 560, 564-65 (6th Cir. 2015) (quoting Coyne v. Am. Tobacco Co. , 183 F.3d 488, 493 (6th Cir. 1999) ). "If there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, [the district] Court must remand the action to state court." Taco Bell Corp. v. Dairy Farmers of Am., Inc. , 727 F. Supp. 2d 604, 607 (W.D. Ky. 2010) (citing Coyne , 183 F.3d at 493 ). In other words, if Plaintiff's claims have even "a ‘glimmer of hope,’ there is no fraudulent joinder." Murriel-Don Coal Co. v. Aspen Ins. UK Ltd. , 790 F. Supp. 2d 590, 597 (E.D. Ky. 2011) (quoting Hartley v. CSX Transp., Inc. , 187 F.3d 422, 426 (4th Cir. 1999) ). This is a "heavy burden," Mayes v. Rapoport , 198 F.3d 457, 463 (4th Cir. 1999), as Defendants must demonstrate that there is no genuine basis upon which Plaintiff may be able to recover against Sherri Morrill. Coyne , 183 F.3d at 493.

The standard for a defendant to successfully show fraudulent joinder is even higher than the standard a defendant must meet to succeed on a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Anderson v. Merck & Co. Inc. , 417 F. Supp. 2d 842, 845 (E.D. Ky. 2006) (citing Little v. Purdue Pharma, L.P. , 227 F. Supp. 2d 838, 845-46 (S.D. Ohio 2002) ). "[T]he benefit of the doubt given a plaintiff as part of the fraudulent joinder inquiry should be more deferential than even that given under Rule 12(b)(6) .... [A] decision overruling a motion for remand where the defendant is claiming fraudulent joinder connotes that a plaintiff's claim, as to the non-diverse defendant, has no basis in law or reason." Little , 227 F. Supp. 2d at 846-47 ; See also Casias v. Wal-Mart Stores, Inc. , 695 F.3d 428, 433 (6th Cir. 2012).

As is always the case in matters concerning comity and federalism, any ambiguity must be resolved against removal. See Brierly v. Alusuisse Flexible Packaging, Inc. , 184 F.3d 527, 534 (6th Cir. 1999) (explaining that "the statutes conferring removal jurisdiction are to be construed strictly because removal jurisdiction encroaches on a state court's jurisdiction" and that ambiguities regarding the scope of removal "should be resolved in favor of remand to the state courts."). Furthermore, any ambiguities in the relevant state law must be resolved in the light most favorable to the plaintiff. Walker v. Philip Morris USA, Inc. , 443 F. App'x 946, 951 (6th Cir. 2011) (citing Alexander v. Electronic Data Systems Corp. , 13 F.3d 940, 949 (6th Cir. 1994) ); See also Coyne , 183 F.3d at 493 ("All doubts as to the propriety of removal are resolved in favor of remand.").

Discussion

1. Motion to Remand:

(I) Kentucky Consumer Protection Act (KCPA).

Plaintiff does not state a colorable claim against Sherri Morrill for violation of the KCPA. The KCPA prohibits "[u]nfair, false, misleading, or deceptive acts or practices in the conduct of any trade or commerce." K.R.S. § 367.170(1). To maintain an action alleging a violation of the KCPA, an individual must fit within the protected class of persons, which includes "any person who purchases or leases goods or services primarily for personal, family or household purposes." K.R.S. § 367.220 (emphasis added); see also Skilcraft Sheetmetal, Inc. v. Kentucky Mach., Inc. , 836 S.W.2d 907 (Ky. Ct. App. 1992). Therefore, as a general rule, there must be privity of contract between the parties in a suit where a violation of the KCPA is alleged. See id. at 909 ("The legislature intended that privity of contract exist between the parties in a suit alleging a violation of the [Kentucky] Consumer Protection Act."); Tallon v. Lloyd & McDaniel , 497 F.Supp.2d 847, 854-55 (W.D. Ky. 2007) (holding a plaintiff lacked standing under KCPA where defendant was "several steps removed from privity of contract with the [plaintiff]"); Brewer v. Portfolio Recovery Associates , No. 1:07-cv-113-M, 2007 WL 3025077 (Oct. 15, 2007) (granting motion to dismiss on KCPA claims where plaintiff failed to allege a qualifying purchase or privity of contract with defendant).

There is no privity of contract between Plaintiff and Sherri Morrill. Sherri Morrill is an insurance agent and is not a party to the insurance contract in controversy. Plaintiff does not argue that Agent Morrill is in privity of contract with the insured. Instead, ...