York v. Prop. & Cas. Ins. Co.

• Decision Date: 03 October 2013
• Docket Number: CIVIL ACTION NO. 2:12-cv-06582
• Court: U.S. District Court — Southern District of West Virginia
• Parties: ROBIN J. YORK, et al., Plaintiffs, v. PROPERTY AND CASUALTY INSURANCE COMPANY OF HARTFORD, Defendant.

ROBIN J. YORK, et al., Plaintiffs, v. PROPERTY AND CASUALTY INSURANCE COMPANY OF HARTFORD, Defendant.

CIVIL ACTION NO. 2:12-cv-06582

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA CHARLESTON DIVISION

ENTER: October 3, 2013

MEMORANDUM OPINION & ORDER

Pending before the court is the plaintiffs' Motion to Remand [Docket 12], Defendant Property and Casualty Company of Hartford's Motion for Relief from Judgment Pursuant to Rule 60(b) [Docket 7], and Defendant Property and Casualty Company of Hartford's Motion to Dismiss Plaintiff's Second Amended Complaint [Docket 5].

For the reasons stated below, the plaintiffs' Motion to Remand [Docket 12] is DENIED, Defendant Property and Casualty Company of Hartford's Motion for Relief from Judgment Pursuant to Rule 60(b) [Docket 7] is GRANTED, and Defendant Property and Casualty Company of Hartford's Motion to Dismiss Plaintiff's Second Amended Complaint [Docket 5] is DENIED without prejudice.

I. Background

A. Mingo County Circuit Court Suit

This case arises from a car accident that occurred on October 13, 2011 in Mingo County, West Virginia. (Second Am. Compl. [Docket 1-1], ¶ 9). Adam York was a passenger in a 2010Toyota Sequoia owned and operated by defendant Joshua Miller and co-owned by defendant John Miller (Id.). Adam York was killed in the accident. The Estate of Adam York filed a lawsuit against Joshua Miller in the Circuit Court of Mingo County on November 11, 2011. (Compl. [Docket 1-1]). The first complaint brought two claims: wrongful death and violation of statute under West Virginia Code § 55-7-9. The Estate amended its complaint ("First Amended Complaint") on March 9, 2012, to add new parties and claims. (See Def. Hartford's Mem. in Opp'n to Pls.' Mot. to Remand [Docket 16], at 4). It added Joshua Miller's parents, John and Myra Miller, to the wrongful death claim. It added Property and Casualty Insurance Company of Hartford ("Hartford"), the plaintiffs' insurer, to both claims and then added a third claim against Hartford for underinsured motorist coverage. (Id.). The underinsured motorist coverage claim alleged that the settlement offered by defendant Joshua Miller's liability insurer "did not fully compensate" the plaintiffs for the injuries and damages from the accident. (First Am. Compl. [Docket 1-1], ¶ 31). The plaintiffs allege they informed Hartford of the settlement on January 23, 2012, requesting that Hartford "waive its subrogation rights" and "tender the limits of the underinsured motorist policy." (Id. ¶ 32). The plaintiffs allege Hartford did not respond, "thus forcing Plaintiff to file the instant underinsured motorist claim." (Id. ¶ 33).

On August 1, 2012, Hartford received a "Notice of Hearing," which would address the Estate's "Petition and Application of Robin J. York, Administratix of the Estate of Adam R. York, for Permission to Settle Claim and Distribute Proceeds." (Def. Hartford's Mem. in Opp'n to Pls.' Mot. to Remand [Docket 16], at 5). At the hearing on August 6, 2012, the Circuit Court approved the settlement and issued an order releasing Joshua Miller, John Miller, and Myra Miller (the "Miller defendants") "from any and all further liability in connection with or arising out of the injuries and death of Adam R. York, except to the extent that there is underinsured motoristcoverage available." (Order Approving Settlement and Distribution [Docket 16-1], ¶ 12). Hartford was not at the hearing and alleges it did not receive a copy of the order.

Because Hartford had not responded to the complaint, default was entered on June 12, 2012. (J. Order [Docket 14-1], ¶¶ 12-14). On August 6, 2012, the circuit court entered default judgment against Hartford in the amount of $4,127,615.18. (Id. at 5-6). On August 20, 2012, the Estate filed a Second Amended Complaint, which continues to list the Miller defendants in the caption, but seeks recovery only from Hartford for violations of West Virginia law regarding the processing of insurance claims. The Second Amended Complaint was sent to the Secretary of State on September 14, 2012, and received by Hartford's agent on September 24, 2012.

B. Removal to District Court and Dismissals

Hartford removed this case on October 12, 2012 pursuant to 28 U.S.C. § 1332(a) and 28 U.S.C. § 1441(b). In its notice of removal, Hartford alleged that the Miller defendants are fraudulently joined because the Second Amended Complaint "states no claim against" the Miller defendants. (Notice of Removal [Docket 1], ¶ 10).

Third-party defendant Paul Howard, Jr. was voluntarily dismissed on February 6, 2013. (See Agreed Dismissal Order [Docket 32]). Subsequently, on July 19, 2013, the claims against the Miller defendants were dismissed. (See Order of Dismissal [Docket 44]). Mr. Howard and the Miller defendants are no longer parties to this case. The Estate, Robin J. York, and Hartford are the only parties that remain.

II. Motion to Remand

The plaintiffs move to remand this case to the circuit court because they argue that Hartford's removal is untimely under 28 U.S.C. § 1446(b).

a. Legal Standard

A case may be removed to federal court only if it is within the federal court's original jurisdiction. 28 U.S.C. § 1441(a); see also Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) ("Only state-court actions that originally could have been filed in federal court may be removed to a federal court by the defendant."). "A case falls within [a] federal district court's 'original' diversity 'jurisdiction' only if diversity of citizenship among the parties is complete, i.e., only if there is no plaintiff and no defendant who are citizens of the same state." Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 388 (1998). The party seeking removal bears the burden of establishing federal jurisdiction. See Mulcahey v. Columbia Organic Chem. Co., 29 F.3d 148, 151 (4th Cir. 1994). Because removal implicates significant federalism concerns, it is strictly construed. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941); Mulcahey, 29 F.3d at 151. If federal jurisdiction is doubtful, the case must be remanded. Palisades Collections LLC v. Shorts, 552 F.3d 327, 334 (4th Cir. 2008).

One exception to the complete diversity requirement is the concept of nominal parties. "[A] federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy." Navarro Sav. Ass'n v. Lee, 466 U.S. 458, 461 (1980). "Nominal parties are generally those without a real interest in the litigation." Spencer v. Harris, 394 F. Supp. 2d 840, 843 (S.D. W. Va. 2005) (citing Bumberger v. Ins. Co. of N.A., 952 F.2d 764, 767 (3rd Cir. 1991). The United States Supreme Court has referred to nominal parties as those "having no interest" and not "concerned in the judgment." Title Guar. & Sur. Co. of Scranton, PA., v. Idaho, 240 U.S. 136, 140-41 (1916).

b. Analysis

i. Diversity of Citizenship

There are no disagreements about the citizenship of the parties in this case. The plaintiffs, Robin J. York and the Estate of Adam R. York, are citizens of Kentucky. (Second Am. Compl. [Docket 1-1], ¶ 1). The Miller defendants are citizens of Kentucky. (Id. ¶¶ 2-4). Hartford is an Indiana corporation with its principal place of business in Connecticut. (Notice of Removal [Docket 1], ¶ 8). The third-party defendant Paul Howard, Jr. is a citizen of West Virginia. (Second Am. Compl. [Docket 1-1], ¶ 6). Most of these parties are no longer parties to this action. The only parties that remain are the Estate, Robin York, and Hartford. Nonetheless, on a motion to remand, I determine whether subject matter jurisdiction existed at the time of removal.

On the face of the Second Amended Complaint, there is not diversity of citizenship. However, Hartford claimed in its Notice of Removal that the Miller defendants are fraudulently joined in the Second Amended Complaint, as the plaintiffs have no actual claims against them. The plaintiffs do not directly address this point, though their timeliness argument (as discussed below) relies on the idea that the citizenship of the Miller defendants ceased to matter when the circuit court approved the release of any and all claims relating to the injury and death of Adam York. I agree that the Miller defendants are no longer real parties in interest in the litigation. Even if the plaintiffs receive all they seek in their Second Amended Complaint, that judgment would not affect the Miller defendants. Accordingly, I FIND the Miller defendants are nominal parties that do not destroy diversity jurisdiction. See Leadman v. Fid. & Cas. Co. of N.Y., 92 F.Supp. 782, 784 (S.D. W. Va. 1950) ("In determining questions of removability, only indispensable and necessary parties are considered. Nominal or formal parties are disregarded.").

ii. Timeliness of Removal

The only grounds the plaintiffs raise in their motion to remand is that Hartford's removal is untimely under 28 U.S.C. § 1446(b). The statute, at the time of removal in 2012, stated in relevant part

[i]f the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed . . . more than 1 year after commencement of the action.

28 U.S.C. § 1446(b) (2012). This subsection has been interpreted to permit the removal of an action when a plaintiff creates complete diversity by voluntarily dismissing the only nondiverse party to a state action. Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1166 (4th Cir. 1998). The key issue in dispute is which document made it first ascertainable by Hartford that the case had become removable.

The plaintiffs allege that when their settlement with the Miller defendants was approved by the state court o...