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Brown v. State Farm Fire & Casualty Co.

United States District Court, N.D. Alabama, Eastern Division

February 7, 2017

JOHN BROWN, Plaintiff,
STATE FARM FIRE & CASUALTY COMPANY and DONALD TAYLOR, individually and as agent, servant, and/or employee of State Farm Fire and Casualty a/k/a DONALD TAYLOR AGENCY, Defendants.


          VIRGINIA EMERSON HOPKINS United States District Judge


         Plaintiff John Brown (“Mr. Brown”) initiated this insurance action against Defendants State Farm Fire & Casualty Company (“State Farm”) and Donald Taylor, a/k/a Donald Taylor Agency (hereinafter, “Mr. Taylor”) (together, “Defendants”) in the Circuit Court of Jefferson County on July 20, 2016. (Doc. 1-2).[1] Mr. Brown's Complaint asserts claims of Negligent Procurement of Insurance, Breach of Contract, Bad Faith Refusal To Investigate and/or Pay a Valid Claim, Bad Faith Failure To Pay a Valid Claim, Breach of Contract To Procure Adequate Insurance Coverage, and Negligent Hiring/Supervision. Id. On August 24, 2016, State Farm and Mr. Taylor removed Mr. Brown's lawsuit to federal court on the basis of diversity jurisdiction, pursuant to 28 U.S.C. § 1332 and in conjunction with the fraudulent joinder of Mr. Taylor. (Doc. 1 at 4, ¶ 8-10). Defendants argue in their notice of removal that Mr. Taylor was fraudulently joined because none of Mr. Brown's claims against him are colorable under Alabama law.

         Pending before the court is Mr. Taylor's Motion To Dismiss, which was filed on August 24, 2016. (Doc. 3). As Mr. Brown did not file either a Motion To Remand or a response to Mr. Taylor's Motion To Dismiss, the court ordered Mr. Brown to respond to Mr. Taylor's Motion and to address Defendants' fraudulent joinder arguments on October 24, 2016. (Doc. 12). Mr. Brown filed a Response on November 4, 2016 (doc. 13), and Defendants filed a Reply on November 21, 2016 (doc. 14).[2] The Motion To Dismiss and underlying fraudulent joinder arguments are now ripe for disposition.

         For the following reasons, the court finds that Mr. Brown is not able to maintain a colorable cause of action against Mr. Taylor. Accordingly, as Mr. Taylor has been fraudulently joined, there is complete diversity in this case. This court retains jurisdiction to determine Mr. Taylor's Motion To Dismiss, which is due to be GRANTED.


         Mr. Brown purchased an insurance policy known as a “Homeowners Policy” from Defendant State Farm. (Doc. 1-2 at 9, ¶ 6). The policy was issued effective from August 12, 2014, to August 12, 2015, and insured a single family dwelling, providing coverage for the dwelling, other structures, personal property, and loss of use. Id. at 9-10, ¶7. The policy was underwritten, marketed, sold, and issued to Mr. Brown by State Farm, which acted through and/or in conjunction with Mr. Taylor and his company, Don Taylor Agency. Id. ¶8.

         Mr. Brown is a citizen of the state of Alabama. Id. ¶ 1. State Farm is an Illinois corporation, with its principal place of business in the state of Illinois, that is licensed to conduct business within the state of Alabama. Id. ¶2; (Doc. 1 at ¶9). Mr. Taylor is also a citizen of Alabama. (Doc. 1-2 at ¶ 3); (Doc. 1 at ¶ 10).

         On October 2, 2014, lightning struck a tree located adjacent to Mr. Brown's home. Id. ¶11. The mechanism of the electrical strike and resultant concussion caused damage to the foundation wall of the structure, which allowed water to enter the dwelling and caused significant damage. Id. Almost immediately thereafter, and in accordance with the subject policy provisions, Mr. Brown notified State Farm of the damages to and losses sustained on the property. Id. at 11, ¶ 14. Mr. Brown was contacted by State Farm through its adjuster, but State Farm did not make any effort to determine the amounts of loss or to make any payment to Mr. Brown. Id. at ¶15.

         On or about November 21, 2014, Mr. Brown was notified by letter from Amy King, a Fire Claim Representative with State Farm, that the insurance policy did not cover the loss because the lightning strike did not result in the damages to the home. Id. at 16. State Farm denied Mr. Brown's claim in its entirety. Id. Mr. Brown claims that he has expended large sums for the work necessary to determine the cause of the damage, he has undertaken temporary repairs in order to mitigate the damage, and he has lost the use and value of his property. Id. at ¶18.

         II. STANDARD

         A. Diversity Jurisdiction

         “It is by now axiomatic that the inferior courts are courts of limited jurisdiction. They are ‘empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution, ' and which have been entrusted to them by a jurisdictional grant authorized by Congress.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)).

         “A necessary corollary to the concept that a federal court is powerless to act without jurisdiction is the equally unremarkable principle that a court should inquire into whether it has subject matter jurisdiction at the earliest possible stage in the proceedings.” Univ. of S. Ala., 168 F.3d at 410. “Indeed, it is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Id. (citing Fitzgerald v. Seaboard Sys. R.R., 760 F.2d 1249, 1251 (11th Cir. 1985) (per curiam)). Furthermore, “[b]ecause removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly.” Univ. of S. Ala., 168 F.3d at 411 (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941)).

         State Farm and Mr. Taylor premise their removal upon this court's diversity jurisdiction. “Diversity jurisdiction exists where the suit is between citizens of different states and the amount in controversy exceeds the statutorily prescribed amount, in this case $75, 000.” Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001) (citing 28 U.S.C. § 1332(a)). Therefore, removal jurisdiction based upon diversity requires: (1) complete diversity of citizenship between the plaintiff(s) and the defendant(s); and (2) satisfaction of the amount in controversy requirement.

         Complete diversity requires that every “plaintiff must be diverse from every defendant.” Palmer v. Hosp. Auth., 22 F.3d 1559, 1564 (11th Cir. 1994). “Citizenship, not residence, is the key fact that must be alleged in the complaint to establish diversity for a natural person.” Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994).

         Mr. Brown's state court complaint makes an unspecified demand for damages, so the removing Defendants bear the burden of demonstrating that the amount in controversy requirement has been met. Roe v. Michelin N. Am., Inc., 613 F.3d 1058, 1060 (11th Cir. 2010). By alleging that they filed their notice of removal within thirty days of service of the complaint by Mr. Brown, Defendants have invoked Section 1446(b)'s first and less demanding removal mechanism. See 28 U.S.C. § 1446(b)(1).[4]A defendant's notice of removal pursuant to Section 1446(b)(1) “need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Evidence establishing the amount is required by §1146(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant's allegations.” Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 554, 190 L.Ed. 2D 495 (2014).

         As another district court in this Circuit has recently stated,

Where the plaintiff does not plead a specified amount of damages in the complaint, a defendant's notice of removal need include only a “plausible allegation” that the amount in controversy meets the jurisdictional threshold. See Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 554 (2014) . . . [i]n assessing whether removal is proper, the court must first look to the complaint. Pretka, 608 F.3d at 754. If a defendant alleges that federal jurisdiction is “facially apparent” from the complaint, the court must evaluate whether the “complaint itself satisfies the defendant's jurisdictional burden.” Roe, 613 F.3d at 1061. The law permits a district court to make “‘reasonable deductions, reasonable inferences, and other reasonable extrapolations'” to determine whether federal jurisdiction exits from the face of the complaint. Id. at 1061-62 (quoting Pretka, 608 F.3d at 754). “A district court need not ‘suspend reality or shelve common sense in determining whether the face of the complaint . . . establishes the jurisdictional amount.'. . . Instead, courts may use their judicial experience and common sense in determining whether the case stated in a complaint meets federal jurisdictional requirements.” Roe, 613 F.3d at 1062 (citations omitted).

Johnson v. Blackburn, No. 2:16-CV-989, 2016 WL 5816114, at *1 (N.D. Ala. Oct. 5, 2016) (Bowdre, J.) (analyzing the amount in controversy requirement in a notice of removal made within the 30-day period in Section 1446(b)(1)).

         In their Notice of Removal, Defendants point to the policy of insurance at the basis of this suit, which has dwelling coverage limits of $270, 300, coverage limits of $27, 030 for other structures, and personal property coverage limits of $202, 725. (Doc. 1 at 17-18, ¶ 24). Defendants also point to Mr. Brown's allegations in the complaint that he had to “expend[] large sums” to determine the cause of the damage and repair the damage; that he has suffered, and continues to suffer, loss of value and damages to his home and other property; and that the loss of the full use and enjoyment of his home has resulted in “emotional and mental distress.” Id. (citing (Doc. 1-2) at ¶¶ 18, 36, 43). Mr. Brown also seeks punitive damages in Counts I-VI of the Complaint. Mr. Brown has not challenged the Defendants' assessment of the amount in controversy. The court finds that Defendants have satisfied their burden of demonstrating that the amount in controversy meets the jurisdictional threshold.

         B. Fraudulent Joinder Principles

         The dispute over satisfaction of the citizenship requirement in this case has to do with whether Mr. Brown has fraudulently joined Mr. Taylor as a defendant in the case. “[W]hen there is no possibility that the plaintiff can prove a cause of action against the resident (non-diverse) defendant[, ]” fraudulent joinder is established. Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). Relatedly, if fraudulent joinder is established, then the resident defendant is subject to dismissal as a party and its citizenship is disregarded for diversity requirement purposes. See id.

         The Eleventh Circuit extensively addressed the issue of removal based on diversity jurisdiction when a non-diverse defendant has allegedly been fraudulently joined in Crowe v. Coleman, ...

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