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Mabry v. Travelers Home and Marine Insurance Co.

United States District Court, M.D. Alabama, Northern Division

March 28, 2017

HENRY and DANA MABRY, Plaintiffs,
v.
TRAVELERS HOME and MARINE INS. CO., ET AL., Defendants.

          MEMORANDUM OPINION AND ORDER

          CHARLES S. COODY UNITED STATES MAGISTRATE JUDGE

         I. INTRODUCTION

         Plaintiffs Henry and Dana Mabry (“the Mabrys”) filed this action in the Circuit Court of Montgomery County, Alabama on July 19, 2016, alleging breach of contract, bad faith delay and denial of insurance claim, negligent procurement of insurance policy, and fraud, misrepresentation and suppression against defendants Travelers Home and Marine Insurance Company (“Travelers”), the Owen Insurance Agency of Montgomery, Inc. (“the Owen Agency”), and insurance agent Doug Poe (“Poe”). On August 18, 2016, defendant Travelers removed the case to this court solely on the basis of diversity of citizenship jurisdiction. See 28 U.S.C. § 1441 and 28 U.S.C. § 1332. Defendants Poe and the Owen Agency have joined the removal. (Docs. # 1 & 9).

         A defendant may remove to federal court any civil action over which the court would have original jurisdiction. 28 U.S.C. § 1441(a). This court has jurisdiction over actions involving citizens of different states provided that all plaintiffs are diverse from all defendants, see Strawbridge v. Curtiss, 7 U.S. 267 (1806), and the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(b). Pursuant to 28 U.S.C. § 636(c)(1) and M.D. Ala. LR 73.1, the parties have consented to the United States Magistrate Judge conducting all proceedings in this case and ordering the entry of final judgment.

         Now pending before the court is the plaintiffs' timely motion to remand in which they argue that there is not complete diversity of the parties because the Owen Agency and Poe are proper parties in this action, are Alabama citizens or corporations, and their presence defeats diversity jurisdiction. (Doc. # 15). Travelers contends that diversity jurisdiction exists because Travelers is a foreign corporation while the Mabrys are citizens of Alabama. Travelers argues that while the Owen Agency is an Alabama corporation and Poe is a citizen of Alabama, their presence as named defendants does not defeat diversity jurisdiction because both defendants were fraudulently joined for the very purpose of destroying diversity jurisdiction. (Doc. # 3 at 2-10). Thus, Travelers argues that the court should disregard the citizenship of Poe and the Owen Agency when determining whether the case is properly removed on diversity grounds.[1] Upon consideration of the motion to remand, the briefs filed in support of and in opposition to the motion to remand, and for the reasons which follow, the court concludes that the motion to remand is due to be GRANTED, and this case remanded to the Circuit Court of Montgomery County, Alabama.

         II. STANDARD OF REVIEW

         “Any civil case filed in state court may be removed by the defendant to federal court if the case could have been brought originally in federal court.” Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1356 (11th Cir. 1996) (citing 28 U.S.C. § 1441(a)), abrogated on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000). “When a defendant removes a case to federal court on diversity grounds, a court must remand the matter back to state court if any of the properly joined parties in interest are citizens of the state in which the suit was filed.” Henderson v. Washington National Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006). When a case is removed to federal court, a removing defendant's burden to establish federal jurisdiction is “a heavy one.” Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1380 (11th Cir. 1998). Any questions or doubts are to be resolved in favor of returning the matter to state court on a properly submitted motion to remand. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994).

         However, “[f]raudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity.” Triggs v. John Crump Toyota Inc., 154 F.3d 1284, 1287 (11th Cir. 1996).

To establish fraudulent joinder of the non-diverse defendant, the removing party must satisfy a “heavy” burden of proving by clear and convincing evidence that: “(1) there is no possibility the plaintiff can establish a cause of action against the resident defendant; or (2) the plaintiff has fraudulently pled jurisdictional facts to bring the resident defendant into state court.”[2]

Ullah v. BAC Home Loans Servicing LP, 538 F. App'x 844, 845-46 (11th Cir. 2013) (footnote added). See also Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th Cir. 2011); Crespo v. Coldwell Banker Mortg., 599 F. App'x 871 (11th Cir. 2014).

         “If there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court.” Triggs, 154 F.3d at 1287 quoting Coker v. Amoco Oil Co., 709 F.2d 1433, 1440-41 (11th Cir. 1983).[3] The plaintiffs “need not have a winning case against the allegedly fraudulent defendant; [they] need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate.” Triggs, 154 F.3d at 1287. See also Stillwell, 663 F.3d at 1333. The court must “evaluate the factual allegations in the light most favorable to the plaintiff[s] and must resolve any uncertainties” in the plaintiffs' favor. Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). Moreover, the court is “not to weigh the merits” of the plaintiffs' claims “beyond determining whether [the claim] is an arguable one under state law.” Stillwell, 663 F.3d at 1333. Finally, when considering a fraudulent joinder claim, the court utilizes the state rather than federal pleadings standard. Stillwell, 663 F.3d at 1334; Ullah, 538 F. App'x at 846.

         III. DISCUSSION

         Travelers asserts that the citizenship of Poe and the Owen Agency should be disregarded because the Mabrys cannot establish a cause of action against either one of these defendants, and thus, they were fraudulently joined. Travelers is traveling under the “no cause of action” theory of fraudulent joinder.[4] The Mabrys, on the other hand, contend that they have pled a claim of fraud in count four of the complaint and a claim of negligent procurement in count three of the complaint against Poe and the Owen Agency sufficient to establish a cause of action against each defendant. The question for the court is whether there is any possibility that the Mabrys could maintain a fraudulent misrepresentation or suppression claim or a negligent procurement claim against the Owen Agency or Poe in state court. Because the court concludes that there is a possibility that the state court would find that the Mabrys have stated a cause of action for negligence procurement against Poe and the Owen Agency, the court need not address whether they have stated a cause of action for fraudulent misrepresentation or suppression.

         A. Facts as alleged in the complaint.

         In their complaint, the Mabrys allege the following facts. On January 8, 2016, the Mabrys had a homeowners insurance policy issued by Travelers that was in full force and effect on their residence. (Doc. # 3, Ex. 7 at 2, ¶ 9). On January 8, 2016 and January 20, 2016, the Mabrys' residence was burglarized. (Id. at 2-3, ¶ 12). The Mabrys reported the thefts to the Montgomery Police Department and timely notified Travelers of their losses under their insurance policy. (Id. at 3, ¶ 13-14). According to the Mabrys, Travelers has “employed a series of delaying tactics that greatly protracted the processing” of their claim and “imposed ...


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