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Alexander v. State Farm Fire & Casualty Co.

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

August 16, 2018




         This case is before the court on Plaintiff's Motion to Remand. (Doc. # 15). Plaintiff Louise Alexander (“Plaintiff”) sued State Farm Fire and Casualty Company (“State Farm”) and Darius Alexander (“Defendant Alexander”) in state court. Plaintiff claims State Farm breached its insurance contract with her and that Defendant Alexander made a misrepresentation concerning her insurance claim. Defendants State Farm and Alexander removed the case to this court, invoking diversity jurisdiction.

         Defendants concede that Defendant Alexander and Plaintiff are both citizens of Alabama, which would ordinarily defeat diversity jurisdiction. (Doc. # 1 at 3-4). However, they argue that because Defendant Alexander was fraudulently joined to prevent removal, his citizenship should be disregarded in determining whether diversity jurisdiction exists. Plaintiff argues that Defendants have not met the high standard for establishing fraudulent joinder and thus requests that the case be remanded to state court. After careful review, and for the reasons explained below, the court agrees with Plaintiff. Because there is a possibility that Plaintiff can state a claim for misrepresentation against Defendant Alexander in state court, the court cannot say Defendant Alexander was fraudulently joined. Thus, Plaintiff's Motion to Remand is due to be granted.

         I. Factual and Procedural Background

         This case arises out of an insurance company's denial of a claim by its insured. Plaintiff Louise Alexander, the insured, commenced this suit in the Circuit Court of Jefferson County, Alabama, in the Bessemer Division. (Doc. # 1-1 at 5). The complaint alleged that her insurance company, State Farm, breached their insurance contract by failing to cover certain damage to her business premises caused by snow and ice. (Id. at 5-6). The complaint also alleged that a State Farm employee, Darius Alexander, made a misrepresentation to Plaintiff concerning her claim.[1](Id.). After being served with process, [2] Defendants removed the case to this court. (Doc. # 1). After removal, Plaintiff filed a motion for leave to file an amended complaint (Doc. # 8), which was subsequently mooted when she amended her complaint as a matter of course under Federal Rule of Civil Procedure 15(a)(1)(B). (See Doc. # 13; Doc. # 14). The parties have also submitted various affidavits and documentary evidence, the relevance of which will be discussed below. Plaintiff now moves to remand the case to state court, arguing that this court lacks subject matter jurisdiction over the case. (Doc. #15; Doc. # 23). Defendants State Farm and Alexander oppose the motion, arguing that Defendant Alexander was fraudulently joined to defeat federal diversity jurisdiction. (Doc. # 18).

         There is no dispute concerning the citizenship of the parties. The parties agree that Plaintiff Louise Alexander and Defendant Darius Alexander are both citizens of Alabama and that Defendant State Farm is a citizen of Illinois. (Doc. # 1 at 3-4; Doc. # 23 at 2). Moreover, there is no dispute that the amount in controversy exceeds $75, 000. (Doc. # 1 at 11; Doc. # 23 at 2). Thus, the only issue the court must decide is whether Defendant Alexander was fraudulently joined in the state court action. If he was, then the case is properly in federal court; if he wasn't, then the case must be remanded for lack of diversity jurisdiction.

         II. Standard of Review

         A removing party bears the burden of establishing subject matter jurisdiction over a case removed to this court. Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 752 (11th Cir. 2010). Courts strictly construe removal statutes, and “all doubts about jurisdiction should be resolved in favor of remand to state court.” City of Vestavia Hills v. Gen. Fidelity Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012). In particular, a party seeking to remove a case on the basis of fraudulent joinder faces a heavy burden of proof, Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997), and must establish fraudulent joinder by clear and convincing evidence, Henderson v. Washington Nat'l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006).

         III. Analysis

         Title 28 U.S.C. § 1441 permits defendants to remove to federal court any state court action falling within the subject matter jurisdiction of the federal courts-that is, any case that could have been brought originally in federal court. Title 28 U.S.C. § 1332, in turn, grants federal district courts jurisdiction over cases where complete diversity of citizenship exists among the parties and where the amount in controversy exceeds $75, 000, even if the case raises only state law claims. If the law were that simple, there is no doubt this case belongs in state court: the plaintiff and one of the defendants are both citizens of the same state (Alabama), and thus complete diversity does not exist. But the law is not that simple. The doctrine of fraudulent joinder provides an exception to the ordinary rules. Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). Under that doctrine, a district court may exercise diversity jurisdiction even in the face of incomplete diversity if the plaintiff fraudulently joined a nondiverse defendant solely for the purpose of defeating federal jurisdiction. Id.

         A defendant can show fraudulent joinder in three circumstances. The first is where “there is no possibility that the plaintiff would be able to establish a cause of action against the [nondiverse] defendant in state court.” Coker v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th Cir. 1983). The second is where “the plaintiff has fraudulently [pleaded] jurisdictional facts to bring the [nondiverse] defendant into state court.” Henderson, 454 F.3d at 1281. The third is “where a diverse defendant is joined with a nondiverse defendant as to whom there is no joint, several or alternative liability and where the claim against the diverse defendant has no real connection to the claim against the nondiverse defendant.”[3] Triggs, 154 F.3d at 1287.

         Only the first situation is at issue here. No one claims Plaintiff fraudulently pleaded jurisdictional facts, and the breach of contract claim against State Farm has at least some connection to the misrepresentation claim against Defendant Alexander.[4] Thus, the only issue the court must decide is whether there is no possibility that Plaintiff could establish[5] a claim for misrepresentation against Defendant Alexander in Alabama's courts. If there is even a possibility that an Alabama court could find that Plaintiff has stated a claim for misrepresentation against Defendant Alexander, this court “must find that the joinder was proper and remand the case to the state court.” Coker, 709 F.2d at 1440-41.

         To be sure, the court must determine whether fraudulent joinder occurred “based upon the plaintiff's pleadings at the time of removal, supplemented by any affidavits . . . submitted by the parties.” Pacheco de Perez v. AT & T Co., 139 F.3d 1368, 1380 (11th Cir. 1998). Though permitted to consider evidentiary submissions by the parties, the court must resolve all questions of fact in favor of the plaintiff. Legg v. Wyeth, 428 F.3d 1317, 1323 (11th Cir. 2005). Moreover, the court “must resolve any uncertainties about state substantive law in favor of the plaintiff.” Crowe, 113 F.3d at 1538.

         At the time of removal, Plaintiff's pleadings consisted of her complaint filed in Alabama state court. (Doc. # 1-1 at 5). That complaint alleged that Defendant Alexander made unspecified misrepresentations to Plaintiff, that Defendant Alexander knew or should have known State Farm had no intention of paying Plaintiff's insurance claim when he made the misrepresentations, and that, by relying on those misrepresentations and continuing to retain State Farm and pay her insurance premiums, Plaintiff suffered $50, 000 in damages. (Doc. # 1-1 at 5, ¶¶ 4-6, 10). As Defendants correctly observe in their notice of removal, Plaintiff failed to allege any specific misrepresentation by Defendant Alexander and thus arguably failed to plead misrepresentation with particularity as required by Alabama law. See (Doc. # 1 at ¶ 13); Ala. R. Civ. P. 9 (“In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.”). But Plaintiff's counsel has since submitted an affidavit to this court explaining that his failure to include the specific statement Defendant Alexander allegedly made to Plaintiff was an oversight, owing to “exhaustion and the prescribed medications [he] was taking” in recovery from a recent surgery. (Doc. # 11). The affidavit states that “[a]t all material times, Plaintiff's misrepresentation claim against [Defendant Alexander] has been that he misrepresented to her, on several occasions after her claim had been submitted, that the claim would be paid by State Farm.” (Id. at ¶ 2). In the amended complaint Plaintiff filed in this court, she claims Defendant Alexander told her “that her claim for the business loss would be paid inasmuch as she had complied with all applicable provisions of ...

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