Franklin County Commission v. Madden

          MEMORANDUM OPINION

         This case originally was filed in the Circuit Court of Franklin County, Alabama, ^[1] and subsequently removed here on the basis of the parties' diversity of citizenship.^[2] See 28 U.S.C. § 1332. It now is before the court on plaintiff's motion to remand, ^[3] the motion to dismiss filed by defendant State Farm Fire and Casualty Company, ^[4] the motion to dismiss by defendants Sinclair Lawrence & Associates and Debbie Thorne, ^[5] and defendant Crista Madden's motion for a more definite statement^[6] and amended motion for a more definite statement.^[7]

         I. MOTION TO REMAND

         A. Standard of Review

         Federal district courts are tribunals of limited jurisdiction, “‘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.” University of South Alabama v. The American Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)). Accordingly, an “Article III court must be sure of its own jurisdiction before getting to the merits” of any action. Ortiz v. Fiberboard Corp., 527 U.S. 815, 831 (1999) (citing Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 88-89 (1998)). A removing defendant bears the burden of proving that federal jurisdiction exists. See, e.g., Leonard v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir. 2002); Williams v. Best Buy Co., 269 F.3d 1316, 1319-20 (11th Cir. 2001).

         Removal statutes must be construed narrowly, and “all uncertainties as to removal jurisdiction are to be resolved in favor of remand.” Russell Corp. v. American Home Assurance Co., 264 F.3d 1040, 1050 (11th Cir. 2001) (citing Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (11th Cir. 1994)). The court must focus upon jurisdictional facts alleged on the date the case was removed from state court. See, e.g., Burns, 31 F.3d at 1097 n.13 (“Jurisdictional facts are assessed on the basis of plaintiff's complaint as of the time of removal.”) (emphasis in original) (citations omitted).

         B. The Allegations of Plaintiff's Complaint

         The state court action was commenced by the Franklin County Commission (“plaintiff” or “the Commission”), which is an Alabama resident.^[8] The Commission sued the following defendants: (1) Crista Madden, an Alabama resident; (2) State Farm Fire and Casualty Company (“State Farm”), an Illinois resident; (3) Lafayette Insurance Company (“Lafayette”), a Louisiana resident; (4) Sinclair Lawrence & Associates, Inc., an Alabama resident; and (5) Debbie Thorn, an Alabama resident.^[9]Madden, a former Commission employee, stole $753, 889.21 from the Commission between 2008 and 2017.^[10] State Farm insured the Commission for employee theft, but it refused to pay the Commission's claim for Madden's theft.^[11] Lafayette insured the Commission for employee theft under a separate policy purchased through Sinclair Lawrence & Associates, but Lafayette also refused to pay the claim. Defendant Debbie Thorn was an agent for Lafayette.^[12]

         The Commission asserts state law claims for: (1) conversion against Crista Madden; (2) breach of contract against State Farm; (3) breach of contract against Lafayette; and (4) fraudulent suppression against Sinclair Lawrence & Associates, Lafayette, and Debbie Thorn.^[13]

         C. Lafayette's Notice of Removal and Plaintiff's Motion to Remand

         Lafayette removed the state case here on February 7, 2019, asserting federal jurisdiction based upon satisfaction of the requirements of the diversity statute.^[14] See 28 U.S.C. § 1332(a) (“The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between - (1) citizens of different States.”).

         Because the Commission is seeking insurance coverage for theft in excess of $750, 000, it is patently clear that more than the jurisdictional amount is in controversy. It equally clear, however, that there is not complete diversity of citizenship, because defendants Crista Madden, Sinclair Lawrence & Associates, and Debbie Thorn are Alabama residents, as is the plaintiff, Franklin County Commission. Even so, Lafayette asserts that the non-diverse defendants were fraudulently joined, and their Alabama citizenship should be disregarded. See, e.g., Wilson v. Republic Iron and Steel Co., 257 U.S. 92, 97 (1921) (holding that a diverse defendant's “right of removal cannot be defeated by a fraudulent joinder of a resident defendant having no real connection with the controversy”). Plaintiff contests that assertion in its motion to remand, insisting that the claims against all non-diverse defendants are valid, and that those defendants' presence in this case prevents this court from exercising diversity jurisdiction.

         D. Plaintiff's Claims Against Crista Madden

         Lafayette asserts that Crista Madden was improperly joined under Federal Rule of Civil Procedure 20 because: Madden is not jointly or severally liable with the other defendants; plaintiff's claims against Madden do not arise out of the same transaction or occurrence as the claims against the other defendants; and there is no question of law or fact common to all defendants. See Colormasters, LLC v. Research Solutions Group, Inc., No. 4:17-CV-0561-VEH, 2017 WL 3605337, at *3 (N.D. Ala. Aug. 22, 2017) (quoting Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998)) (“The Eleventh Circuit . . . recognizes a third type of fraudulent joinder 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.'”); see also Fed. R. Civ. P. 20(a)(2) (providing that persons may be joined in one action as defendants if: “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences, ” and “any question of law or fact common to all defendants will arise in the action”).

         This court agrees. Plaintiff's conversion claim against Crista Madden is based solely upon Madden's embezzlement of the Commission's money. Only Madden can be held liable for that claim, and her liability likely would not be disputed, considering that she pled guilty to criminal charges that grew from the theft. In contrast, all of plaintiff's other claims (for breach of contract against State Farm and Lafayette, and fraudulent suppression against Sinclair Lawrence & Associates, Lafayette, and Thorn) relate to either the issuance or payment of insurance policies. Madden had nothing to do with those policies, so she would not be subject to joint and several liability with the other defendants. Madden's theft did not arise out of the same transaction, occurrence, or series of events as the insurance companies' alleged breach of their insurance contracts or the alleged fraudulent suppression of material facts by Sinclair Lawrence & Associates, Lafayette, and Thorn. Finally, plaintiff's conversion claim against ...