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Cahaba Valley Health Services, Inc. v. Great American Alliance Insurance Company

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

September 20, 2019

CAHABA VALLEY HEALTH SERVICES, INC., et al, Plaintiffs,
v.
GREAT AMERICAN ALLIANCE INSURANCE COMPANY, Defendants. CAHABA VALLEY HEALTH SERVICES, INC., et al, Plaintiffs,
v.
GREAT AMERICAN ALLIANCE INSURANCE COMPANY, Defendants.

          MEMORANDUM OPINION

          R DAVID PROCTOR, UNITED STATES DISTRICT JUDGE

         This matter is before the court on Defendant Great American Alliance Insurance Company’s Motion for Realignment of Parties (Doc. # 3) and Motion to Consolidate Cases (Doc. # 4), and Plaintiff Cahaba Valley Health Service’s Motion to Remand (Doc. # 8). After careful consideration, and for the reasons explained below, the court concludes that Defendant’s Motion for Realignment of Parties (Doc. # 3) and Motion to Consolidate Cases (Doc. # 4) are due to be granted, and Plaintiff’s Motion to Remand is due to be denied.

         I. Background

         On July 25, 2019, this action was filed by Plaintiff Cahaba Valley Health Services (“Cahaba”) in Alabama state court[1] seeking payment of insurance benefits by Defendant Great American Alliance Insurance Company (“Great American”). (Doc. # 1 at ¶2). Cahaba previously obtained a judgment[2] in state court against Great American’s insured, Bravo Food Services, LLC (“Bravo”). (Doc. # 1 at ¶2).

         Cahaba’s Complaint contains two counts. Count One, titled Request for Declaratory Judgment, seeks a ruling establishing the right of Cahaba to recover Bravo’s insurance benefits under a policy issued by Great American. (Id. at ¶3). As part of that claim, Cahaba also requests that Great American be required to indemnify Cahaba and Bravo in connection with the verdict obtained in the underlying lawsuit. (Id.). Count Two, titled Direct Action Against Insurer, alleges that Cahaba, as a judgment creditor of Bravo, has a statutory right under Alabama Code § 27-23-2 to bring a direct action against Great American for payment of the insurance policy benefits purchased by Bravo. (Id.).

         Cahaba is a non-profit corporation organized under the laws of Alabama with its principal place of business in Centreville, Alabama. (Id. at ¶9). Bravo is a limited liability company (LLC) organized under the laws of Alabama. (Id. at ¶10). Bravo has two members: Ramon Arias and Pamela Arias, who are both residents of Jefferson County, Alabama, and citizens of the State of Alabama. (Id.). Great American is a corporation organized under the laws of Ohio, with its principal place of business in Cincinnati, Ohio. (Id. at ¶11).

         Great American filed a timely Notice of Removal, pursuant to 28 U.S.C. § 1332(a), on July 30, 2019. (Id. at ¶3). At the time of removal, Cahaba was listed as Plaintiff, with Great American and Bravo listed as Defendants’. (Id.). Cahaba maintains that removal is proper under 28 U.S.C. § 1332(a) because Bravo should be realigned, in accordance with its interests. If Bravo is so realigned, diversity of citizenship under § 1332(a) is proper. Moreover, Great American maintains removal is proper because the Circuit Court of Tuscaloosa County, Alabama, the court in which this action was pending, is located within the jurisdiction of the United States District Court for the Northern District of Alabama. (Doc. # 1 at ¶5).

         Prior to the filing of the instant action, on July 1, 2019, Great American filed a Complaint for Declaratory Judgment (“the Related Action”), [3] which sought a ruling that it does not have the duty to defend or indemnify Bravo or Cahaba in connection with the verdict obtained in the Underlying Lawsuit. (Doc. # 4 at ¶3). The same parties (Bravo, Cahaba, and Great American) are present in both the instant action and the Related Action. (Id. at ¶5).

         Currently there are three motions pending before the court. (Docs. # 3, 4, 8). First, Defendant Great American’s Motion for Realignment of Parties. (Doc. # 3). Second, Defendant Great American’s Motion for Consolidation. (Doc. # 4). Third, Plaintiff Cahaba’s Motion to Remand this case to the Circuit Court of Bibb County. (Doc. # 8).

         II. Analysis

         Defendant Great American requests that this court consolidate the two cases and realign the parties to reflect their respective interests. Plaintiff opposes these requests and asks this court to remand this case to state court because the parties are not diverse. The outcome of these competing motions turns on whether the court has subject matter jurisdiction over the action.

         a. Subject Matter Jurisdiction

         Federal courts are courts of limited jurisdiction and “because removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly. Indeed, all doubts about jurisdiction should be resolved in favor of remand to state court.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999) (citations omitted). Even so, cases that originally could have been filed in federal court may invoke this court's jurisdiction through removal from a state court proceeding. E.g., Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994).

         In this context, for removal to be proper, there must be complete diversity of citizenship and the amount in controversy must exceed $75, 000. Here, the parties do not dispute that the amount in controversy requirement is met, (Doc. # 1 at ¶8), and with good reason: there was a $1, 825, 000 judgment entered by the state court. (Doc. # 1 at ¶4). Thus, the court’s ...


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