Cason v. Western Heritage Insurance Company et al

Filing 15

MEMORANDUM OPINION AND ORDER directing as follows: (1) Plf's 10 Motion to Remand is GRANTED; (2) This case is REMANDED to the Circuit Court of Lee County, Alabama; (3) The Clerk is DIRECTED to take appropriate steps to effect the remand; (4) Any pending motions other than the motion to remand are left for resolution by the Circuit Court of Lee County, Alabama. Signed by Hon. Chief Judge Mark E. Fuller on 11/23/2009. (Attachments: # 1 Civil Appeals Checklist)(wcl, )

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IN THE UNTIED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA E A S T E R N DIVISION A G N E S L. CASON, P L A IN T IF F , v. W E S T E R N HERITAGE INSURANCE, C O M P A N Y and ROBBINS HOME C E N T E R , LLC, DEFEN DANTS. ) ) ) ) ) ) ) ) ) ) ) CASE NO. 3:09-cv-885-MEF (W O -N o t Recommended for Publication) M E M O R A N D U M OPINION AND ORDER T h is cause is before the Court on the Plainitff's Motion to Remand (Doc. # 10-2) filed o n October 12, 2009. This lawsuit was originally filed in the Circuit Court of Lee County, A laba m a. Arguing that Plaintiff had fraudulently joined Defendant Robbins Home Center, L L C ("RHC"), Defendant Western Heritage Insurance ("Western") removed the action from s ta te to federal court. Plaintiff seeks remand of this action contending that RHC was not f ra u d u le n tly joined. For the reasons set forth in this Memorandum Opinion and Order, the C o u rt finds that the Plaintiff's Motion to Remand is due to be GRANTED. Federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. Guardian Life In s . Co. of Am., 511 U.S. 375, 377 (1994); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (1 1 th Cir. 1994); Wymbs v. Republican State Executive Comm., 719 F.2d 1072, 1076 (11th C ir. 1983). As such, federal courts only have the power to hear cases that they have been a u th o riz e d to hear by the Constitution or the Congress of the United States. See Kokkonen, 5 1 1 U.S. at 377. Because federal court jurisdiction is limited, the Eleventh Circuit favors re m a n d of removed cases when federal jurisdiction is not absolutely clear. See Burns, 31 F .3 d at 1095. R e m o v a l of a case from state to federal court is proper if the case could have been b ro u g h t originally in federal court. See 28 U.S.C. 1441(a). The removing defendant has th e burden of establishing that this a court has subject matter jurisdiction over an action. See D ia z v. Sheppard, 85 F.3d 1502, 1505 (11th Cir.1996) (stating that the party seeking removal to federal court has the burden of establishing federal jurisdiction). Here, the removing defendant argues that removal was proper because the Court has jurisd iction over this case due to diversity of citizenship. The diversity statute confers ju ris d ic tio n on the federal courts in civil actions between citizens of different states, in which th e jurisdictional amount of greater than $75,000, exclusive of interest and costs, is met. See 2 8 U.S.C. 1332(a)(1). According to the rule of "complete diversity," no plaintiff may share th e same state citizenship with any defendant. See Riley v. Merrill Lynch, Pierce, Fenner & S m ith Inc., 292 F.3d 1334, 1337 (11th Cir.2002). From the Complaint it appears that there is not complete diversity of citizenship in this c a se because Plaintiff and RHC are both residents of Alabama for purposes of determining d iversity jurisdiction. Western argues that, due to the fraudulent joinder of RHC, the Court s h o u ld disregard the citizenship of RHC for purposes of diversity jurisdiction or, in the a lte rn a tiv e , reallign RHC as a party plaintiff and conclude that complete diversity between 2 th e parties exists. See, e.g., Owens v. Life Ins. Co. of Ga., 289 F. Supp. 2d 1319, 1325 (M.D. A la. 2003); Bullock v. United Benefit Ins. Co., 165 F. Supp. 2d 1255, 1247 (M.D. Ala. 2001) ((" W h e n a defendant has been fraudulently joined, the court should disregard his or her c itiz e n sh ip for purposes of determining whether a case is removable based upon diversity of c itiz e n sh ip ." ). Thus, in order to determine whether complete diversity exists in this case, the C o u rt must address the issue of fraudulent joinder. A s the United States Supreme Court has long recognized, a defendant's "right to re m o v a l cannot be defeated by a fraudulent joinder of a residential defendant having no real c o n n e ctio n to the controversy." Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921). T h e Eleventh Circuit has articulated that joinder may be deemed fraudulent in three s it u a t io n s : T h e first is when there is no possibility that the plaintiff can p ro v e a cause of action against the resident (non-diverse) d e f en d a n t1 . . . The second is when there is outright fraud in the p la in tif f 's pleading of jurisdictional facts . . . [A third situation a r is e s ] where a diverse defendant is joined with a nondiverse d e f en d a n t as to whom there is no joint, several or alternative lia b ility and where the claims against the diverse defendant has n o real connection to the claim against the nondiverse d e f e n d a n t. T r ig g s , 154 F.3d at 1287. A removing defendant bears the burden of proving fraudulent "The plaintiff need not have a winning case against the allegedly fraudulent d e f en d a n t; he [or she] need only have a possibility of stating a valid cause of action in order f o r the joinder to be legitimate." Triggs v. John Crump Toyota, 154 F.3d 1284, 1287 (11th C ir. 1998) (emphasis in original). 3 1 jo in d e r. See Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997) (citation omitted). T h is burden on the defendant is a heavy one. It requires the court to evaluate the parties' f a ctu a l allegations in the light most favorable to the plaintiff and resolve all uncertainties a b o u t state substantive law in favor of the plaintiff. See id. If there is a possibility that a s ta te court would find that the complaint states a cause of action against any one of the r e sid e n t defendants, the federal court must find that the joinder is proper and remand the case to the state court. See Coker v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th Cir. 1983).2 In o ther words, a motion to remand should be denied only if the court is convinced that there is "no possibility that the plaintiff can establish any cause of action against the resident d e f en d a n t." See Cabalceta v. Standard Fruit Co., 883 F.2d 1553,1561 (11th Cir. 1989). The Court has carefully reviewed the claims against the resident defendant and the a rg u m e n ts of the parties, and it must conclude that RHC has not been fraudulently joined as a defendant to this action and that it need not be realligned as a plaintiff.3 Plaintiff brought It is important to note that the Court should determine its jurisdiction over the case " b a se d upon the plaintiff's pleadings at the time of removal," Coker, 709 F.2d 1433, 1440 ( 1 1 th Cir. 1983), supplemented by any affidavits or deposition transcripts filed by the parties. " W h ile `the proceeding appropriate for resolving a claim of fraudulent joinder is similar to th a t used for ruling on a motion for summary judgment under Fed. R. Civ. P. 56(b),' the ju ris d ic tio n a l inquiry `must not subsume substantive determination'. . . When considering a motion for remand, federal courts are not to weigh the merits of a plaintiff's claim beyond d e te r m i n i n g whether it is an arguable one under state law." Crowe v. Coleman, 113 F.3d 1 5 3 6 , 1538 (11th Cir. 1997) (citations omitted). Because of the Court's conclusion that the diversity of citizenship requirement has n o t been met, it need not and will not address the other arguments presented by defendant in su p p o rt of the removal. 4 3 2 th is suit against RHS and its insurer, Western, pursuant to Alabama Code 27-23-2. This s ta tu te provides that [u ]p o n the recovery of a final judgment against any person, firm o r corporation by any person, including administrators or e x e cu to rs , for loss or damage on account of bodily injury, or d e a th or for loss or damage to property, if the defendant in such a c tio n was insured against the loss or damage at the time when th e right of action arose, the judgment creditor shall be entitled to have the insurance money provided for in the contract of in s u ra n c e between the insurer and the defendant applied to the s a tis f a ctio n of the judgment, and if the judgment is not satisfied w ith in 30 days after the date when it is entered, the judgment c re d ito r may proceed against the defendant and the insurer to re a ch and apply the insurance money to the satisfaction of the ju d g m e n t. Ala. Code 27-23-2. In this case, Cason is a judgment creditor who has brought suit against R H C and Western just as this provision specifies. Indeed, Alabama cases applying this s ta tu te require Cason to bring suit against both RHC and Western. Western argues that under th e settlement agreement Cason may not recover the judgment from RHC and that such a situ a tio n means that Cason has no right to bring this action against RHC. The law of this c ir c u it requires this Court to remand if plaintiff has a mere possibility of stating a valid cause o f action, not if the plaintiff is likely to win the case and recover from the allegedly f ra u d u len t defendant. Based on the foregoing, the Court concludes that RHC was properly n a m e d as a defendant to this action and that diversity of citizenship is not present. Therefore, th i s Court lacks subject matter jurisdiction to entertain this suit. Accordingly, this Court must re m a n d the case to the Circuit Court of Lee County, Alabama. 5 F o r the foregoing reasons, it is hereby ORDERED as follows: (1 ) (2 ) (3 ) (4 ) P la in tif f 's Motion to Remand (Doc. # 10-2) is GRANTED. This case is REMANDED to the Circuit Court of Lee County, Alabama. The Clerk is DIRECTED to take appropriate steps to effect the remand. Any pending motions other than the motion to remand are left for resolution b y the Circuit Court of Lee County, Alabama. D O N E this the 23 r d day of November, 2009. /s/ Mark E. Fuller CHIEF UNITED STATES DISTRICT JUDGE 6

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