Heath v. Estate of Bryan Wayne Heath et al
MEMORANDUM OPINION. Signed by Judge James H Hancock on 9/24/2014. (JLC)
2014 Sep-24 AM 10:57
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
CHRISTY JAMES HEATH,
ESTATE OF BRYAN WAYNE
HEATH, et al.
The court has before it the Motion (Doc. #30) to Remand filed on August 21,
2014 by Plaintiff Christy James Heath. In accordance with the Order (Doc. #31) of
August 22, 2014, the Motion (Doc. #30) has been fully briefed (Docs. #30, 32, 33)
and is now under submission to the court for review.
On February 18, 2014, Plaintiff Christy James Heath filed a complaint in the
Circuit Court of Jefferson County, Alabama alleging: breach of contract (Count One);
civil contempt (Count Two); breach of fiduciary duty and conspiracy (Count Three);
unjust enrichment against defendants Linda Heath and Zachary Heath (Count Four);1
tortious interference with contract (Count Five); breach of professional responsibility
(Count Six); civil conspiracy (Count Seven); outrageous conduct (Count Eight);
claims against Principal Life Insurance Company (Count Nine); and equitable relief
(Count Ten). (See Doc. #1, Exh. A). On April 2, 2014, this case was removed to this
court by defendant Principal Life Insurance Company (“Principal Life”) with the
consent of all properly joined and served Defendants. (See Doc. #1, ¶ 24). In the
removal, Principal Life asserts diversity of citizenship on the ground that Elizabeth
McElroy, the Administrator of the Estate, was fraudulently joined to the action.
(See Doc. #1 at 2-11). Plaintiff Heath now asserts that the case should be remanded
to the Circuit Court of Jefferson County because the Estate was not fraudulently
joined to the action and the parties are non-diverse. (See Doc. #30 at ¶¶ 6, 7, 8).
The claims center on the pursuit of the proceeds of an insurance policy.
Plaintiff Christy James Heath married Bryan Wayne Heath on November 2, 2001.
Two children were born into the marriage – James Matthew Heath on December 17,
2003 and Ellen Tyler Heath on June 23, 2005. (See Doc. #1, Exh. A at ¶ 4). Prior to
On July 30, 2014, the court entered a Memorandum Opinion and Order (Doc. #25) and
Order (Doc. #26) dismissing defendants Linda Heath and Zachary Heath from this case for lack
of personal jurisdiction. (See Doc. #26).
the birth of their first child, the Plaintiff and Bryan Heath each took out life insurance
policies through defendants Wayne Heath and Heath Financial, Inc. on their
respective lives in the amount of $2 million dollars, and named each other as
beneficiaires thereof. (See id. at ¶¶ 5, 6).
Plaintiff instituted divorce proceedings against Bryan Heath in the Circuit
Court of Jefferson County, Alabama, Domestic Relations Division in 2011. On or
about November 29, 2011, the parties entered into an Agreement in the divorce action
and on December 15, 2011 the court entered an Order adopting the parties’
Agreement. (See id. at ¶ 8). The Agreement and Order created an equitable and/or
constructive trust over the life insurance proceeds in favor of the survivor of the
parties to the divorce action: “Both parties shall maintain the life insurance on his or
her life, Pendente Lite, and shall make no changes of beneficiaries during the
pendency of this matter.” (Id. at ¶ 9). Plaintiff alleges that while the Pendente Lite
order was in effect, defendant Bryan Heath changed the beneficiaries of the $2
million insurance policy on his life on two different occasions. (See id. at ¶ 10). At
the time of the last beneficiary change, the beneficiaries were named as: James
Matthew Heath and Ellen Tyler Heath as twenty-five percent (25%) beneficiaries and
Zachary Heath and Linda Heath as twenty-five percent (25%) beneficiaries,
respectively. (See id.).
Plaintiff filed this lawsuit alleging that Bryan Wayne Heath violated the
Pendente Lite order by changing those beneficiaries. (See Compl., ¶ 10). Plaintiff
further alleges that Wayne Heath and Heath Financial, Inc. – acting as Principal
Life’s agents – colluded with Bryan Heath to violate the Pendente Lite order and
deprive Plaintiff of the life insurance proceeds. (See Compl., ¶¶ 11, 13).
Legal Standards for Remand
Under 28 U.S.C. § 1441(a), “[a]ny 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), abrogated on other grounds by Cohen v. Office Depot, Inc., 204
F.3d 1069 (11th Cir. 2000). Federal courts may exercise diversity jurisdiction over
all civil actions where the amount in controversy exceeds $75,000, exclusive of
interest and costs, and the action is between citizens of different states. 28 U.S.C. §
1332(a)(1). However, “[b]ecause 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.”
University of South Alabama v. American Tobacco Co., 168 F.3d 405, 411 (11th
Cir.1999). That is, 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. See
Lincoln Prop. Co. v. Roche, 546 U.S. 81 (2005) (citing 28 U.S.C. § 1441(b)). Such
a remand is the necessary corollary of a federal court’s diversity jurisdiction, which
requires complete diversity of citizenship. See Henderson v. Washington Nat. Ins.
Co., 454 F.3d 1278, 1281 (11th Cir. 2006).
When a plaintiff names a non-diverse defendant solely in order to defeat
federal question jurisdiction, the district court must ignore the presence of the nondiverse defendant and deny any motion to remand the matter back to state court. The
plaintiff is said to have effectuated “fraudulent joinder,” see Crowe v. Coleman, 113
F.3d 1536, 1538 (11th Cir. 1997), and a federal court may appropriately assert its
removal jurisdiction over the case. A defendant seeking to prove that a co-defendant
was fraudulently joined must demonstrate either 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. See id. The defendant bears the burden of proof on fraudulent joinder
and must make such a showing by clear and convincing evidence. See Parks v. New
York Times Co., 308 F.2d 474, 478 (5th Cir. 1962). If there is 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 is proper and remand
the case to the state court. See Coker v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th
Cir.1983). In other 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 defendant.” See Cabalceta v. Standard Fruit Co., 883 F.2d
1553,1561 (11th Cir.1989).
In this case, Defendants do not allege that Plaintiff has fraudulently pled facts;
instead, they claim that there is no possibility that Plaintiff could maintain a cause of
action against the Estate of Bryan Wayne Heath, the non-diverse defendant, in state
court. (See Doc. #32 at 1). The four causes of action purportedly asserted against the
Estate are: breach of contract; civil contempt;2 civil conspiracy; and outrageous
Plaintiff concedes that her claim for civil contempt is only properly brought under the
purview of the Domestic Relations court. (See Doc. #30-1 at 10) (“Only one of the four claims
[civil contempt] would fall under the purview of the Domestic Relations Division of the Circuit
Court of Jefferson County.”). Her argument for why the other claims against the Estate survive
in federal court are somewhat obscure. She states that: “Just because the Plaintiff is the ex-wife
of the decedent Bryan Wayne Heath does not negate her right to bring an action against the
Estate of Bryan Wayne Heath or require that all matters involving her and the Estate of Bryan
Wayne Heath should be heard in the Domestic Relation Division. Even if the Domestic Relation
Division of the Circuit Court of Jefferson County is the proper court for this matter that is a
decision for the Circuit Court of Jefferson County.” (Doc. #30-1 at 10; see also Doc. #33 at 4).
But the Plaintiff’s suit rests on violation of the Pendente Lite order in connection with the final
Divorce Decree. It is impossible, and would be wholly improper, to separate the two. See Duerr
v. Duerr, 104 So.3d 229, 233 (Ala. Civ. App. 2012) (holding final divorce judgment barred
former wife from asserting claim against former husband for alleged failure to comply with
pendente lite order); see also Reid v. Reid, 897 So.2d 349, 355 (Ala. Civ. App. 2004) (noting that
a Pendente Lite order “clearly envisions a temporary disposition . . . pending a later final
determination of the . . . dispute.”). Once the Divorce Decree is in place and the Domestic
conduct. (Compl., ¶¶ 15-18, 19-24, 45-48, 49-50). The problems for plaintiff in
asserting these claims are multifold.3 But the most basic issue requiring denial of the
motion to remand is that the non-diverse Estate can not be sued in state court for
compliance with the Pendente Lite order for payment of the life insurance policy.
In Alabama, life insurance proceeds made payable to the parties other than the
deceased person, the estate of the deceased person, or the personal representative of
Relations Court enters a final judgment divorcing two parties, “jurisdiction of all matters arising
from the divorce judgment, including provisions of the marital settlement agreement, remains
with the domestic relations division.” Turenne v. Turenne, 884 So.2d 844, 849 (Ala. 2003); see
also Hill v. Hill, 89 So.3d 116, 119 (Ala. Civ. App. 2010) (“[T]o the extent that the plaintiffs
might properly have asserted any claims that stemmed from alleged noncompliance . . . with the
settlement agreement, those claims would arise under judgment and not the settlement agreement
and would, under Turenne, be within the exclusive jurisdiction of the family-relations division of
the circuit court.”).
The individual causes of action also would not stand in state court. For the breach of
contract claim, the reasoning set forth in footnote 2, supra, prevails. For the civil conspiracy
claim, because the underlying claim of breach of contract fails against the Estate, the claim for
civil conspiracy must also necessarily fail. See Allied Supply Co., Inc. v. Brown, 585 So.2d 33,
36 (Ala. 1991); see also Avis Rent A Car Sys., Inc. v. Heilman, 876 So.2d 1111, 1124 (Ala. 2003)
(“[L]iability for civil conspiracy rests upon the existence of an underlying wrong and if the
underlying wrong provides no cause of action, then neither does the conspiracy.”). And finally,
for the outrageous conduct claim, “the conduct of the Defendants . . . [must be] so outrageous
that it shocks the conscience and that such conduct should not be tolerated in a civilized society.”
(Compl., ¶ 50). But the tort of outrage is well recognized as an extremely limited cause of
action. See Potts v. Hayes, 771 So.2d 462, 465 (Ala. 2000). In fact, Alabama recognizes the tort
only for four specific circumstances: (1) wrongful conduct in the family-burial context; (2)
barbaric methods employed to coerce an insurance settlement; (3) egregious sexual harassment
by a supervisor in the workplace; and (4) a family physician, when asked to counsel a teenage
patient concerning the stress of his parents’ divorce, provided the patient with addictive
prescription drugs in exchange for homosexual sex for a number of years, leading to the patient’s
drug addiction. See Ex parte Bole, 103 So.3d 40, 52-53 (Ala. 2012) (citations omitted). Here,
although the Estate is a named Defendant, the Complaint fails to assert any facts showing the
Estate engaged in any tortious conduct.
the estate do not become part of the estate. See Rau v. Rau, 429 So.2d 593, 595 (Ala.
Civ. App. 1982) (“[B]y virtue of § 27-14-29, [Ala.] Code 1975, the proceeds of the
policy of insurance in this case would not be a part of the estate or subject to
creditor’s claims.”); see also 31 Am. Jur.2d, Executors and Administrators 257, § 509
(1989) (“The proceeds of a life insurance policy made payable to a named beneficiary
are not assets of the estate, but belong solely to the beneficiary.”); Equitable Life
Assurance Society of the United States v. Sandra Porter, 867 F.2d 79 (1st Cir. 1989)
(satisfying the beneficiary is the contractual responsibility of the insurer not the
fiduciary responsibility of the executor). Elizabeth McElroy, as the administrator of
the former husband’s estate, has no interest in the life insurance policy or the
proceeds therefrom. See First Nat’l Bank of Mobile v. Pope, 270 Ala. 202, 205
(1960) (holding the estate of the insured was not indispensable party in dispute over
insurance proceeds between beneficiary and purported constructive trustees because
“[t]he personal representative has no [ownership] interest in the policies as to require
that he be made a party.”); see also Arnold v. Garrison, 49 So.2d 787, 788 (Ala.
1950) (“The authority of the special administrator is defined by statute . . . he has no
authority to pay debts or receive the presentation of claims or to be rendered liable
to suits on contracts of the decedent.”). Thus, neither the domestic relations court,
nor the state court, can hail McElroy into court for remedy related to the payment of
the proceeds of the life insurance policy. See Stroeker v. Harold, 111 So.3d 138, 144
(Ala. Civ. App. 2012).
The non-diverse Defendant, the Administrator of the Estate, was improperly
joined in this action for the purpose of defeating federal jurisdiction and is due to be
dismissed from this action. A separate order will be entered denying the motion to
remand and dismissing the non-diverse Defendant, the Estate of Bryan Wayne Heath,
from this action with prejudice.
DONE this the 24th day of September, 2014.
SENIOR UNITED STATES DISTRICT JUDGE
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