Driver et al v. Protective Life Insurance Co. et al

Filing 24

MEMORANDUM OPINION. Signed by Judge R David Proctor on 6/7/2017. (JLC)

FILED
2017 Jun-07 PM 04:43
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
JASPER DIVISION

BILLY DRIVER, et al.,
Plaintiffs,
v.
PROTECTIVE LIFE INSURANCE
COMPANY, et al.,
Defendants.

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Case No.: 6:17-cv-00186-RDP

MEMORANDUM OPINION
This case is before the court on Plaintiffs’ Motion to Remand. (Doc. # 15). Defendants
American General Life and Accident Insurance Company (“American General Life”) and Globe
Life and Accident Insurance Company (“Globe Life”) have responded to the motion and it is
under submission. (Doc. # 19). Plaintiffs filed this suit in state court against three insurance
companies for the alleged denial of death benefits from five life insurance policies. Defendants
American General Life and Globe Life removed the suit to this court. They conceded that the
third Defendant, Protective Life Insurance Company (“Protective Life”), is a citizen of Alabama.
(Doc. # 1 at 3). But, they insisted that diversity jurisdiction exists for the claims against
American General Life and Globe Life because Plaintiffs fraudulently joined a claim against
Protective Life to avoid removal.
Plaintiffs have contested the charge of fraudulent joinder and seek to remand this action
to state court. After careful review, and for the reasons explained below, the court agrees with
Plaintiffs. Although the court finds that Plaintiffs’ individual claims are misjoined with each

other, Plaintiffs’ incorrect use of joinder falls far short of fraudulent joinder. Thus, Plaintiffs’
Motion to Remand is due to be granted.
I.

Factual and Procedural Background
Plaintiffs Billy Driver, Lisa Driver, and the Estate of Pearlie Driver commenced this suit

in the Circuit Court of Walker County against Defendants, three life insurance companies. (See
generally Doc. # 1-1 at 10-16) (hereinafter “Complaint”). Plaintiffs alleged that Pearlie Driver
obtained two life insurance policies from American General Life in 1992 and 1994. (Complaint
at ¶¶ 10-11). Pearlie Driver was the insured life for those policies, and Lisa Driver was the
beneficiary of those policies. (Id.). Pearlie Driver sent monthly premium payments to American
General Life, and American General Life allegedly accepted and cashed those premium
payments. (Id. at ¶ 12).
In 2002, Pearlie Driver obtained another life insurance policy on her own life, and Billy
Driver was the named beneficiary of that policy. (Id. at ¶ 14). She obtained two more insurance
policies in 2003 on her own life; the beneficiary for those policies was her own estate. (Id. at
¶ 15). Protective Life acquired those three insurance policies. (Id. at ¶¶ 14-15). Pearlie Driver
sent monthly premium payments to Protective Life for the policies. (Id. at ¶ 16). Protective Life
allegedly accepted and cashed those premium payments. (Id.).
In August 2011, Billy Driver obtained a life insurance policy from Globe Life. (Id. at ¶
18). Pearlie Driver was the insured life, and Billy Driver was the beneficiary. (Id.). Billy Driver
made monthly premium payments to Globe Life for the policy, and Globe Life allegedly
accepted and cashed those payments. (Id. at ¶ 19).

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Pearlie Driver died in January 2013.1 (Doc. # 1-3 at 2). After her death, Plaintiff Lisa
Driver filed a claim with Defendant American General Life for benefits from the two life
insurance policies Pearlie Driver had purchased from that company.

(Complaint at ¶ 13).

Defendant American General Life refused her claim and denied her benefits. (Id.). Plaintiff
Billy Driver filed a claim with Defendant Protective Life for benefits from the three insurance
policies purchased by Pearlie Driver from that company, but Protective Life refused the claim
and denied the Estate of Pearlie Driver the benefits it allegedly was entitled to. (Id. at ¶ 17).
Finally, Plaintiff Billy Driver filed a claim for benefits with Defendant Globe Life, but Globe
Life refused to pay benefits. (Id. at ¶ 20). Plaintiffs’ Complaint contains one breach of contract
claim against each of the three Defendant insurers: (1) a claim by Plaintiff Lisa Driver against
Defendant American General Life;2 (2) a claim by Plaintiff Estate of Pearlie Driver against
Defendant Protective Life; and (3) a claim by Plaintiff Billy Driver against Defendant Globe
Life. (Id. at ¶¶ 21-32).3
Defendants American General Life and Global Life filed some documentary evidence
with their Notice of Removal. In November 2011, Defendant American General Life informed
Pearlie Driver that one of the life insurance policies had been terminated in August 2010 because
the balance of loans taken from the life insurance policy and the interest due on the loans
exceeded the cash value of the policy. (Doc. # 1-2 at 2-3). The second policy she had obtained
from American General Life lapsed in October 2010 because the monthly premiums paid by
Pearlie Driver did not cover the monthly cost of insurance due to yearly increases in the

1

The Complaint incorrectly states that Pearlie Driver died in January 2014.

2

The Complaint’s charge against Defendant Protective Life does not concern the life insurance policy
Pearlie Driver obtained in 2002.
3

Plaintiff’s Complaint designates two sets of paragraphs as Paragraphs 25 through 28.

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premiums owed. (Id. at 4-5). Pearlie Driver continued to make premium payments to American
General Life in 2010 and 2011, but American General Life refunded the payments to her on a
regular basis. (See id. at 2-5). Defendant Globe Life denied Billy Driver’s claim for benefits in
May 2013 because he had failed to disclose some of his mother’s medical conditions in the life
insurance application. (Doc. # 1-3 at 2-3).
II.

Standard of Review
Pursuant to 28 U.S.C. § 1332, the court has subject matter jurisdiction over a case

involving state law claims where there is both complete diversity of citizenship among the
parties, and the amount in controversy exceeds $75,000.00.4 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.
City of Vestavia Hills v. Gen. Fidelity Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012) (citing
Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999)). “[A]ll doubts about
jurisdiction should be resolved in favor of remand to state court.” Vestavia Hills, 676 F.3d at
1313 (quoting Univ. of S. Ala., 168 F.3d at 411). 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).

A defendant must establish fraudulent joinder by clear and

convincing evidence. Henderson v. Washington Nat’l Ins. Co., 454 F.3d 1278, 1281 (11th Cir.
2006). The court’s analysis of fraudulent joinder is analogous to Rule 56 review insofar as the
court may consider evidentiary submissions by the parties, such as affidavits and deposition
transcripts, so long as it resolves issues of fact in favor of the plaintiff. Legg v. Wyeth, 428 F.3d
1317, 1322-23 (11th Cir. 2005).

4

The amount-in-controversy requirement is not at issue in this case.

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III.

Analysis
Defendants hang their removal hat on the fraudulent joinder of Plaintiffs’ claims against

them with the Estate’s claim against Defendant Protective Life. (Doc. # 1 at 4, 6-11). Absent an
application of fraudulent joinder doctrine, it is undisputed that federal diversity jurisdiction is
inappropriate because, at a minimum, Plaintiff Billie Driver and Defendant Protective Life are
both residents of Alabama. (Docs. # 1 at 3; 15 at 3). “Fraudulent joinder is a judicially created
doctrine that provides an exception to the requirement of complete diversity.” Triggs v. John
Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). A defendant can show fraudulent
joinder in three circumstances. “The first is when there is no possibility that the plaintiff can
prove a cause of action against the resident (non-diverse) defendant.” Id. “The second is when
there is outright fraud in the plaintiff’s pleading of jurisdictional facts.” Id. 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.”5 Id. Defendants argue that Plaintiffs’ joinder of
their three claims is fraudulent under the third ground.
The court’s analysis of fraudulent joinder begins with the text of the relevant joinder rule.
Federal Rule of Civil Procedure 20(a)(2) provides that persons may be joined as defendants in an
action if (1) “any right to relief is asserted against them jointly, severally, or in the alternative
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The first category listed is the usual one at issue when fraudulent joinder is raised. The third category of
the fraudulent joinder rule (i.e., the one raised here) was announced by the Eleventh Circuit in Tapscott v. MS
Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996), abrogated on other grounds by Cohen v. Office Depot,
Inc., 204 F.3d 1069 (11th Cir. 2000). Several courts have criticized Tapscott’s fraudulent joinder standard. See,
e.g., Osborn v. Metro. Life Ins. Co., 341 F. Supp. 2d 1123, 1126-28 (E.D. Cal. 2004) (explaining that Tapscott’s
standard engenders “more procedural complexity” in removal proceedings and noting uncertainty about whether to
apply federal or state joinder rules); Rutherford v. Merck & Co., Inc., 428 F. Supp. 2d 842, 851-55 (S.D. Ill. 2006)
(describing Tapscott’s standard as “an improper expansion of the scope of federal diversity jurisdiction” and
suggesting that courts “have foundered on shoals of tautology in trying to define fraudulent misjoinder”). See also
In re Prempro Prod. Liab. Litig., 591 F.3d 613, 622 (8th Cir. 2010) (declining to adopt or reject Tapscott’s
fraudulent joinder doctrine). Nevertheless, because Tapscott is binding authority in this circuit, the court will
faithfully apply its egregious misjoinder standard.

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with respect to or arising out of the same transaction, occurrence, or series of transactions or
occurrences” and (2) “any question of law or fact common to all defendants will arise in the
action.”6 Under Rule 20(a)(2), it appears that Defendants have a strong argument for misjoinder
because no right to relief is asserted jointly by any Plaintiff against any combination of
Defendants. Plaintiff Lisa Driver seeks relief from Defendant American General Life. (Doc. # 1
at ¶¶ 21-24). Plaintiff Estate of Pearlie Driver seeks relief from Defendant Protective Life. (Id.
at ¶¶ 25-28). And, Plaintiff Billy Driver seeks relief from Defendant Globe Life. (Id. at ¶¶ 2932). If a finding of misjoinder was sufficient for the court to assert diversity jurisdiction over the
claims in this case between diverse parties, Plaintiffs’ remand motion would be denied.
However, “mere misjoinder” is not equivalent to “fraudulent joinder.” Tapscott v. MS
Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996), abrogated on other grounds by Cohen
v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000). To establish fraudulent joinder under
Tapscott, Defendants must also show that there is no “real connection” between the claims.
Triggs, 154 F.3d at 1287. Here, Plaintiffs’ claims have an actual fact connection because
members of the same family purchased life insurance policies with the same insured individual
life, the insured’s estate and children were designated as beneficiaries of the policies, many of
the policies lapsed due to insufficient cash value remaining in the policies, and the claims made
by the beneficiaries were all denied after the insured’s death.

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Several district courts have applied state law joinder rules to determine whether plaintiffs committed
fraudulent joinder, under the logic that plaintiffs are obligated to comply with state joinder rules -- rather than
federal joinder rules -- when filing an action in state court. E.g., Accardo v. Lafayette Ins. Co., 2007 WL 325368, at
*3-4 (E.D. La. Jan. 30, 2007) (collecting cases and concluding that state joinder rules should be assessed). The
Eleventh Circuit’s fraudulent joinder opinions, though, have referred to Federal Rule of Civil Procedure 20 when
analyzing whether a plaintiff committed fraudulent joinder. E.g., Triggs, 154 F.3d at 1288; Tapscott v. MS Dealer
Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996), abrogated on other grounds by Cohen v. Office Depot, Inc., 204
F.3d 1069 (11th Cir. 2000). Therefore, in accordance with the Eleventh Circuit, the court will analyze whether
Defendants are fraudulently joined under Federal Rule of Civil Procedure 20. Having said that, the federal joinder
rule is similar to the Alabama rule governing permissive joinder. See Ala. R. Civ. P. 20(a).

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The history of this litigation is distinguishable from the Tapscott litigation in two
important respects. First, Plaintiffs filed all of their claims against all Defendants in the first
complaint, whereas the plaintiffs in Tapscott added a set of class action claims against a distinct
group of defendants in their second amended complaint. (See generally Complaint). See also
Tapscott, 77 F.3d at 1355 (explaining how the plaintiffs added claims against extended service
contracts for retail products to an action involving extended service contracts for automobiles).
Second, the classes joined together in Tapscott involved distinct product groups, whereas
Plaintiffs’ claims all involve life insurance contracts. Cf. Tapscott, 77 F.3d at 1355. Thus, the
court cannot say that Plaintiffs’ misjoinder of Defendants was as egregious as the misjoinder at
issue in Tapscott. Although Plaintiffs optimistically joined the claims in this action without
considering the need for some degree of joint, several, or alternative liability between
Defendants, the court does not find that Plaintiffs egregiously joined claims with no real
connection.7
IV.

Conclusion
As Plaintiffs suggest in their Motion to Remand, their joinder of the insurance claims in

this action is better explained by cost control than chicanery. (See Doc. # 15 at 8) (asserting that
the claims were filed together for “judicial economy”). A review of the Complaint indicates that
the claims should have been brought in separate actions. But, on the other hand, Defendants
could have resolved that problem through a motion to sever rather than a removal petition.
Because Defendants American General Life and Globe Life have not shown by clear and
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Notably, the court lacks a factual basis to determine why Defendant Protective Life denied the Estate’s
claim for benefits. The Complaint alleges that Pearlie Driver made monthly premium payments to American
General Life and Protective Life to maintain life insurance policies she obtained from those companies. (Complaint
at ¶¶ 12, 16). Nevertheless, Protective Life and American General Life denied claims for benefits from those
policies. The record before the court indicates why American General Life denied benefits. (See Doc. # 1-2 at 2-5).
But, it does not indicate why Protective Life denied benefits. Defendants American General Life and Globe Life
insist that the three Defendants denied Plaintiffs’ benefit claims for different reasons, but the court has no evidence
or basis to determine why Protective Life denied a claim for benefits.

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convincing evidence that Plaintiffs fraudulently joined the Estate of Pearlie Driver’s claim
against Protective Life with the other two claims, Henderson, 454 F.3d at 1281, the court
concludes that it cannot exercise diversity jurisdiction over Plaintiffs’ claims against these
Defendants. Accordingly, Plaintiffs’ Motion to Remand (Doc. # 15) is due to be granted.
Defendants’ other pending motions (Docs. # 7, 8, 10) are due to be denied as moot. An Order
consistent with this Memorandum Opinion will be entered.
DONE and ORDERED this June 7, 2017.

_________________________________
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE

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