Southall et al v. Lincoln Life & Annuity Company of New York

Filing 23

MEMORANDUM OPINION AND ORDER; denying as moot 14 Motion to Dismiss; granting 19 Motion to Remand. Further this matter is REMANDED to the Circuit Court of Pike County, Arkansas. Signed by Honorable Robert T. Dawson on October 20, 2010. (lw)

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS HOT SPRINGS DIVISION JAMES SOUTHALL AND LYNDA SOUTHALL v. Case. No. 6:10-CV-06019 PLAINTIFFS

LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, STANDRIDGE INSURANCE AGENCY, INC., and STEVE STANDRIDGE, Individually MEMORANDUM OPINION AND ORDER Before the Court are Separate Defendants

DEFENDANTS

Standridge

Insurance Agency Inc. and Steve Standridge's Motion to Dismiss (Doc. 14), Defendants' Memorandum Brief in Support of Motion to Dismiss (Doc. 15), Plaintiffs James Southall and Lynda

Southall's Motion to Remand (Doc. 19), Plaintiffs' Memorandum Brief in Support of Motion to Remand (Doc. 20), Plaintiffs'

Response to Separate Defendants' Motion to Dismiss (Doc. 21), and Plaintiffs' Memorandum Brief in Support of Response (Doc. 22).1 For the reasons discussed below, Separate Defendants'

Motion to Dismiss (Doc. 14) is DENIED, and Plaintiffs' Motion to Remand (Doc. 19) is GRANTED. I. Background On January 19, 2010, Plaintiff filed suit against Separate Defendant Lincoln Life & Annuity Company of New York ("Lincoln") in
1

Circuit

Court

of

Pike

County,

Arkansas,

alleging

Lincoln

Separate Defendant Lincoln Life & Annuity Company of New York did not join or file any response to Separate Standridge Defendants' Motion to Dismiss or Plaintiffs' Motion to Remand. 1

breached its contract with Plaintiffs when it canceled James Southall's life insurance policy (Doc. 2). On March 8, 2010,

Lincoln timely filed a Notice of Removal to this court pursuant to 28 U.S.C. §§ 1441 and 1446(b), and on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. Plaintiffs filed a Motion for Leave to On April 1, 2010, File First Amended

Complaint (Doc. 7).

Separate Defendant Lincoln did not file a

response to Plaintiff's Motion for Leave to File First Amended Complaint, and on April 22, 2010, the Court entered an Order granting Plaintiffs Standridge Plaintiff's filed and its Motion First (Doc. Amended Insurance 8). On May 5, 2010, Steve (the

Complaint Agency,

joining Inc.

Standridge

"Standridge defendants") as co-defendants in the lawsuit. On June 23, 2010, the Standridge Defendants filed a Motion to Dismiss (Doc. 14), citing Federal Rules of Civil Procedure 12(b)(1) (lack of subject matter jurisdiction). On July 7,

2010, the Plaintiff's filed a Motion to Remand (Doc. 19) arguing lack of subject matter jurisdiction. II. Discussion The moving parties similarly argue that the Court lacks subject matter jurisdiction because there is not complete

diversity.

The Standridge Defendants move the Court to dismiss

the matter, and the Plaintiffs seek remand.

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A

Federal

court

will

have

subject

matter

jurisdiction

either when the claims brought involve a Federal question or when there is diversity jurisdiction. 1332. 28 U.S.C. §§ 1331 and

A Federal question exists when the claims arise under the 28 U.S.C.

Constitution, laws, or treaties of the United States. § 1331. diversity

Diversity jurisdiction exists when there is complete amongst the parties and the amount in controversy

exceeds the sum or value of $75,000.

28 U.S.C. § 1332(a).

Complete diversity requires that no defendant be a citizen of the same state as any plaintiff. Walker by Walker v. Norwest

Corp., 108 F.3d 158, 161 (8th Cir. 1997)(citations omitted). Section 1447(c) of Title 28 provides that "[i]f at any time before the final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). "[i]f after removal whose Section 1447(e) of Title 28 provides that the plaintiff would seeks to join additional matter

defendants

joinder

destroy

subject

jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court."). While it is the general rule that jurisdiction, once having attached, will not be divested by subsequent events. there is this exception to the rule as follows: However, "[t]he

plaintiff, after jurisdiction has attached, may so change his pleading voluntarily that the
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court

will

no

longer

have

jurisdiction on the face of the pleading.

If this is done, it

then becomes the duty of the court to remand the case, if it be a removed case." Highway Const. Co. v. McClelland, 15 F.2d 187,

188 (8th Cir. 1926)(citations omitted). On motion by Separate Defendant Lincoln, this matter was removed to this Court pursuant to diversity jurisdiction because of the civil action in which the amount in controversy exceeds the sum of $75,000 and there was complete diversity between the parties. Leave to Following removal, the Plaintiffs filed its Motion for File First of Amended the Complaint, which set out the

proposed

joinder

non-diverse

Standridge

Defendants.

Pursuant to 28 U.S.C. § 1447(e) the Court had the authority to deny Plaintiff's proposed joinder, or grant the joinder and

remand the action.

The Court granted Plaintiff's Motion for

Leave to File First Amended Complaint and permitted the joinder of the Standridge Defendants. a remand. It is undisputed that complete diversity does not exist. The Plaintiffs are citizens and residents of Arkansas, the However, the Court did not order

Standridge Defendants are citizens and residents of Arkansas, and Separate Defendant Lincoln, as a New York corporation with its principal place of business in the state of New York, is a citizen of New York. complete diversity Upon joinder of the Standridge defendants was extinguished
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and

subject

matter

jurisdiction no longer existed. pursuant to 28 U.S.C. § 1447(c). Similarly, § 1447(e). remand is

Therefore, remand is proper

proper

pursuant

to

28

U.S.C.

The Court had discretion to either deny joinder of

the non-diverse Standridge Defendants or permit the joinder and remand the matter. It would be redundant for the Court, having

granted joinder, to vacate the original Order only to re-issue a subsequent order permitting joinder but remanding the case. the interest of economy, a remand order now is In

proper. If

Likewise, dismissal would not serve the interest of economy.

the case is dismissed, the Plaintiff will likely re-file the matter in State court against both the Standridge Defendants and Lincoln, but that will require new pleadings, additional filling fees, and another service of process. accomplished more simply through remand. have not raised, and the Court does The same result can be Lastly, the Defendants not find, any issues See Cir.

regarding fraudulent joinder, therefore, remand is proper. Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 809 (8th

2003)(holding "petitioner may avoid remand-in the absence of a substantial-federal question-only by demonstrating that the nondiverse party was fraudulently joined.") Accordingly, the Court finds that remand of this matter based on a lack of subject matter jurisdiction is proper

pursuant to both 28 U.S.C. §§ 1447(c) and 1447(e).
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28 U.S.C.

§ 1447(c); 28 U.S.C. § 1447(e); see Continental Cablevision of St. Paul, Inc. v. U.S. Postal Service, 945 F.2d 1434, 1441 n.3 (8th Cir. 1991)(stating "[w]hen a federal court to which a case has been removed from a state court determines that it lacks jurisdiction, the proper action is not dismissal of the

complaint, but remand to the state court.")(citations omitted). III. Conclusion For the reasons stated above, Plaintiffs' Motion to Remand is GRANTED, Defendant's Motion to Dismiss is DENIED as moot, and this matter is REMANDED to the Circuit Court of Pike County, Arkansas. IT IS SO ORDERED this 20th day of October, 2010.

/s/ Robert T. Dawson Honorable Robert T. Dawson United States District Judge

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