Southeast Business Network, Inc. v. Security Life of Denver Insurance Co. et al

Filing 26

ORDER granting 7 Motion to Dismiss; denying 18 Motion to Remand to State Court. Plaintiff is ordered to show cause in writing, within 7 days of this order as to why defendants' motion for sanctions 25 should not be granted. The Court also orders defendants to file a memorandum within 14 days of this order detailing expenses incurred as part of this suit. Signed by Judge J. Randal Hall on 8/27/15. (cmr)

IN THE UNITED

STATES DISTRICT COURT

FOR THE

SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION

SOUTHEAST BUSINESS

*

NETWORK,

*

INC.,

*

Plaintiff,

*

v.

*

CV 415-159

*

SECURITY LIFE

OF DENVER

*

INSURANCE

and VOYA

*

CO.

RETIREMENT

INSURANCE AND

ANNUITY CO.

*

f/k/a ING LIFE

*

COMPANIES,

*
*

Defendants.

*

ORDER

Presently
(1)

before

Plaintiff's

motion

motion

to

sanctions

the motion

dismiss
(Doc.

to

the
to

(Doc.

25) .

remand,

Court

remand

7);

For

GRANTS

(Doc.

and

the

are

(3)

three

18);

(2)

Defendants'

Defendants'

reasons

below,

the motion

to

the

motions:

motion
Court

dismiss,

for

DENIES

and ORDERS

Plaintiff to show cause regarding the motion for sanctions.
I,

This

case

arises

from

BACKGROUND

a

$5

million

life

insurance

issued by Defendants for the life of Sushila K. Shah.
Doc.

1-1.)

Effective

on July

19,

2006,

Trust as owner and sole beneficiary.

the

(Id.)

policy

(Compl.,

policy named DDS

Shortly thereafter,

DDS Trust collaterally assigned certain rights under the policy
to

Plaintiff,

benefit.

(Id.)

including
Then,

a

right

to

a

portion

on or about September 5,

of
2008,

the

death

DDS Trust

designated Dharmistha Shah as an irrevocable
the

policy.

Sushila

(Doc.

Shah

competing

7-2,

died,

Ex.

and

claims

to

A.)

Dharmista

the

Defendants

filed

Plaintiff

Dharmistha

Shah

District

Court

United

States

Georgia.
No.

(See

response,

Security

(S.D.

Plaintiff

Life

of

alleging breach of
claims,

the

Denver

Shah

of

the

and

(Doc.

granted

against
of

District

Co.

1-1,

v.

Ex.

against

7-2,

Q.)

Life's

of

In

Defendant

("Security

Ex.

the

Shah,

E.)

Company

Security

interpleader and summary judgment.

action

Ins.

counterclaim

M-0.)

Division

Doc.

made

Exs.

Southern

2012),

Insurance

contract.

Savannah

Denver Life

later,

Plaintiff

(Id.,

the

29,

a

two years

interpleader

for

Ga. Aug.
filed

Court

an
in

Security Life

4:ll-cv-008,

than

benefit.

Consequently,
and

Less

beneficiary under

As

Life")

to

those

motions

for

(Id., Ex. A.)

Plaintiff then initiated this case on January 18,

2015,

by

filing a complaint in the Eighteenth Judicial Circuit in and for
Seminole

County,

complaint,
of

Florida.

Defendants

tortious

Florida

removal,

served

with

which alleged one count of negligence and one
interference

with

Within the United States District

of

were

an

on

April

answer

27,
to

2015,

contract,
Court

for

Defendants

Plaintiff's

on

April

9,

the

count
2015.

the Middle District

filed

complaint,

a
a

notice

of

motion

to

transfer venue, and a motion to dismiss Plaintiff's complaint1 on
grounds of res judicata and collateral estoppel.
On May 22,

2015,

the Middle District of Florida transferred

the instant action to this Court.
a motion to remand,
To

Defendants'

Subsequently,

Plaintiff filed

and Defendants filed a motion for sanctions.

motion

to

dismiss

and

motion

for

sanctions,

Plaintiff has yet to file a response.
II.

On a motion to

Motion to Remand

remand,

the burden of

establishing federal

jurisdiction is placed upon the party seeking removal.
v.

Best

Buy

Co.,

269

F.3d

1316,

1319

(11th

Cir.

Williams

2001).

It

is

well established that removal jurisdiction is construed narrowly
with

all

doubts

Ins.

Co.

of

resolved

Am. , 505

strictly

construe

favor

remand.");

of

F.3d 405,
v.

411

Sheets,

Co.,

31

are

evidence

removal
Univ.

U.S.

construed

district

F.3d

100,

1092,

court

favor

1094

available

of

S.

1999)

856

(11th Cir.

resolving

Ala,

v.

(1941));

(11th

the

Mann

v.

Unum

2013)

Life

(u [W] e

doubts

Tobacco

Am.

all

in

Co.,

168

(citing Shamrock Oil & Gas Corp.

108-09

before

when

remand.

statutes,

narrowly.").

"has

of

F. App'x 854,

(11th Cir.

313

in

Cir.

In

it

1994)

to

the

v.

Windsor

(*[R]emoval

evaluating

only

motion

Burns

this

limited

remand

is

Ins.

statutes

motion,

a

universe

of

filed

—

i.e.,

1 Defendants moved to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(2), (3), and (6); however, Defendants waived any Rule 12(b)(2)-(3)
defenses when they failed to assert them in their answer to Plaintiff's
complaint (Doc. 5). See Fed. R. Civ. P. 12(h)(1). Hence, this motion will
be considered only as it relates to Rule 12(b)(6).
3

the

notice

Ala.

of

removal

Power Co.,

evidence

is

483

and

accompanying

F.3d 1184,

insufficient

to

1214

documents."

(11th Cir.

establish

Lowery

2007).

removal,

If

v.

that

''neither

the

defendants nor the court may speculate in an attempt to make up

for the notice's failings."

Id. at 1214-15.

For an action to be properly removed to federal court,
federal

court must

matter.

28

original

U.S.C.

§

not

law.

arise

original

jurisdiction over the

1441(a).

jurisdiction

under federal
does

have

over

28

federal

diversity

U.S.C.

under

A

federal

§§

cases

1331,

law;

district

and

1332.

the

subject

court

cases

has

arising

The present case

therefore,

this

Court

must

decide whether diversity jurisdiction exists.
Federal courts may exercise diversity jurisdiction over all

civil

actions

exclusive
citizens

removal

of
of

where

interest

different

context,

no defendant

brought.

28

removed more
28 U.S.C.

amount
and

in controversy exceeds

costs,

states.

28

and

the

U.S.C.

§

action

$75,000,

is

between

1332(a)(1).

In

two additional conditions must be met.

can be

U.S.C.

a

citizen of

§

the

state

1441(b)(2).

in which the

Second,

than one year after it

was

a

case

the

First,
case was

cannot

filed in state

be

court.

§ 1446(c) (1) .

A,

To

the

meet

the

Diversity of Citizenship

diversity

of

citizenship

requirement,

a

defendant's notice of removal "must distinctly and affirmatively

allege each party's citizenship."
Talbot

(N.D.

Constr. ,

Ala.

Apr.

511 F.2d 653,

Inc. ,

654

2:llcvl40,

2011

WL

Am.

(5th Cir.

1975)).

state

the

in

state

business

in

is

Washington,

how

a

of

of

the

business

See

28

can

has

U.S.C.

526

properly

§

"Plaintiff
State

in Chatham

of

been

is

County,

1332(c)(1);

and

*1

Inc.,

necessary

Georgia."

Marshall

of

Defendants'

allegations

of

of

under

principal

(Not.

v.

(discussing

organized

its

of

citizenship

In this case,

has

and

place

2012)

the

corporation

Georgia

Airlines,

principal

allege

the

a

at

incorporated

(11th Cir.

in the removal context).
provides

1297971,

v.

the notice must provide

corporation's

App'x 523,

removal

citizenship.

K 7.)

F.

corporation

each

located.

defendant

notice

each

which

487

corporations

laws

which

L.L.C.

To sufficiently allege the

citizenship of one or more corporations,
the

Constr.,

2011) (citing McGovern v.

5,

No.

Seven Oaks

Rem.,

the

place

of

Doc.

1,

"Defendant Security Life of Denver Insurance Company is a

corporation

organized under

the

laws

of

the

State

of

Colorado

with its principal place of business in the State of New York."

(Id. , f 8.)

"Defendant Voya Retirement Insurance Co. f/k/a ING

Life Companies are corporations organized under the laws of the

State of Delaware with their principal place of business in the
State of New York."

With

these

(Id., K 9. )

allegations,

Defendants

have

shown

(1)

that

Plaintiff is not a citizen of any state in which Defendants have
5

citizenship and
forum

state.

(2)

that neither defendant

Additionally,

Defendants

is

a

citizen of

removed

this

than one year from the time in which it was filed.

result,

Defendants

have

met

their

burden

case

less

(Id. )

of

the

As a

establishing

diversity of citizenship.
B.

When

damages,

a

exceeds

complaint

removal

apparent

Amount in Controversy

from

"does

the

complaint

[$75,000]."

removal

and may

controversy

at

conclusory

underlying
to meet

the

In
for,"
Yet,

facts

its

"request,"

evidence

was

notice

controversy

to

Id.

of

without

Plaintiff

at

the

amount

in

Id.

removed."

"A

removal

that

the

setting

forth

the

such an assertion,

burden."

"seek"

relevant

case

satisfied,

supporting

or

in

1319.

facially

the notice

the

complaint,

is

the court should "look to

in

defendant's

of

it

amount

269 F.3d at

the

is

the

amount

the amount

time

amount

specific

If

require

the

a

is proper if

that

Williams,

allegation

jurisdictional

claim

from state court

is not facially apparent,
of

not

is

insufficient

1319-20.

does

not

any amount of

specifically

damages.

(Doc.

"pray
1-1.)

Plaintiff does allege that " [its] damages include an amount

equal

to

approximately

costs

incurred

during

Plaintiff notes that it

approximately

$3,600,000.00
the

plus

interpleader."

attorneys
(Id.)

fees

and

Furthermore,

"ultimately received an amount that was

$3,600,000.00

less
6

than

what

was

contractually

guaranteed

to

"facially

[it]."

apparent"

(Id.)

that

Given

the

these

statements,

amount-in-controversy

it

is

requirement

is met.

III.

Before
dismiss,

considering

the

Court

will

Motion to Dismiss

the

merits

first

of

Defendants'

motion

to

address

Plaintiff's

failure

to

respond.

Local

assigned

Rule

7.5

Judge

provides

prescribes

that

"[u]nless

otherwise,

these

each

rules

party

or the

opposing

a

motion shall serve and file a response within fourteen (14) days
of

service of

within the

no

the motion."

applicable

opposition

Plaintiff

to

was

SDGa.

time period shall

[the]

served

LR 7.5,

motion."
with

a

indicate

Id.

copy

of

"Failure to respond

In

(Docket

Entry

7).

motion's filing,

On June

the motion on April

2015,

thirty-six days

case,

motion

(Doc.

7-1),

28,

is

to

and

2015

after the

Defendants entered a notice of no opposition to

the motion to dismiss.
later,

3,

2015

there

present

Defendants'

dismiss via United States mail on April 23,

was provided electronic notice of

the

that

(Doc.

22.)

Today,

over one hundred days

Plaintiff still has not filed a response.

Because

of

Plaintiff to have
However,

this

failure

to

"no opposition"

respond,

the

to the motion.

Court

considers

LR 7.5,

SDGa.

the Eleventh Circuit has held that a district court may

only dismiss an action for failure to comply with a local rule
when "(1)

a party engages in a clear pattern of delay or willful

contempt

(contumacious

conduct) ;

specifically

finds

that

World Thrust

Films,

Inc.

1454,

1456

(11th

evidence of

v.

Cir.

Id.

Int'l

the

district

would

not

Family Entm't,
Here,

"engag[ing]

Thus,

(2)

sanctions

1995).

Defendants

or contempt."

lesser

and

there

suffice."

Inc.,

is

court

41

F.3d

insufficient

in a clear pattern of

the Court must undertake a

delay

review of

the motion's merits.

In considering a motion to dismiss under Rule 12(b)(6),

the

court tests the legal sufficiency of the complaint,

not whether

the plaintiff will ultimately prevail on the merits.

Scheuer v.

Rhodes,

all

416 U.S.

facts

236

alleged in the

inferences

in the

Hoffman-Pugh

The

232,

Court

conclusions

v.

as

not,

true.

The Court must accept as true

complaint

light most

Ramsey,

need

(1974).

312

and construe

favorable
F.3d

however,

1222,

to

v.

reasonable

plaintiff.

1225

(11th

the

complaint's

accept

Ashcroft

the

all

Iqbal,

556

U.S.

Cir.

662,

See
2002).

legal
678-79

(2009).

A

complaint

also must

accepted as true,
on its face.'"

550

U.S.

"factual

544,

factual

matter,

'to state a claim to relief that is plausible
Id.

570

content

"contain sufficient

at

678

(citing Bell Atl.

(2007)).
that

allows

The plaintiff
the
8

court

to

Corp.

v.

Twombly,

is required to plead
draw

the

reasonable

inference

that

alleged."

the

Iqbal,

defendant

556 U.S.

is not akin to a

is

at

liable

678.

for

the

misconduct

"The plausibility standard

'probability requirement, ' but it asks for more

than a sheer possibility that a defendant has acted unlawfully."
Id.

Res Judicata

A.

Defendants contend that Plaintiff's claims are precluded by

res judicata.
be

barred

elements
merits;

Under the doctrine of res judicata,

by

are
(2)

prior

litigation

present:
the

jurisdiction;

"(1)

there

decision was

(3)

the

involved in both cases."

same

1238

(11th

nucleus

of

Cir.

all
is

or

a

and

1999).

" [I] f

fact,

a

or

the

or

judicata."
From

Life

the

record,

case,

it

the

of

Co.

v.

Court

is

First,

in the parties'

Ins.

court

of

on

the

competent

privity with

them,

case

is

Inc.,

arises

based

193 F.3d

out

upon

of

the

the

same

the two cases are really

action'

for

purposes

of

res

Id. at 1239.

requirements are met.
merits

'cause

in

following

judgment

Rubbermaid,

as a former action,

'claim'

a

the

(4) the same cause of action is

factual predicate,
same

of

final

those

Ragsdale v.

operative

four

rendered by

parties,

are identical in both suits;

1235,

if

a claim will

clear

granted

No.

the

first

three

there was a final judgment on the

first lawsuit.

Shah,

that

(Security Life of Denver

4:ll-cv-008,

Security
9

Life's

Doc.

7-2.)

motion

for

In

that

summary

judgment

Second,

on

Plaintiff's

the

prior

breach

decision

of

was

contract

made

by

jurisdiction.

Third,

the

(Id. )

Federal

the

Court for the Southern District of Georgia,

competent

claim.

District

which was a court of

parties

are

identical

in

both cases.2

Turning to the fourth element,

involved in both cases.
a breach of

2,

Ex.

In the prior lawsuit,

First,

[Plaintiff's]

assignee

insurance benefits to

notice

Life

to

asserted

a

Plaintiff alleged

contract by Security Life on two grounds.

Q.)

Security

the same cause of action is

Security

Life

interests

and

[Plaintiff]

''process [ed]

[Plaintiff]."

negligence

as

fail[ed]

assignee."

various
Now,

"fail [ed]

change

in

this

claim alleging

to
to

pay

the

Second,

requests

without

Plaintiff

Defendants

7-

protect

(Id.)

case,

that

(Doc.

has

"breached

their duty to Plaintiff by filing the interpleader and requiring

the

Plaintiff

to

litigate

rightfully entitled."
a

tortious

(Doc.

interference

"Defendant[s]

inducted

over
1-1.)

with

[sic]

benefits

to

which

it

was

Plaintiff has also asserted

contract

claim

alleging

that

the parties to breach the agreement

2 Although Defendant Voya Retirement Insurance and Annuity Company was not a
named defendant in the prior suit (Doc. 1-2), this fact does not alter the
determination that the parties are identical.
See Goodridge v. Quicken
Loans,

Inc. , No.

2015);

Official

(S.D.N.Y.

1993)

CV 115-093,
Publ/ns,

2015 WL 4487757,

Inc.

("Where the

v.

'new'

Kable

News

at

*2

Co.,

n.2
811

(S.D.
F.

Ga.

Supp.

July 22,
143,

147

defendants are sufficiently related to one

or more of the defendants in the previous action which arises from the
transaction all defendants may invoke res judicata.") .
10

same

by filing an interpleader forcing litigation."
these pleadings,
the

previous

operative

contract

to

Based on

it is apparent that the present tort claims and

fact:

obligations

(Id.)

claims

arose

Defendants

from

acted

the

same

inconsistent

nucleus
with

of
its

Plaintiff by failing to award it with the death

benefit.

While

tort

the

claims

elements

should

be

res

of

judicata are

barred,

also favors dismissal.

the

policy

which were

proceeding."
in

the

raised or could have

Here,

earlier

the

suit.

well

claim

asserted.

was

known

newly-discovered

First,

to

the

res

that

the

judicata

193 F.3d at 1238,

"bar[]

the filing of

been raised in an earlier

alleged

wrongful

conduct

of

present claims—filing an interpleader
Plaintiff

Second,

facts

such

present claims could have been brought

Defendants underlying the
action—was

behind

The Court in Ragsdale,

stated that res judicata should operate to
claims

met

at

Plaintiff

that

make

judicata

bars

its

the

time

has

not

claims

its

contract

asserted

more

likely

any

to

succeed now.

Because
Plaintiff

has

res

failed to state a

Plaintiff's

tort

claim upon which relief

claims,
can be

granted, and its case must be dismissed.3

3 Consequently, the Court need not address Defendants' other grounds for
dismissal.

11

B.

As

Lee v. West Life Insurance Company

support

for

its

contention

that

*independent

tort

damages are still available" against Defendants,

Plaintiff cites

to

1004

Lee

v.

2012),
the

West

in its

Ninth

Coast

Life

complaint.

Circuit

makes

Ins.

Co.,

(Compl.,
clear

688

Doc.

in

Lee

F.3d

1-1,
that

at

(9th

4.)

such

Cir.

However,

damages

are

unavailable if the alleged tortious conduct is the filing of an

interpleader
bases

action.

its

tort

Plaintiff's

Lee,

claims

on

reliance on Lee

IV.

Lastly,

688

1012-14.

Defendants'

Thus,

interpleader

have

for

it

action,

Sanctions

filed

a

motion

for

pursuant to Federal Rule of Civil Procedure 11(b),
reasonable attorney's

as

fails.

Motion

Defendants

F.3d at

sanctions,

seeking "all

fees and costs incurred in its defense of

this action,

and any and all other relief the Court deems just."

(Doc.

In

the

11

sanctions:

25.)

warrant

Rule

Eleventh

Circuit,

Ml)

when a

*three

types

of

party

files

a

conduct

pleading

that is based on a legal theory that has no reasonable factual

basis;

(2)

when the party files

legal theory that has
cannot be

a pleading that

no reasonable chance of

advanced as a reasonable argument to

law; and (3)

is based on a

success and that
change existing

when the party files a pleading in bad faith for an

improper purpose.'" Didie v.

Howes,
12

988 F.2d 1097,

1104

(11th

Cir.

1993)

(11th

(citing

Cir.

Pelletier

1991)).

limited to what

If

v.

they

are

Zweifel,

921

warranted,

F.2d

1465,

sanctions

"suffices to deter repetition of

1514

must

be

the conduct or

comparable conduct by others similarly situated."

Fed.

R.

Civ.

P.

include

(1)

penalty

into

11(c)(4).

Specifically,

"nonmonetary directives";
court";

or

(3)

deterrence,
all

of

(2)

sanctions

"an order

a

reasonable

attorney's

fees

and

other

a

copy

of

the

motion

to

the

provide

that party with twenty-one days

Fed.

Civ.

P.

11(c)(2).

Here,

Upon review,

to

(Doc.

the movant

opposing

correct

Defendants

they complied with this requirement.

expenses

Id.

before a motion for sanctions can be filed,

provide

R.

pay

"if imposed on motion and warranted for effective

directly resulting from the violation."

must

to

an order directing payment to the movant of part or

the

Yet,

may

have

party

and

the matter.

certified that

25.)

the Court acknowledges that Defendants'

motion

for sanctions may be reasonable and that Plaintiff has failed to
respond.

However,

given

the

posture

of

this

will provide Plaintiff with an extension of

case,

the

seven days

Court

to show

cause as to why Rule 11 sanctions should not be imposed.
V,

CONCLUSION

Based upon the foregoing, the Court DENIES Plaintiff's motion
to

remand

(Doc.

18),

GRANTS

Defendants'

13

motion

to

dismiss

(Doc.

7) , and ORDERS Plaintiff to show cause,
(7)

DAYS of

for

sanctions

ORDERS

of

(Doc.

Defendants

the

fees,

the date of

date

of

to

this

25)

in writing,

within SEVEN

this Order as

to why Defendants'

should not

granted.

file

a

Order

be

memorandum within

detailing

the

The

FOURTEEN

reasonable

motion

Court

also

(14)

DAYS

attorney's

costs, and expenses they have incurred as part of this suit.

ORDER ENTERED at Augusta, Georgia,
August,

this <^Y / daY of

2 015.

Ho<ogg»rar j .~ ran^al^hall

UNITED/STATES DISTRICT JUDGE
SOUTHERN DISTRICT

14

OF

GEORGIA