Sauder West Farms, Inc. et al v. Sentry Select Insurance Co

Filing 17

MEMORANDUM AND ORDER: The court has diversity jurisdiction over plaintiff Sauder's claim under 28 U.S.C. § 1332. And, it may exercise supplemental jurisdiction over plaintiff Farmers State Bank's claim under 28 U.S.C. § 1367. Subject matter jurisdiction thus exists in this case. And, the court denies plaintiffs' Motion to Remand 12 . Signed by District Judge Daniel D. Crabtree on 3/13/2017. (ms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

SAUDER WEST FARMS, INC. and
FARMERS STATE BANK OF
ALICEVILLE,
Plaintiffs,
v.

Case No. 16-cv-4192-DDC-KGG

SENTRY SELECT INSURANCE CO.,
Defendant.

MEMORANDUM AND ORDER
Plaintiffs Sauder West Farms, Inc. (“Sauder”) and Farmers State Bank of Aliceville
(“Farmers State Bank”) filed this lawsuit against defendant Sentry Select Insurance Co. in
Anderson County, Kansas. Defendant removed the action to federal court, asserting that
diversity jurisdiction exists over the action. Plaintiffs have filed a Motion to Remand. Doc. 12.
Defendant has filed a Response opposing remand. Doc. 13. And, plaintiffs have filed a Reply.
Doc. 15. After considering the parties’ arguments, the court denies plaintiffs’ Motion to
Remand.
I.

Factual and Procedural Background

The following facts are taken from plaintiffs’ First Amended Complaint (Doc. 10) or
defendant’s Notice of Removal (Doc. 1). Plaintiff Sauder is a Kansas corporation with its
principal place of business in Kansas. Plaintiff Farmers State Bank is a business organized in
Kansas and is a registered Kansas company in good standing. Doc. 1-2. Defendant is an

insurance company organized under the laws of Wisconsin with its principle place of business in
Wisconsin. Defendant is authorized to engage in business in Kansas.
Plaintiff Sauder asserts a breach of contract claim against defendant. Plaintiff Sauder
alleges that defendant insured farm equipment under an insurance policy. Plaintiff Sauder
alleges that the policy provided “$90,000 for the no-till drill and $55,000 for the accompanying
cart and designated [plaintiff] as the named insured.” Doc. 10 at 2. Plaintiff Sauder asserts that
defendant breached the insurance contract by denying its claim for loss of the no-till drill and
cart. Plaintiff asks for a judgment against defendant “for an amount in excess of $75,000, and no
less than the full amount of coverage specified in the policy for the no-till drill and cart.” Id. at
4.
Plaintiff Farmers State Bank asserts a third party creditor beneficiary claim against
defendant. Plaintiff Farmers State Bank alleges that it held a security interest in the no-till drill
and cart, with an outstanding loan balance on the no-till drill and cart at the time of loss in the
amount of $64,850. Id. at 5. Plaintiff Farmers State Bank asserts that it was entitled to receive
timely written notice of any decision by defendant not to renew or cancel the insurance policy.
Id. Plaintiff Farmers State Bank asserts that it never received any written notice of such
decision, and this omission wrongfully precluded it “from taking measures to protect its financial
interests.” Id. at 5–6. Plaintiff Farmers State Bank thus seeks a judgment against defendant for
$64,850. Id. at 6.
II.

Legal Standard

“Federal courts are courts of limited jurisdiction; they must have a statutory basis for
their jurisdiction.” Dutcher v. Matheson, 733 F.3d 980, 984 (10th Cir. 2013) (quoting Rural
Water Dist. No. 2 v. City of Glenpool, 698 F.3d 1270, 1274 (10th Cir. 2012)). Under 28 U.S.C. §

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1441, a defendant may remove to federal court “any civil action brought in a State court of which
the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a); see also
Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (explaining that “[o]nly state-court actions
that originally could have been filed in federal court may be removed to federal court by the
defendant”). “This jurisdictional prerequisite to removal is an absolute, non-waivable
requirement.” Hunt v. Lamb, 427 F.3d 725, 726 (10th Cir. 2005) (quoting Brown v. Francis, 75
F.3d 860, 864 (3d Cir. 1996)).
Two federal statutes confer subject matter jurisdiction on federal district courts: federal
question jurisdiction under 28 U.S.C. § 1331, and diversity jurisdiction under 28 U.S.C. § 1332.
For a federal court to have federal question jurisdiction over a lawsuit, plaintiff must assert a
“civil action[ ] arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. §
1331. For a federal court to have diversity jurisdiction, the amount in controversy must exceed
$75,000, and complete diversity of citizenship must exist between all plaintiffs and all
defendants. 28 U.S.C. § 1332(a).
III.

Analysis

Defendant removed this lawsuit asserting that the court has diversity jurisdiction under 28
U.S.C. § 1332. Plaintiffs disagree. Plaintiffs contend no diversity jurisdiction exists here, and
thus ask the court to remand the case.
Diversity jurisdiction requires: (1) complete diversity of citizenship; and (2) an amount
in controversy exceeding $75,000. 28 U.S.C. § 1332. The parties do not dispute that the first
element of diversity jurisdiction is satisfied. For diversity purposes, plaintiffs are Kansas
citizens1 and defendant is a Wisconsin citizen. So, complete diversity of citizenship exists.

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Plaintiff’s original Complaint and First Amended Complaint do not allege the citizenship of
plaintiff Farmers State Bank. A state bank is a citizen of the state of incorporation and the state of its

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The parties dispute whether the amount in controversy here exceeds the jurisdictional
threshold of $75,000. As described, plaintiffs bring two claims against defendant. Plaintiff
Sauder asserts a breach of contract claim, seeking a judgment against defendant “for an amount
in excess of $75,000, and no less than the full amount of coverage specified in the policy for the
no-till drill and cart.” Doc. 10 at 4 (emphasis added). Plaintiff Farmers State Bank asserts a
third party creditor beneficiary claim, seeking a judgment against defendant for $64,850. Id. at
6.
Plaintiffs argue that the court lacks jurisdiction over plaintiff Farmers State Bank’s claim
because the damages sought in that claim are limited to $64,850—an amount below the $75,000
threshold. Plaintiffs assert that defendant cannot aggregate the damages sought by each
plaintiff’s claim to establish the necessary jurisdictional amount in controversy. Plaintiff cites
Snyder v. Harris, 394 U.S. 332 (1969), to support its argument. But, the facts of Snyder differ
from the facts here. Snyder was a class action in which no single plaintiff met the jurisdictional
amount in controversy. Id. at 333. But, here, at least one of the plaintiffs—Sauder—satisfies the
amount-in-controversy requirement.
Under these facts, the court has jurisdiction over plaintiff Sauder’s claim, and it may
exercise supplemental jurisdiction over plaintiff Farmers State Bank’s claim under 28 U.S.C. §
1367. Section 1367 provides:

principal place of business. See Heil v. Iron Cty., 376 F. App’x 868, 871 (10th Cir. 2010) (concluding
diversity jurisdiction existed because the plaintiff was a California citizen and the defendant state bank
“was formed pursuant to Utah’s banking laws and had its principal place of business in Utah”).
Defendant attached records from the Kansas Secretary of State’s Office to its Notice of Removal,
showing that Farmers State Bank is organized in Kansas and registered with the State of Kansas in good
standing. Doc. 1-2. Farmers State Bank does not dispute that it is a Kansas citizen. Also, its website
provides three locations—all in Kansas. See http://www.fsbaliceville.com/locations.php (last visited Mar.
13, 2017); see also O’Toole v. Northrop Grumman Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) (holding
that courts may take judicial notice of factual information found on the world wide web). The court is
satisfied that the record here establishes that Farmers State Bank is a Kansas citizen.

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[I]n any civil action of which the district courts have original jurisdiction, the
district courts shall have supplemental jurisdiction over all other claims that are so
related to claims in the action within such original jurisdiction that they form part
of the same case or controversy under Article III of the United States
Constitution. Such supplemental jurisdiction shall include claims that involve the
joinder or intervention of additional parties.
28 U.S.C. § 1367. The Supreme Court has concluded that § 1367(a) allows a court to exercise
diversity jurisdiction over additional plaintiffs who fail to satisfy the minimum amount-incontroversy requirement when the other elements of diversity jurisdiction are present and at least
one named plaintiff satisfies the amount-in-controversy requirement. Exxon Mobil Corp. v.
Allapattah Servs., Inc., 545 U.S. 546, 558–59 (2005) (“[Section] 1367(a) confers supplemental
jurisdiction over all claims, including those that do not independently satisfy the amount-incontroversy requirement, if the claims are part of the same Article III case or controversy.”).
Because plaintiff Sauder asserts a claim for damages exceeding the minimum
jurisdictional amount, the court may exercise supplemental jurisdiction over plaintiff Farmers
State Bank’s claim against the same defendant because its claim is “part of the same case or
controversy.” 28 U.S.C. § 1367. Subject matter jurisdiction exists, and plaintiff’s Motion for
Remand is denied.
IV.

Conclusion

For the reasons explained, the court has diversity jurisdiction over plaintiff Sauder’s
claim under 28 U.S.C. § 1332. And, it may exercise supplemental jurisdiction over plaintiff
Farmers State Bank’s claim under 28 U.S.C. § 1367. Subject matter jurisdiction thus exists in
this case. And, the court denies plaintiffs’ Motion to Remand.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiffs’ Motion to
Remand (Doc. 12) is denied.
IT IS SO ORDERED.
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Dated this 13th day of March, 2017, at Topeka, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge 

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