Dequeen, Inc. v. G&M Marine, Inc. et al
Filing
5
ORDER & REASONS: REMANDING CASE TO STATE COURT. Signed by Judge Carl Barbier on 11/12/13.(sek, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
NATIONAL CASUALTY CO. ET AL
CIVIL ACTION
VERSUS
NO: 13-5611 c/w
13-5851
Applies to 13-5851
DEQUEEN, INC.
SECTION: "J" (4)
ORDER AND REASONS
Before the Court is Plaintiff DeQueen, Inc. ("DeQueen")'s
Motion to Remand (Rec. Doc. 10), Defendants National Casualty
Company ("National") and American Alternative Insurance Company
("American",
and
collectively,
"Insurers")'s
opposition
(Rec.
Doc. 15), Plaintiff's reply (Rec. Doc. 21), and Insurers' surreply (Rec. Doc. 23). Defendant G & M Marine, Inc. ("G
& M") did
not respond to the instant motion. Plaintiff's motion was set for
hearing on November 6, 2013, on the briefs. Having considered the
motion and memoranda of counsel, the record, and the applicable
law, the Court finds that Plaintiff's motion should be GRANTED
for reasons set forth more fully below.
FACTS AND PROCEDURAL HISTORY
This matter arises out of a dispute over the Insurers'
denial of coverage. Insurers issued DeQueen a policy of insurance
("the Policy") for DeQueen's vessel that contained an "on-board
warranty" requiring one of the two identified captains to be on
board of the vessel at all times. At some point, DeQueen's vessel
sank, and the Insurers denied coverage stating that neither of
the captains listed in the Policy were aboard the vessel at the
time it sank. DeQueen disputes this contention, alleging that
Insurers and/or Defendant G & M either mistakenly or maliciously
listed the wrong names on the Policy and that this flawed Policy
caused Insurers to deny coverage.1
Insurers filed an action in this Court seeking a declaratory
judgment that the denial of coverage was proper. The next day,
DeQueen filed suit in state court alleging breach of contract and
bad faith and requesting various equitable remedies. In its state
court action, DeQueen included G & M, a Louisiana corporation, as
a defendant.
Insurers removed DeQueen's suit to federal court,
and the removed action was consolidated with the Insurers' action
for declaratory judgment. DeQueen filed the instant motion to
1
The names on the policy are: Mrs. Dao Tran, co-owner of DeQueen in
title, but who in reality is the Captain's wife and has never stepped foot on
the vessel at issue, and Mr. Lahn Nguyen, a deckhand who is incapable of
piloting the vessel. DeQueen contends that Defendants mistakenly listed these
names rather than listing Mr. Hung Tran, co-owner and captain of the vessel,
and Mr. Phuong Tran, the relief captain.
remand thereafter.
PARTIES' ARGUMENTS
Defendants argue that removal is proper because G & M is
improperly joined as a defendant in DeQueen's state court suit.
Defendants argue that G & M is an improper defendant because the
state court complaint fails to state a claim against G & M. To
support this contention, Insurers argue that: (a) G & M is a
third-party administrator, thus is not liable for failure to pay
a claim or breach of contract, (b) DeQueen does not meet state
law pleading requirements for bad faith allegations, and (c)
DeQueen's pleadings repeated references to "underwriters" do not
state a claim against G & M because it is not an underwriter.
DeQueen argues that it did not fraudulently add G & M as a
defendant and that this matter should be remanded to state court
because DeQueen may have an individual tort claim against G & M,
making
G
&
M
a
proper
defendant.
DeQueen
urges
that
full
discovery is needed to determine if G & M could be liable to
DeQueen, thus this Court should grant its motion to remand.
LEGAL STANDARD
There are two ways to establish improper joinder:
(1)
actual fraud in the pleading of jurisdictional facts, or (2)
inability of the plaintiff to establish a cause of action against
the non-diverse party in state court.
Smallwood
v. Ill. Cent.
R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc). The test
for improper joinder where there is no allegation of actual fraud
is
whether
the
defendant
has
demonstrated
that
there
is
no
possibility of recovery by the plaintiff against an in-state
defendant. Id. A mere theoretical possibility of recovery is not
sufficient to preclude a finding of improper joinder. Id. A court
should
ordinarily
resolve
the
issue
by
conducting
a
Rule
12(b)(6)-type analysis, looking initially at the allegations of
the complaint to determine whether the complaint states a claim
under state law against the in-state defendant.
plaintiff
has
stated
a
claim,
but
has
misstated
Id. Where a
or
omitted
discrete and undisputed facts that would preclude recovery, the
court may, in its discretion, pierce the pleadings and conduct a
summary inquiry. Id. at 573-74.
The party seeking removal bears a heavy burden of proving
improper joinder. Id. at 574.
In determining the validity of an
allegation of improper joinder, the district court must construe
factual
allegations,
resolve
ambiguities
plaintiff’s favor.
216 (5th Cir. 1995).
resolve
in
the
contested
controlling
factual
state
issues,
and
law
the
in
Burden v. Gen. Dynamics Corp., 60 F.3d 213,
DISCUSSION
Insurers
jurisdictional
do
not
facts,
contend
so
the
that
DeQueen
Court's
fraudulently
inquiry
will
plead
focus
on
whether DeQueen states a claim against G & M. DeQueen argues that
it has stated a claim against G & M for negligence in the
handling of Policy documents. DeQueen alleges that it never told
G & M to change the names of the captains. Instead, DeQueen
alleges that G & M mixed up the names either mistakenly or
maliciously. G & M asserts that, even if this is true, there is
no cognizable claim for unkempt files and records.
Though DeQueen's state court petition does not include the
word "negligence," the facts alleged state a cause of action for
negligence under Louisiana law.2 "Louisiana is a jurisdiction
which allows recovery in tort for purely economic loss caused by
negligent misrepresentation when privity of contract is absent.”
Audler v. CBC Innovis Inc., 519 F.3d 239, 250 (5th Cir. 2008)
citing Barrie v. V.P. Exterminators, 625 So.2d 1007, 1014 (La.
2
"Louisiana utilizes a system of fact pleading. Accordingly, it is not
necessary for a plaintiff to plead the theory of his case in the petition."
State, Div. of Admin., Office of Facility Planning & Control v. Infinity Sur.
Agency, L.L.C., 2010-2264 (La. 5/10/11), 63 So. 3d 940, 946 (internal
citations omitted). Though DeQueen's pleadings are vague, the Court finds that
they are sufficient to put Defendants on notice of the claims alleged, thereby
restricting this Court's jurisdiction. See Smallwood, 385 F.3d at 576 ("When a
defendant removes a case to federal court on a claim of improper joinder, the
district court's first inquiry is whether the removing party has carried its
heavy burden of proving that the joinder was improper. Indeed, until the
removing party does so, the court does not have the authority to do more; it
lacks the jurisdiction to dismiss the case on its merits. It must remand to
the state court.")
1993). Further, a review of the applicable law indicates that
there may be a cause of action for negligence against an agent
who completes Policy-related documents in cases where said agent
incorrectly fills out the documents. Lee v. Nationwide Property &
Cas. Ins. Co., No. 09-86, 2010 WL 1758882 (N.D. Miss., April 27,
2010). In Lee, upon hearing the plaintiff's motion to remand, a
Mississippi federal court found that the plaintiff's state court
complaint stated a cause of action for breach of contract against
the
defendant
insurer
and
a
cause
of
action
for
negligence
against the agent who incorrectly filled out certain forms. Id.
at *2. As such, the court granted the plaintiff's motion to
remand. Id.
Based on these standards and the state court pleading, the
Court finds that there is a reasonable basis for predicting that
Louisiana law will allow recovery against G & M on at least one
theory. Taking DeQueen's allegations as true, the state court
could find that, as a general managing agent and/or underwriter,3
3
The parties expend a considerable amount of time disputing whether G &
M is an underwriter. On this point, the Court notes, without making any
conclusions, that: (1) any reference to "underwriters" in the Complaint may be
construed as a reference to G & M because it is clear that DeQueen believes
that G & M is in fact an underwriter, and (2) Insurers' argument that G & M is
not an underwriter because it is a Third Party Administrator is flawed
because, one way in which La. R.S. 22:1641 defines "Third Party Administrator"
is as one who underwrites, thus the two classifications are not mutually
exclusive. The Court need not, and must not, make a determination on this
issue, however, because the law does not require that G & M be an underwriter
to incur liability in tort and because the Court must not consider the merits
of DeQueen's case. Smallwood, 385 F.3d at 574 (A Federal Court's "inability to
make the requisite decision in a summary manner itself points to an inability
there
is
a
negligence
claim
against
G
&
M
for
improperly
including Mrs. Dao Tran and Mr. Lahn Nguyen as captains in the
paperwork completed in connection with the Policy. Alternatively,
even without privity of contract between DeQueen and G & M, a
state
court
could
find
that
G
&
M
is
liable
in
Bobby
for
negligent
misrepresentation.4
As
the
Fifth
Circuit
stated
Jones
Garden
Apartments, Inc. v. Suleski, "whether plaintiff can make out a
case we do not know. Whether he can do so is a matter for the
[state] Courts to decide on the evidence brought forward and in
the light of legal theories [the state] is free to embrace. [...]
And not for the first time, the [state] Courts may disagree with
either our declaration or prediction of [state] Law." Bobby Jones
Garden Apartments, Inc. v. Suleski, 391 F.2d 172, 179 (5th Cir.
1968). However, because there is at least one theory on which
this Court predicts DeQueen could succeed against G & M, G & M is
of the removing party to carry its burden.").
4
To hold a party liable for negligent misrepresentation "whether
plaintiff is a third party or a party to the contract or transaction-there
must be a legal duty on the part of the defendant to supply correct
information, there must be a breach of that duty, and the breach must have
caused plaintiff damage." Barrie, 625 So. 2d at 1015 (Louisiana courts
recognize a legal duty "in cases where privity of contract is absent but there
is communication of the misinformation by the tortfeasor directly to the user
or the user's agent.").
a
proper
defendant
who
will
destroy
complete
diversity
of
citizenship thereby making the Plaintiff's state court filing
proper.
Accordingly,
DeQueen, Inc.'s Motion to Remand (Rec. Doc. 10) is GRANTED.
New Orleans, Louisiana, this 12th day of November, 2013.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
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