Steed v. Hartford Underwriters Insurance Carrier et al

Filing 15

ORDER granting 5 Motion to Remand to State Court; denied as to request for costs and expenses. Signed by District Judge Debra M. Brown on 5/28/15. (tab)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
GREENVILLE DIVISION
SANDRA STEED

PLAINTIFF

V.

NO. 4:14-CV-00147-DMB-JMV

HARTFORD UNDERWRITERS
INSURANCE CARRIER; EMMA
BASSETT

DEFENDANTS

ORDER GRANTING REMAND
This personal injury and insurance dispute arises from a parking lot collision between
Plaintiff Sandra Steed and an automobile driven by Defendant Emma Bassett.

Doc. #2.

Plaintiff seeks to recover compensatory damages from her insurance carrier, Defendant Hartford
Underwriters Insurance Carrier (“Hartford”), and from Bassett. Id. The case was removed on
October 15, 2014, and is before the Court on Plaintiff’s motion to remand. Doc. #1; Doc. #5.
I
Procedural History
On October 9, 2013, Plaintiff filed a complaint against Hartford and Bassett in the Circuit
Court of Humphreys County, Mississippi. Doc. #2. In her complaint, Plaintiff alleges that
Bassett, “an under insured motorist,” negligently struck Plaintiff in a parking lot and that
Hartford, Plaintiff’s insurance carrier, is liable to her for uninsured driver benefits.1 Id. at ¶¶ 10,
15. According to the complaint: (1) Hartford has its principal place of business in Connecticut;
(2) Plaintiff is a resident of Mississippi; and (3) Bassett is a resident and citizen of Mississippi.
Id. at ¶¶ 1–3.

Plaintiff’s complaint alleges that “[t]he liability insurer for Emma Bassett has tendered the limits of the bodily
injury liability coverage for its insured which are less than the limits applicable to Plaintiff as provided under her
underinsured motorist coverage with [Hartford].” Doc. #2 at ¶ 13.
1

Both Defendants were served with a summons and copy of the complaint on November
5, 2013. Doc. #3-6; Doc. #3-7. Hartford answered the complaint on February 10, 2014. Doc.
#3-10. Bassett never answered or otherwise responded to the complaint. Despite Bassett’s
failure to respond, Plaintiff has not sought default against Bassett.
On October 15, 2014, Hartford removed the state action to this Court. Doc. #1. The
notice of removal contains no jurisdictional allegation as to Hartford, 2 but alleges that Plaintiff3
and Bassett4 are Mississippi “resident[s].” Id. at ¶ 6.

2

While Plaintiff alleges that Hartford has its principal place of business in Connecticut, neither Plaintiff nor
Hartford has provided information as to Hartford’s organizational form. Assuming Hartford is a corporation, the
Court cannot determine Hartford’s citizenship without also knowing its state of incorporation. See 28 U.S.C. §
1332(c)(1) (“a corporation shall be deemed to be a citizen of every State and foreign state by which it has been
incorporated and of the State or foreign state where it has its principal place of business”) (emphasis added); see
also Booth v. Shoney’s Inc., 872 F.Supp. 1524, 1528–29 (E.D. La. 1995) (“Shoney’s alleged that the plaintiffs are
citizens of the State of Louisiana and that Shoney's is a foreign corporation ‘domiciled in the State of Tennessee and
having its principal place of business in Nashville, Tennessee.’ This allegation is deficient because it fails to set
forth the state in which Shoney's was incorporated.”). If Hartford’s organizational form is something other than a
corporation, more would still be required. See Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079–80 (5th Cir.
2008) (citizenship of unincorporated entities and limited liability companies determined by citizenship of members);
see also Hukic v. Aurora Loan Servs., 588 F.3d 420, 427 (7th Cir. 2009) (“The notice of removal therefore gave two
pieces of irrelevant information about Aurora (the state of its principal place of business and that it was a Delaware
company) while failing to provide the information critical to determining [limited liability company’s] citizenship:
the citizenship of its members”). Since it is the burden of the party invoking jurisdiction to establish the basis for
federal jurisdiction, Hartford should have provided this additional information. Booty, 872 F.Supp. at 1528 (“If the
basis of jurisdiction is diversity of citizenship, the citizenship of the parties must be set forth [in the notice of
removal].” However, because the Court finds that remand is appropriate due to violation of the forum-defendant
rule, Hartford’s failing in this regard is irrelevant.
Like Plaintiff’s complaint, the notice of removal alleges that Plaintiff is a Mississippi “resident.” Doc. #1 at ¶ 6.
“It is established that an allegation of residency does not satisfy the requirement of an allegation of citizenship.”
Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 310 n.2 (5th Cir. 2002). However, a
court may presume, for the purpose of deciding a jurisdictional motion, that a “plaintiff means ‘citizen’ when using
the term ‘resident.’” Myers v. Long Island Light. Co., 623 F. Supp. 1076, 1077 n.1 (E.D.N.Y. 1985); see also Brunk
v. Graybar Elec. Co., Inc., 713 F.Supp.2d 814, 816 n.3 (S.D. Iowa 2010) (“[A]n averment of residency is not
sufficient to establish citizenship for purposes of diversity jurisdiction. Regardless, for purposes of the present
motions, the Court will presume that Defendants are asserting that Paschke is a citizen of Minnesota and that
Vandenberg is a citizen of Iowa.”). For the purpose of deciding this motion, the Court will presume that Plaintiff
and Defendant meant “citizen” when they used the term “resident” in relation to Plaintiff. Nevertheless, once again,
because this Court decides this case based on the citizenship of Bassett, it need not address this additional deficiency
in Hartford’s notice of removal.
3

While the notice of removal only alleges Basset’s residency, the complaint properly alleged her citizenship.
Accordingly, Bassett’s Mississippi citizenship is established in this action. See Brunk, 713 F.Supp.2d at 816 n.2
(citizenship established where notice of removal alleged residence but complaint alleged citizenship).
4

2

In its notice of removal, Hartford “acknowledge[]d that technically … diversity of
citizenship does not … exist in this case to satisfy removal to federal court.” Id. at 4. However,
Hartford stated that “[t]his Notice, in essence, is based on fraudulent joinder grounds in that it is
obvious at this point that Plaintiff never intended on pursuing Defendant Bassett as evidenced by
Bassett taking no action in this lawsuit [and] Plaintiff [having] failed to timely pursue default
proceedings ….” Id.
On November 7, 2014, Plaintiff filed a motion to remand. Doc. #5. In her motion,
Plaintiff argues that Basset was properly joined and, therefore, remand is required. Id. Plaintiff
also seeks recovery of costs and expenses related to the motion to remand. Id.
II
Removal and Improper Joinder
Diversity jurisdiction requires that there be: (1) complete diversity between the parties;
and (2) an amount in controversy in excess of $75,000. 28 U.S.C. § 1332. “Complete diversity
requires that all persons on one side of the controversy be citizens of different states than all
persons on the other side.” Harvey, 542 F.3d at 1079 (internal quotation marks omitted).
Pursuant to the forum-defendant rule of 28 U.S.C. § 1441(b)(2), “[a] civil action
otherwise removable solely on the basis of [diversity] jurisdiction … may not be removed if any
of the parties in interest properly joined and served as defendants is a citizen of the State in
which such action is brought.” The requirement of proper joinder is reflective of the rule that
“[t]he Federal courts should not sanction devices intended to prevent the removal to a Federal
court where one has that right….” Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 573 (5th
Cir. 2004). “The doctrine of improper joinder rests on these statutory underpinnings, which
entitle a defendant to remove to a federal forum unless an in-state defendant has been ‘properly
joined.’” Id. Thus, under the improper joinder rule, “a court may disregard the citizenship of
3

parties that have been improperly joined.” Gavelston Bay Biodiesel, L.P. v. Ace American Ins.
Co., 719 F.Supp.2d 736, 738 (S.D. Tex. 2010) (citing Smallwood, 385 F.3d at 572–73).
In support of her motion to remand, Plaintiff argues that remand is required under the
forum-defendant rule.5 Doc. #8 at 2. There is no dispute that Bassett is a citizen of Mississippi.
Accordingly, unless Bassett’s citizenship may be disregarded under the improper joinder
doctrine, removal of this matter is barred by § 1441(b)(2).
The Fifth Circuit has recognized two distinct ways to establish improper joinder: “(1)
[demonstrate] actual fraud in the pleading of jurisdictional facts;” or (2) “demonstrate[] that there
is no possibility of recovery by the plaintiff against an in-state defendant.” Smallwood, 385 F.3d
at 573. Under either of these methods, the “heavy” burden of showing improper joinder rests
with the removing party. Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir.
2011) (citation omitted).
In its response to the motion to remand Hartford concedes that it cannot establish actual
fraud in the pleading of jurisdictional facts. Doc. #11 at 4. Rather, Hartford argues that
“Plaintiff has no possibility of establishing a cause of action against … Bassett.” Id. at 5.
The second improper joinder inquiry centers on “whether the defendant has demonstrated
that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated
differently means that there is no reasonable basis for the district court to predict that the plaintiff
might be able to recover against an in-state defendant.” Smallwood, 385 F.3d at 573 (citation
omitted). In resolving this question, “[a] district court should ordinarily … conduct[] a Rule
12(b)(6)-type analysis. However, in cases where the plaintiff has stated a claim, but ‘misstated
or omitted discrete facts’ the district court has the discretion to pierce the pleadings and conduct

5

Plaintiff’s motion cites a 1997 version of the removal statute.

4

a summary inquiry.” McDonal v. Abbott Labs., 408 F.3d 177, 183 n.6 (5th Cir. 2005). The party
asserting improper joinder bears the burden of showing no possibility of recovery under both
inquiries. See Barbee v. Scott, No. H-10-1797, 2010 WL 3257477, at *7 (S.D. Tex. Aug. 17,
2010) (“The court concludes, therefore, that under a Rule 12(b)(6)-type analysis the defendants
have failed to meet their burden of establishing improper joinder.”); see also Veritas Consulting
Grp. Inc. v. Gasbuddy Org., Inc., No. C-10-147, 2010 WL 2598386, at *3 n.3 (S.D. Tex. June
24, 2010) (“[E]ven if this Court were to pierce the pleadings and consider the summary judgment
type evidence, removing Defendants have not met their burden of proving improper joinder.”).
A. 12(b)(6) Inquiry
As with motions to dismiss for failure to state a claim, under the improper joinder
inquiry, “[a] plaintiff fails to state a claim for relief under Rule 12(b)(6) when the complaint does
not contain enough facts to state a claim to relief that is plausible on its face.” Harried v.
Forman Perry Watkins Krutz & Tardy, 813 F.Supp.2d 835, 840 (S.D. Miss. 2011) (citing Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Such analysis must be done in the context of
Rule 8’s notice pleading standard, which requires only ‘a short and plain statement of the claim
showing that the pleader is entitled to relief in order to give defendant fair notice of what the ...
claim is and the grounds upon which it rests.’” Id. (quoting Twombly, 550 U.S. at 554–55).
Here, Defendant does not argue that Plaintiff’s complaint is deficient in any way.
Accordingly, the Court concludes that there is no improper joinder under the 12(b)(6) inquiry.
B. Piercing the Pleadings
As explained above, a Court has discretion to pierce the pleadings and conduct a
summary judgment-type analysis if: (1) the plaintiff has stated a claim under the 12(b)(6)
inquiry; and (2) in stating the claim, plaintiff has misstated or omitted discrete facts. McDonal,

5

408 F.3d at 183 n.6. When the court elects to pierce the pleadings, it may consider summary
judgment-type evidence, such as affidavits. Toney v. Lowery Woodyards and Employer’s Ins. of
Wausau, 278 F.Supp.2d 786, 790 (S.D. Miss. 2003) (citing Cavallini v. State Farm Mutual Auto
Ins. Co., 44 F.3d 256 (5th Cir. 1995)). In so doing, the court must “take into account all
unchallenged factual allegations, including those alleged in the complaint, in the light most
favorable to the plaintiff.” Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003). Furthermore,
“[a]ny contested issues of fact and any ambiguities of state law must be resolved in [the
plaintiff’s] favor.” Id.
While the piercing step is normally applied to determine the merits of a plaintiff’s claim,
it may also be used to determine whether the plaintiff actually intends to pursue her claims
against the in-state defendant. See Morris v. P & S Transp., Inc., No. 4:07-cv-153, 2008 WL
607195, at *2 (N.D. Miss. Feb. 29, 2008) (“Moreover, a court may find an improperly joined
defendant based on ‘whether the plaintiff really intended to obtain a judgment against both
defendants.’”) (quoting Parks v. New York Times Co., 308 F.2d 474, 478 (5th Cir. 1962)); see
also Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999) (finding improper joinder
where “the pleadings, standing alone, [did] not set forth actionable claims against [defendant
and] the record [did] not support any inference that [plaintiff] intended to actively pursue claims
against [defendant]”). Although not stated explicitly, this rule appears to rest on the very
reasonable assumption that there can be no possibility of recovery against a defendant where a
plaintiff does not intend to actively pursue a claim against that defendant. See Ample Business
Investments, L.P. v. American States Ins. Co., No. H-10-0802, 2010 WL 1737114, at *3 (S.D.
Tex. Apr. 28, 2010) (“[T]he proper test for improper joinder is … whether the defendant has
shown that there is no reasonable possibility that the plaintiff will be able to establish a cause of

6

action against the defendant in state court. Whether the plaintiff actually intends to pursue
claims against the instate defendant is merely a subset of that test.”) (internal citation omitted).
When framed in this fashion, the omitted discrete fact justifying the piercing of the pleadings is
the plaintiff’s lack of intention to pursue the validly stated claim.
When considering intent, “[f]actors to consider include whether the defendant is only
minimally mentioned [in the complaint], whether any actionable facts or causes of action are
specifically alleged against the defendant, and whether the defendant was ever served.”
Escuadra v. Geovera Specialty Ins. Co., 739 F.Supp.2d 967, 975 (E.D. Tex. 2010) (citing
Griggs, 181 F.3d at 699); see also First Baptist Church of Mauriceville, Tex. v. GuideOne Mut.
Ins. Co., No. 1:07-cv-988, 2008 WL 4533729, at *3 (E.D. Tex. Sep. 29, 2008) (same).
Axiomatically, courts may also consider whether the plaintiff has made any specific
representations that they do not intend to pursue claims against the allegedly improperly joined
defendant. See Ashley v. Devon Energy Corp., No. 14-512, 2015 WL 803136, at *4 (M.D. La.
Feb. 25, 2015) (finding improper joinder of bankrupt defendant based on no possibility of
recovery where “Plaintiffs specifically represented … that they did not intend to assert claims
against a defendant that has filed for, or has been discharged in, bankruptcy”).
As an initial matter, the Court notes that Plaintiff’s complaint contains specific
allegations against Bassett. Specifically, the complaint alleges that Bassett: (1) failed to keep a
proper lookout while operating her motor vehicle; (2) failed to maintain proper control of her
motor vehicle; (3) failed to decrease her speed when approaching pedestrians; (4) failed to make
a reasonable effort to prevent her motor vehicle from striking plaintiff; (5) operated her motor
vehicle at a dangerous rate of speed; and (6) operated her motor vehicle “in a careless and
reckless manner.” Doc. #2 at ¶ 10. Based on these allegations, Plaintiff specifically alleges a

7

claim of negligence against Bassett. Id. at ¶ 11. Due to the specificity and scope of these
allegations, the Court concludes that Bassett is not minimally mentioned in Plaintiff’s complaint
and that Plaintiff has specifically pled actionable facts and a cause of action against Bassett.
Next, the record is clear that Plaintiff served Bassett. And, finally, Hartford has pointed
to no statements or affirmative conduct indicating lack of intent to sue Bassett. Accordingly, the
four court-endorsed factors weigh in favor of intent.
Without addressing the court-endorsed factors, Hartford argues that lack of intent to
pursue the negligence claims against Bassett may be inferred from the following facts: (1)
Plaintiff’s complaint alleges that Bassett’s insurance carrier6 “has tendered the limits of the
bodily injury liability coverage for its insured;”7 (2) “a settlement agreement [between Bassett
and Plaintiff] has been verbally consummated so there is no reason to pursue Defendant Bassett;”
(3) “Plaintiff identified Defendant Bassett as being the culpable party for causing the subject
accident but only in the context of an ‘uninsured motorist;’” (4) Plaintiff failed to seek a default
judgment against Bassett after Bassett failed to answer the complaint; and (5) Plaintiff has failed
to actively pursue discovery against Bassett. Doc. #11 at 4–6.
First, Hartford has cited no authority, and this Court has been unable to find any, which
would support the proposition that, in an automobile collision action, an insurer’s tender of its
policy limits is indicative of a plaintiff’s lack of intent to pursue a cause of action against an
insured (or, if not the insured, the driver of the automobile). Second, Hartford has offered no
evidence which would show the existence of a settlement agreement, verbal or otherwise. Third,

6

In its response to the motion to remand, Hartford submits that the vehicle driven by Bassett was owned by Nechia
Coleman, “an Allstate Insurance Company insured.” Doc. #11. While the identity of the insured has no bearing on
resolution of the instant motion, the Court notes that Hartford has cited no evidence supporting its statement
regarding Nechia Coleman.
7

Doc. #2 at ¶ 13.

8

the Court disagrees that the complaint identifies Basset as “culpable … only in the context of an
uninsured motorist.” Rather, as explained above, the complaint clearly pleads a negligence claim
against Bassett as the driver of the motor vehicle which struck and injured Plaintiff.
Finally, Hartford has not cited any case law supporting the proposition that the pursuit of
discovery or default is a relevant consideration under the second prong of the Smallwood inquiry.
The Court is, however, aware of one case where these two factors were considered under the first
Smallwood prong on the issue of whether Plaintiffs had an “interest in gaining a judgment
against [an in-state defendant].” See Rodriguez v. Casa Chapa S.A. de C.V., 394 F.Supp.2d 901,
908 (W.D. Tex. 2005) (under fraudulent pleading prong of Smallwood, noting that “Plaintiffs
had no real interest in gaining a judgment against [defendant because] Plaintiffs never sought
discovery from [defendant and w]hen the [defendant] failed to file an answer to the complaint,
the Plaintiffs did not seek any default judgment ….”). Additionally, at least one other court has
considered a plaintiff’s failure to conduct discovery as evidence of improper joinder. See In re
Avandia Mktg., Sales Practices and Prods. Liab. Litig., No. 07-md-1871, 2014 WL 2011597, at
*2–3 (E.D. Pa. May 15, 2014) (finding improper joinder based on failure to propound
discovery).
Assuming without deciding that failure to pursue discovery or default are proper factors
in a prong-two inquiry, the Court notes that a review of the state court record reflects little to no
activity on the part of Plaintiff with regard to either defendant. Indeed, it seems that the only
state court discovery undertaken by Plaintiff was a service of a set of interrogatories and requests
for admission on Hartford. See Doc. #3-12; Doc. #13. Hartford’s notice of removal even alleges
that “Plaintiff has not yet responded to Hartford’s written discovery ….” Doc. #1 at 4. In light
of Plaintiff’s general lack of activity in the state court litigation, the Court is unconvinced that

9

Plaintiff’s failure to seek default or discovery is indicative of a lack of intent to pursue her claims
against Bassett, as opposed to a general lackadaisical attitude toward the litigation in general.
Furthermore, to the extent the failure to seek discovery may be deemed intentional, Hartford has
offered no argument or evidence that the discovery Plaintiff requested from Hartford is
insufficient to support a claim against Bassett. See Stiglick v. Chattem, No. 12-cv-1858, 2012
WL 5403437, at *3 (D.N.J. Nov. 5, 2012) (rejecting improper joinder argument based on lack of
discovery because “Plaintiff may [have] believe[d], for whatever reason, that the key discovery
from the Defendants will be from [diverse defendant]”). Thus, to the extent Plaintiff’s litigation
conduct is relevant to the intent inquiry, it does not outweigh the cumulative weight of the four
factors identified above. Under these circumstances, Hartford has failed to meet its heavy
burden of showing no possibility of recovery under the negligence claim against Bassett. Thus,
Bassett was not improperly joined and this matter must be remanded for violation of the forumdefendant rule.8
III
Costs and Expenses
28 U.S.C. § 1447(c) provides, in relevant part, that “[a]n order remanding the case may
require payment of just costs and any actual expenses, including attorney fees, incurred as a
result of the removal.” Here, Plaintiff seeks $10.70 in costs, and $750.00 in attorney’s fees.
Doc. #8 at 3.
While an award of expenses and costs rests in a court’s discretion, “absent unusual
circumstances, attorney’s fees should not be awarded under § 1447(c) when the removing party
has an objectively reasonable basis for removal.” Admiral Ins. Co. v. Abshire, 574 F.3d 267, 280

8

Assuming that Plaintiff is in fact a Mississippi citizen, remand would also be required for lack of complete
diversity.

10

(5th Cir. 2009) (citing Martin v. Franklin Corp., 546 U.S. 132, 141 (2005)) (internal quotation
marks omitted). While the objectively reasonable test was first articulated for the purpose of
awarding or denying attorney’s fees under § 1447(c), courts in this circuit have employed the
same standard for determining the propriety of awarding costs and other expenses under the
statute. See Williams v. State Farm Mut. Auto Ins. Co., No. 11-1141, 2011 WL 3240814, at *4
(E.D. La. July 28, 2011) (“Although Defendant failed to carry its burden in demonstrating that
federal subject matter jurisdiction exists, it did not lack an objectively reasonable basis for
removal. Accordingly, the Court declines to award Plaintiff attorney's fees and costs.”); Estate
of Pringle v. Pringle, No. 1:11-cv-152, 2011 WL 2446478, at *4 (S.D. Miss. June 15, 2011)
(denying costs and expenses based on objectively reasonable standard).
Here, the Court concludes that Plaintiff’s failure to seek default and discovery against
Bassett created an objectively reasonable basis for removal. Accordingly, an award of expenses
and costs would be inappropriate.
IV
Conclusion
For the reasons set forth above, the Court finds that, while Hartford had an objectively
reasonable basis for removal, it failed to carry its burden of showing that Bassett was improperly
joined in this action. Accordingly, Plaintiffs’ motion to remand [5] is GRANTED in Part and
DENIED in Part. The motion is GRANTED on the issue of remand, and is DENIED as to
Plaintiff’s request for costs and expenses. This matter is REMANDED to the Circuit Court of
Humphreys County, Mississippi.
SO ORDERED, this 28th day of May, 2015.

/s/ Debra M. Brown
UNITED STATES DISTRICT JUDGE
11