Strachan et al v. State Farm Fire And Casulty Company et al

Filing 25

ORDER denying as moot 3 Motion to Sever; granting 16 Motion to Remand to State Court. Signed by District Judge Debra M. Brown on 4/5/18. (jtm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
GREENVILLE DIVISION
KENNETH STRACHAN and SHEILA
STRACHAN

PLAINTIFFS

V.

NO. 4:17-CV-138-DMB-JMV

STATE FARM FIRE AND CASUALTY
COMPANY and DON PYRON
BUILDERS, LLC

DEFENDANTS

ORDER
Before the Court are Kenneth Strachan and Sheila Strachan’s motion to remand, Doc. #16,
and State Farm Fire and Casualty Company’s motion to sever, Doc. #3.
I
Relevant Procedural History
On August 11, 2017, Kenneth and Shelia Strachan filed a complaint in the Circuit Court of
Carroll County, Mississippi, against State Farm Fire and Casualty Company (“State Farm”) and
Don Pyron Builders, LLC (“Builders”). Doc. #2. In their complaint, the Strachans allege that they
contracted for Builders to perform extensive remodeling of their home and that Builders
negligently completed the project, causing damage to their property. Id. at ¶ 7, 10–11. They
further allege that State Farm wrongfully rejected their requested reimbursement under their home
insurance policy. Id. at ¶¶ 15, 23–29. The Strachans assert claims for breach of contract,
negligence, bad faith, and breach of fiduciary duty against State Farm, and claims for breach of
contract, breach of warranty, negligence, and unjust enrichment against Builders. Id. at ¶¶ 17–51.
The Strachans served State Farm with process on August 29, 2017, and State Farm,
asserting diversity jurisdiction, removed the state court action to this Court on September 28, 2017.

Doc. #1. The notice of removal, as amended,1 alleges that State Farm is a citizen of Illinois,
Builders is a citizen of Mississippi, and the Strachans are citizens of Mississippi. Doc. #15 at ¶¶
4–6. The notice of removal also alleges that, notwithstanding the matching citizenship of the
Strachans and Builders, complete diversity exists because, pursuant to the doctrine of fraudulent
or egregious misjoinder, the citizenship of Builders may be disregarded.2
One day after removal, State Farm filed a motion seeking severance and remand of the
claims against Builders. Doc. #3. The Strachans did not respond to the motion to sever but, on
October 27, 2017, filed a motion to remand. Doc. #16. The motion to remand has been fully
briefed. See Doc. #21; Doc. #22.
II
Standard
“Under the federal removal statute, a civil action may be removed from a state court to a
federal court on the basis of diversity. This is so because the federal court has original subject
matter jurisdiction over such cases.” Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp.,
Ltd., 818 F.3d 193, 199 (5th Cir. 2016). “The party seeking to remove bears the burden of showing
that federal jurisdiction exists and that removal was proper. Any ambiguities are construed against
removal and in favor of remand to state court.” Scarlott v. Nissan N. Am., Inc., 771 F.3d 883, 887
(5th Cir. 2014) (internal citations omitted). In this regard, “[i]f at any time before final judgment
it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28
U.S.C. § 1447(c).

1
On October 13, 2017, United States Magistrate Judge Jane M. Virden gave State Farm the opportunity to cure
technical defects in its notice of removal. Doc. #10. State Farm filed an amended notice of removal on October 20,
2017. Doc. #15.
2

Builders was served with process on September 21, 2017. Doc. #8-11. State Farm alleges in the removal notice
that, “as a fraudulently or improperly joined party, Don Pyron Builders, LLC is not required to join or consent to this
removal and dismissal.” Doc. #1 at ¶ 3.

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III
Analysis
Diversity jurisdiction requires that there be: (1) complete diversity between the parties; and
(2) an amount in controversy in excess of $75,000, exclusive of interest and costs. 28 U.S.C. §
1332; Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). Complete diversity “requires that all
persons on one side of the controversy be citizens of different states than all persons on the other
side.” Vaillancourt v. PNC Bank, Nat’l Ass’n, 771 F.3d 843, 847 (5th Cir. 2014).
As explained above, State Farm submits that complete diversity exists because Builders, a
non-diverse defendant, was fraudulently misjoined. The Strachans seek remand on the ground that
Builders was not fraudulently misjoined in this action and that, therefore, complete diversity does
not exist.
The doctrine of fraudulent misjoinder derives from the Eleventh Circuit’s opinion in
Tapscott v. MS Dealer Service Corp., which held that “[a] defendant’s right of removal cannot be
defeated by a fraudulent joinder of a resident having no real connection with the controversy.” 77
F.3d 1353, 1360 (11th Cir. 1996)). Recently, this Court rejected fraudulent misjoinder as a basis
for removal jurisdiction. See Wilson v. State Farm Mut. Auto. Ins. Co., No. 4:17-cv-124, 2018
WL 1096836, at *2 (N.D. Miss. Feb. 28, 2018). In reaching this conclusion, the Court relied on
both the rule that the removal statute must be strictly construed and the absence of clear guidance
from the Fifth Circuit or the United States Supreme Court on the application of the fraudulent
misjoinder doctrine. Id. For these same reasons, the Court concludes here that fraudulent
misjoinder is not a viable rule and that, therefore, the citizenship of Builders, a non-diverse
defendant, may not be disregarded. Accordingly, in the absence of complete diversity, the
Strachans’ motion to remand must be granted. State Farm’s motion to sever will be denied as
moot.
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IV
Conclusion
For the reasons above, the Strachans’ motion to remand [16] is GRANTED. State Farm’s
motion to sever [3] is DENIED as moot. This action is REMANDED to the Circuit Court of
Carroll County.
SO ORDERED, this 5th day of April, 2018.
/s/Debra M. Brown
UNITED STATES DISTRICT JUDGE

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