Rankin v. Shelter Insurance et al

Filing 21

ORDER granting 5 Motion to Dismiss for Fraudulent Joinder; denying 7 Motion to Remand; granting 17 Motion to Dismiss for Fraudulent Joinder. Defendant Helen Burks Agency, LLC, is dismissed from this action without prejudice. The parties sh all promptly notify Magistrate Judge Parker of this Court's Order denying the motion to remand, and shall submit a proposed Order Lifting the Stay. Within 14 days of entry of the Order Lifting the Stay, the parties shall confer as outlined in L.U.Civ.R. 26(e). A telephonic case management conference shall be scheduled within sixty (60) days of the lifting of the stay. Signed by Honorable David C. Bramlette, III on 9/4/2018 (ECW)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
LEROY RANKIN, JR.

PLAINTIFF

VS.

CIVIL ACTION NO. 5:18-cv-25(DCB)(MTP)

SHELTER INSURANCE; HELEN BURKS AGENCY, LLC;
AND ANY AND ALL UNKNOWN SHELTER INSURANCE
REPRESENTATIVES, ADJUSTERS AND AGENTS

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This cause is before the Court on defendant Helen Burks
Agency, LLC’s Rule 12(b)(1) Motion to Dismiss for Fraudulent
Joinder (docket entry 5); on the plaintiff Leroy Rankin, Jr.’s
Motion to Remand (docket entry 7); and on defendant Helen Burks
Agency, LLC’s Second Rule 12(b)(1) Motion to Dismiss for Fraudulent
Joinder (docket entry 17).
This action was originally filed in the Circuit Court of
Jefferson County, Mississippi, against “Shelter Insurance; Helen
Burkes Agency, LLC; and Any and All Unknown Shelter Insurance
Representatives, Adjusters and Agents.”

Docket Entry 1-1.

The

Complaint alleges Breach of Contract, Negligent Misrepresentation,
Specific Performance, Unjust Enrichment, and Bad Faith.

Id.

Defendant Helen Burks Agency, LLC (“Burks Agency”) moves to
dismiss all claims against it without prejudice, alleging that the
plaintiff has fraudulently joined Burks Agency in order to defeat
diversity jurisdiction (docket entry 5).
The plaintiff, Leroy Rankin, Jr., has filed a motion to remand

(docket entry 7), contending that there is a possibility that the
state court would find a cause of action against the named in-state
defendant on the facts alleged by the plaintiff, and that the
federal court must find that the in-state defendant has been
properly joined, that there is incomplete diversity, and that the
case must be remanded to the state court.

Id.

In support of his motion, the plaintiff argues that
Helen Burks Agency, LLC explained the policy to Mr.
Rankin. Helen Burks Agency, LLC sold the policy to Mr.
Rankin. It was through Helen Burks Agency, LLC that the
policy was issued to Mr. Rankin. Helen Burks Agency, LLC
received premium payments and/or profits from Mr. Rankin.
Helen Burks Agency, LLC was listed on every document the
Plaintiff received regarding his fire claim.
These
undisputed facts alone show that making Helen Burks
Agency, LLC a party to this case was not fraudulent, and
that there is a possibility that a state court could find
that a cause of action exists against Helen Burks Agency,
LLC.
Id.
In response to the plaintiff’s argument, Burks Agency refers
the Court to the defendants’ Notice of Removal, in which the
defendants assert that Burks Agency has been fraudulently joined to
defeat diversity jurisdiction.
Rankin’s Complaint alleges that his home was destroyed by fire
on September 30, 2016, during which time the home was insured by
Shelter Insurance (“Shelter”). Rankin further alleges that Shelter
failed to pay policy benefits allegedly owed under his homeowner’s
policy.
Rankin is a Mississippi resident citizen.
2

Shelter is a

Missouri insurance company and has its principal place of business
in that state.

Burks Agency is Mississippi limited liability

company with a resident member.

However, the defendants allege

that Burks Agency’s citizenship should be disregarded because
Rankin has fraudulently joined it to defeat diversity jurisdiction.
Under 28 U.S.C. § 1441(a), the citizenship of fictitious
defendants (“Any and All Unknown Shelter Insurance Representatives,
Adjusters and Agents”) is disregarded for purposes of establishing
diversity jurisdiction.

Therefore, according to 28 U.S.C. § 1332,

complete

citizenship

diversity

of

exists

between

Rankin

and

Shelter, the only properly joined defendant.
A plaintiff’s inability to establish a cause of action against
a non-diverse defendant in state court establishes fraudulent
joinder.

Burrell v. Ford Motor Co., 304 F.Supp.2d 883, 887 (S.D.

Miss. 2004).

A plaintiff is unable to do so if there is no

reasonable basis to predict that the plaintiff might recover
against the in-state defendant in state court.

Smallwood v. Ill.

Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004). Under a standard
similar to Rule 12(b)(6) dismissal with discretion to pierce the
pleadings and consider evidence appropriate for summary judgment,
if no reasonably possibility of recovery exists, then the nondiverse defendant has been fraudulently joined.
Ins., Inc., 509 F.3d 665, 669 (5th Cir. 2007).

Campbell v. Stone

A mere hypothetical

possibility of recovery fails to alter that conclusion.

3

Griggs v.

State Farm Lloyds, 181 F.3d 694, 701 (5th Cir. 1999).
Rankin’s Complaint alleges breach of contract, negligent
misrepresentation, specific performance, unjust enrichment, and bad
faith against all “Defendants” generally (docket entry 1).

But

Rankin cannot rely on collective allegations of wrongdoing to
circumvent fraudulent joinder. Donald v. Arrowood Indem. Co., 2010
U.S. Dist. LEXIS 128005 at *18 (S.D. Miss. Nov. 23, 2010).

The

focus must be on factual allegations specific to Burks Agency. Id.
at *19.

Rankin’s Complaint, however, fails to allege such.

Rankin’s Complaint does not distinguish claims against Shelter from
claims against Burks Agency.

It makes conclusory assertions that

Burks Agency is somehow liable to Rankin for the same reasons that
Shelter is allegedly liable to Rankin.

As with the improper

collective allegations against all defendants generally, conclusory
assertions that Burks Agency is somehow liable to Rankin on the
same basis as Shelter are also insufficient.

Id. at 5.

In addition, Burks Agency, as a matter of law, cannot be
liable to Rankin on the same basis as Shelter.

All of Rankin’s

claims

policy

center

on

an

alleged

failure

to

supposedly owed to him because of the fire.

pay

benefits

Yet, as the Complaint

alleges, Burks Agency is an insurance “agent.”

Shelter is the

insurance company that issued Rankin’s policy. Burks Agency is not
a party to that contract and, as a matter of law, cannot be held
liable

for

breach

of

contract,

4

negligent

misrepresentation,

specific performance, unjust enrichment, or bad faith on a theory
that Shelter allegedly failed to pay policy proceeds.

See, e.g.,

Thompson v. Nationwide Mut. Ins. Co., 971 F.Supp. 242, 243 (N.D.
Miss. 1997)(“A claim for breach of an insurance policy lies against
the company, not its agent.”).
No reasonable possibility of recovery for breach of contract,
negligent

misrepresentation,

specific

performance,

unjust

enrichment or bad faith against Burks Agency exists; therefore,
Burks Agency has been fraudulently joined for purposes of defeating
diversity jurisdiction.
Also before the Court is the matter of amount in controversy
which the Court raised sua sponte (docket entry 15).

In response,

Shelter shows that Rankin is claiming in excess of $217,600, plus
attorneys

fees

and

punitive

damages.

See

Docket

Entry

18.

Plaintiff Rankin concurs in that amount. See Docket Entry 19. The
Court

therefore

finds

that

the

requisite

amount

for

removal

jurisdiction (over $75,000) is met.
IT IS THEREFORE ORDERED that defendant Helen Burks Agency,
LLC’s Rule 12(b)(1) Motions to Dismiss for Fraudulent Joinder
(docket entries 5 and 17) are GRANTED, and Helen Burks Agency, LLC,
is dismissed from this action without prejudice;
FURTHER ORDERED that the plaintiff Leroy Rankin, Jr.’s Motion
to Remand (docket entry 7) is DENIED.
FURTHER ORDERED that, as set forth in Magistrate Judge Michael
5

T. Parker’s Order Staying the Attorney Conference and Disclosure
Requirements, and all discovery not relevant to the remand or
referral issue (docket entry 10), the parties shall promptly notify
the Magistrate Judge of this Court’s Order denying the motion to
remand, and shall submit a proposed Order lifting the stay. Within
fourteen (14) days of entry of the order lifting the stay, the
parties shall confer as outlined in L.U.Civ.R. 26(e). A telephonic
case management conference shall be scheduled within sixty (60)
days of the lifting of the stay.
SO ORDERED, this the 4th day of September, 2018.

/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

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