State Farm Mutual Automobile Insurance Company v. Sentry Select Insurance Company et al
MEMORANDUM AND ORDER OF REMAND. (See Full Order.) IT IS HEREBY ORDERED that this action is remanded to the Circuit Court of Crawford County, Missouri under 28 U.S.C. § 1447(d). Signed by District Judge Catherine D. Perry on 02/05/2015. (Order and certified copy of docket sheet mailed to Crawford County Circuit Court this date.) (CBL)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
STATE FARM MUTUAL AUTO.
SENTRY SELECT INS. CO., et al.,
Case No. 4:15 CV 149 CDP
MEMORANDUM AND ORDER OF REMAND
This newly-removed case is before me on my review for subject matter
jurisdiction. Plaintiff State Farm filed this action for declaratory judgment in state
court against another insurance company (Sentry), an individual (Gail Cape), and its
insured (Andrea Macier). The state court petition alleges that, as a result of an
underlying tort action brought by Cape against Macier, an insurance coverage dispute
has arisen between State Farm and Sentry. In the underlying action, Cape is suing
Macier because Cape‟s son, Christopher Bell, was killed in an automobile accident.
Cape claims that Macier was driving an automobile loaned to Bell by Flying A Motor
Sports and that Macier‟s negligent operation of the vehicle caused her son‟s death.
Macier denies she was driving. Sentry is the insurer of the automobile loaned to Bell.
State Farm is Macier‟s insurer. State Farm admits that Macier was an insured under
its policy if she was operating the vehicle, but contends that Sentry was the primary
insured for Macier if she was driving. Sentry‟s policy has liability coverage in the
amount of $1,000,000.00. Sentry has refused to provide a defense or coverage for
Macier and denied its policy limits apply in the underlying action. State Farm‟s
petition is silent regarding whether it is providing a defense to Macier in the
underlying action subject to a reservation of rights.
The state court petition seeks a declaration that Macier is an insured under the
Sentry policy if she was driving the vehicle at the time of the accident, that Sentry is
the primary insured and obligated to provide a defense and indemnify Macier in the
underlying action, and that the policy limit is $1,000,000.00. Both Cape and Macier
are Missouri citizens, Sentry is a Wisconsin citizen, and State Farm is a citizen of
Illinois. Sentry removed the case to this Court, alleging diversity jurisdiction. In
support of removal jurisdiction, Sentry argues that I should ignore the citizenship of
resident defendants Cape and Macier because they are nominal parties, or
alternatively, that they should be realigned as party plaintiffs. Because this Court
lacks removal jurisdiction over this action, I will sua sponte remand this action to
state court for the reasons that follow.
28 U.S.C. § 1441(b) allows a defendant to remove a civil action from state
court to federal court based on diversity jurisdiction only if none of the properly
joined defendants are citizens of the state on which the original action was filed.
Applied here, there is no removal jurisdiction over this case if one of the defendants
is citizen of Missouri. 28 U.S.C. § 1441(b); Hurt v. Dow Chem. Co., 963 F.2d 1142,
1145 (8th Cir. 1992). Sentry, as the party invoking jurisdiction, bears the burden of
proving that all prerequisites to jurisdiction are satisfied. See In re Business Men‟s
Assur. Co. of America, 992 F.2d 181, 183 (8th Cir. 1993). Removal statutes are
strictly construed, and any doubts about the propriety of removal are resolved in favor
of remand. Transit Cas. Co. v. Certain Underwriters at Lloyd‟s of London, 119 F.3d
619, 625 (8th Cir. 1997).
Here, two of the defendants -- Cape and Macier -- are Missouri citizens.
Sentry argues that Macier and Cape are nominal defendants whose presence may be
disregarded for determining the propriety of removal. Nominal defendants need not
join in the petition for removal. Thorn v. Amalgamated Transit Union, 305 F.3d 826,
833 (8th Cir. 2002). Nominal defendants are defined as those “against whom no real
relief is sought.” Id. (quoting Pecherski v. Gen. Motors Corp., 636 F.2d 1156, 1161
(8th Cir. 1981)). The nominal party defendant exception is limited “to situations in
which it is clear that the defendant is not a necessary or an indispensable party as a
matter of law, the party has nothing at stake in the litigation, and no real, present
claim for relief is being sought against the party.” Guy v. State Farm Mut. Auto. Ins.
Co., No. 3:10CV255, 2011 WL 1212179, at *2 (E.D. Ark. Mar. 31, 2011) (quoting
Fisher v. Dakota Cmty. Bank, 405 F. Supp. 2d 1089, 1095 (D.N.D. 2005)); see also
Williams ex rel. McIntosh v. City of Beverly Hills, Mo., No. 4:07CV661, 2007 WL
2792490, at *4 (E.D. Mo. Sept. 24, 2007); Dumas v. Patel, 317 F. Supp. 2d 1111,
1113 n. 5 (W.D. Mo. 2004) (“A nominal party has been defined as „[a] party who,
having some interest in the subject matter of a lawsuit, will not be affected by any
judgment but is nonetheless joined in the lawsuit to avoid procedural defects.‟”
(quoting Black‟s Law Dictionary 1145 (7th ed.1999))).
Sentry argues that Cape and Macier are nominal defendants because State
Farm seeks only a determination of Sentry‟s duties and obligations under the policies
and asks for no relief against them. However, as Macier is State Farm‟s insured and
the alleged insured of Sentry, she has more than a nominal interest in the outcome of
a declaratory judgment action regarding the terms of the policy. See Geismann v.
American Economy Ins. Co., 4:11CV1185, 2011 WL 4501161, at *2 (E.D. Mo. Sept.
28, 2011); Missouri United School Ins. Council v. Lexington Ins. Co., No.
4:10CV130, 2010 WL 1254657, at *2 (E.D. Mo. Mar. 24, 2010). Here, Macier‟s
rights would certainly be affected by a declaration of the insurance companies‟
respective rights and obligations under the insurance agreements. There has been a
denial of coverage to the insured by Sentry, and it is unclear from the petition
whether State Farm is even providing Macier a defense, whether or not subject to a
reservation of rights. This is sufficient to put the insured‟s interests at stake in the
lawsuit. Macier is more than a nominal party in this case.
Sentry further contends that the Court should realign the parties so that Macier
and Cape are listed as plaintiffs. If the Missouri citizens were plaintiffs, the resident
defendant rule would not preclude removal of this case. Sentry argues that this
realignment reflects the parties‟ true interests, as State Farm, Cape, and Macier all
have an interest in declaring Sentry‟s policy limit to be $1,000,000.00. In the Eighth
Circuit, to determine whether to realign Cape and Macier as plaintiffs I must decide
whether any actual and substantial conflict exists between them and State Farm,
regardless of whether it concerns the primary issue in dispute. See Universal
Underwriters Ins. Co. v. Wagner, 367 F.2d 866, 870 (8th Cir. 1966); Alliance Energy
Services, LLC v. Kinder Morgan Cochin LLC, 14CV1668, 2015 WL 263691, at * 9
(D. Minn. Jan. 21, 2015); Geismann, 2011 WL 4501161, at *3; Lexington Ins. Co.,
2010 WL 1254657, at *3; Hartford Accident and Indemnity Co. v. Doe Run
Resources Corp., 4:08CV1687, 2009 WL 1067209, *3 (E.D. Mo. April 21, 2009). As
discussed above, such a conflict does exist in this case. State Farm is either not
providing a defense to its insured Macier in the underlying action or is doing so under
a reservation of rights. In either case, this establishes that State Farm and Macier
have a genuine dispute about the existence and extent of State Farm‟s coverage
obligations. Just because Macier may have an interest in State Farm and/or Sentry
providing coverage does not make Macier aligned with State Farm as a plaintiff.
Moreover, in the underlying action Macier is contesting liability. A determination of
whether coverage exists under any of the policies will necessarily involve
consideration of Macier‟s actions and whether she violated Missouri state law. An
actual conflict therefore exists sufficient to obviate realignment. See Geismann, 2011
WL 4501161, at *4; Lexington Ins. Co., 2010 WL 1254657, at *3; PW Shoe Lofts,
LP v. State Auto Prop. and Casualty Ins. Co., 4:10CV2241, 2011 WL 2295068, at *3
(E.D. Mo. June 7, 2011). Because an actual and substantial controversy exists
between State Farm and Macier, realignment of her as a plaintiff is not required.
Macier was properly joined as a defendant in this case and is a citizen of the State of
Missouri, so 28 U.S.C. § 1441(b) bars the removal of this lawsuit without
consideration of whether Cape should be realigned as a plaintiff. This case was
improvidently removed to federal court, and I am without jurisdiction to hear it.
IT IS HEREBY ORDERED that this action is remanded to the Circuit Court
of Crawford County, Missouri under 28 U.S.C. § 1447(d).
CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 5th day of February, 2015.
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