Walsh v. GEICO Casualty Company et al
ORDER. Plaintiff's motion to remand, [Doc. 6 ], is granted. Because the Court grants Plaintiff's Motion to Remand, Defendant's Motion to Consolidate, [Doc. 8 ], is denied for lack of subject matter jurisdiction. Signed on 10/10/17 by District Judge Nanette K. Laughrey. (Matthes Mitra, Renea)
UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
NICOLE M. WALSH,
ADAM C. ARBUCKLE, and
GEICO CASUALTY COMPANY,
Case No. 4:17-cv-00664-NKL
Plaintiff Nicole Walsh moves to remand this action to the Circuit Court of Jackson
County, Missouri for lack of subject matter jurisdiction, [Doc. ]. For the following reasons,
the Motion to Remand is granted. Because the Court grants Plaintiff’s Motion to Remand,
Defendant’s Motion to Consolidate, [Doc. ], is denied for lack of subject matter jurisdiction.
On February 14, 2016, Plaintiff Nicole Walsh was seriously injured in an automobile
collision with Defendant Adam Arbuckle. Arbuckle was insured under two American Family car
insurance policies, and subsequently entered into an agreement (the “Agreement”) with Walsh,
under Missouri Revised Statute § 537.065. In the Agreement, Arbuckle acknowledged he was at
fault for the collision, but the parties agreed Walsh would bring a lawsuit in Jackson County,
Missouri to determine the extent of her injuries and the value of her damages. The collection of
any judgment would be limited to available insurance coverage and any bad faith claim against
American Family. American Family, the insurer of Arbuckle, agreed to pay the per-person policy
limit of one of the relevant insurance policies, which amounted to $100,000. Walsh thereafter
commenced this action against Arbuckle in state court, on January 9, 2017.
Walsh also has underinsured motorist coverage through her own insurer, Geico. She filed
a UIM claim after her collision with Arbuckle, and took the position that her policy, which
covers three vehicles, permits “stacking.” She asserts her policy has a combined limit of
$150,000. In December 2016, Geico informed Walsh that it would agree to pay $50,000, but
informed her that it believed the policy does not permit stacking. In light of the dispute, Geico
filed a declaratory judgment action in this Court on June 15, 2017. On July 24, 2017, Walsh
amended her petition in the state court case. In addition to her claims against Arbuckle, the
amended petition added Geico as a defendant and seeks judicial interpretation of the Geico
policy, as well as a claim for vexatious delay in paying.
Geico subsequently removed the case to federal court on the basis of diversity citizenship
and fraudulent joinder. Walsh moves to remand.
It is undisputed that Walsh and Arbuckle are Missouri citizens, such that diversity
jurisdiction does not exist unless Arbuckle has been fraudulently joined. Upon removing an
action to federal court, the defendant bears the burden of proving by a preponderance of the
evidence that the court has subject matter jurisdiction over the case. In re Prempro Prods. Liab.
Litig., 591 F.3d 613, 620 (8th Cir. 2010); Hatridge v. Aetna Cas. & Sur. Co., 415 F.2d 809, 814
(8th Cir. 1969). “Removal statutes are strictly construed, and any doubts about the propriety of
removal are resolved in favor of state court jurisdiction and remand.” Baumgartner v. Ford
Motor Credit Co., 2007 WL 2026135, at *1 (W.D. Mo. July 9, 2007) (citing In re Business
Men's Assurance Co. of America, 992 F2d 181, 183 (8th Cir. 1993)). Geico contends that in light
of the Agreement between Walsh and Arbuckle concerning the underlying tort, Arbuckle no
longer has an interest in the matter and is merely a fraudulently joined “nominal party.” [Doc. 7,
Fraudulent joinder is “the filing of a frivolous or otherwise illegitimate claim against a
non-diverse defendant solely to prevent removal.” Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 809
(8th Cir. 1993). Fraudulent joinder occurs, and federal jurisdiction will be retained, if there is “no
reasonable basis in fact and law supporting a claim against the resident defendants.” Id. at 810.
Nominal defendants are “those against whom no real relief is sought . . . .” Thorn v.
Amalgamated Transit Union, 305 F.3d 826, 833 (8th Cir. 2002); see also 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)). “[M]ost lower federal courts have limited the ‘exception’ for
formal or nominal party defendants 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.” Balling v.
Bendickson, No. 4:12-CV-860 CAS, 2012 WL 3715810, at *2 (E.D. Mo. Aug. 27, 2012).
Both parties cite to the same case in support of their arguments, Dumas v. Patel. Geico
quotes Dumas for the proposition that “where a plaintiff settles his controversy with a resident
defendant, the controversy against the remaining nonresident defendant is then removable
irrespective of whether a formal dismissal as to the resident defendant has been entered.” [Doc.
7, p. 3] (quoting Dumas, 317 F.Supp.2d at 1115). However, that quote is merely a description of
another court’s decision, which involved circumstances inapposite to the present matter. Id.
(citing Gable v. Chicago, M., St. P. & P.R. Co., 8 F.Supp. 944 (W.D.Mo.1934)). In Gable, a
plaintiff entered into a binding and final settlement agreement with one defendant, but then did
not seek his dismissal solely for the purpose of defeating diversity. Gable, 8 F.Supp at 945.
Although the quote Geico relies on is correct, Gable clarifies that, “[a]ll that has been said is that
where clear and convincing proof has been made that a plaintiff has extinguished his cause of
action against the resident defendant by a binding and final settlement, however evidenced, then
the controversy with the nonresident remaining is removable.” Id. at 946. Gable did not
contemplate an agreement such as the one between Walsh and Arbuckle, where no cause of
action has been “extinguished.”
Moreover, as Walsh argues, the ultimate decision in Dumas strikes against Geico’s
position. Similar to the present matter, Dumas involved an agreement between plaintiffs and a
resident defendant “to limit recovery and not to enforce judgment.” Dumas, 317 F. Supp. 2d at
1112-13. There, co-defendants removed the case to federal court on a theory of fraudulent
joinder in light of the agreement. The court remanded the case, however, finding that “[s]ince
[the defendant] remains technically exposed to entry of a judgment for his tortious conduct, . . .
Missouri cases show that it is not necessary that plaintiffs continue to seek serious damages from
him, or intend to execute on any judgment obtained. He apparently may be sued in the Missouri
courts.” Id. at 1117.
Geico also cites this Court’s decision in Heckenmeyer v. Healea for the proposition that
“a defendant becomes nominal if the plaintiff has settled with or obtained a judgment against that
defendant.” [Doc. 7, p. 3] (citing Heckenmeyer v. Healea, No. 2:16-CV-04231-NKL, 2016 WL
6436572, at *3 (W.D. Mo. Oct. 31, 2016)). However, for the same reason Gable is irrelevant, so
too is Heckenmeyer. Once again, Heckenmeyer contemplated a complete settlement that
extinguishes a claim, rather than an agreement under Section 537.065. Id. Furthermore, there the
Court simply addressed a hypothetical posed by the plaintiffs, and in no way asserted a rule of
law as definite as Geico would suggest. Heckenmeyer has no bearing on the present matter.
Arbuckle has admitted fault for the automobile collision, but has not agreed to any
damages assessment. To the contrary, Walsh will seek serious damages from Arbuckle, and he
may contest any issue related to Walsh’s injuries and the damages. Indeed, Arbuckle has raised
several affirmative defenses and also alleged intervening and superseding causes. He may even
ultimately argue that Walsh’s injuries were not caused by the collision. Additionally, Arbuckle’s
insurer is a party to the Agreement, has hired an attorney to defend him, and as the one who must
pay, has an interest in keeping any damages judgment as low as possible.
Currently, there is no money judgment against Arbuckle, and Walsh has not fully
released him. Despite the presence of an agreement to limit her method of recovery, litigation
between Walsh and Arbuckle is ongoing and meaningful. Geico has provided no controlling case
law for the proposition that a defendant becomes a nominal party whenever his ultimate exposure
is limited to an insurance policy. Cf. Balling v. Bendickson, No. 4:12-CV-860 CAS, 2012 WL
3715810, at *4 (E.D. Mo. 2012) (“[Defendant] has a stake in [the] litigation because plaintiff
seeks a judgment against her—regardless of who pays it.”). Arbuckle is not a nominal party, and
complete diversity does not exist. Therefore, the Court does not have subject matter jurisdiction
over the matter.
For the foregoing reasons, Plaintiff’s motion to remand, [Doc. ], is granted. Because
the Court grants Plaintiff’s Motion to Remand, Defendant’s Motion to Consolidate, [Doc. ], is
denied for lack of subject matter jurisdiction.
s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: October XX, 2016
Jefferson City, Missouri
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