Harris et al v. State Farm Fire and Casualty Company et al

Filing 18

ORDER DENYING Plaintiff's 7 Motion to Remand. Counsel is directed to read Order in its entirety for critical information. Signed by US District Judge Terrence W. Boyle on 7/2/2013. (Fisher, M.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:13-CV-61-BO
MARY H. HARRIS and,
BRENT D. HUNTER,

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Plaintiffs,

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V.

ORDER

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STATE FARM FIRE AND CASUALTY
COMPANY and TERI LAROCCA
INSURANCE AGENCY, INC.

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Defendants.
__________________________ )

This matter is before the Court on the plaintiffs' motion to remand [DE 7]. For the
reasons stated herein, the plaintiffs' motion is DENIED.

BACKGROUND
The plaintiffs filed their complaint in Wake County Superior Court on December 19,
2012. This matter was removed to federal court on January 28, 2013. The plaintiffs moved to
remand this matter to state court on February 22, 2013.
This matter concerns the plaintiffs' State Farm homeowner's insurance policy. Defendant
Teri LaRocca Insurance Agency served as the insurance agent for this policy. In May, 2011, the
plaintiffs' home was damaged by severe thunderstorms. Following these storms, the plaintiffs
submitted loss claims to State Farm. As part of its claim processing procedure State Farm sent
its agents and/or adjusters to inspect the home and assess the damage. Plaintiffs allege that this
inspection was conducted negligently to the extent that it did not discover the full extent of the
damage caused to the home. As a result, the plaintiffs allege that the defendants' have failed to
comply with the terms of the policy and have refused to provide adequate coverage.
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DISCUSSION

The plaintiffs ask that the Court remand this case to Wake County Superior Court
because this suit does not meet the requirements for federal diversity jurisdiction. Diversity
jurisdiction requires both an amount in controversy exceeding $75,000, and absolute diversity of
citizenship between plaintiffs and defendants. 28 U.S.C. § 1332 (2005). In this case plaintiffs are
citizens ofNorth Carolina and have alleged that the Teri LaRocca Insurance Agency, Inc.
(TLIA) is incorporated and located in the same state. The defendants counter that TLIA is
fraudulently joined in this matter for the purpose of destroying diversity and precluding this
Court from presiding over the matter.
I.

TLIA HAS BEEN FRAUDULENTLY JOINED AND ITS PRESENCE IN THE
SUIT DOES NOT DESTROY DIVERISTY FOR PURPOSES OF FEDERAL
DIVERSITY JURISDICTION.

When parties have been fraudulently joined, diversity jurisdiction may be found
notwithstanding the shared citizenship of certain plaintiffs and defendants. Mayes v. Rapoport,
I98 F.3d 457, 46I (4th Cir. I999). The party opposing remand on a fraudulent joinder theory
must demonstrate that either: (I) there is no possibility that the plaintiff would be able to
establish a cause of action against the in-state defendant in state court; or (2) there has been
outright fraud in the plaintiffs pleading of jurisdiction facts. Marshall v. Manville Sales Corp., 6
F.3d 229, 232 (4th Cir. I993)(intemal quotation marks omitted). In evaluating the propriety of a
remand the court is not confined to the pleadings presented to it, but may consider the entire
record available to it. AIDS Counseling & Testing Ctr. 's v. Grp. W Television, Inc., 903 F.2d
I 000, I 004 (4th Cir. 1990). The Fourth Circuit has made it clear that a defendant

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Alleging fraudulent joinder bears a heavy burden- it must show that the plaintiff
cannot establish a claim even after resolving all issues of law and fact in the
plaintiffs favor. This standard is even more favorable to the plaintiff than the
standard for ruling on a motion to dismiss under Fed. R. Civ. P. 12(b)(6) ... Once
the court identifies [a] glimmer of hope for the plaintiff, the jurisdictional inquiry
ends.

Hartley v. CSXTransp., Inc., 187 F.3d 422,424-26 (4th Cir. 1999) (citations omitted). In
considering a motion to remand the Court keeps in mind that a plaintiffs right to select his
forum trumps a defendant's right to remove. Griffin v. Holmes, 843 F.Supp. 81, 84 (E.D.N.C.
1993). However, the role of the plaintiff as the "master of the complaint" must be balanced
against "the fact that courts must be cautious in denying defendants access to a federal forum
since under 28 U.S.C. § 1447(d), remand orders are generally not reviewable." McKinney v. Bd.

ofTr. of Maryland Cmty. Call., 955 F.2d 924, 927 (4th Cir. 1992).
Here, the defendants alleged that the plaintiffs cannot maintain a claim against TLIA and,
therefore, its presence in the lawsuit should be ignored for diversity purposes. To support their
argument the defendants rely on two cases: Selvaggi v. Prudential Prop. & Casualty Insurance

Co., 871 F.Supp. 815 (E.D.Pa. 1995) and Poston v. Bankers Life and Casualty Company, 2010
WL 4638566 (D.S.C. 2010) (unpublished). In both of those cases the respective court found that
claims could not be maintained against a non-diverse insurance agent. On the other hand, the
plaintiffs have cited some North Carolina cases wherein a plaintiff was allowed to proceed
against an insurance agent after that agent had failed to secure the requested coverage. See Elam

v. Smithdeal Realty & Ins. Co., 182 N.C. 599 (1921). The Court finds that the instant factual
allegations are similar to the fact patterns set forth in both Selvaggi and Poston and agrees with
the reasoning of those district courts.
In Selvaggi the plaintiff attempted to bring breach of contract and negligence claims
against his insurance agent after his fire loss claims were denied. The insurer denied the
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insured's claims due to a suspicion that Mr. Selvaggi had been the cause of the fire. Dispositive
to the court's decision was the fact that it was not a lapse or deficiency in coverage that lead to
the plaintiffs claim, but a factual dispute- the origin of the fire - between the insurer and the
insured that gave rise to the case.
In Poston, the insurance agent sold a Bankers Life policy to the plaintiff that offered

coverage if the plaintiff became "chronically ill." Prior to purchasing the insurance, the plaintiff
asked if the policy covered dementia and the agent assured her that it did. However, after being
diagnosed with dementia, the plaintiff was denied benefits. The plaintiff brought suit and
attempted to bring claims for negligent misrepresentation and unfair and deceptive trade
practices against the agent. The district court found that plaintiff could not maintain an action
against the insurance agent because he had not been mistaken - dementia was listed in the
policy. Bankers Life's determination that the plaintiffs dementia diagnosis did not fit within its
definition of"chronically ill" was outside the insurance agent's control.
Here, the acts complained of by plaintiff were also outside of the agent's control. As in

Selvaggi and Poston, the crux ofthis case is not the adequacy of the coverage provided by the
plaintiffs' policy with State Farm, but the manner in which State Farm has carried out its
contractual duties to the policyholder. In Elam, the case cited by plaintiffs, the insurance agent
assured the insured that he was protected against a certain type of risk - auto collision - when in
fact he was not. 182 N.C. 599 (1921). It is not disputed that where an agency has failed to secure
the proper coverage as it was requested by the insured that insured may be able to maintain a
claim against the agent. However, that is not the scenario presented to the Court in this action.
Because the plaintiffs' do not have a glimmer of hope in maintain their action against TLIA it is
proper to deny their motion for remand.

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II.

THE AMOUNT IN CONTROVERSY EXCEEDS $75,000

A defendant seeking to remove a case to federal court on diversity jurisdiction grounds
must show that the amount in controversy exceeds $75,000. See 14C WRIGHT & MILLER,
FEDERAL PRACTICE AND PROCEDURE,§ 3725 (3d. 1998). Generally, the Court must confine its
evaluation of the amount in controversy to the amount that is apparent from the pleadings in the
matter. Am. Fire and Cas. Co. v. Finn, 341 U.S. 6, 14 (1951). The amount claimed by the
plaintiffs, rather than the amount that will be recovered, is the appropriate amount to consider
when making this jurisdictional evaluation. Further, the amount claimed includes compensatory
damages, punitive damages, and, where allowable, attorneys' fees to the extent claimed by the
plaintiff. Bell v. Preferred Life Assur. Soc., 320 U.S. 238,240 (1943). Additionally, where
damages are not apparently clear from the face of the complaint a plaintiffs stipulation, or
failure to stipulate, to damages in a certain amount can influence the Court's decision regarding
the jurisdictional amount in controversy. See Gwyn v. Wal-Mart Stores, Inc., 955 F.Supp. 44, 46
(1996).
Here, the plaintiffs' complaint has stated six causes of action. For each cause of action
the plaintiffs requested relief in an amount in excess of $10,000. For their cause of action under
North Carolina's Unfair and Deceptive Trade Practices Act the plaintiffs requested that their
damages be trebled. For each cause of action the plaintiffs also request an award of attorneys'
fees. Further, the plaintiffs request separate awards of punitive damages. There is also evidence
to suggest that plaintiffs have refused to sign a stipulation limiting their damages to an amount
less than $75,000. Regardless of their failure to stipulate to an amount in controversy, the
plaintiffs' complaint states a claim for damages exceeding $80,000 in damages. As such, it is
clear that the jurisdictional threshold of an amount in excess of $75,000 has been met and
exceeded.
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CONCLUSION

For the foregoing reasons, the plaintiffs motion is DENIED.

SO ORDERED.
This the ~ay of July, 2013.
TE
NCE W. BOYLE
UNITED STATES DISTRICT JUDO

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