Barclay v. USAA General Indemnity Company et al
OPINION AND ORDER regarding 11 Plaintiff's Motion to Remand, 16 the court's Order to Show Cause, and 20 Defendant's Motion to Strike 17 Amended Complaint. Because Plaintiff has not served Defendant United Services Auto A gency ("USAA") with process as directed by the court, Plaintiff's claims against USAA are dismissed. Plaintiff's motion to remand the original complaint is DENIED. Plaintiff's effective motion seeking the court's leave t o amend the complaint is accordingly DENIED, and Defendants' motion to strike the amended complaint from the docket is GRANTED pursuant to Rule 12(f). Signed by Chief US District Judge Richard E. Myers II on 7/16/2021. (Copy of order sent to Peter Barclay, 14 Colony Park Circle, Columbia, SC 29229 via US Mail.) (Waddell, K.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
Case No. 7:20-cv-00249-M
USAA GENERAL INDEMNITY
COMPANY; USAA INSURANCE
AGENCY, INC. OF TEXAS; and UNITED
SERVICES AUTO AGENCY,
This matter comes before the court regarding: (1) Plaintiffs motion to remand the original complaint
to Robeson County, North Carolina Superior Court, filed January 15, 2021 [DE-11] ; (2) the court' s April
15, 2021 order to show cause [DE-16] ; and (3) Defendants USAA General Indemnity Company and USAA
Insurance Agency, Inc. of Texas ' s motion to dismiss or strike Plaintiffs amended complaint, filed May 5,
Order to show cause
Because Plaintiff has not served Defendant United Services Auto Agency ("USAA") with process
as directed by the court, Plaintiffs claims against USAA are dismissed. Fed. R. Civ. P. 4(m).
Motion to remand the original complaint
The record reflects that: (1) Plaintiff sued USAA General Indemnity Company and USAA Insurance
Agency, Inc. of Texas (collectively, "Defendants") in Robeson County, North Carolina Superior Court on
November 13, 2020: (a) bringing breach-of-contract and unfair-and-deceptive-trade-practices claims
arising out of a dispute regarding a motor-vehicle insurance policy Plaintiff allegedly had with one or both
Defendants; and (b) claiming contract damages that could exceed $75,000, punitive damages, and treble
damages under N.C. Gen. Stat.§ 75-1.1 [DE-1-1
ml 6, 48, 56, and prayer for judgment]; and (2) Defendants
removed the lawsuit to this court on December 16, 2020 pursuant to the federal diversity-jurisdiction statute,
28 U.S.C. § 1332, alleging that: (a) Plaintiff is a "resident of South Carolina"; 1 (b) Defendants are both
corporations with Texas citizenships alone; and (c) 28 U.S.C. § 1332's $75,000 amount-in-controversy
requirement was satisfied by virtue of the allegations that Plaintiff made within the original complaint [DE1 ,r,r 2-7]. Plaintiff argues within his motion to remand that this is a "direct action" against an insurer under
28 U.S .C. § 1332(c)(l), meaning that Defendants are deemed to be citizens of South Carolina as well,
defeating diversity jurisdiction. [see generally DE-11]
28 U.S.C. § 1332(c)(l), in relevant part, sets forth as follows:
[I]n any direct action against the insurer of a policy or contract ofliability insurance,
whether incorporated or unincorporated, to which action the insured is not joined
as a party-defendant, such insurer shall be deemed a citizen of(A) every State and foreign state of which the insured is a citizen;
(B) every State and foreign state by which the insurer has been incorporated;
(C) the State or foreign state where the insurer has its principal place of
The question is therefore whether Plaintiff's lawsuit qualifies as a "direct action against the insurer of a
policy or contract ofliability insurance" within the meaning of28 U.S.C. § 1332(c)(l). The court concludes
that it does not. The Fourth Circuit has made clear that '"direct action' in [28 U.S.C.] § 1332(c)(l) does
Although allegations of mere residence are insufficient for purposes of 28 U.S.C. § 1332, see Axel
Johnson, Inc. v. Carroll Carolina Oil Co., 145 F.3d 660, 663 (4th Cir. 1998) ("state citizenship for purposes
of diversity jurisdiction depends not on residence, but on national citizenship and domicile, and the
existence of such citizenship cannot be inferred from allegations of mere residence, standing alone."
(citations omitted)), Plaintiff alleges within his motion to remand that he is a South Carolina citizen [DE11 ,i 4(e)].
not include an insured ' s suit against his or her own insurer for breach of the terms of the insurance policy
or the insurer' s own alleged tortious conduct[,]" including where an insured brings an unfair-and-deceptivetrade-practices claim against its insurer. See Elliott v. Am. States Ins. Co. , 883 F.3d 384, 395 (4th Cir. 2018)
(affirming denial of motion to remand insured ' s lawsuit bringing N.C. Gen. Stat. § 75-1.1 unfair-anddeceptive-trade-practices claim against her insurer). Because Plaintiffs lawsuit is precisely the sort of suit
that the Elliott court held did not qualify as a "direct action" under 28 U.S.C. § 1332(c)(l), and Plaintiff
makes no other arguments within his motion as to why remand is required, Plaintiffs motion to remand the
original complaint is DENIED.
Motion to dismiss or strike the amended complaint
On April 21 , 2021 , Plaintiff filed an amended complaint on the docket that appears identical to the
original complaint except for a modification of the prayer for judgment to cap his damages award at
$65,000. [DE-17] Defendants moved on May 5, 2021 to: (1) dismiss the amended complaint pursuant to
Federal Rules of Civil Procedure (hereinafter, "Rule") 15 and 41 (b ); or, in the alternative (2) strike the
amended complaint pursuant to Rule 12(f). [DE-20]
Rule 15 allows a plaintiff to amend its complaint once as a matter of course within: (1) 21 days after
serving the original complaint; or (2) 21 days after the plaintiff is served with a responsive pleading or Rule
12 motion to dismiss, whichever is earlier. Fed. R. Civ. P. 15(a)(l). Plaintiff served his initial complaint
and Defendants filed their answer in 2020 [see DE-1; DE-6], meaning that Plaintiffs time to amend his
complaint as a matter of course expired well before the amended complaint was filed in April 2021.
Plaintiff was therefore only able to amend his complaint with Defendants' consent or with leave of
the court. See Fed. R. Civ. P. 15 (a)(2). Defendants' motion to dismiss/strike makes clear that Defendants
do not consent to the amendment, so the court construes Plaintiff as effectively having made a motion
seeking the court' s leave to amend. See Beaudett v. City of Hampton , 775 F.2d 1274, 1277- 78 (4th Cir.
1985) (recognizing that pro se litigants have an ''untutored hand requiring special judicial solicitude" and
saying that prose "litigants with meritorious claims should not be tripped up in court on technical niceties").
The Fourth Circuit has said:
Rule l 5(a) directs that leave to amend shall be freely given when justice so requires.
This liberal rule gives effect to the federal policy in favor of resolving cases on their
merits instead of disposing of them on technicalities.
We have interpreted Rule 15(a) to provide that leave to amend a pleading should
be denied only when
(l] the amendment would be prejudicial to the opposing party,
 there has been bad faith on the part of the moving party, or
(3] the amendment would have been futile.
Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006) (en bane) (internal quotation marks and citations
omitted). Defendants do not argue prejudice or bad faith, but they do argue that the proposed amendments
are futile in that they constitute a "transparent attempt to destroy diversity jurisdiction by reducing the
amount in controversy below the threshold required in 28 U.S.C. § 1332." [DE-21 at 4-6]
The Supreme Court long ago said that "events occurring subsequent to removal which reduce the
amount recoverable, whether beyond the plaintiffs control or the result of his volition, do not oust the
district court' s jurisdiction once it has attached" and that "subsequent reduction of the amount claimed
cannot oust the district court's jurisdiction." Saint Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 ,
293, 295 (1938). The Supreme Court and the federal courts of appeals have also echoed the Saint Paul rule
more recently. See Rockwell Int '! Corp. v. United States, 549 U.S . 457, 474 n.6 (2007) ("when a defendant
removes a case to federal court based on the presence of a federal claim, an amendment eliminating the
original basis for federal jurisdiction generally does not defeat jurisdiction" (citing Saint Paul)); In Touch
Concepts, Inc. v. Cellco P 'ship, 788 F.3d 98, 101 (2d Cir. 2015) ("in cases removed on the basis of
diversity[,] the filing of a post-removal amended complaint that reduces the amount in controversy below
the statutory threshold does not impair diversity jurisdiction" (citing Saint Paul and Rockwell)). Other
district courts in this Circuit have noted "the futility of a post-removal attempt by a plaintiff to manipulate
the amount in controversy[,]" Campbell v. Rests. First/Neighborhood Rest., Inc., 303 F. Supp. 2d 797, 798
(S.D. W. Va. 2004), and where plaintiffs have proposed post-removal amendments to oust the district court
of subject-matter jurisdiction elsewhere, the proposals have been rejected, see Reece v. AES Corp., 638 F.
App'x 755, 775 (10th Cir. 2016) (unpublished) ("the district court properly decided to decline Plaintiffs'
amendment proposal" to change the class plaintiffs for purposes of modifying the relevant citizenships
because "post-removal amendments are ineffective to divest a federal court of jurisdiction" (citing
Plaintiff's proposed amendments therefore cannot destroy the court's jurisdiction under 28 U.S.C.
§ 1332, and are futile within the meaning of Laber. Plaintiff's effective motion seeking the court's leave
to amend the complaint is accordingly DENIED, and Defendants' motion to strike the amended complaint
from the docket is GRANTED pursuant to Rule 12(f).
SO ORDERED this the
- -'~-It day of _ _ _
~ ~ =---1---- - - - - -: 2021.
L M1..u--• r
CHIEF UNITED STATES DISTRICT ruDGE
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