O'Nan et al v. Nationwide Insurance Company et al
Filing
102
ORDER granting Pltf's 20 Motion to Remand to State Court and this action is hereby REMANDED to the NC General Court of Justice, Superior Court Division, McDowell County. Signed by District Judge Martin Reidinger on 7/11/2017. (ejb)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
DOCKET NO. 1:17-CV-5
ELIZABETH M.T. O’NAN,
)
)
Plaintiff,
)
)
vs.
)
)
NATIONWIDE INSURANCE
)
COMPANY, et al.,
)
)
Defendants.
)
_______________________________ )
ORDER
THIS MATTER is before the Court on the Plaintiff’s Motion to Remand
[Doc. 20]; Defendants’ opposition memorandum, [Doc. 33]; Plaintiff’s reply
[Doc. 53]; and amendment to Plaintiff’s reply [Doc. 54].
I.
PROCEDURAL AND FACTUAL BACKGROUND
Plaintiff Elizabeth M.T. O’Nan1 filed this action pro se in the General
Court of Justice, Superior Court Division, McDowell County, North Carolina,
on November 30, 2016, asserting claims of breach of contract and breach of
This action was originally filed by Plaintiffs Elizabeth M.T. O’Nan and her daughter,
Elizabeth M.S. O’Nan. After removal, on March 24, 2017, on the Plaintiffs’ unopposed
“Motion to remove Elizabeth M.S. O’Nan as a co-plaintiff,” [Doc. 51], which the Court
construed as a motion to dismiss, the Court dismissed all claims asserted by Plaintiff
Elizabeth M.S. O’Nan without prejudice. [Doc. 72]. Therefore, only Plaintiff Elizabeth M.T.
O’Nan remains as a plaintiff in this matter.
1
1
the duty of good faith and fair dealing against Defendant Nationwide
Insurance Company (“Nationwide”); claims of breach of contract, intentional
interference with contractual relations, “false promise,” and negligence
against the Defendants Servpro Industries, Inc., (“Servpro Industries”),
Servpro of Marion, and DOES 1 through 50; and a claim of fraud against all
of the aforementioned Defendants. [Complaint, Doc. 1-1].
The Plaintiff is and was at all relevant times an individual residing in
and a citizen of McDowell County, North Carolina. [Complaint, Doc. 1-1 at ¶
1]. Although the Plaintiff alleged Defendant Nationwide is a North Carolina
corporation, [Complaint, Doc. 1-1 at ¶ 2], Defendant Nationwide, through a
Declaration in support of removal by its Associate Vice President and
Assistant Secretary, has demonstrated that it is an Iowa corporation with its
principal place of business and corporate headquarters in Des Moines, Iowa.
[Richards Dec., Doc. 1-5 at ¶ 3].
The Plaintiff alleged Defendant Servpro Industries is a corporation
organized and existing pursuant to the laws of the State of Tennessee and
“authorized to transact and is transacting business in the State of North
Carolina.”
[Doc. 1-1 at ¶ 3].
Defendant Servpro Industries, through a
Declaration by its Assistant General Counsel, has shown that it is a Nevada
2
corporation with its principal place of business in Gallatin, Tennessee.
[Zomek Dec., Doc. 1-1 at ¶ 3].
The third defendant the Plaintiff names in this action she identifies as
“Servpro of Marion.” She has alleged that “defendant Servpro of Marion was
at the time of the complaint a corporation duly organized and existing under
the laws of the State of North Carolina and is authorized to transact and is
transacting business in the State of North Carolina.” [Complaint, Doc. 1-1 at
¶ 4] Defendants dispute the existence of such entity.2
This case arises out of an accidental chimney fire in Plaintiff’s home in
Marion, North Carolina, on December 4, 2013. In extinguishing the fire, the
fire department used a chemical that Plaintiff asserts rendered her house
“uninhabitable.” [Doc. 1-1 at ¶¶ 8, 19; Ex. A to Complaint, Doc. 1-1 at 42].
The Plaintiff reported the loss to her insurance carrier, Defendant
Nationwide, and was referred to Defendant Servpro Industries, “Nationwide’s
Preferred Fire Restoration company,” for fire restoration. [Id. at ¶ 10].
2
Plaintiff also undertook to name, but did not identify, certain defendants who are
presently unknown. With respect to these Defendants DOES 1 through 50, the Plaintiff
alleged, “[t]he true names or capacities, whether individual, corporate, associate, or
otherwise, of defendants DOES 1 through 50, are unknown to plaintiff[ ], who therefore
designate those defendants by these fictitious names…. Plaintiff[ ] will amend this
complaint as necessary to allege DOE defendants’ identities when the same becomes
known to plaintiff[ ].” [Complaint, Doc. 1-1 at ¶ 5]. These parties are not pertinent to the
disposition of the present motion.
3
Defendant Nationwide also specifically referred the Plaintiff to “Servpro of
Marion” to request that Servpro of Marion assess the damages and
determine if the Plaintiff had a claim. [Id. at ¶ 10]. Servpro of Marion visited
Plaintiff’s home on December 6, 2013. [Id. at ¶ 11]. Plaintiff further alleges
In December 2013, Nationwide employees, Mr. Brian
L. Maness and Mr. Spencer Gates met at the O’Nan
home with the new owner of its Preferred Fire
Restoration provider, Servpro of Marion, Mr. John
Kuder, whom they stated was a personal friend, to
perform cleanup and fire restoration due to dry
chemical fire extinguisher residue remediation
services in exchange for payment from plaintiffs’
insurance benefits.
[Id. at ¶ 82]. According to an attachment to Plaintiff’s Complaint, on or around
December 9, 2013, Plaintiff and Servpro of McDowell & Rutherford Counties
entered into an Authorization to Perform Services and Direction of Payment
(“Contract”), which provided for Servpro of McDowell & Rutherford Counties
to perform fire restoration services in relation to Plaintiff’s December 4, 2013
chimney fire loss. [Ex. D to Complaint, Doc. 1-1 at 117-119]. Plaintiff alleges
the Contract was breached.
Even though the Contract states that the “Franchise Legal Name” of
the contracting party is “Servpro of McDowell and Rutherford Counties,”
Plaintiff also alleges by way of attachment that J.L. Kuder Enterprises, Inc.,
is the entity that does business as “Servpro of McDowell & Rutherford
4
Counties.” [Ex. D to Complaint, Doc. 1-1 at 121]. John L. Kuder is the
president of and registered agent for that corporation, which is organized and
exists pursuant to the laws of the State of North Carolina.3 On December 8,
2016, John L. Kuder received a copy of the Summons and Complaint that
were directed to “Servpro of Marion.” [Notice of Removal, Doc. 1 at 2-3].4
On January 4, 2017, Defendant Nationwide, with the consent of
Defendant Servpro Industries, filed a timely Notice of Removal removing the
lawsuit to this Court on the basis of diversity jurisdiction. [Doc. 1]. Defendant
Nationwide asserts that the entity “Servpro of Marion” does not exist and,
therefore, there is complete diversity between the remaining parties such
that removal to this Court is proper. Defendant Nationwide further argues
that even if an entity that can be identified as Servpro of Marion does exist
and can be substituted as the proper defendant in this matter, the Contract’s
one-year limitations period bars Plaintiff’s claims against such party in any
event. [Doc. 1 at ¶ 36].
Thereafter, on February 2, 2017, the Plaintiff filed the present Motion
to Remand the case to state court for lack of subject matter jurisdiction,
The Court takes judicial notice of these facts, which are recorded and published by the
North Carolina Department of the Secretary of State. Fed. R. Evid. Rule 201(b).
3
Plaintiff served Defendant Servpro Industries on December 5, 2016, and Defendant
Nationwide on December 9, 2016. [Notice of Removal, Doc. 1 at 2]
4
5
asserting that diversity does not exist between the parties. [Doc. 20]. Based
thereon, Plaintiff seeks remand to state court.
II.
STANDARD OF REVIEW
“Only state-court actions that originally could have been filed in federal
court may be removed to federal court by the defendant.” Caterpillar Inc. v.
Williams, 482 U.S. 386, 392 (1987); 28 U.S.C. § 1441(a). The Defendants
removed this civil action on the basis of diversity jurisdiction under 28 U.S.C.
§ 1332(a), which provides that the federal courts “have original jurisdiction of
all civil actions where the matter in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs, and is between citizens of different
States.” 28 U.S.C. § 1332(a)(1).
When federal-court jurisdiction is predicated on the parties’ diversity of
citizenship under 28 U.S.C. § 1332, removal is allowed “only if none of the
parties in interest properly joined and served as defendants is a citizen of the
State in which the action was brought.” Lincoln Prop. Co. v. Roche, 546 U.S.
81, 83-84 (2005) (quoting 28 U.S.C. § 1441(b)). The party seeking removal
bears the burden of establishing federal subject matter jurisdiction. Hoschar
v. Appalachian Power Co., 739 F3d 163, 169 (4th Cir. 2014).
The removal statute provides that “[i]f at any time before final judgment
it appears that the district court lacks subject matter jurisdiction [over a case
6
removed from state court], the case shall be remanded.” 28 U.S.C. § 1447(c)
(emphasis added). If federal jurisdiction is doubtful, remand to state court is
necessary. Dixon v. Coburg Dairy, 369 F.3d 811, 816 (4th Cir. 2004). An
order remanding a case for lack of subject matter jurisdiction is not
reviewable on appeal. 28 U.S.C. § 1447(d); Ellenburg v. Spartan Motors
Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008) (“[A] remand order based on
a lack of subject matter jurisdiction, whether sua sponte or not, falls within
the scope of § 1447(c) and therefore is not reviewable by a court of
appeals.”).
The existence of diversity jurisdiction is determined as of the time of
removal. Duck Village Outfitters v. Nationwide Mutual Ins. Co., No. 2:14-cv60-FL, 2015 WL 540149, *2 (E.D.N.C. Feb. 10, 2015) (Flanagan, J.); New
Jerusalem Rebirth & Restoration Ministries, Inc. v. Meyer, No. 1:11-cv-312,
2012 WL 2704251, *4 (W.D.N.C. July 6, 2012) (Reidinger, J.); see St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-91, 58 S.Ct. 586,
590-91, 82 L.Ed. 845 (1938); see also Porsche Cars. Am., Inc., v.
Porsche.net, 302 F.3d 248, 255-56 (4th Cir. 2002). Accordingly, the Court
will only consider the facts alleged in the Complaint in determining whether
removal was improper.
7
III.
ANALYSIS
The issue before the Court is whether removal was improper. The
burden is on Defendants to establish that it was not. Hoschar, 739 F3d at
169. Defendants argue that the only non-diverse defendant named in the
original Complaint, Defendant Servpro of Marion, does not exist and,
therefore, Plaintiff cannot establish a cause of action against a non-diverse
defendant in state court, making removal proper. [See Doc. 1 at 17].
Whether removal was proper, however, does not depend on the
existence of Servpro of Marion. Instead, removal was improper if, upon
remand, Plaintiff’s service of the state summons in her state action will likely
be deemed by the state court to have been sufficient identification of and
service upon J.L. Kuder Enterprises d/b/a Servpro of McDowell and
Rutherford Counties. If so, state law allows Plaintiff to amend her Complaint
on remand to substitute the proper Servpro entity for the allegedly nonexisting entity. The Court holds such service was sufficient and remand,
therefore, is required.
North Carolina Rule of Civil Procedure 15(c) provides:
(c) Relation back of amendments. – A claim asserted
in an amended pleading is deemed to have been
interposed at the time the claim in the original
pleading was interposed, unless the original pleading
does not give notice of the transactions, occurrences,
8
or series of transactions or occurrences, to be proved
pursuant to the amended pleading.
N.C. R. Civ. P. 15(c). North Carolina appellate courts have applied this rule
in contexts substantially similar – if not essentially identical – to the one at
issue. In Liss v. Seamark Foods, 147 N.C. App. 281, 555 S.E.2d 365 (2001),
the plaintiff suffered food poisoning as the result of the consumption of a jar
of oysters he purchased from “Seamark Foods” store in Kitty Hawk, North
Carolina. 147 N.C. App. at 282, 555 S.E.2d at 366. The plaintiff named
“Seamark Foods” as the defendant in the summons and complaint, within
the limitations period, served Tim Walters, the president of “Seamark
Enterprises, Inc.,” at a location where “Seamark Foods” conducts business.
Id. at 282, 285, 555 S.E.2d at 366, 368. After the limitations period expired,
“Seamark Enterprises, Inc.,” filed multiple Rule 12 motions to dismiss.
Thereafter, the plaintiff moved to amend the summons and complaint to
name “Seamark Enterprises, Inc.,” as defendant and for the amendment to
relate back to the filing of the complaint under Rule 15(c). The trial court
granted plaintiff’s motion to amend, then granted “Seamark Enterprises,
Inc.’s” motion to dismiss with prejudice. Id. at 282, 555 S.E.2d at 366-67.
The North Carolina Court of Appeals reversed the trial court’s decision,
holding plaintiff’s amendment to correct the name of the defendant entity
related back to the original filing date and the amended complaint was,
9
therefore, not barred by the statute of limitations. Id. at 283, 555 S.E.2d at
367. In so holding, the appellate court emphasized that North Carolina’s
Rule 15(c) is modeled after New York Civil Practice Law and Rules Sec.
203(e).
Under the law of New York, correction of a misnomer
in a pleading is allowed even after the expiration of
the statute of limitations provided certain elements
are met. An amendment to correct a misnomer in the
description of a party defendant may be granted after
the expiration of the Statute of Limitations if (1) there
is evidence that the intended defendant has in fact
been properly served, and (2) the intended defendant
would not be prejudiced by the amendment.
Liss, 147 N.C. App. at 286, 555 S.E.2d at 368-69.
In Liss, there was
evidence the intended defendant was properly served within the applicable
limitations period and was not subject to any lack of notice of the claims
plaintiff would be asserting against it but for the plaintiff’s mistake. The court
held “Seamark Enterprises, Inc.,” “through its president, [ ] had notice of the
action from the beginning and would suffer no prejudice as a result of the
amendment.” 147 N.C. App. at 286, 555 S.E.2d at 369.
The instant case is no different. J.L. Kuder Enterprises did business
as Servpro of McDowell & Rutherford Counties at the times relevant to this
matter. [See Ex. D to Complaint, Doc. 1-1 at 121]. John L. Kuder is the
president of and registered agent for J.L. Kuder Enterprises. On November
10
30, 2016, the Plaintiff filed the original Complaint in the Superior Court of
McDowell County, North Carolina, [See Complaint, Doc. 1-1 at 5], and
Summons was issued. [Doc. 1-1 at 3]. The Complaint specifically alleges
that John Kuder was the owner of “Servpro of Marion,” [Complaint, Doc. 1-1
at ¶ 82]. It was Defendant Nationwide who referred to the local Servpro
franchise as “Servpro of Marion.” [Doc. 1 at ¶ 10]. In the Contract at issue,
the franchisee identifies itself by the “Legal Name” of “Servpro of McDowell
and Rutherford Counties.” [Doc. 1-1 at 117]. It is, however, alleged and
undisputed that “Servpro of McDowell and Rutherford Counties” is a trade
name employed by J.L. Kuder Enterprises, Inc. On December 8, 2016, well
within the sixty (60) days allowed for service under N.C. Rule of Civil
Procedure 4(c), Mr. Kuder was served with a copy of the Summons and
Complaint at the registered office for J.L. Kuder Enterprises. [Notice of
Removal, Doc. 1 at 2-3; Summons, Doc. 1-1 at 3].
It is, therefore, undisputed that Mr. Kuder received the Complaint and
was aware of all of the allegations and claims asserted against his company
within the limitations period, even though the trade name of the company
was not quite accurate.
Had Plaintiff named “Servpro of McDowell &
Rutherford Counties” or “J.L. Kuder Enterprises, Inc.” as original defendants
in this matter the principal therein would not have received notice any sooner.
11
Further, a motion filed on behalf of “Servpro of Marion” acknowledges that
process running in the name of “Servpro of Marion” was issued,5 [Doc. 14-1
at 5], and the Notice of Removal acknowledges that such summons, along
with the Complaint, was served on John L. Kuder. [Doc. 1 at 2-3]. In short,
under Liss, (1) there is direct evidence the intended defendant was properly
served, and (2) the intended defendant would not be prejudiced by the
amendment of the Complaint to substitute the proper defendant.
Because under state law Plaintiff’s service on John Kuder was
sufficient identification of and service upon J.L. Kuder Enterprises d/b/a
Servpro of McDowell and Rutherford Counties, remand is required.
Particularly since the confusion regarding the franchisee’s correct name was
caused by the Defendants – and particularly by the franchisee itself, and
since the pro se Plaintiff has managed to allege all of the alternatively used
names of the franchisee, it is hard to imagine that the state court would not
allow the Plaintiff to amend her Complaint on remand to substitute J.L. Kuder
Enterprises, Inc., d/b/a Servpro of McDowell & Rutherford Counties for
“Servpro of Marion” as a defendant in this matter. See also Langley v.
Baughman, 195 N.C. App. 123, 126, 670 S.E.2d 913, 915 (2009) (applying
Though the Notice of Removal fails to include this part of the State court file. [See Doc.
1-1].
5
12
Liss to allow amendment to relate back where “defendant received notice of
the original claim despite the error in his name”); Pierce v. Johnson, 154 N.C.
App. 34, 571 S.E.2d 661 (2002) (applying Liss where the named defendant,
unbeknownst to plaintiff, was deceased and service of summons and
complaint was unintentionally effected on the individual who had been
named the personal representative of his estate and was the proper
defendant in the matter); Thorpe v. Wilson, 58 N.C. App. 292, 297, 293
S.E.2d 675, 679 (1982) (“If, as here, the effect of amendment is merely to
correct the name of a person already in court, there is no prejudice. This is
true even though the change relates back to the date of the original
complaint.”). Moreover, because Plaintiff’s claims against this defendant
relate back, Defendants’ argument regarding the statute of limitations is
inapplicable.6
Defendants argue that, even if Plaintiff could otherwise establish the possibility of a claim
against Servpro of Marion, any such claim would be barred by the Contract’s one-year
limitations period. [Doc. 1 at 14-17; see Ex. D to Complaint, Doc. 1-1 at 119, ¶ 7]. The
issue of whether the Defendants acted to contractually shorten the limitations period is a
question of substantive contract law and will be addressed by the state court on remand.
It has no bearing on whether this Court has jurisdiction.
6
13
ORDER
IT IS, THEREFORE, ORDERED that the Plaintiffs’ Motion to Remand
[Doc. 20] is hereby GRANTED and this action is hereby REMANDED to the
North Carolina General Court of Justice, Superior Court Division, McDowell
County.
IT IS SO ORDERED.
Signed: July 11, 2017
14
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?