Stewart v. State Farm Fire and Casualty Company et al

Filing 14

ORDER denying 6 Motion to Remand to State Court. Signed by Honorable David C Norton on 1/26/12. (juwo)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
DEBORAH STEWART,
Plaintiff,
vs.
STATE FARM FIRE AND CASUALTY
COMPANY and LES JORDAN, III,
Defendants.

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No. 2:11-cv-03020-DCN

ORDER

This matter is before the court on plaintiff’s motion to remand. For the reasons
set forth below, the court denies plaintiff’s motion.
I. BACKGROUND
Plaintiff Deborah Stewart (“Stewart”) filed a complaint in the South Carolina
Court of Common Pleas for the Fourteenth Judicial Circuit in Colleton County, on
October 4, 2011, for breach of contract and bad faith resulting from an insurance claim
made under Stewart’s automobile insurance policy with State Farm Fire and Casualty
Company (“State Farm”). Defendants State Farm and Les Jordan, III (“Jordan”)
(collectively, “defendants”) filed a notice of removal in this court on November 7, 2011,
asserting diversity jurisdiction under 28 U.S.C. § 1332. Defendants then filed an answer
to the complaint on November 10, 2011. On November 21, 2011, Stewart filed the
instant motion to remand to state court.
II. DISCUSSION
“When a plaintiff files in state court a civil action over which the federal district
courts would have original jurisdiction based on diversity of citizenship, the defendant or

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defendants may remove the action to federal court, 28 U.S.C. § 1441(a), provided that no
defendant ‘is a citizen of the State in which such action is brought,’ § 1441(b).”
Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). Once the defendant files a notice of
removal in federal court, the plaintiff may seek a remand to state court. Id. at 69 (citing
28 U.S.C. § 1447(c)). The party seeking removal bears the burden of establishing federal
jurisdiction. Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir.
1994). “If federal jurisdiction is doubtful, remand is necessary.” Id. District courts have
original diversity jurisdiction over a case “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).
Defendants argue that Jordan, a South Carolina resident, was fraudulently joined
and should therefore be ignored for purposes of establishing diversity jurisdiction.
Stewart asserts that joinder was proper and argues that because Stewart and Jordan are
both South Carolina residents, there is not complete diversity. Stewart concedes that the
amount in controversy exceeds $75,000.
To establish fraudulent joinder, the removing party must either prove: (1) that
“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) that “there has been outright fraud in
the plaintiff’s pleading of jurisdictional facts.” Mayes v. Rapoport, 198 F.3d 457, 464
(4th Cir. 1999) (citations omitted). “The burden on the defendant claiming fraudulent
joinder is heavy: the defendant must show that the plaintiff cannot establish a claim
against the nondiverse defendant even after resolving all issues of fact and law in the
plaintiff’s favor.” Marshall v. Manville Sales Corp., 6 F.3d 229, 232-33 (4th Cir. 1993).

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The only issue here is whether Stewart can possibly establish a cause of action
against Jordan, as defendants do not argue that Stewart committed any outright fraud by
joining Jordan. Defendants argue that Jordan is not a party to the insurance contract and,
therefore, Stewart cannot maintain her causes of action for breach of contract and breach
of the duty of good faith and fair dealing against Jordan under South Carolina law. In
South Carolina, when an agent enters into a contract for a known principal while acting
within her authority as an agent, she is not personally liable on the resulting contract.
Skinner & Ruddock, Inc. v. London Guarantee & Accident Co., 124 S.E.2d 178, 180
(S.C. 1962). The liability, if any, is of the principal alone. Id. Jordan was an agent of
State Farm, a known principal, and acted within his authority as an agent.
Moreover, “the duty of good faith in the performance of obligations based on or
arising under the contract does not extend to a person who is not a party to the insurance
contract.” Carolina Bank & Trust Co. v. St. Paul Fire & Marine Co., 310 S.E.2d 163, 166
(S.C. Ct. App. 1983). When an insurance agent is not a party to the contract, no duty of
good faith and fair dealing may be implied between the agent and the insured. See id. at
166 & n.1. There is no evidence here that Jordan was a party to the contract; instead, the
evidence shows that Jordan acted as an insurance agent for State Farm. See Compl. ¶ 3.
For these reasons, Stewart cannot possibly maintain an action against Jordan for breach
of contract or breach of the duty of good faith and fair dealing.
III. CONCLUSION
For the foregoing reasons, the court DENIES plaintiff’s motion to remand.
AND IT IS SO ORDERED.

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________________________________________
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
January 26, 2012
Charleston, South Carolina

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