Palmetto Health Alliance v. South Carolina Electric & Gas Company et al

Filing 25

ORDER granting 8 Motion to Remand to State Court, remanding the action to the Richland County Court of Common Pleas, Fifth Judicial Circuit of South Carolina; denying 18 Motion to Sever or Alternatively, to Certify Pursuant to 28 U.S.C. § 1292(b). Clerk's Notice: Attorneys are responsible for supplementing the State Record with all documents filed in Federal Court. Signed by Honorable Joseph F Anderson, Jr on 10/21/2011.(bshr, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
Palmetto Health Alliance,

Plaintiff,
vs.
South Carolina Electric & Gas
Company and Fireman’s Fund
Insurance Company,
Defendants.

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C/A No.: 3:11-cv-2060-JFA

REMAND ORDER

This matter comes before the court pursuant to the plaintiff’s motion to remand
(ECF No. 8) and the defendant’s motion to sever or alternatively, to certify pursuant to
28 U.S.C. § 1292(b) for an interlocutory appeal (ECF No. 18). The parties have fully
briefed this matter, and after hearing oral argument from the parties, the court has
determined that remand is appropriate. For the reasons stated herein, the court hereby
grants plaintiff’s motion to remand and denies the defendant’s motion to sever and
alternatively to certify pursuant to 28 U.S.C. § 1292(b).
I.

FACTUAL AND PROCEDURAL HISTORY
This case arises from a power outage and accompanying power surge at Palmetto

Health Baptist Hospital (Palmetto) on July 10, 2008. Because of the interruption and
surge, the hospital experienced problems with its HVAC system. The problem with the
HVAC in turn damaged numerous sterile supplies. Palmetto also had to employ staff
overtime to remedy the problems from the power outage and surge. As a result, Palmetto
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filed a claim with its insurer Fireman’s Fund Insurance Company (Fireman’s Fund).
Fireman’s Fund denied the claim.
Palmetto then filed this cause of action in the Richland County Court of Common
Pleas. Palmetto alleges negligence, gross negligence, strict liability, breach of implied
warranties, breach of contract, and negligence per se against SCE&G. Palmetto seeks a
declaratory judgment regarding coverage and alleges breach of contract and bad faith
refusal to pay against Fireman’s Fund. Defendant Fireman’s Fund removed the action to
this court; SCE&G did not join the removal petition. Plaintiff then filed the present
motion to remand.

In response to Palmetto’s motion to remand, the defendant,

Fireman’s Fund, filed a motion to sever or alternatively to certify pursuant to 28 U.S.C. §
1292(b). Fireman’s Fund asserts that under the doctrine of fraudulent misjoinder, not
recognized in this Circuit, a court can ignore an improperly joined party for jurisdictional
purposes. Palmetto and SCE&G are residents of S.C. for jurisdictional purposes, while
Fireman’s Fund is a resident of California.
II.

LEGAL STANDARD
In state civil actions, a defendant who is a citizen of the state in which the action

was filed may remove the case to a federal district court if the court has original
jurisdiction. 28 U.S.C. § 1441(a) (2006). Diversity jurisdiction exists where the amount
in controversy exceeds $75,000 and complete diversity is present. 28 U.S.C. § 1332
(2006).

“In order to establish diversity jurisdiction, the parties must be completely

diverse; none of the plaintiffs may share citizenship with any of the defendants.” OwensIllinois, Inc. v. Meade, 186 F.3d 435, 440 (4th Cir. 1999).
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Federal courts are courts of limited jurisdiction, and a federal court must carefully
guard to ensure that all cases before it are properly subject to its jurisdiction. “The burden
of establishing federal jurisdiction is placed upon the party seeking removal.” Muclcahey
v. Columbia Organic Chemicals Co. Inc. 29 F.3d 148,151 (4th Cir. 1994) (citing Wilson v.
Republic Iron & Steel Co., 257 U.S. 92, (1921)). “Because removal jurisdiction raises
significant federalism concerns, [courts] must strictly construe removal jurisdiction.” Id.
(citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 1941)). “If federal jurisdiction
is doubtful, a remand is necessary.” Id. (citing Cheshire v. Coca-Cola Bottling Affiliated,
Inc., 758 F. Supp. 1098, 1102 (D.S.C. 1990)).
To show fraudulent joinder, the removing party must demonstrate either “outright
fraud in the plaintiff's pleading of jurisdictional facts” or 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.” Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999) (citing
Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993)). Because neither of
these factors is satisfied in this case, the defendant asks this court to exercise jurisdiction
based on the doctrine of fraudulent misjoinder.1 This doctrine allows a federal court to
ignore for jurisdictional purposes a party that has no real connection to the claims against
other defendants if the claims were joined in an effort to defeat diversity. The Eleventh
Circuit currently recognizes this doctrine where misjoinder “is so egregious as to
constitute fraudulent joinder.” Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1356
n.4 (11th Cir. 1996), abrogated on other grounds by Cohen v. Office Depot, Inc., 204 F.3d
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This doctrine is alternatively known as procedural misjoinder.
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1069 (11th Cir. 2000). Currently, however, the Fourth Circuit does not recognize this
doctrine.
III.

DISCUSSION
Absent direction from the Fourth Circuit, this court declines to adopt fraudulent

misjoinder and accept jurisdiction over this case. Because SCE&G and Palmetto are both
citizens of South Carolina for jurisdictional purposes, this court does not have diversity
jurisdiction.

Though the parties dispute whether the claims against SCE&G and

Fireman’s Fund are improperly joined, they agree that this is not a case involving
fraudulent joinder. Thus, the case does not fall within the parameters of the Fourth
Circuit’s fraudulent joinder test and the resolution of the joinder issue is best left to a
state court. See Hartley, 187 F.3d at 424 (requiring either outright fraud or no possibility
that the plaintiff would be able to establish a cause of action against the defendant in a
state court). As such, this court also declines to sever SCE&G under Fed. R. Civ. P. 21.
Accordingly, remand is appropriate.
Nor does this court find that this case is appropriate for an interlocutory appeal
pursuant to 28 U.S.C. § 1292(b). As this court has previously noted, such an appeal is an
“extraordinary measure.” Friends of the Earth, Inc. v. Laidlaw Envtl. Services (TOC),
Inc., 890 F. Supp. 470, 499 (D.S.C. 1995). Moreover, under federal law, piecemeal
appeals are disfavored. See Switzerland Cheese Ass'n, Inc. v. E. Horne's Market, Inc.,
385 U.S. 23, 24 (1966). An interlocutory appeal at this stage would protract the case
without providing a resolution on the merits.

As a result, this court declines the

defendant’s request to certify this order for interlocutory appeal.
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Accordingly, the action is remanded to the Court of Common Pleas, Richland
County, South Carolina. Remand is without prejudice to a second removal in the event
the claims of the non-diverse defendants are severed prior to the expiration of one year
from institution of the action. A certified copy of this order of remand shall be sent by
the Clerk of this Court to the Clerk of the Court of Common Pleas, Richland County,
Fifth Judicial Circuit of South Carolina.

IT IS SO ORDERED.
October 21, 2011
Columbia, South Carolina

Joseph F. Anderson, Jr.
United States District Judge

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