Tolbert v. Cook
Filing
27
ORDER denying 20 Motion for Joinder; denying 20 Motion to Amend/Correct. Signed by Honorable G Ross Anderson, Jr on 4/23/14.(alew, )
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
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Plaintiff,
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v.
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Markela Cook,
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Defendant.
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Brittany Tolbert,
C/A No.: 8:13-03312-GRA
ORDER
(Written Opinion)
This matter is before the Court on Plaintiff Brittany Tolbert’s Motion to Join
Other Parties and Amend Pleadings. ECF No. 20.
Plaintiff commenced this action
on November 27, 2013, pursuant to 28 U.S.C. § 1332, seeking actual and punitive
damages and claiming personal injuries as a result of Defendant’s alleged
negligence, gross negligence, and negligence per se while driving her motor vehicle.
See ECF No. 1. Plaintiff alleges that Defendant struck her while she was walking in a
pedestrian crosswalk in Newberry, South Carolina. Id. Defendant has agreed to
tender the limits of her $50,000.00 liability policy. ECF No. 20-1. However, the
insurance policy covering Defendant’s vehicle does not adequately cover the
expenses incurred by Plaintiff as a result of her injuries and thus, the underinsured
motorist (“UIM”) provisions of two policies issued to Plaintiff’s parents are in dispute.
ECF Nos. 20, 20-1, & 23. As a result, Plaintiff seeks to add her insurance carriers,
Nationwide Affinity Insurance Company of America (“Nationwide Affinity”) and
Nationwide Insurance Company of America (“Nationwide”) (collectively, the
“Nationwide Entities”), as defendants to the present action. ECF Nos. 20 & 20-1.
Page 1 of 12
The Nationwide Entities jointly filed a declaratory judgment action against
Plaintiff in the Superior Court of Wake County, North Carolina, for the purpose of
determining UIM coverage. ECF Nos. 20 at 2 & 23 at 2. Despite the pending North
Carolina action, Plaintiff argues that the Nationwide Entities are necessary parties to
the instant action because the only remaining point of contention in this case is the
amount of UIM benefits Plaintiff is to receive, which requires a determination of
whether the UIM policies may be stacked. ECF Nos. 20 & 20-1.1 The Nationwide
Affinity policy issued to Plaintiff’s mother provides potential UIM coverage of
$50,000.00 per person, and the Nationwide policy issued to Plaintiff’s father provides
potential UIM coverage of $50,000.00 per person.
ECF Nos. 20-1 & 23.
The
Nationwide Entities filed a Response in Opposition to Plaintiff’s Motion to Join Other
Parties and Amend Pleadings. See ECF No. 23. Plaintiff did not file a Reply in
support of her Motion. After reviewing the parties’ submissions, this Court finds that
Plaintiff’s Motion is DENIED.
Discussion
Leave to amend under Rule 15(a) is not granted automatically. Deasy v. Hill,
833 F.2d 38, 40 (4th Cir. 1987). Generally, motions to amend under Rule 15 should
be freely granted when justice so requires. Fed. R. Civ. P. 15(a)(2). However, the
1
Plaintiff has not attached a proposed Amended Complaint; therefore, this Court assumes
Plaintiff’s amendment seeks to add the Nationwide Entities for the purpose of asserting a
declaratory judgment claim. See ECF No. 20 at 2–3 (“Plaintiff contends she is entitled to add
[Nationwide Affinity] and [Nationwide] as Defendants under Rule 19 as necessary parties, for
a complete determination of the issues involved in the case now pending before the Court
pursuant to a Rule 57 of Federal Rules of Civil Procedure Motion which shall be forthcoming
from the Plaintiff.”). Moreover, the Nationwide Entities made this same assumption in their
Response in Opposition to Plaintiff’s Motion to Join Other Parties and Amend Pleadings.
ECF No. 23. Plaintiff’s failure to file a Reply evidences her acquiescence to this assumption.
Page 2 of 12
Supreme Court has construed the phrase “when justice so requires” to preclude
granting leave to amend when any of the following are found to exist: “undue delay,
bad faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, futility of the amendment, etc.”
Foman v. Davis, 371 U.S. 178, 182 (1962); see also Steinburg v. Chesterfield Cnty.
Planning Comm'n, 527 F.3d 377, 390 (4th Cir. 2008); United States v. Pittman, 209
F.3d 314, 317 (4th Cir. 2000). The Nationwide Entities argue that allowing Plaintiff to
amend her Complaint to add them as parties to the present action would be futile for
three reasons: (1) this Court lacks subject matter jurisdiction over Plaintiff’s proposed
declaratory judgment action because the amount in controversy is not satisfied; (2)
this Court lacks supplemental jurisdiction over Plaintiff’s claims; and (3) even if
subject matter jurisdiction exists, this Court should abstain from hearing the coverage
disputes because a declaratory judgment action between Plaintiff and the Nationwide
Entities is already pending in North Carolina. ECF No. 23 at 3.
“‘Futility’ means that the complaint, as amended, would fail to state a claim
upon which relief could be granted.” Glassman v. Computervision Corp., 90 F.3d
617, 623 (1st Cir. 1996). A court may deny a motion to amend on the ground of
futility “when the proposed amendment is clearly insufficient or frivolous on its face.”
Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir.1986); see also Perkins v.
U.S., 55 F.3d 910, 917 (4th Cir. 1995) (If an amended complaint could not withstand
a motion to dismiss, then the motion to amend should be denied as “futile.”).
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A.
This Court Lacks Subject Matter Jurisdiction
The Nationwide Entities argue that, as this Court’s subject matter jurisdiction is
based on diversity jurisdiction under 28 U.S.C. § 1332, Plaintiff’s proposed
amendment lacks the requisite jurisdictional amount of greater than $75,000.2 ECF
No. 23 at 4–5.
The amount in controversy for purposes of a declaratory judgment action is
measured by the “value of the object of the litigation.” Toler v. State Farm Mut. Auto.
Ins. Co., 25 F. App'x 141, 143 (4th Cir. 2001) (quoting Hunt v. Wash. State Apple
Adver. Comm’n, 432 U.S. 333, 347 (1977)). “In determining whether the ‘value of the
object of the litigation’ is sufficient to satisfy the amount in controversy requirement,
the Court should grant a dismissal only where it appears to a legal certainty that the
controversy involves less than $75,000.” Fairfield Resorts, Inc. v. Fairfield Mountains
Prop. Owners Ass'n, Inc., No. 1:06CV191, 2006 WL 1801547, at *2 (W.D.N.C. June
28, 2006) (emphasis in original). It is well settled in the Fourth Circuit that the test for
determining the amount in controversy in a diversity proceeding is the “eitherviewpoint rule” which is concerned with “the pecuniary result to either party which [a]
judgment would produce.” Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002)
(citing Gov't Emps. Ins. Co. v. Lally, 327 F.2d 568, 569 (4th Cir. 1964)); see also
Gonzalez v. Fairgale Props. Co., 241 F.Supp.2d 512, 517 (D. Md. 2002). Under the
“either-viewpoint” rule, the amount-in-controversy requirement is satisfied if either the
gain to the plaintiff or the cost to the defendant is greater than $75,000.
See
Gonzalez, 241 F.Supp.2d at 517. The party “seeking dismissal based on the amount
2
There is no question here as to diversity of citizenship. See ECF No. 1.
Page 4 of 12
in controversy must show that it is legally impossible for the plaintiff to recover the
jurisdictional amount.” VCA Cenvet, Inc. v. Chadwell Animal Hosp., LLC, Civil No.
JKB–11–1763, 2011 WL 6257190, at *1 (D. Md. Nov. 29, 2011) (citing Wiggins v. N.
Am. Equitable Life Assurance Co., 644 F.2d 1014, 1017 (4th Cir. 1981)).
The rules of aggregation are fairly simple. A single plaintiff's claims against
several defendants can be aggregated for jurisdictional purposes only if the
defendants are jointly liable to the plaintiff on each claim. Sovereign Camp Woodmen
v. O'Neil, 266 U.S. 292, 297–98 (1924); see also Jewell v. Grain Dealers Mut. Ins.
Co., 290 F.2d 11, 13 (5th Cir. 1961) (“This rule is applicable to suits against two or
more insurance companies, each of which has separately insured against a stated
risk for a sum less than the jurisdictional amount.”). However, where the liability
alleged is separate, rather than joint, aggregation is not permitted even if the claims
arise out of the same transaction. See Ex Parte Phoenix Ins. Co., 117 U.S. 367, 369
(1886); see also Jewell, 290 F.2d at 13 (holding that “no joint liability of the defendant
insurance companies” exists to “permit[] the claims against them to be joined for
determining jurisdiction”).
The Fourth Circuit has similarly held that “[i]f a single
plaintiff joins several parties as defendants, the plaintiff may not aggregate the
various claims unless the defendants’ liability is common, undivided, or joint.” Liberty
Mut. Fire Ins. Co. v. Hayes, 122 F.3d 1061, at *2 (4th Cir. 1997) (unpublished table
decision) (per curiam) (internal citation omitted). Moreover, “[a]ggregation is keyed to
the type of recovery, not the factual relatedness of the claims.” Id. The Hayes Court
denied a plaintiff's attempt to aggregate claims against multiple insurers where he
had not stated a joint and several claim against them. See id.
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In this case, Plaintiff’s “total claimed damages stemming from the accident are
not at issue for purposes of determining the amount in controversy,” id. at 3, because
Plaintiff’s basis for joining the Nationwide Entities as Defendants under Fed. R. Civ.
P. 19 is to pursue a declaratory judgment action concerning the UIM policies under
Fed. R. Civ. P. 57. See supra note 1; see also ECF No. 20 at 2–3. Plaintiff seeks to
recover from each of the Nationwide Entities separately, and Plaintiff does not state a
joint and several claim for insurance coverage. Therefore, under the general rules of
aggregation, the $50,000.00 policy limits afforded by the Nationwide Affinity policy
and the $50,000.00 policy limits afforded by the Nationwide policy cannot be
aggregated to satisfy the jurisdictional amount. This Court finds that the Nationwide
Entities have proven to a legal certainty that the amount in controversy is insufficient.
See Erie Ins. Prop. & Cas. Co. v. Stricklin, No. 5:13CV30, 2013 WL 6265843, at *3
(N.D.W. Va. Dec. 4, 2013) (“As the policy at issue, insomuch as it concerns
underinsured motorist benefits, is limited to $50,000.00, it follows that the amount in
controversy is no more than $50,000.00. Such an amount is insufficient to establish
the amount in controversy required for diversity jurisdiction and, thus, this Court lacks
subject matter jurisdiction.”). Accordingly, the proposed amendment and joinder of
Nationwide Affinity and Nationwide would be futile.
B.
This Court Does Not Have Supplemental Jurisdiction
Plaintiff asserts she is entitled to add the Nationwide Entities as Defendants
pursuant to Fed. R. Civ. P. 19 as they are necessary parties. ECF No. 20 at 2.
However, the Nationwide Entities argue that “the Court cannot use supplemental
jurisdiction to expand its grasp to the coverage claim.” ECF No. 23 at 7. This Court
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agrees with the Nationwide Entities and finds that it does not have supplemental
jurisdiction over Plaintiff’s proposed declaratory judgment claim.
Section 1367(a) provides that, in cases over which a federal court has original
jurisdiction, it also has “supplemental jurisdiction over all other claims that are so
related to claims in the action within such original jurisdiction that they form part of the
same case or controversy under Article III of the United States Constitution.” 28
U.S.C. § 1367(a); see Rosmer v. Pfizer, Inc., 263 F.3d 110, 114 (4th Cir. 2001)
(“Section 1367(a) is a general grant of supplemental jurisdiction.”). However, the
statute instructs the courts to examine § 1367(b) to determine if any of its exceptions
apply. Section 1367(b), which applies only to diversity cases, provides that “district
courts shall not have supplemental jurisdiction . . . over claims by plaintiffs against
persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil
Procedure . . . .” 28 U.S.C. § 1367(b); see Rosmer, 263 F.3d at 114 (“[I]n diversity
actions the rule of complete diversity would still be required in the context of . . . Rule
19 joinder of necessary parties.”).
Because Plaintiff moved to join the Nationwide Entities as defendants pursuant
to Fed. R. Civ. P. 19, and because this Court has “original jurisdiction” under § 1332
over Plaintiff and Defendant, it is not necessary for this Court to address whether
Plaintiff’s claims against the Nationwide Entities “form part of the same case or
controversy” as Plaintiff’s claims against Defendant under § 1367(a). Regardless of
the outcome under § 1367(a), since the exclusions under § 1367(b) apply in this
case, the result is ultimately the same: Plaintiff cannot use supplemental jurisdiction
to avoid the amount in controversy requirement for her claims against Nationwide
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Affinity and Nationwide. Accordingly, the proposed amendment and joinder of the
Nationwide Entities would be futile.
Even if this Court could exercise supplemental jurisdiction over the claims in
this action, it would decline to do so because it finds “exceptional circumstances” and
“compelling reasons” for not exercising supplemental jurisdiction.
28 U.S.C. §
1367(c)(4). As Plaintiff recognizes, her proposed action involves the same underlying
facts as a pending state court action in Wake County, North Carolina. ECF No. 20.
This Court finds Plaintiff filed her current Motion in order to apply South Carolina,
rather than North Carolina law.
Allowing Plaintiff to amend her Complaint and
proceed with a declaratory judgment action in this Court while a separate, but related,
action proceeds in a North Carolina state court would not be judicially economical and
could result in disparate results that could undermine both the state and federal
proceedings. Moreover, because Plaintiff concedes that the UIM coverage dispute
“substantially predominates” over Plaintiff’s claims against Defendant, this Court
would also decline to exercise supplemental jurisdiction under § 1367(c)(2). See
ECF No. 20-1 at 2. Accordingly, even if this Court had the discretion to exercise
supplemental jurisdiction over Plaintiff’s claims against the Nationwide Entities, it
would decline to do so under § 1367(c)(2) & (4).
C.
Abstention
As previously discussed, this Court does not have jurisdiction over Plaintiff’s
proposed declaratory judgment action against the Nationwide Entities.
However,
even if such subject matter jurisdiction existed, this Court would abstain from hearing
the UIM coverage dispute.
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The Federal Declaratory Judgment Act provides that this Court “may declare
the rights and other legal relations of an interested party seeking such declaration.”
28 U.S.C. § 2201(a). When deciding whether to exercise jurisdiction under this Act,
this Court must consider:
(i) the strength of the state's interest in having the issues raised in the
federal declaratory action decided in the state courts; (ii) whether the
issues raised in the federal action can more efficiently be resolved in the
court in which the state action is pending; (iii) whether permitting the
federal action to go forward would result in unnecessary “entanglement”
between the federal and state court systems, because of the presence
of “overlapping issues of fact or law”; and (iv) whether the declaratory
judgment action is being used merely as a device for “procedural
fencing”—that is, “to provide another forum in a race for res judicata” or
“to achiev[e] a federal hearing in a case otherwise not removable.”
Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 257 (4th Cir. 1996) (quoting Nautilus
Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 377 (4th Cir. 1994)).
As to the first factor, state insurance law governs the UIM coverage issues.
“State courts have a particular interest in deciding questions of insurance law.”
Beach Cove Assocs. v. U.S. Fire Ins. Co., 904 F. Supp. 959, 962 (D.S.C. 1995).
Plaintiff argues that South Carolina law applies to the UIM coverage dispute, while
the Nationwide Entities argue that North Carolina law applies.
In support of her
position, Plaintiff directs this Court to Hartsock v. American Automobile Insurance
Company, 788 F. Supp. 2d 447 (D.S.C. 2011), where the district judge found that
South Carolina law governed the UIM coverage dispute on facts involving a South
Carolina collision and a North Carolina insurance policy.
ECF No. 20-1 at 2.
However, Hartsock involved a policy covering a South Carolina resident, operating a
vehicle registered and garaged in South Carolina, and a car accident occurring in
South Carolina. Hartsock, 788 F. Supp. 2d at 449. In this case, although the car
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accident happened in South Carolina, Plaintiff is a North Carolina resident seeking
UIM coverage under two insurance policies issued in North Carolina to her parents,
who are North Carolina residents, insuring automobiles registered and garaged in
North Carolina.
See ECF No. 23 at 11–12.
Thus, North Carolina has a strong
interest in deciding the UIM coverage issues.
The existence of the pending North Carolina declaratory judgment action goes
to the second factor, judicial efficiency. Since the state court is familiar with the
underlying controversies, it would be wasteful to amend Plaintiff’s Complaint and
allow a parallel declaratory judgment action to proceed in this Court. Moreover, the
Nationwide Entities argue that if this case were to proceed to trial, then the UIM
coverage matters would have to be litigated separately from Plaintiff’s claims against
Defendant as the coverage claims cannot be joined with Plaintiff’s tort claims in this
Court. See ECF No. 23 at 10. Thus, this factor weighs in favor of abstention.
As to the third factor, the issues of fact or law clearly overlap. In her Motion,
Plaintiff asks this Court to disregard the existence of the North Carolina pending
declaratory judgment action. ECF No. 20 at 2. However, “[e]fficiency dictates that
resolution of issues stemming from one controversy should be resolved by one court.”
Beach Cove Assocs., 903 F. Supp. at 963. Because the issues Plaintiff is attempting
to raise by amending her Complaint in this Court are identical to the issues pending in
the North Carolina state court, every question of law and fact overlaps. Thus, this
factor weighs in favor of abstention.
As to the fourth factor, this Court finds Plaintiff’s Motion and proposed
amendment to initiate a declaratory judgment action in this Court qualifies as
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procedural fencing.
After the Nationwide Entities filed their declaratory judgment
action in North Carolina, Plaintiff, presumably in an attempt to have South Carolina
law, rather than North Carolina law, apply to the UIM coverage dispute, filed the
current Motion in this Court to add the Nationwide Entities as defendants.3 Thus, this
factor weighs in favor of abstention.
Accordingly, even if this court had jurisdiction, comity would dictate declining
federal jurisdiction. This Court is confident that the North Carolina state court is
equally able to apply the appropriate law and resolve the UIM coverage dispute.
Conclusion
After a review of the record and applicable law in this case, this Court finds
that it lacks subject matter jurisdiction over the proposed UIM coverage issues
because Plaintiff’s claims against the Nationwide Entities do not satisfy the amount in
controversy requirement contained in 28 U.S.C. § 1332. Moreover, were this Court to
allow Plaintiff to amend her Complaint and join Nationwide Affinity and Nationwide as
defendants, 28 U.S.C. § 1367 would not permit the use of supplemental jurisdiction
over Plaintiff’s claims against the Nationwide Entities. Furthermore, even if this Court
had jurisdiction to determine the amount of UIM coverage available to Plaintiff, it
would refrain from exercising this jurisdiction on principles of comity.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Join Other Parties and
Amend Pleadings is DENIED.
3
In their Response to Plaintiff’s Motion, the Nationwide Entities argue that regardless of
whether North Carolina law or South Carolina law applies, Plaintiff will recover the exact
same amount of UIM coverage. ECF No. 23 at 6 n. 2, 11 n. 4. Plaintiff failed to respond to
these assertions. This Court, however, declines to address the applicable UIM coverage
under either state’s insurance law.
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IT IS SO ORDERED.
April 23 , 2014
Anderson, South Carolina
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