Ohio Security Insurance Company v. K R Enterprises, Inc. et al

Filing 55

MEMORANDUM OPINION AND ORDER granting Plaintiff's 23 MOTION for Appointment of Guardian ad Litem for Jeremy Evans: The court will appoint a guardian ad litem for Jeremy Evans for the limited purpose of effecting service upon him. Ohio Secu rity should file a proposed order consistent with this opinion that: 1) names Mr. Thompson as Evans' guardian if he willing and able do so or, in the alternative, another individual who will undertake such an appointment; and 2) indicates how the guardian ad litem is to be compensated. Pursuant to Federal Rule of Civil Procedure 4(m), the court finds that good cause exists to extend the time limits for service upon defendant Evans and plaintiff has sixty (60) days from entry of the Memorandum Opinion and Order in which to effectuate service upon Jeremy Evans. Signed by Senior Judge David A. Faber on 3/27/2017. (cc: attys; any unrepresented party) (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
AT BLUEFIELD
OHIO SECURITY INSURANCE COMPANY,
Plaintiff,
v.

CIVIL ACTION NO. 1:15-16264

K R ENTERPRISES, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the court is plaintiff’s motion to appoint
a guardian ad litem for Jeremy Evans or to issue another
appropriate order.

(ECF No. 23).

For reasons expressed more

fully below, the motion to appoint a guardian ad litem is
GRANTED.
Plaintiff Ohio Security Insurance Company (“Ohio
Security”) is an insurance company organized under the laws of
New Hampshire with its principal place of business in Boston,
Massachusetts.

See Amended Complaint ¶ 5.

Defendant K R

Enterprises, Inc. (“K R Enterprises”) is a Virginia corporation
with its principal place of business located in Martinsville,
Virginia.

See id. at ¶ 6.

Defendant Jackson Hewitt, Inc. is a

Virginia corporation with its principal place of business in
Parsippany, New Jersey.

See id. at ¶ 7.

During the relevant

time period, Ohio Security issued a BusinessOwners Liability
Policy to K R Enterprises, Policy Number BZS (15) 56 08 16 29.

See Amended Complaint at ¶ 60.

The Ohio Security Policy also

included Data Compromise and CyberOne Coverage endorsements.

See

id. at ¶¶ 73 and 75.
The instant dispute centers on fraudulent tax returns
filed by defendant Jeremy Evans, a former employee of defendant K
R Enterprises, doing business as Jackson Hewitt.1

Specifically,

former customers of K R Enterprises have alleged that Evans
improperly accessed the records of K R Enterprises to obtain
their personal and confidential information for the purpose of
fraudulently filing their 2014 income tax returns.

All of the

former customers had sought assistance preparing their 2013 tax
returns from K R Enterprises and their confidential information
had been saved in the company’s database.
Upon discovering Evans’ conduct, these customers of K R
Enterprises filed suit in the Circuit Court of McDowell County,
West Virginia, against Evans, K R Enterprises, and Jackson Hewitt
raising various state law claims including, but not limited to,
Breach of Fiduciary Duty, Negligence, and Invasion of Privacy.
There are six of these lawsuits currently pending in the McDowell
County Circuit Court.

All of the state lawsuits allege that

Evans was arrested on or about February 4, 2015, at a K R
Enterprise location and that Evans admitted to police that he had

1

According to the Amended Complaint, there was a franchise
agreement between K R Enterprises and Jackson Hewitt. See
Amended Complaint at ¶ 3.
2

used the customers’ 2013 tax return information to fraudulently
file 2014 tax returns in their names.

For his part, Evans faces

criminal charges of identity theft, attempted felony, forgery,
uttering, petit larceny, and fraudulent schemes.
On December 18, 2015, Ohio Security Insurance Company
filed the instant declaratory judgment action on the basis of
diversity jurisdiction pursuant to 28 U.S.C. § 1332 and, on March
14, 2016, it filed an amended complaint.

Ohio Security asks this

court to determine that it has no duty to defend or indemnify K R
Enterprises, Evans, or Jackson Hewitt under the BusinessOwners
liability coverage and/or the Data Compromise and CyberOne
coverage for the six underlying lawsuits.
Because Jeremy Evans is incarcerated, he is not legally
competent to consent to service and thus cannot be properly
served.

Under Federal Rule of Procedure 17(b)(1), the capacity

of an individual to be sued is determined by the law of the
individual’s domicile.”

At the time Ohio Security filed the

instant motion, this court had found that Evans was domiciled in
West Virginia.

See Memorandum Opinion and Order, Sacra, et al.

v. Jackson Hewitt, Inc., et al., 1:15-cv-16265 (S.D.W. Va. Feb.
19, 2016) (ECF No. 23 at p.9).
As this court has found on another occasion,
“[F]or an individual who is not acting in a
representative capacity,” the individual's capacity
to be sued is determined “by the law of the
individual's domicile[.]” Fed. R. Civ. P. 17(b)(1). As stated
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in this Court's
Virginia and he
Court must look
protections, if

prior Order, Defendant Davis' domicile is West
is incarcerated in West Virginia. Thus, the
to West Virginia law to determine what
any, Defendant Davis is entitled to receive.

In considering this precise issue, the Fourth
Circuit ruled in Siers v. Greiner, No. 92-6501,
1993 WL 3475 (4th Cir. Jan. 11, 1993), that the
district court erred in not appointing a guardian
ad litem for an inmate whose ex-wife sought to
enforce outstanding judgments against him by
intervening in a civil action in which he was
awarded $15,000. 1993 WL 3475, at *1. In reaching
this result, the Fourth Circuit relied upon West
Virginia Code § 28-5-36 and the West Virginia
Supreme Court's interpretation of that statute in
Craigo v. Marshall, 175 W.Va. 72, 331 S.E.2d 510
(W. Va. 1985).
Branch Banking and Trust Co. v. Davis, Civil Action No. 3:0401055, 2008 WL 5099627, *2 (S.D.W. Va. Dec. 2, 2008).
The West Virginia Rules of Civil Procedure require that
when a civil suit is brought against an incarcerated person,
service be made on
that person’s committee, guardian, or like
fiduciary resident in the State; or, if there be no
such committee, guardian, or like fiduciary . . .
service of process shall be made upon a guardian ad
litem appointed under Rule 17(c).
W. Va. R. Civ. P. 4(d)(4).
West Virginia Rule of Civil Procedure 17(c) provides as
follows:
Whenever an infant, incompetent person, or convict
had a representative, such as a general guardian,
curator, committee, conservator, or other like
fiduciary, the representative may sue or defend on
behalf of the infant, incompetent person, or
convict. An infant, incompetent person, or convict
who does not have a duly appointed representative
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may sue by a next friend or by a guardian ad litem.
The court or clerk shall appoint a discreet and
competent attorney at law as guardian ad litem for
an infant, incompetent person, or convict not
otherwise represented in an action, or shall make
such other order as it deems proper for the
protection of the infant, incompetent person, or
convict. A guardian ad litem is deemed a party for
purposes of service; failure to serve a guardian ad
litem in circumstances where service upon a party
is required constitutes failure to serve a party.
W. Va. R. Civ. P. 17(c).
In accordance with these authorities, the court will
appoint a guardian ad litem for Jeremy Evans for the limited
purpose of effecting service upon him.

Based on the foregoing,

the court GRANTS Ohio Security’s motion to appoint a guardian ad
litem.

Ohio Security should file a proposed order consistent

with this opinion that: 1) names Mr. Thompson as Evans’ guardian
if he willing and able do so or, in the alternative, another
individual who will undertake such an appointment; and 2)
indicates how the guardian ad litem is to be compensated.

The

proposed order should also advise the guardian ad litem to
provide written notice to the court when service has been
effected and, if feasible, be accompanied by a writing signed by
Evans indicating how he wishes to proceed in this matter.
Furthermore, pursuant to Federal Rule of Civil Procedure 4(m),
the court finds that good cause exists to extend the time limits
for service upon defendant Evans and plaintiff has sixty (60)

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days from entry of the Memorandum Opinion and Order in which to
effectuate service upon Jeremy Evans.
The Clerk is directed to forward a copy of this Memorandum
Opinion and Order to counsel of record and unrepresented parties.
IT IS SO ORDERED this 27th day of March, 2017.
ENTER:

David A. Faber
Senior United States District Judge

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