Banks v. Nationwide Property & Casualty Insurance Company et al
Filing
110
MEMORANDUM OPINION AND ORDER granting 100 Motion for Leave to Amend Complaint and denying as moot 52 Motion to Reconsider; because the amendment deprives this Court of subject matter jurisdiction, this matter is hereby REMANDED to the Circuit Court of Kanawha County, West Virginia. Signed by Judge Thomas E. Johnston on 2/19/2019. (cc: counsel of record; any unrepresented party) (kp)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
CALEB BANKS,
Plaintiff,
v.
CIVIL ACTION NO. 2:18-cv-00259
NATIONWIDE PROPERTY & CASUALTY
INSURANCE COMPANY, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Before this Court is Plaintiff Caleb Banks’s (“Plaintiff”) motion to reconsider this Court’s
previous rulings dismissing several employees of Defendant Nationwide Property & Casualty
Insurance Company (“Nationwide”) from the action and denying Plaintiff’s motion to remand the
case to state court. (ECF No. 52; see ECF Nos. 44, 45.) Plaintiff contends that Defendants
Kenneth R. Conaway (“Conaway”), Betsy Ross (“Ross”), and Lisa McGahan (“McGahan”)
(collectively, “Nationwide Adjusters”) were not fraudulently joined in the action and seeks to
amend his complaint to plead additional facts about Nationwide Adjusters’ conduct. (See ECF
No. 100.) For the reasons explained more fully herein, this Court GRANTS Plaintiff’s motion
for leave to amend the complaint, (ECF No. 100), and REMANDS this matter to the Circuit Court
of Kanawha County, West Virginia, for lack of subject matter jurisdiction. Plaintiff’s motion to
reconsider, (ECF No. 52), is DENIED AS MOOT.
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I.
BACKGROUND
Plaintiff filed this action in state court on December 29, 2017, alleging that Nationwide
and Nationwide Adjusters failed to timely investigate and make payment on his fire loss claim.
(See ECF No. 1-1 at 4–11.) Nationwide and Nationwide Adjusters removed the case to this Court
on February 5, 2018, contending that Ross, whom Plaintiff alleged to be a citizen of West Virginia,
was fraudulently joined as a defendant in order to defeat diversity jurisdiction. (ECF No. 1.)
Shortly after removal, Nationwide Adjusters filed a motion to dismiss Plaintiff’s claims
against them. (ECF No. 4.) Plaintiff also filed a motion to remand the case to state court. (ECF
No. 9.) In an Order entered on July 13, 2018, this Court denied Plaintiff’s motion to remand and
granted Nationwide Adjusters’ motion to dismiss.
(ECF No. 44.)
This Court held that
Nationwide Adjusters were fraudulently joined in the action because Plaintiff failed to plead
sufficient facts to support a claim against them under the West Virginia Unfair Trade Practices Act
(“WVUTPA”), W. Va. Code § 33-11-1, et seq. (See id.) 1
On July 31, 2018, Plaintiff filed the motion to reconsider presently pending before this
Court, arguing that this Court should alter its rulings with respect to the motions to dismiss and the
motion to remand in light of evidence obtained during discovery. (ECF No. 52.) Nationwide
filed a timely response, (ECF No. 69), and Plaintiff filed a timely reply, (ECF No. 71). On
January 7, 2019, Plaintiff filed a supplemental memorandum that includes a request to amend the
complaint to conform to the newly discovered evidence. (ECF No. 100.) 2 Nationwide filed a
Nationwide also filed a motion to dismiss certain claims against it because it had not yet acted on Plaintiff’s fire loss
claim. (ECF No. 6.) In an Order entered on July 23, 2018, this Court dismissed Plaintiff’s breach of contract claim
as not ripe for adjudication and Plaintiff’s breach of the covenant of good faith and fair dealing claim as indistinct
from the breach of contract claim. (ECF No. 45.)
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This Court construes the supplemental memorandum as a motion to amend the complaint.
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timely response, (ECF No. 101), and Plaintiff filed a timely reply, (ECF No. 102). As such, this
matter is fully briefed and ripe for adjudication.
II.
LEGAL STANDARD
“[T]he grant or denial of an opportunity to amend [the complaint] is within the discretion
of the district court.” Drager v. PLIVA USA, Inc., 741 F.3d 470, 474 (4th Cir. 2014) (internal
quotation marks omitted). This Court “should freely give leave when justice so requires.” Fed.
R. Civ. P. 15(a)(2). However, this Court “may deny a motion to amend when the amendment
would be prejudicial to the opposing party, the moving party has acted in bad faith, or the
amendment would be futile.” Equal Rights Ctr. v. Niles Bolton Assocs., 602 F.3d 597, 603 (4th
Cir. 2010) (citing Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006) (en banc)); see Drager, 741
F.3d at 474 (clarifying that “[a] district court’s denial of leave to amend is appropriate” only under
these three circumstances).
If, as here, a proposed amendment purports to destroy this Court’s subject matter
jurisdiction by adding a nondiverse defendant, this Court “may deny joinder, or permit joinder and
remand the action to the State court” from which it was removed. 28 U.S.C. § 1447(e); Mayes v.
Rapoport, 198 F.3d 457, 461–62 (4th Cir. 1999) (clarifying that “[t]hese are the only two options
for a district court faced with a post-removal attempt to join a nondiverse defendant”); see Dotson
v. Elite Oil Field Servs., Inc., 91 F. Supp. 3d 865, 875 (N.D.W. Va. 2015) (explaining that this
Court must apply § 1447(e) when the “amended complaint would add . . . a non-diverse defendant
who has been dismissed from the original complaint”). In making this determination, this Court
considers “the extent to which the purpose of the amendment is to defeat federal jurisdiction,
whether the plaintiff has been dilatory in asking for amendment, whether the plaintiff will be
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significantly injured if amendment is not allowed, and any other factors bearing on the equities.”
Mayes, 198 F.3d at 462.
III.
DISCUSSION
Plaintiff seeks to amend his complaint to add factual support for his claims against
Nationwide and Nationwide Adjusters.
(See ECF No. 100 at 6–8; ECF No. 100-1.)
The
proposed amended complaint provides additional information about Nationwide Adjusters’
involvement in the investigation of Plaintiff’s fire loss claim and more specifically describes the
conduct on which he bases his claims against Nationwide Adjusters. (Compare ECF No. 100-1,
with ECF No. 1-1 at 4–11.)
Plaintiff also seeks to modify his contractual claims against
Nationwide to reflect Nationwide’s partial payment of his claim. (See ECF No. 100-1 at 9–12.)
Finally, the proposed amended complaint includes allegations related to Nationwide and
Nationwide Adjusters’ conduct that occurred after this action was filed. (See ECF No. 100-1.)
Nationwide urges this Court to deny Plaintiff’s motion for leave to amend because Plaintiff unduly
delayed his request to amend and did so in bad faith. (ECF No. 101 at 4–6.)
“Whether an amendment is prejudicial will often be determined by the nature of the
amendment and its timing.” Mayfield v. NASCAR, Inc., 674 F.3d 369, 379 (4th Cir. 2012)
(quoting Laber, 438 F.3d at 427). Nationwide accurately asserts that Plaintiff’s request for leave
to amend the complaint comes after the discovery and dispositive motion deadlines. 3 (ECF No.
101 at 5–6; see ECF No. 18.) However, Plaintiff filed his initial motion to reconsider on July 31,
2018, one week after this Court entered its Memorandum Opinion and Order dismissing the breach
of contract claims against Nationwide, (ECF No. 45), and just over two weeks after this Court
Nationwide also argues that the request for leave to amend is prejudicial because it was made two months before the
scheduled trial date. (ECF No. 101 at 6.) However, this Court has since continued the trial. (ECF No. 109.)
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entered its Memorandum Opinion and Order dismissing Plaintiff’s claims against Nationwide
Adjusters and denying Plaintiff’s motion to remand, (ECF No. 44). (ECF No. 52.) At that point,
the case had been pending for more than six months, (see ECF No. 1-1 at 4), and the parties were
engaged in discovery, (see ECF No. 18). Most relevant here, the parties conducted depositions
of Nationwide Adjusters, (see ECF Nos. 36, 37, 38), which revealed evidence prompting Plaintiff
to move this Court for reconsideration of its prior orders, (see ECF No. 52). The majority of the
allegations in the proposed amended complaint derive from the evidence that Plaintiff submitted
in support of the motion to reconsider. (Compare ECF No. 100-1, with ECF No. 52-1.) Plaintiff
represents that many of the other allegations are also the subject of a case he filed in state court
against Nationwide and Nationwide Adjusters while this action was pending. (See ECF No. 100
at 6 n.2.) As such, any prejudice to Nationwide as a result of Plaintiff’s delay in moving to amend
the complaint is diminished by Nationwide’s knowledge of Plaintiff’s claims against Nationwide
Adjusters and the basis for them well before the proposed amended complaint was submitted.
Indeed, Plaintiff made the claims against Nationwide Adjusters in his initial complaint,
(see ECF No. 1-1 at 4–11), but this Court dismissed those claims as inadequately pled, (ECF No.
44). A plaintiff whose claims are dismissed without prejudice due to pleading deficiencies may
generally amend his complaint to correct those deficiencies. See Goode v. Cent. Va. Legal Aid
Soc’y, Inc., 807 F.3d 619, 626–27 (4th Cir. 2015); Legg v. KLLM, Inc., No. 2:05-cv-00540, 2007
WL 1308974, at *2 (S.D.W. Va. May 3, 2007) (“Leave to amend may be permitted even after a
motion to dismiss is granted if the party against whom the dismissal is directed can correct the
defective pleading.”). Moreover, as Plaintiff points out, he requests leave to amend the complaint
principally because this Court suggested that he do so in a telephonic status conference held on
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December 19, 2018. (See ECF No. 102 at 1; ECF No. 99.) This eliminates any significant
concern of bad faith on Plaintiff’s part in requesting the amendment.
Relatedly, because Nationwide Adjusters were parties to this action when it was initially
filed in state court, this Court concludes that Plaintiff does not seek to amend his complaint solely
to defeat this Court’s subject matter jurisdiction. West Virginia law provides for a cause of action
against “a claims adjuster employed by an insurance company” in his or her personal capacity for
violations of the WVUTPA. Syl. Pt. 1, Taylor v. Nationwide Mut. Ins. Co., 589 S.E.2d 55 (W.
Va. 2003). In his initial complaint, Plaintiff alleges that Nationwide Adjusters violated the
WVUTPA by “fail[ing] to conduct a prompt and reasonable investigation” of his insurance claim.
(ECF No. 1-1 at 9.) Plaintiff’s proposed amended complaint specifies that McGahan—who is
alleged to be a citizen of West Virginia for diversity purposes—failed to investigate Plaintiff’s
claimed losses for theft of items from his garage and for cable equipment. (ECF No. 100-1 at 2,
13–14.) These allegations appear sufficient to state a WVUTPA claim against McGahan. See
Dodrill v. Nationwide Mut. Ins. Co., 491 S.E.2d 1, 12–13 (W. Va. 1996) (discussing “general
business practice” element of WVUTPA claim in context of “the handling of a single claim”); see
also W. Va. Code § 33-11-4(9)(d) (prohibiting “[r]efusing to pay claims without conducting a
reasonable investigation based upon all available information”). The fact that the proposed
amended complaint makes out a legitimate WVUTPA claim against McGahan suggests that
Plaintiff does not seek joinder for the express purpose of depriving this Court of subject matter
jurisdiction. See Mayes, 198 F.3d at 463 (“[T]he fraudulent joinder doctrine can be yet another
element of the district court’s ‘flexible, broad discretionary approach’ to resolving a post removal
question of whether a nondiverse defendant should be joined under [§] 1447(e).”); Weldman v.
Exxon Mobil Corp., 776 F.3d 214, 218 (4th Cir. 2015) (explaining that fraudulent joinder occurs
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when “the plaintiff commit[s] outright fraud in pleading jurisdictional facts” or “there is no
possibility that the plaintiff would be able to establish a cause of action against the in-state
defendant in state court” (emphasis in original)).
Accordingly, having determined that any prejudice to Nationwide as a result of the
amendment is minimal and that Plaintiff’s request for leave to amend is not brought in bad faith
or solely to defeat this Court’s subject matter jurisdiction, this Court GRANTS Plaintiff’s motion
to amend the complaint. (ECF No. 100.) In light of the allowed amendment, Plaintiff’s motion
to reconsider, (ECF No. 52), is DENIED AS MOOT.
IV.
CONCLUSION
For the foregoing reasons, Plaintiff’s motion for leave to amend the complaint, (ECF No.
100), is GRANTED. Because the amendment deprives this Court of subject matter jurisdiction,
this matter is hereby REMANDED to the Circuit Court of Kanawha County, West Virginia.
IT IS SO ORDERED.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:
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February 19, 2019
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