Pettit v. State Farm Mutual Automobile Insurance Company et al
Filing
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MEMORANDUM OPINION AND ORDER granting 11 MOTION to Remand to Circuit Court of Kanawha County, West Virginia; denying as moot Defendant State Farm Mutual Automobile Insurance Co.s and Defendant Angela Cookes 3 Motion to Dismiss for Failure to Sta te a Claim; denying as moot Defendant State Farm Mutual Automobile Insurance Co.s and Defendant Angela Cookes 6 MOTION to Stay; denying as moot Defendant State Farm Mutual Automobile Insurance Co.s and Defendant Angela Cookes 16 MOTION to Dismiss; denying as moot 18 MOTION to Stay; directing the Clerk to remove this matter from the Courts docket. Signed by Judge Thomas E. Johnston on 10/10/2018. (cc: attys; any unrepresented party) (tmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
JOSEPH R. PETTIT,
Plaintiff,
v.
CIVIL ACTION NO. 2:18-cv-00472
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff Joseph R. Pettit’s motion to remand.1 (ECF No. 11.)
For the reasons discussed more fully below, the Court GRANTS the motion.2
I.
BACKGROUND
Also pending before the Court is Defendant State Farm Mutual Automobile Insurance Co.’s and Defendant Angela
Cooke’s individual motions to stay and motions to dismiss. (ECF Nos. 3, 6, 16, 18.) As this opinion is remanding
the case, the Court DENIES AS MOOT those motions. (ECF Nos. 3, 6, 16, 18.)
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The Court notes that motions to remand, virtually identical to the present motion, are currently pending before this
Court in Martin v. State Farm Fire & Casualty Co. et al., (2:18-cv-00473, ECF No. 11), and Schaefer et al v. State
Farm Fire and Casualty Company et al. (2:18-cv-00474, ECF No. 8.) These motions contain the same arguments
as the present motion and thus the Court’s analysis and ruling on the present motion will apply to those motions as
well. However, the Court will enter a separate memorandum opinion and order in each of those cases reflecting the
adoption of the Court’s ruling in the present motion.
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Plaintiff Joseph R. Pettit (“Pettit”) is a West Virginia citizen. (ECF No. 1-1 at ¶ 1
(Compl.).) Defendant State Farm Mutual Automobile Insurance Co. (“State Farm”) is an Illinois
citizen. (Id. at ¶ 2.) Defendant Angela Cooke (“Cooke”) is a West Virginia citizen. (Id. at ¶ 3.)
This case arises from a car accident that occurred on September 23, 2009 involving Pettit
(“Pettit”) and Mark Lorenz (“Lorenz”), in which Pettit was injured. (See id. at ¶¶ 4–10.) Lorenz
was insured by Permanent General Assurance Corp. (“PGAC”). (See ECF No. 1-1 at ¶ 12.)
However, PGAC initially denied coverage for the accident because Lorenz’s driver’s license was
suspended at the time of the accident. (See id. at ¶ 14.) Because PGAC initially denied coverage,
Pettit made a claim with his insurance agency, State Farm. (See id. at ¶ 15.) State Farm
subsequently paid Pettit $40,000 for his claim, which reflected the $20,000 per person limit on
each of his two insurance policies with State Farm. (See id. at ¶17.) These policies included
uninsured motorist (“UM”)/underinsured motorist (“UIM”) coverage. (See ECF No. 12 at 2.)
PGAC subsequently agreed to pay its liability coverage limit of $15,000 to Pettit for the accident.
(See ECF No. 1-1 at ¶ 12–19.)
Despite the payouts from State Farm and PGAC, Pettit alleges that he was not made whole
and that, as a result, he is entitled to collect UM/UIM benefits from State Farm, inasmuch as Lorenz
was an uninsured/underinsured motorist at the time of the accident. (See id. at ¶¶ 19–20.) On
October 24, 2017, Pettit filed the present action against State Farm alleging that State Farm failed
to make a commercially reasonable offer of UIM coverage and against Cooke based on her
handling of his insurance claim and the allegedly false representations she made regarding the
UIM coverage. (See id. at ¶¶ 22, 48.) Specifically, Pettit alleges claims for Breach of Contract
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(Count I) and Common Law Bad Faith (Count II) against State Farm and a claim for Unfair Trade
Practices (Count III) against Cooke.
On March 23, 2018, State Farm removed the case to this Court. (ECF No. 1.) Pettit
subsequently filed the present motion to remand on April 19, 2018, (ECF No. 11), to which State
Farm timely responded, (ECF No. 21), and Pettit timely replied. (ECF No. 24.) As such, the
motion is fully briefed and ripe for adjudication.
II.
LEGAL STANDARD
Article III of the United States Constitution provides, in pertinent part, that “[t]he judicial
Power shall extend . . . to Controversies . . . between Citizens of different States.” U.S. Const.
art. III, § 2. “The district courts shall have original jurisdiction of all civil actions 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).
Congress provided a right to remove a case from state to federal court under 28 U.S.C. §
1441. This statute states, in relevant part:
Except as otherwise expressly provided by Act of Congress, any civil action
brought in a state court of which the district courts of the United States have original
jurisdiction, may be removed by the defendant or the defendants, to the district
court of the United States for the district and division embracing the place where
such action is pending.
28 U.S.C. § 1441(a). Because removal of civil cases from state to federal court infringes state
sovereignty, federal courts strictly construe the removal statute and resolve all doubts in favor of
remanding cases to state court. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109
(1941); see also Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994)
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(“Because removal jurisdiction raises significant federalism concerns, we must strictly construe
removal jurisdiction.” (citation omitted)).
The Supreme Court has long “read the statutory formulation ‘between . . . citizens of
different States’” in Section 1332(a)(1) “to require complete diversity between all plaintiffs and
all defendants.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (citing Caterpillar Inc. v.
Lewis, 519 U.S. 61, 68 (1996)). “[T]he ‘complete diversity’ rule clarifies that the statute
authorizing diversity jurisdiction over civil actions between a citizen of a state where the suit is
brought and a citizen of another state permits jurisdiction only when no party shares common
citizenship with any party on the other side.” Mayes v. Rapoport, 198 F.3d 457, 461 (4th Cir.
1999) (citation omitted). “This . . . rule . . . makes it difficult for a defendant to remove a case if
a nondiverse defendant has been party to the suit prior to removal.” Id.
“There are, however, certain limited exceptions to the complete diversity requirement.”
Mansfield v. Vanderbilt Mortg. & Fin., Inc., 29 F. Supp. 3d 645, 651 (E.D.N.C. 2014). One such
exception is fraudulent joinder. The fraudulent joiner standard is well settled, and the Fourth
Circuit lays a “heavy burden” upon a defendant claiming fraudulent joinder. Johnson v. Am.
Towers, LLC, 781 F.3d 693, 704 (4th Cir. 2015) (quoting Hartley v. CSX Transp., Inc., 187 F.3d
422, 424 (4th Cir. 1999)). To establish that a nondiverse defendant has been fraudulently joined,
the removing party must establish either: “[t]hat 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 [t]hat there has
been outright fraud in the plaintiff’s pleading of jurisdictional facts.” Mayes, 198 F.3d at 464
(quoting Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993)).
III.
DISCUSSION
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In his motion for remand, Pettit argues that removal was improper because there is not
complete diversity as he and one of the defendants, Cooke, are both residents of West Virginia.
(See ECF No. 12 at 8.) However, in its response to the motion, State Farm argues that removal
was proper because Cooke was fraudulently joined. (See ECF No. 21 at 4–6.) Specifically, State
Farm asserts that Pettit has no possible cause of action against Cooke because Pettit’s claim against
her is barred by the statute of limitations. (See id.)
This Court has held that “fraudulent joinder claims are subject to a rather black-and-white
analysis in this circuit. Any shades of gray are resolved in favor of remand.” Morrison v.
Standard Ins. Co., No. 2:10–CV–0156, 2010 WL 3703036, *4 (S.D. W. Va. Sept. 16, 2010).
Furthermore, the Court is mindful of the Fourth Circuit’s recognition that permitting “extensive
litigation of the merits of a case while determining jurisdiction thwarts the purpose of jurisdiction
rules,” Hartley, 187 F.3d at 425, and direction to “minimize threshold litigation over jurisdiction,”
id.
“[A] defendant asserting a fraudulent joinder claim predicated on a limitations defense
faces a nearly insurmountable challenge. Put simply, although fraudulent joinder may apply in
cases where the statute of limitations has run against a non-diverse defendant, ‘[i]f the statute of
limitations issue is difficult to determine, the doctrine of fraudulent joinder is not appropriate, and
the case should be remanded to the state court.’” See Morrison, 2010 WL 3703036, at *7 (quoting
Shaffer v. Nw. Mut. Life Ins. Co., 394 F.Supp.2d 814, 818 (N.D. W. Va. 2005)).
In West Virginia, courts apply the following five-step analysis to determine whether a
cause of action is barred by the statute of limitations:
First, the court should identify the applicable statute of limitation for each cause of
action. Second, the court (or, if questions of material fact exist, the jury) should
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identify when the requisite elements of the cause of action occurred. Third, the
discovery rule should be applied to determine when the statute of limitation began
to run by determining when the plaintiff knew, or by the exercise of reasonable
diligence should have known, of the elements of a possible cause of action . . . .
Fourth, if the plaintiff is not entitled to the benefit of the discovery rule, then
determine whether the defendant fraudulently concealed facts that prevented the
plaintiff from discovering or pursuing the cause of action. Whenever a plaintiff is
able to show that the defendant fraudulently concealed facts which prevented the
plaintiff from discovering or pursuing the potential cause of action, the statute of
limitation is tolled. And fifth, the court or the jury should determine if the statute
of limitation period was arrested by some other tolling doctrine. Only the first step
is purely a question of law; the resolution of steps two through five will generally
involve questions of material fact that will need to be resolved by the trier of fact.
Dunn v. Rockwell, 689 S.E.2d 255, 262 (W. Va. 2009).
As to the first step of the analysis, generally, the statute of limitations for bringing a claim
under the West Virginia Unfair Trade Practices Act (“UTPA”) is one year. See Wilt v. State Auto.
Mut. Ins. Co., 406 S.E.2d 608, 609 (W. Va. 1998). However, there is a genuine issue of material
fact as to steps two and three—when the requisite elements of the cause of action occurred and
whether the discovery rule applies. Here, Cooke provided Pettit with the UM/UIM offer form in
October 2009. (See ECF No. 21 at 7.) State Farm argues that, at the time Cooke provided the
offer form, Pettit and his counsel knew that the UM/UIM coverage under each policy was $20,000
and thus had all the information necessary to bring a cause of action based on the UM/UIM
coverage amount. (See id.) State Farm further asserts that Cooke settled Pettit’s claim from the
accident in December 2009, which ended Cooke’s involvement in the claim. (See id.) Thus, at
the latest, State Farm argues, the statute of limitations on Pettit’s claim began to run in December
2009.
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Pettit, however, alleges that State Farm and Cooke misrepresented material facts regarding
the amount of the UM/UIM coverage available and Pettit did not discover this misrepresentation
until 2016 when he learned of the problems with State Farm’s UM/UIM selection/rejection forms.
(See ECF No. 1-1 at ¶¶ 31, 61.) Pettit further alleges that he could not by exercise of reasonable
diligence have known of the same prior to that time because State Farm concealed those facts.
(See id. at ¶ 61.) Thus, Pettit argues, the statute of limitations on his UTPA claim against Cooke
was tolled by the discovery rule. (See id. at 5–6.)
The parties clearly dispute the date on which Pettit should have known of the elements of
his UTPA cause of action against Cooke. If Pettit’s allegations regarding the misrepresentations
and concealment are true, then it is possible that Pettit would not have known by the exercise of
reasonable diligence of the elements of the possible cause of action in this case until well after
2009. Thus, it is possible that Pettit is entitled to the benefit of the discovery rule. See Ash v.
Allstate Ins. Co., No. 5:10-cv-5, 2010 WL 3788045, at *4 (N.D. W. Va. Sept. 23, 2010). This is
a genuine issue of material fact that, as stated above, the West Virginia Supreme Court of Appeals
has stated should be resolved by the trier of fact.
See Dunn, 689 S.E.2d at 262.
Furthermore, this District has held that, “[i]nsomuch as the Supreme Court of Appeals of
West Virginia has recognized a number of equitable modifications regarding the statute of
limitations, . . . the court cannot conclude that without a doubt” a plaintiff’s claims are precluded
by the statute of limitations. See Morrison, 2010 WL 3703036, at *7 (rejecting defendant’s
fraudulent joinder argument because, inter alia, where West Virginia has “recognized a number of
equitable modifications regarding the statute of limitations,” the court could not conclude “without
a doubt” that plaintiff’s claims were barred by the statute of limitations). As there is a “glimmer
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of hope” that the statute of limitations was tolled on Pettit’s claim, Pettit has a possible UTPA
claim against Cooke. Accordingly, this Court must remand this civil action to the Circuit Court
of Kanawha County, West Virginia.
IV.
CONCLUSION
For the reasons discussed more fully herein, the Court GRANTS Pettit’s motion to remand,
(ECF No. 11), and REMANDS the case to the Circuit Court of Kanawha County, West Virginia.
The Court further DIRECTS the Clerk to remove this matter from the Court’s docket.
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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October 10, 2018
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