Holmes v. Acceptance Cas. Ins. Co.

942 F.Supp.2d 637

Elizabeth HOLMES, Plaintiff,

v.ACCEPTANCE CASUALTY INSURANCE COMPANY and Wellington Claim Service Company, Defendants.

Civil Action No. 1:12–CV–584.

United States District Court, E.D. Texas.

April 29, 2013.

Rodney Allen Townsend, Rodney Townsend-Attorney at Law, PC, Orange, TX, Gregory F. Cox, The Mostyn Law Firm, Beaumont, TX, for Plaintiff.

Michael Joseph Truncale, Orgain Bell & Tucker, Beaumont, TX, for Defendants.

MEMORANDUM AND ORDER

MARCIA A. CRONE, District Judge.

Pending before the court is Plaintiff Elizabeth Holmes's (“Holmes”) Motion to Remand. Holmes seeks remand to state court on the ground that this court lacks subject matter jurisdiction because the parties are not completely diverse. Having reviewed the pending motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that remand is not warranted.

I. Background

On October 9, 2012, Holmes filed her original petition in the 260th Judicial District Court of Orange County, Texas, asserting claims for common law fraud, negligence, breach of contract, and violations of the Texas Deceptive Trade Practices Act (“DTPA”) and the Texas Insurance Code. It is undisputed that Holmes is a citizen and resident of the State of Texas. Defendant Acceptance Casualty Insurance Company (“Acceptance”) is a Nebraska corporation with its principal place of business in North Carolina. Defendant Wellington Claim Service Company (“Wellington”) is a Texas corporation.

On December 7, 2012, Acceptance removed the case to this court on the basis of diversity of citizenship, alleging that complete diversity exists among the real parties in interest and that the amount in controversy exceeds $75,000.00, exclusive of interest and costs. Acceptance asserts that because Wellington was improperly joined as a defendant to defeat diversity, it should be dismissed as a party to this action and its citizenship ignored for jurisdictional purposes. On January 7, 2013, Holmes filed a motion to remand the case to state court, contending that Wellington was properly joined, and, therefore, because complete diversity does not exist among the parties, federal jurisdiction is lacking.

II. Analysis

“ ‘Federal courts are courts of limited jurisdiction.’ ” Rasul v. Bush, 542 U.S. 466, 489, 124 S.Ct. 2686, 159 L.Ed.2d 548 (2004) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994)); accord Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290, 292 (5th Cir.2010); Johnson v. United States, 460 F.3d 616, 621 n. 6 (5th Cir.2006); McKee v. Kan. City S. Ry. Co., 358 F.3d 329, 337 (5th Cir.2004). “ ‘They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree.’ ” Rasul, 542 U.S. at 489, 124 S.Ct. 2686 (quoting Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673 (citations omitted)). The court “must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum.” Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.), cert. denied,534 U.S. 993, 122 S.Ct. 459, 151 L.Ed.2d 377 (2001) (citing Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673);see also Hertz Corp. v. Friend, 559 U.S. 77, 95–96, 130 S.Ct. 1181, 1194 (2010);Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir.2005). In an action that has been removed to federal court, a district court is required to remand the case to state court if, at any time before final judgment, it determines that it lacks subject matter jurisdiction. See28 U.S.C. § 1447(c); Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 571, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004); In re 1994 Exxon Chem. Fire, 558 F.3d 378, 392 (5th Cir.2009); McDonal v. Abbott Labs., 408 F.3d 177, 182 (5th Cir.2005).

When considering a motion to remand, “[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002); accord DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n. 3, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006); Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir.2008); In re Hot–Hed Inc., 477 F.3d 320, 323 (5th Cir.2007); Guillory v. PPG Indus., Inc., 434 F.3d 303, 308 (5th Cir.2005); Boone, 416 F.3d at 388. “ ‘This extends not only to demonstrating a jurisdictional basis for removal, but also necessary compliance with the requirements of the removal statute.’ ” Roth v. Kiewit Offshore Servs., Ltd., 625 F.Supp.2d 376, 382 (S.D.Tex.2008) (quoting Albonetti v. GAF Corp.-Chem. Grp., 520 F.Supp. 825, 827 (S.D.Tex.1981)); accord Crossroads of Tex., L.L.C. v. Great–West Life & Annuity Ins. Co., 467 F.Supp.2d 705, 708 (S.D.Tex.2006); Smith v. Baker Hughes Int'l Branches, Inc., 131 F.Supp.2d 920, 921 (S.D.Tex.2001). “Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (citing 28 U.S.C. § 1441(a)); see Aetna Health Inc. v. Davila, 542 U.S. 200, 207, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004); Halmekangas, 603 F.3d at 294;Gutierrez, 543 F.3d at 251. “The removal statute ties the propriety of removal to the original jurisdiction of the federal district courts.” Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir.1997); see28 U.S.C. § 1441(a); Hoskins v. Bekins Van Lines, 343 F.3d 769, 772 n. 2 (5th Cir.2003). Because removal raises significant federalism concerns, the removal statutes are strictly and narrowly construed, with any doubt resolved against removal and in favor of remand. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941); Gutierrez, 543 F.3d at 251;Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281–82 (5th Cir.2007); In re Hot–Hed Inc., 477 F.3d at 323.

Federal courts have subject matter jurisdiction and are authorized to entertain causes of action only where a question of federal law is involved or where there is diversity of citizenship between the parties and the amount in controversy exceeds $75,000.00, exclusive of interest and costs. See28 U.S.C. §§ 1331, 1332; Arbaugh v. Y & H Corp., 546 U.S. 500, 513, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006); Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005); Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005); Halmekangas, 603 F.3d at 294;McDonal, 408 F.3d at 181. In order to determine whether jurisdiction is present in a removed action, the claims set forth in the state court petition are considered as of the date of removal. See Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 391, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998); Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 n. 2 (5th Cir.2007); McGowin v. ManPower Int'l, Inc., 363 F.3d 556, 558 n. 1 (5th Cir.2004); Manguno, 276 F.3d at 723. In removed cases where, as here, there is no suggestion that a federal question is involved, subject matter jurisdiction exists only if there is complete diversity among the parties and the amount in controversy exceeds $75,000.00. See28 U.S.C. § 1332; Lincoln Prop. Co., 546 U.S. at 89, 126 S.Ct. 606;Exxon Mobil Corp., 545 U.S. at 552, 125 S.Ct. 2611;Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996); Halmekangas, 603 F.3d at 294;Heritage Bank v. Redcom Labs., Inc., 250 F.3d 319, 323 (5th Cir.), cert. denied,534 U.S. 997, 122 S.Ct. 468, 151 L.Ed.2d 384 (2001). Complete diversity requires that no plaintiff be a citizen of the same state as any defendant. See Exxon Mobil Corp., 545 U.S. at 552, 125 S.Ct. 2611;Caterpillar Inc., 519 U.S. at 68, 117 S.Ct. 467;Wallace v. La. Citizens Prop. Ins. Corp., 444 F.3d 697, 702 (5th Cir.2006); Heritage Bank, 250 F.3d at 323. Furthermore, removal is appropriate only if none of the parties properly joined and served as defendants are citizens of the state in which the action was brought. See28 U.S.C. § 1441(b); Lincoln Prop. Co., 546 U.S. at 89, 126 S.Ct. 606;Gasch, 491 F.3d at 281;Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 531–32 (5th Cir.), cert. denied,548 U.S. 907, 126 S.Ct. 2945, 165 L.Ed.2d 956 (2006).

In the case at bar, although there is no dispute that Plaintiff Holmes and Defendant Acceptance are citizens of different states and that more than $75,000.00 is at issue, complete diversity may be lacking in this case because Defendant Wellington is a citizen of Texas. Therefore, to establish the existence of diversity jurisdiction, Acceptance must show that Wellington was fraudulently or improperly joined as a defendant to this action. See Crockett, 436 F.3d at 532;Guillory, 434 F.3d at 307–08;Hawthorne Land Co. v. Occidental Chem. Corp., 431 F.3d 221, 224–25 (5th Cir.2005), cert. denied,549 U.S. 811, 127 S.Ct. 48, 166 L.Ed.2d 20 (2006); Heritage Bank, 250 F.3d at 323;Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir.2000). “The removing party bears the heavy burden of proving that non-diverse defendants have been fraudulently joined to defeat diversity, either by showing that (1) there has been outright fraud in the plaintiff's recitation of jurisdictional facts, or (2) there is no possibility that the plaintiff would be able to establish a cause of action against the non-diverse defendants in state court.” Burden v. Gen. Dynamics Corp., 60 F.3d 213, 217 (5th Cir.1995); accord Gasch, 491 F.3d at 281;Larroquette v. Cardinal Health 200, Inc., 466 F.3d 373, 376 (5th Cir.2006); Holder v. Abbott Labs., Inc., 444 F.3d 383, 387 (5th Cir.2006); Guillory, 434 F.3d at 308–09;McDonal, 408 F.3d at 183;Melder v. Allstate Corp., 404 F.3d 328, 330 (5th Cir.2005); Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir.2004), cert. denied,544 U.S. 992, 125 S.Ct. 1825, 161 L.Ed.2d 755 (2005). The United...