Mills v. White Contracting, Inc.

JERRY D. MILLS, JR; and STACY S. MILLS PLAINTIFFS v. WHITE CONTRACTING, INC.; SHIRLEY TRUCKING, LLC;NATIONAL FIRE INSURANCE COMPANY OF HARTFORD;and JOHN DOES 1-5 DEFENDANTS

NO. 3:14-CV-00020-DMB-SAA

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI OXFORD DIVISION

March 27, 2015

ORDER GRANTING REMAND

Plaintiffs Jerry D. Mills, Jr., and Stacy S. Mills brought this action in the Circuit Court of Tate County, Mississippi, against Defendants White Contracting, Inc., Shirley Trucking, LLC, and National Fire Insurance Company of Hartford ("National Fire"). Doc. #2. Plaintiffs assert claims for breach of contract and bad faith arising from an alleged refusal by White Contracting, Shirley Trucking and/or National Fire to provide workers compensation benefits to Jerry Mills. Id. National Fire removed the action to this federal district court based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). Doc. #1. Plaintiffs have filed a motion to remand on grounds that this Court lacks subject matter jurisdiction because: (1) there is no complete diversity among the parties; and (2) 28 U.S.C. § 1446(b)¹ bars removal. Doc. # 9. For the reasons below, Plaintiffs' motion to remand is granted.

IRelevant Allegations and Procedural Posture

Prior to April 7, 2011, White Contracting awarded a contract to Shirley Trucking to assist with the cleanup of right-of-ways along Interstate 55 in Tate County, Mississippi ("Interstate 55 job"). Doc. #2 at ¶ 7. In accordance with an agreement between White Contracting and Shirley Trucking, White Contracting withheld workers compensation premiums from checks made payable to Shirley Trucking in exchange for securing workers compensation insurance for the employees of Shirley Trucking. Id. at Ex. B. White Contracting secured a workers compensation insurance policy from National Fire for the period September 30, 2010, to September 30, 2011. Id. at Ex. A. Shirley Trucking represented to its employee Jerry that he would be provided workers compensation coverage during the Interstate 55 job. Id. at ¶ 8.

On April 7, 2011, Jerry, while working on the Interstate 55 job, was injured when a co-worker negligently caused a tree to collide with him. Doc. #2 at ¶ 9. "Almost immediately" after the injury, Jerry made a claim for workers compensation benefits pursuant to the agreement between White Contracting and Shirley Trucking. Id. at ¶ 10. Shortly thereafter, White Contracting and Shirley Trucking became aware of the injury and Jerry's request for benefits. Id. at ¶ 10. National Fire, White Contracting, and/or Shirley Trucking denied the claim for benefits. Id. White Contracting subsequently refunded the workers compensation premiums to Shirley Trucking. Id.

On September 20, 2011, Plaintiffs filed their original complaint in the Circuit Court of Tate County, Mississippi, against Defendants White Contracting, Shirley Trucking, and John Does 1-5. Doc. #4 at 5. Plaintiffs alleged that, as a result of Defendants' conduct, Jerry incurred financial loss in the form of medical expenses, loss of income and income earning capacity, lossof property, and pain and suffering. Id. at 9. Additionally, Plaintiffs alleged that Stacy Mills, Jerry's wife, suffered loss of consortium, including a loss of Jerry's love and affection. Id.

On June 22, 2012, Jerry filed a Petition to Controvert with the Mississippi Workers' Compensation Commission ("MWCC") naming White Trucking as contractor-employer and National Fire as insurance carrier. Doc. #13-5. On October 17, 2012, the Circuit Court of Tate County voluntarily dismissed, without prejudice, "all tort claims against Defendants, except those sounding in bad faith," and stayed the case pending resolution of Plaintiffs' litigation before the MWCC. Doc. #13-8.

Following resolution of the MWCC litigation, on December 16, 2013, Plaintiffs filed their first amended complaint against White Contracting, Shirley Trucking and National Fire for breach of contract and bad faith refusal to provide workers compensation benefits. Doc. #2.

On January 31, 2014, National Fire filed a Notice of Removal, alleging that this Court has jurisdiction over the action pursuant to diversity of citizenship under 28 U.S.C. § 1332(a). Doc. #1. In its notice, National Fire argues that Plaintiffs cannot prevail on either cause of action against Shirley Trucking and, consequently, under the doctrine of improper joinder, there is complete diversity of citizenship.² Id. at 4-15.

On February 5, 2014, approximately one week after this case was removed, the state court entered an order of dismissal as to White Contracting.³ Doc. #15-4.

On March 31, 2014, Plaintiffs filed a motion to remand, arguing that this Court lacks subject matter jurisdiction because: (1) Shirley Trucking is a properly joined defendant that defeats complete diversity; and (2) 28 U.S.C. § 1446(b) bars removal when, as in the present case, one year has passed since initiation of the suit. Doc. #9. Because the Court finds that Shirley Trucking's presence in the action defeats complete diversity, it will not consider whether § 1446(b) applies.

IIDiversity and Improper Joinder

Diversity jurisdiction requires that there be: (1) complete diversity between the parties; and (2) an amount in controversy in excess of $75,000. 28 U.S.C. § 1332. "Complete diversity requires that all persons on one side of the controversy be citizens of different states than all persons on the other side." Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (internal quotation marks omitted). National Fire alleges, and Plaintiffs do not contest, that the amount in controversy exceeds $75,000. Doc. #1 at ¶ IX. However, there is also no dispute that Plaintiffs are Mississippi citizens and that Shirley Trucking, a citizen of Mississippi, is a non-diverse defendant. Nevertheless, National Fire argues that Shirley Trucking has been improperly joined and that, therefore, its citizenship may be disregarded for the purpose of assessing diversity jurisdiction. Doc. #13 at 6.

"The improper joinder doctrine constitutes a narrow exception to the rule of complete diversity."⁴ McDonal v. Abbot Labs. 408 F.3d 177, 183 (5th Cir. 2005). Under this rule, "a district court is prohibited by statute from exercising jurisdiction over a suit in which any party ... has been improperly or collusively joined to manufacture federal diversity jurisdiction." Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 572 (5th Cir. 2004) (en banc). The "heavy" burden of showing improper joinder rests with the removing party. Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011) (citation omitted).

The Fifth Circuit has recognized two ways to establish improper joinder: "(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003). National Fire concedes that "the actual fraud prong ... test has no application to the issue before the Court." Doc. #13 at 6. Rather, National Fire argues that remand is proper because Plaintiffs cannot establish a cause of action against Shirley Trucking. Id.

The second improper joinder inquiry centers on "whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." Smallwood, 385 F.3d at 573 (citation omitted). In resolving this question, "[a] district court should ordinarily ... conduct[] a Rule 12(b)(6)-type analysis. However, in cases where the plaintiff has stated a claim, but 'misstated or omitted discrete facts' the district court has the discretion to pierce the pleadings and conducta summary inquiry." McDonal, 408 F.3d at 183 n.6. The party asserting improper joinder bears the burden at each stage of this inquiry. See Barbee v. Scott, No. H-10-1797, 2010 WL 3257477, at *7 (S.D. Tex. Aug. 17, 2010) ("The court concludes, therefore, that under a Rule 12(b)(6)-type analysis the defendants have failed to meet their burden of establishing improper joinder."); see also Veritas Consulting Grp. Inc. v. Gasbuddy Org., Inc., No. C-10-147, 2010 WL 2598386, at *3 n.3 (S.D. Tex. June 24, 2010) ("[E]ven if this Court were to pierce the pleadings and consider the summary judgment type evidence, removing Defendants have not met their burden of proving improper joinder.").

When the court elects to pierce the pleadings, it may consider summary judgment-type evidence, such as affidavits. Toney v. Lowery Woodyards and Employer's Ins. of Wausau, 278 F.Supp.2d 786, 790 (S.D. Miss. 2003) (citing Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256 (5th Cir. 1995)). In so doing, the court must "take into account all unchallenged factual allegations, including those alleged in the complaint, in the light most favorable to the plaintiff." Travis, 326 F.3d at 649. Furthermore, "[a]ny contested issues of fact and any ambiguities of state law must be resolved in [the plaintiff's] favor." Id. However, "if the defendant presents summary judgment-type evidence to show that plaintiff's allegations in his complaint are unfounded as a matter of fact, then the plaintiff, to secure remand, may not rest on the mere allegations or denials of [his] pleadings, or rely on conclusory or generic allegations of wrongdoing on the part of the non-diverse defendant ...." Toney, 278 F.Supp.2d at 790 (internal citations and quotation marks omitted).

A. 12(b)(6) Inquiry

In their amended complaint, Plaintiffs bring nine claims against Shirley Trucking: (1) a breach of contract action based on a breach of alleged promise made by Shirley Trucking toMills that it would provide worker's compensation ("Shirley-Mills Agreement"); (2) a third-party beneficiary claim...