Stuart v. GEICO Gen. Ins. Co.

LISA STUART, Plaintiff, v. GEICO GENERAL INSURANCE COMPANY, Defendant.

1:19cv319

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

November 14, 2019

MEMORANDUM OPINION, RECOMMENDATION, AND ORDER OF UNITED STATES MAGISTRATE JUDGE

This case comes before the Court on "Plaintiff['s] Motion to Remand to State Court" (Docket Entry 14)¹ (the "Remand Motion") and on the "Motion to Dismiss" (Docket Entry 8) (the "Dismissal Motion") filed by GEICO General Insurance Company (the "Defendant"). For the reasons that follow, the Court (I) will deny the Remand Motion² and (ii) should deny the Dismissal Motion.

BACKGROUND

On February 12, 2019, Lisa Stuart (the "Plaintiff") initiated a lawsuit against Defendant in the North Carolina General Court of Justice for Durham County (see Docket Entry 1 at 1; see also DocketEntry 4 (the "Complaint") at 1)³ related to the nonpayment of uninsured/underinsured motorist insurance ("UIM") benefits arising from an accident on February 13, 2016 (see, e.g., Docket Entry 4, ¶¶ 6-11). Asserting the existence of diversity jurisdiction, see 28 U.S.C. § 1332, Defendant timely removed the lawsuit to this Court under 28 U.S.C. §§ 1441 and 1446. (See Docket Entry 1 at 1-4.) Shortly thereafter, Defendant moved to dismiss the lawsuit pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (the "Rules"), contending "that Plaintiff's Complaint fails to state a claim upon which relief can be granted pursuant to the contract at issue in this matter." (Docket Entry 8 at 1.)

Plaintiff responded by opposing the Dismissal Motion (see Docket Entry 22) and seeking to remand this lawsuit to state court (see Docket Entry 14). In particular, the Remand Motion contends that "a lack of complete diversity of citizenship among the parties exists," on the theory that, "[p]ursuant to 28 U.S.C. § 1332(c)(l)(A)[,] Defendant . . . is deemed to be a citizen of North Carolina, the same state as its insured Plaintiff." (Id. at 3.) Defendant, in turn, opposes the Remand Motion. (See generally Docket Entry 17.)

As relevant to the pending motions, the Complaint alleges the following:

Plaintiff "is a citizen and resident of Durham County, North Carolina." (Docket Entry 4, ¶ 1.) Defendant "is a foreign corporation, incorporated in the State of Maryland," with "[i]ts primary place of business" also located in Maryland. (Id., ¶ 2.) However, "[t]he events at issue in this lawsuit took place in Durham County, North Carolina." (Id., ¶ 4.) "On or about September 10, 2015 Plaintiff purchased and Defendant issued an automobile liability [insurance] policy to Plaintiff and her ex-husband, which is attached [to the Complaint] as Exhibit 'A.'" (Id., ¶ 6.) This insurance policy provides for UIM benefits "of $100,000.00 per person/$300,000.00 per accident." (Id.)

"Prior to the institution of this action, Plaintiff filed a [c]omplaint against Sakura Amoan Anning Yoshihara and EAN Holdings LLC for damages Plaintiff suffered stemming from a February 13, 2016 motor vehicle collision (16 CVS 3853 - Durham County, NC)" (the "Durham County Action"). (Id., ¶ 7.) Plaintiff served Defendant with a copy of the summons and complaint in that action. (Id., ¶ 8.) "On or about November 30, 2016 Plaintiff settled her claim against the defendants in the previous case. However, her damages exceeded the $30,000.00 liability policy limit amount tendered by the at-fault carrier." (Id., ¶ 9.) "On or about December 5, 2016 Plaintiff presented a[] UIM claim to Defendant. Defendant has denied Plaintiff's UIM claim." (Id., ¶ 10.) "As a result of the exhaustion of the at-fault carrier's liabilitylimits, as a first-class insured under Defendant's liability policy with damages that exceeded the at-fault carrier's liability limits, Plaintiff is entitled to coverage under the UIM provisions of Defendant's liability policy." (Id., ¶ 11.)

"Plaintiff's damages stemming from the February 13, 2016 motor vehicle collision which exceeded the at-fault carrier's policy limits were covered under Defendant's policy attached as Exhibit A" to the Complaint. (Id., ¶ 15.) "Under the terms of Defendant's policy attached as Exhibit A, Defendant is obligated to compensate Plaintiff for these damages." (Id., ¶ 16.) "Defendant breached the terms of the automobile insurance policy by wrongfully, and without just cause, failing and refusing to honor the UIM provision of its insurance cont[r]act by not compensating Plaintiff for her damages which exceeded the at-fault carrier's policy limits." (Id., ¶ 17.)

In addition, Defendant acted in bad faith by, inter alia:

a. Failing to act in good faith in investigating damages suffered by Plaintiff and failing to follow accepted standards within the insurance industry of dealing with such a claim;

b. Acting willfully and wantonly with the intention of causing financial injury to Plaintiff while protecting Defendant's insurance reserves;

c. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;

d. Compelling the insured to institute litigation to recover amounts due under an insurance policy by offeringsubstantially less than the amounts ultimately recovered in actions brought by such insured;

e. Attempting to settle a claim for less than the amount to which a reasonable person would have believed she was entitled;

f. Receiving payment of Plaintiff's insurance premium payments, but deliberately den[ying] her UIM claim and refus[ing] to pay all of her outstanding motor vehicle collision related medical bills, consider her pain and suffering, and other incurred expenses;

g. Concluding some of her treatment was unrelated to the collision despite Plaintiff producing causation documentation from a medical professional per Defendant's request; [and]

h. Unilaterally concluding some of Plaintiff's medical issues were unrelated to the collision [without requesting that] Plaintiff undergo an Independent Medical Examination to obtain contrary causation documentation from a medical professional; . . . .

(Id., ¶ 29; see also id., ¶¶ 20-26 (relying on similar allegations to assert claim for unfair and deceptive trade practices under North Carolina General Statute Section 75-1.1).)⁴

The insurance policy attached as Exhibit A to the Complaint bears the title "Florida Family Automobile Insurance Policy" (id. at 13) and contains a "Choice of Law" provision specifying that "[t]he policy and any amendment(s) and endorsement(s) are to be interpreted pursuant to the laws of the state of Florida" (id. at 31). In the applicable UIM benefits section, the policy statesthat Defendant "will pay damages for bodily injury, sustained by an insured, caused by accident which the insured is legally entitled to recover from the owner or operator of an uninsured auto arising out of the ownership, maintenance or use of that auto." (Id. at 52 (emphasis omitted).)⁵ This section also contains a segment entitled "Disputes between [Defendant] and an insured" (id. at 53 (emphasis omitted)), which provides:

1. Disputes between an insured and [Defendant] as to damages may be submitted to arbitration. Arbitration must be agreed to in writing between the insured and [Defendant].

If arbitration is agreed upon, each party shall select an impartial arbitrator. These arbitrators shall select a third one. The cost of the arbitration and any expenses for experts shall be paid by the party who hired them. The cost of the third arbitrator shall be paid equally by the parties.

2. If the insured and [Defendant] cannot agree to arbitrate or agree to a third arbitrator, the insured shall:

(a) Sue the owner or driver of the uninsured auto and [Defendant] in a court of competent jurisdiction. If the owner or driver is unknown, name [Defendant] as the defendant.

(b) When suit is filed, immediately give [Defendant] copies of the suit papers.

3. If the insured agrees to settle with another insurer, the insured must submit to [Defendant] in writing by certified or registered mail a copy of the proposed settlement.

4. If within 30 days after receipt of the proposed settlement agreement, [Defendant] do[es] not(a) Approve the proposed settlement and the signing of the full release[,]

(b) Waive [its] subrogation rights, and

© Agree to arbitrate the claim,

the insured shall then file suit against [Defendant] and the person(s) legally liable.

The insured may not dismiss a defendant from such lawsuit without [Defendant's] prior written consent.

5. Any award against [Defendant] shall be binding and conclusive against [Defendant] and the insured up to [Defendant's] coverage limit.

(Id. (emphasis omitted) (formatting in original).)

DISCUSSION

I. Remand Motion

A defendant may remove to federal court "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). When, as here, diversity jurisdiction forms the basis of federal jurisdiction (see, e.g., Docket Entry 1 at 1), complete diversity must exist between the plaintiffs and defendants, "that is, no plaintiff may be a citizen of the same state as any defendant," Elliott v. American States Ins. Co., 883 F.3d 384, 394 (4th Cir. 2018). Plaintiff disputes the existence of complete diversity. (See generally Docket Entry 14.)⁶ In other words, notwithstanding the Complaint's allegations of complete diversity (see Docket Entry4, ¶¶ 1-2 (asserting that Plaintiff possesses North Carolina citizenship and Defendant possesses Maryland citizenship)), Plaintiff now contends that Plaintiff and Defendant "are all citizens of North Carolina for purposes of 28 U.S.C. §§ 1332 and 1441," rendering removal improper (Docket Entry 14, ¶ 15).

More specifically, Plaintiff asserts that "this is a direct action against" an insurer under an insurance policy "in which the insured . . . is not a party-defendant," such that, pursuant to 28 U.S.C. § 1332(c)(1)(A), Defendant "is deemed to be a citizen of the same state as the insured, [Plaint...