United States District Court, W.D. Kentucky, Bowling Green Division
MEMORANDUM OPINION & ORDER
GREG N. STIVERS, District Judge.
Plaintiff filed a motion to remand this action to Warren Circuit Court. Defendants, however, assert that Crystal Baugh ("Baugh") was fraudulently joined as a defendant to defeat diversity jurisdiction, and that this matter can be heard in this forum. Because the Court finds none of the claims against Baugh colorable and the jurisdictional requirement for diversity met, the Motion to Remand (DN 6) is DENIED.
I. SUMMARY OF FACTS AND CLAIMS
While still a minor, Ashley Puri ("Puri") was injured as a passenger in her family's car on October 4, 2009. At the time of the accident, she was covered under an auto insurance policy issued by Shelter Mutual Insurance Company ("Shelter"). (Answer ¶ 9, DN 1-6). Following the accident, Baugh, Shelter's claims adjuster, contacted Puri's mother to, inter alia, settle Puri's bodily injury claim. (Compl. ¶ 9, DN 1-1; Answer ¶ 9).
On January 23, 2010, Baugh offered the sum of $1, 500 in exchange for an "indemnifying release." (Compl. ¶¶ 11-12). Communication between Baugh and Puri's mother consisted of two phone calls and two letters: one making the settlement offer and a second letter forwarding the settlement check and release. (Def's Resp. to Pl.'s Mot. to Remand Ex. 4-5, 8, DN 12-4 to 12.5, DN 12-8; Hr'g Tr. 19). On August 18, 2014, Puri filed suit in Warren Circuit Court asserting claims of negligence, fraud in the inducement, fraud by omission, and intentional infliction of emotional distress ("IIED") against Baugh relating to the release negotiations. (Compl. ¶¶ 55-81). Puri alleged that Baugh disregarded her duty to advise and misrepresented or omitted material facts over the course of her communication with Puri's mother.
Defendants then removed the lawsuit to this Court based upon diversity jurisdiction under 28 U.S.C. § 1332, arguing that Baugh's Kentucky citizenship should be disregarded for jurisdictional purposes because she was fraudulently joined to the suit. (Notice of Removal, DN 1). It is undisputed that Baugh and Plaintiff are Kentucky citizens, and that Shelter is a citizen of Missouri. The Court held a hearing on this motion on April 15, 2015. (Order, DN 21).
"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction may be removed by... the defendants." 28 U.S.C. § 1441(a). Fraudulent joinder is "a judicially created doctrine that provides an exception to the requirement of complete diversity." Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999) (citation omitted) (internal quotation marks omitted). Defendants can avoid remand "by demonstrating that the non-diverse party was fraudulently joined." Probus v. Charter Commc'n, LLC, 234 F.Appx. 404, 406 (6th Cir. 2007) (citation omitted) (internal quotation marks omitted).
Fraudulent joinder exists where "it [is] clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law...." Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994) (citation omitted). "However, if there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, [the federal] [c]ourt must remand the action to state court." Coyne, 183 F.3d at 494. "[A] claim is colorable if the state law might impose liability on the resident defendant under the facts alleged.'" Kent State Univ. Bd. of Trs. v. Lexington Ins. Co., 512 F.Appx. 485, 489 (6th Cir. 2013) (citing Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir. 2003)). Further, the federal court must resolve "all disputed questions of fact and ambiguities in the controlling... state law in favor of the nonremoving party." Coyne, 183 F.3d at 494 (citation omitted) (internal quotation marks omitted). The burden to establish jurisdiction is on the removing party. Id.
The standard for fraudulent joinder is similar to that for motions to dismiss under Fed.R.Civ.P. 12(b)(6). Courts analyzing those motions consider only pleadings and attached documents. Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). All allegations in the complaint are assumed true. Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir.1983). The standard for fraudulent joinder is even more deferential to the plaintiff than motions under Rule 12(b)(6). Walker v. Philip Morris USA, Inc., 443 F.Appx. 946, 954 (6th Cir. 2011). Because fraudulent joinder questions the court's jurisdiction rather than the merits of the claim, in analyzing motions to remand for fraudulent joinder courts are empowered to go beyond the pleadings. Id. Nonetheless, "even if the district court pierces the pleadings' to consider summary-judgment-type evidence (such as depositions, affidavits, etc.), the proper standard for evaluating that evidence remains akin to that of a Rule 12(b)(6) motion to dismiss, and is arguably even more deferential." Id. Further, "any contested issues of fact must be construed in the plaintiff's favor." Id.
A removing defendant must prove the jurisdictional requirements are met by a preponderance of the evidence. Everett v. Verizon Wireless, Inc., 460 F.3d 818, 829 (6th Cir. 2006). For diversity jurisdiction, these requirements include complete diversity and a specified amount in controversy. 28 U.S.C. § 1332(a). In this case, these requirements demand the case be remanded should any defendant be found to share plaintiff's Kentucky citizenship or the amount in controversy be less than $75, 000.
To determine whether the diversity requirement is met, the Court must determine whether Plaintiff has stated viable claims for negligence, fraud, or intentional infliction of emotional distress against Baugh, a fellow Kentucky citizen of Plaintiff, under the fraudulent joinder standard. Should these claims survive that standard, complete diversity would be lacking. The amount in controversy requirement concerns all claims against both Shelter and Baugh. Even when the amount is unspecified, "clear allegations" in the complaint that a case involves a "sum well in excess of the $75, 000" are sufficient for jurisdictional purposes. Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 573 (6th Cir. ...