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Griffin v. Middlefork Insurance Agency

United States District Court, E.D. Kentucky, Southern Division, London

October 4, 2017

GERALDINE GRIFFIN PLAINTIFF
v.
MIDDLEFORK INSURANCE AGENCY, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          DAVID L. BUNNING DISTRICT JUDGE.

         This matter is before the Court upon Plaintiff Geraldine Griffin's Motion to Remand (Doc. # 5). In her motion, Plaintiff contests Defendant Allstate Insurance Company's removal of this action based on diversity jurisdiction and asks the Court to remand the matter to the Owsley County Circuit Court. The Motion is fully briefed (Docs. # 6 and 7) and ripe for the Court's review. For the reasons stated herein, this Court has jurisdiction under 28 U.S.C. § 1332. Therefore, Plaintiff's Motion to Remand (Doc. # 5) is denied.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On June 23, 2017, Plaintiff filed this civil action against Defendants Middlefork Insurance Agency (“Middlefork”) and Allstate Insurance Company (“Allstate”) in Owsley County Circuit Court, asserting claims for breach of contract, fraud, and violations of the Kentucky Unfair Claims Settlement Practices Act (“UCSPA”). (Doc. # 1-1 at 15-25). On July 28, 2017, Defendant Allstate removed this case to federal court based on diversity jurisdiction. (Doc. # 1). In its Notice of Removal, Allstate acknowledged that on the face of the Complaint, complete diversity of citizenship does not exist. Id. at ¶ 9. However, Allstate asks the Court to disregard the fact that Defendant Middlefork is a Kentucky citizen because the “improper or fraudulent joinder of a non-diverse defendant will not defeat removal on diversity grounds.” Id. at ¶ 10. In response, Plaintiff filed the instant Motion to Remand, arguing that this case is not removable and that Middlefork was not improperly or fraudulently joined. (Doc. # 5).

         II. ANALYSIS

         A. Standard of Review

         A defendant may remove any civil action “of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(1). Once a case is removed, a plaintiff may bring a motion to remand under 28 U.S.C. § 1447(c). “[R]emoval statutes are to be narrowly construed.” Long v. Brando Mfg. of Am., Inc., 201 F.3d 754, 757 (6th Cir. 2000). Therefore, “[a]ll doubts as to the propriety of removal are resolved in favor of remand, ” and the “party ‘seeking to bring a case into federal court carries the burden of establishing'” federal jurisdiction. Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999).

         Under 28 U.S.C. § 1332, district courts have original jurisdiction of all civil actions where the amount in controversy exceeds $75, 000 and where there is complete diversity of citizenship-meaning that “all parties on one side of the litigation are of a different citizenship from all parties on the other side of the litigation.” SHR Ltd. P'ship v. Braun, 888 F.3d 455, 456 (6th Cir. 1989). When removal is based on diversity jurisdiction, the citizenship of the defendants as of the time of removal must be considered. Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000). However, the citizenship of an improperly or fraudulently joined defendant is disregarded and “does not defeat removal on diversity grounds.” Coyne, 183 F.3d at 493 (internal citations omitted).

         B. Improper or Fraudulent Joinder

         “To prove fraudulent joinder, the removing party must present sufficient evidence that a plaintiff could not have established a cause of action against” the non-diverse defendant “under state law.” Id. at 492-93 (citing Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994)). Put another way, a defendant is fraudulently joined only “if 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.'” Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 432-33 (6th Cir. 2012) (quoting Alexander, 13 F.3d at 949).

         “However, if there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, ” the action must be remanded to state court. Coyne, 183 F.3d at 493. When considering the viability of a plaintiff's claims, the Court must “resolve all disputed questions of fact and ambiguities in the controlling state law in favor of the non-removing party.” Id. The “combination of the ‘colorable' standard with the requirement that all ambiguities of state law … be resolved in favor of the non-removing party” creates a “particularly heavy burden” for the defendant. Kent State Univ. Bd. of Trs. V. Lexington Ins. Co., 512 F. App'x 485, 2013 WL 216026 (6th Cir. 2013) (table). In fact, “[w]hen deciding a motion to remand, including fraudulent joinder allegations, ” the Court applies “a test similar to, but more lenient than, the analysis applicable to a Rule 12(b)(6) motion to dismiss.”[1] Casias, 695 F.3d at 433 (citing Walker v. Philip Morris USA, Inc., 443 F. App'x 946, 952-54 (6th Cir. 2011)).

         The single issue presented here is whether the parties are completely diverse. Neither party disputes the Plaintiff's or Defendants' citizenship. Plaintiff is a citizen of Kentucky. (Docs. # 1 at ¶ 6; 1-1 at 16). Defendant Allstate is a citizen of Illinois. (Doc. # 1 at ¶ 7). Defendant Middlefork is a citizen of Kentucky. Id. at ¶ 8. Therefore, if Middlefork is a properly joined defendant in this matter, complete diversity will not exist, and remand would be required. Accordingly, the Court will consider each claim asserted against Middlefork and whether there is a colorable basis for predicting that the Plaintiff may recover on such a claim.

         1. Breach of Contract Claim

         Plaintiff's Complaint does not state a colorable breach-of-contract claim against Middlefork. To establish a cause of action for breach of contract, the Plaintiff must establish “three things: (1) existence of a contract; (2) breach of that contract; and (3) damages flowing from the breach of contract.” Metro Louisville/Jefferson Cty. Gov't v. Abma, 326 S.W.3d 1, 8 (Ky. Ct. ...


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