United States District Court, E.D. Kentucky, Northern Division, Ashland
MEMORANDUM OPINION AND ORDER
R. WILHOIT, JR. JUDGE.
matter is before the Court on its own motion based on the
Court's inherent power and duty to insure the
requirements for subject matter jurisdiction are satisfied in
of Removal [Docket No. 1] in the above-styled action states
that this Court may exercise subject matter jurisdiction over
this matter pursuant to 28 U.S.C. §1332. Upon review of
the Notice, this Court found that a serious question existed
as to whether it may properly exercise jurisdiction over this
matter. Specifically, in setting forth the basis for removal,
Defendants maintain that Lindsey Patton has been fraudulently
joined as parties so as to defeat federal jurisdiction This
Court directed the parties to submit briefs in this regard
[Docket No. 4]. Having reviewed the parties' submissions
[Docket Nos. 5 and 6], as well as the record herein, the
Court finds that Defendants have not met the stringent
requirements for establishing fraudulent joinder, and, as
such, remand is warranted
February 7, 2018, a six-foot portion of the cinderblock
foundation of the Hambeltons' home collapsed. [Complaint,
Docket No, 1-1, ¶ 10]. At all relevant times, the
Hambeltons had insurance coverage for their home through
Defendant State Farm, Policy Number 17-BY-G955-1.
Id. at ¶¶6-9.
February 13, State Farm's adjuster, Defendant Linsdey
Patton, inspected the home and indicated to Plaintiffs that
"there was nothing that could have been done to prevent
it," that he was not qualified to handle the claim, and
that he would have someone more qualified look into the
matter. Id. at ¶¶ 17-19. One week later,
the Hambeltons received a letter from Patton stating, that
the collapse had been caused by the "expansion of the
adjacent soil from the hydrostatic pressure placed on it from
the heavy rains, and soil saturation we have in the area
currently." Patton added that "based on the
information we currently have and the policy language noted
above, we are unable to assist you with this loss."
Id. at ¶¶ 20-21.
Hambeltons filed this lawsuit against State Farm as well as
Lindsey Patton in Greenup Circuit Court alleging that State
Farm breached its contract of insurance and violated
Kentucky's Consumer Protection Act, KRS.367.110 et
seq. [Docket No. 1-1, Counts 1 and VI]. Plaintiffs also
allege the following claims against both State Farm and its
adjuster, Linsdey Patton: negligence and bad faith, under
both common law and Kentucy's Unfair Settlement Practices
Act ("UCSPA"), KRS.304.12-230 and 304.12-235.
Id., Counts II, III, IV, and V. Plaintiffs seek
compensatory and punitive damages.
filed a Notice of Removal alleging jurisdiction pursuant to
28 U.S.C. § 1332, which provides, in pertinent part:
The district courts shall have original jurisdiction of all
civil actions where the matter in controversy exceeds the sum
or value of $75, 000, exclusive of interest and costs, and is
between... citizens of different States;
28 U.S.C. § 1332 (a)(1). The requisite amount in
controversy does not appear in dispute, as the policy at
issue has limits of $75, 400 for the dwelling with dwelling
extension costs, $56, 550 for personal property and actual
loss for loss of use. [Docket No. 1].
regard to citizenship, in its Notice of Removal Defendants
state that Plaintiffs are citizens of Kentucky, State Farm is
a citizen and domiciliary of the State of Illinois, where it
maintains its principal place of business and that Lindsey
Patton is a citizen of Kentucky. Id. at ¶¶
acknowledge that absence of diversity of citizenship but
claims that the non-diverse Defendant Lindsey Patton was
fraudulently joined as a defendant for the specific purpose
of defeating federal jurisdiction. They contend that, as
Patton was fraudulently joined, his citizenship is not
relevant to the jurisdiction inquiry and that this Court may
properly exercise jurisdiction over this matter.
"party seeking to bring a case into federal court
carries the burden of establishing diversity
jurisdiction." Coyne v. Am. Tobacco Co., 183
F.3d 488, 493 (6th Cir. 1999) (internal citation and
quotation marks omitted). There must be complete diversity
such that no plaintiff is a citizen of the same state as any
defendant. V&M Star, LP v. Centimark Corp., 596
F.3d 354, 355 (6th Cir. 2010) (citing Lincoln Prop. Co.
v. Roche,546 U.S. 81, 89 (2005)). However, fraudulent
joinder of a non-diverse party does not defeat removal on
diversity grounds. Alexander v. Elec. Data Sys.
Corp.,13 F.3d 940, 948-49 (6th Cir. 1994). The relevant
inquiry is whether the plaintiff had at least a colorable
cause of action against the defendant in state court.
Jerome-Duncan, Inc. v. Auto-By-Tel, LLC, 176 F.3d
904, 907 (6th Cir. 1999), A colorable cause of action exists
if there is "arguably a reasonable basis for predicting
that the state law might impose liability on the facts
involved." Alexander, 13 F.3d at 949. This is a
less searching inquiry than that triggered by a motion to
dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure. See Gibson v. Am. Min. Ins. Co., No.
08-118-ART, 2008 WL 4602747, *5 (E.D. Ky. Oct. 16, 2008)
(citing Batoff v. State Farm Ins. Co.,977 F.2d 848,
852 (3d Cit. 1992)). "If there is a colorable basis for
predicting that a plaintiff could recover against the