United States District Court, W.D. Kentucky
MEMORANDUM OPINION & ORDER
B. Russell, Senior Judge.
matter is before the Court upon a motion by Plaintiff, Lance
Wright, to remand this action to Jefferson County Circuit
Court, where Plaintiff filed it. (DN 10). Defendant, State
Farm Mutual Automobile Insurance Company (“State
Farm”), has responded to Plaintiff’s motion. (DN
13). Defendant, Bob Dotson Insurance Agency, Inc., responded
to Plaintiff’s arguments in its response to
Plaintiff’s motion to place Defendants’ motion to
dismiss in abeyance. (DN 12). Plaintiff has filed his reply.
(DN 16). Fully briefed, this matter is ripe for review and
for the following reasons, Plaintiff’s motion to remand
factual allegations as set forth in the Complaint, (DN 1-2 at
4), and taken as true are as follows. On March 15, 2018, Plaintiff
suffered a fractured pelvis and several other injuries in a
serious vehicle accident. (Id. (Complaint) at ¶
10). On March 20, 2018, Plaintiff sent a letter to State Farm
advising the insurer to produce “all policy
declarations for all policies which would potentially provide
[Plaintiff] with coverage.” (Id. at ¶
11). State Farm responded by calling Plaintiff to tell him
that he did not have underinsured motorist coverage
(“UIM”) but eventually identified a claims
handler for the UIM claim and offered to settle the claim for
the “policy limits” of $25, 000. (Id. at
¶ 12-14). The vehicle identified on the policy was a
2007 Ford Edge. (Id. at ¶ 14).
alleges that, after accepting the claim settlement, he
discovered that State Farm had been systematically
misrepresenting coverage available to its insureds and that
the Dotson Agency (the “Agency”) alters their
insureds’ policies. (Id. at ¶ 15).
Plaintiff lives with several family members who acquired
insurance from State Farm through the Agency. (Id.
at ¶ 15-21). In fact, Plaintiff claims that there are
more than a dozen vehicles which have been insured by State
Farm and the Agency which grant coverage to Plaintiff.
(Id.) These coverages were for family members living
in a single connected residence with three different
addresses. (Id.) Plaintiff alleges that State Farm
and the Agency were aware when they issued the policies that
these addresses were part of one connected residence.
(Id. at ¶ 21). Although he informed Defendants
about these additional policies, State Farm and the Agency
refused to produce the household policy coverages to
Plaintiff. (Id. at 22). Plaintiff alleges that
“[t]he Dotson Agency and State Farm, in a blatant
effort to disguise and misrepresent coverages, insured some
vehicles of the household members under one street address
while insuring other vehicles of the household members under
[policies] with different street addresses listed.”
(Id.). Plaintiff also alleges that “the
Defendant Bob Dotson Agency has already confirmed that they
have forged several of their customers’ policies in an
effort to try and deny them coverage.” (Id.).
And Plaintiff claims that “State Farm and the Dotson
Agency blatantly misinform their agents and claims handlers
that there is no mechanism for them to identify State Farm
coverages by an address.” (Id. at ¶ 26).
Plaintiff sent a list of the fifteen vehicles allegedly
insured by State Farm and the Agency to State farm and
requested coverage declarations for the policies.
(Id. ¶ 27-29). State Farm responded with
coverage declarations for only five of the vehicles and
refused to produce any others. (Id. at ¶ 29).
Plaintiff then “reiterated the request for the ten or
more outstanding coverages.” (Id. at ¶
31). State Farm denied these requests. (Id.).
Plaintiff also requested these documents from the Agency, who
denied his requests. (Id.).
filed his Complaint against State Farm and the Agency in
Jefferson Circuit Court, alleging violations of the Kentucky
Consumer Protection Act, the Kentucky Unfair Claims and
Settlement Practices Act, common law bad faith, breach of
contract, fraudulent misrepresentation, and civil conspiracy.
Plaintiff claims that “State Farm and the Bob Dotson
Insurance Agency, and in furtherance of a civil conspiracy,
withheld information from Mr. Wright and his counsel that he
was actually insured under multiple insurance policies
affording him tens, if not hundreds, of thousands of dollars
in coverage.” (DN 10 at 2-3).
November 21, 2018, State Farm removed this action under
diversity jurisdiction. Because the Plaintiff and the Agency
are both citizens of Kentucky, there is no diversity on the
face of the complaint. But State Farm argues that “the
Kentucky citizenship of Agent Dotson should be ignored under
fraudulent joinder because Wright failed to assert a
colorable claim against Agent Dotson.” (DN 13 at 4).
State Farm argues that the Agency is fraudulently joined
because (1) Plaintiff’s bad faith claim against the
Agency fails as a matter of law because the Agency was not a
party to the contract of insurance between Plaintiff and
State Farm; (2) Plaintiff’s claim of fraudulent
misrepresentation fails because Plaintiff does not plead
fraud with sufficient specificity and the allegations against
the Agency do not support a claim of fraud; and (3) Plaintiff
cannot assert a colorable claim against the Agency for civil
conspiracy because he has no viable free-standing cause of
action and because no civil conspiracy claim can be brought
against an insurance agent and its insurer as a matter of
law. (DN 13 at 20-21). Plaintiff’s motion to remand is
now before the Court and for the following reasons, it is
burden to establish federal subject matter jurisdiction lies
with the party seeking removal. Vill. Of Oakwood v. State
Bank & Trust Co., 539 F.3d 373, 377 (6th Cir. 2008)
(citing Ahearn v. Charter Township of Bloomfield,
100 F.3d 451, 453-54 (6th Cir. 1996)). Generally, a defendant
may remove a civil case to federal court only if the action
is one over which the federal court could have exercised
original jurisdiction. See 28 U.S.C. § 1441,
1446. Because Plaintiff’s complaint does not raise a
federal question, the exclusive basis for federal subject
matter jurisdiction is 28 U.S.C. § 1332, which requires
the citizenship of each plaintiff to be diverse from the
citizenship of each defendant. See Caterpillar Inc. v.
Lewis, 519 U.S. 61, 67-68, 117 S.Ct. 467, 136 L.Ed.2d
437 (1996) (explaining the principle of complete diversity).
While Plaintiff, a citizen of the Commonwealth of Kentucky,
is diverse from State Farm, a company that is incorporated
and maintains its principal place of business in Illinois, he
is not diverse from the Bob Dotson Insurance Agency, a
Kentucky corporation. Therefore, complete diversity is
lacking based on the face of Plaintiff’s complaint. (DN
1-2 at 4). However, the Defendants insist that Plaintiff
fraudulently joined the Bob Dotson Insurance Agency in an
effort to defeat diversity jurisdiction and confine the case
to state court.
bear the burden of proving 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 non-diverse defendants
under state law.” Chambers v. HSBC Bank USA,
N.A., 796 F.3d 560, 564-65 (6th Cir. 2015) (quoting
Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th
Cir. 1999)). “If there is a colorable basis for
predicting that a plaintiff may recover against non-diverse
defendants, [the district] Court must remand the action to
state court.” Taco Bell Corp. v. Dairy Farmers of
Am., Inc., 727 F.Supp.2d 604, 607 (W.D. Ky. 2010)
(citing Coyne, 183 F.3d at 493). In other words, if
Plaintiff’s claims have even “a ‘glimmer of
hope, ’ there is no fraudulent joinder.”
Murriel-Don Coal Co. v. Aspen Ins. UK Ltd., 790
F.Supp.2d 590, 597 (E.D. Ky. 2011) (quoting Hartley v.
CSX Transp., Inc., 187 F.3d 422, 426 (4th Cir. 1999)).
This is a “heavy burden, ” Mayes v.
Rapoport, 198 F.3d 457, 463 (4th Cir. 1999), as
Defendants must demonstrate that there is no genuine basis
upon which Plaintiff may be able to recover against the Bob
Dotson Insurance Agency. Coyne, 183 F.3d at 493.
standard for a defendant to successfully show fraudulent
joinder is even higher than the standard a defendant must
meet to succeed on a motion to dismiss pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure.
Anderson v. Merck & Co. Inc., 417 F.Supp.2d 842,
845 (E.D. Ky. 2006) (citing Little v. Purdue Pharma,
L.P., 227 F.Supp.2d 838, 845-46 (S.D. Ohio 2002)).
“[T]he benefit of the doubt given a plaintiff as part
of the fraudulent joinder inquiry should be more deferential
than even that given under Rule 12(b)(6). . . . [A] decision
overruling a motion for remand where the defendant is
claiming fraudulent joinder connotes that a plaintiff’s
claim, as to the non-diverse defendant, has no basis in law
or reason.” Little, 227 F.Supp.2d at 846-47;
see also Casias v. Wal-Mart Stores, Inc., 695 F.3d
428, 433 (6th Cir. 2012).
always the case in matters concerning comity and federalism,
any ambiguity must be resolved against removal. See
Brirly v. Alusuisse Flexible Packaging, Inc., 184 F.3d
527, 534 (6th Cir. 1999) (explaining that “the statutes
conferring removal jurisdiction are to be construed strictly
because removal jurisdiction encroaches on a state
court’s jurisdiction” and that ambiguities
regarding the scope of removal “should be resolved in
favor of remand to the state courts.”). Furthermore,
any ambiguities in the relevant state law must be resolved in
the light most favorable to the plaintiff. Walker v.
Phillip Morris USA, Inc., 443 F. App’x 946, 951
(6th Cir. 2011) (citing Alexander v. Electronic Data
Systems Corp., 13 F.3d 940, 949 (6th Cir. 1994));
See also Coyne, 183 F.3d at 493 (“All doubts
as to the propriety of removal are resolved in favor of
to Plaintiff’s Complaint, the Bob Dotson Insurance
Agency is a citizen of Kentucky and therefore is not diverse
from Plaintiff. The Court must determine whether Plaintiff
has asserted any claim against the Agency that is colorable.
As an initial matter, it is important to recognize the
limited nature of the Court’s examination of the merits
of Plaintiff’s claims. The question before the Court is
not whether Plaintiff will ultimately succeed in his claims
against the Defendants. Instead, the question before the
Court is whether there is a “glimmer of hope” or
a reasonably arguable basis upon which Plaintiff might
recover under Kentucky law. If there is a chance Plaintiff
could succeed under Kentucky law, then the Court must remand
the case to state court.
claims that State Farm and the Agency misrepresented and
concealed coverage from him through a deliberate scheme of
separating household coverages under different policy numbers
and then concealing the existence of coverage to the insured.
Then, Plaintiff claims, the Defendants refused to produce
policy information to him. Furthermore, Plaintiff claims that
the Agency forged documents limiting coverage to him.
Plaintiff alleges that State Farm offered incentives to the
Agency to take these actions and that the Agency took
independent actions to further the wrongful denial of
coverage to him.
claims, inter alia, that State Farm and the Agency
each, and acting in concert, violated the Unfair Claims
Settlement Practices Act (“UCSPA”), Ky. Rev.
Stat. § 304.12-230. The UCSPA prohibits any
person from committing or performing seventeen
specific acts or omissions including:
(1) Misrepresenting pertinent facts or insurance policy
provisions relating to coverages at issue; (2) Failing to
acknowledge and act reasonably promptly upon communications
with respect to claims arising under insurance policies; (3)
Failing to adopt and implement reasonable standards for the
prompt investigation of claims arising under insurance
policies; (4) Refusing to pay claims without conducting a
reasonable investigation based upon all available
information; . . . (6) Not attempting in good faith to
effectuate prompt, fair and equitable settlements of claims
in which liability has become reasonably ...