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Brandon v. Shelter Mutual Insurance Co.

United States District Court, N.D. Mississippi, Aberdeen Division

February 27, 2017



         Presently before the Court is a motion to remand to state court and defer answer to counterclaim [6] filed by Plaintiff Leon Brandon ("Plaintiff'). Upon due consideration, the Court finds that the motion is well taken.

I. Factual and Procedural Background

         On June 23, 2016, Plaintiff Leon Brandon ("Plaintiff) filed a complaint in the Circuit Court of Monroe County, Mississippi, against Defendants Shelter Mutual Insurance Company ("Shelter") and Bill E. Morgan ("Morgan") (collectively, "Defendants") to recover for fire loss and smoke damage to his dwelling and personal property. It is undisputed that Plaintiff purchased an insurance policy from Shelter that provided insurance coverage on his home within the terms, conditions, and exclusions contained in the policy and that the subject policy was in force at the time of the fire. Plaintiff asserts the following claims against Defendants: breach of contract; breach of the warranty of good faith and fair dealing; gross negligence in not providing a timely settlement in Plaintiffs time of loss; willful, wanton, and intentional deception; and bad-faith delay in processing of the claim.

         Plaintiff alleges that on or around December 22, 2015, he arrived at his home and discovered smoke billowing inside. Plaintiff further alleges that he called the fire department, members of which arrived on the premises, ensured there was no remaining fire, and vented the dwelling to remove any smoke. Plaintiff submitted a claim to Shelter, claiming that his dwelling and personal property suffered considerable fire and smoke damage to the point that the dwelling was uninhabitable. Plaintiff avers that he has repeatedly contacted Shelter and his Shelter insurance agent, Morgan, concerning his claim, but that as of the date of his complaint, approximately five months after he submitted the claim, Shelter had not submitted payment on the claim.

         On August 5, 2016, Shelter timely removed this case to this Court on the basis of diversity jurisdiction and filed an answer, affirmative defenses, and counterclaim for a declaratory judgment [3]. On August 23, 2016, Plaintiff filed the present motion to remand the case to state court and defer answer to counterclaim [6]. Shelter filed a response; Plaintiff filed a reply; and Shelter filed a supplement to its response after seeking and being granted leave to do so.[1] The matter is now ripe for review.

         II. Standard of Review

         The removal statute provides in pertinent part:

Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

28 U.S.C. § 1441(a).

         A case may be remanded upon a motion filed within thirty days after the filing of the notice of removal on any defect except subject matter jurisdiction, which can be raised at any time by any party or sua sponte by the Court. See Wachovia Bank, N.A. v. PICC Prop. & Cos. Co. Ltd., 328 F.App'x 946, 947 (5th Cir. 2009); see also Kontrick v. Ryan, 540 U.S. 443, 455, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004) (citing Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 28 L.Ed. 462 (1884)). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c); see Fed. R. Civ. P. 12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."). Any "doubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction." Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir. 2000).

         III. Analysis and Discussion

         Shelter can remove the action to this Court on the basis of diversity jurisdiction if this Court would have had original jurisdiction over the action. See Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013) (citing 28 U.S.C. § 1441(a)). Federal diversity jurisdiction requires complete diversity between all plaintiffs and all defendants and an amount in controversy that exceeds $75, 000.00. See 28 U.S.C. § 1332(a). Shelter, as the removing party seeking to invoke federal diversity jurisdiction, bears the burden of establishing both that the parties are diverse and that the amount in controversy exceeds $75, 000. See 28 U.S.C. § 1332(a); Garcia v. Koch Oil Co. of Tex. Inc., 351 F.3d 636, 638 (5th Cir. 2003) (citing St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998)).

         Plaintiff contends that removal is not appropriate because there is lack of complete diversity of citizenship among the parties.[2] It is undisputed that complete diversity exists between Plaintiff, a citizen of Mississippi, and Shelter, which is incorporated in and has its principal place of business in Missouri and thus is a citizen of Missouri. However, Plaintiff contends that Morgan's presence as a Defendant destroys complete diversity, as both Plaintiff and Morgan are citizens of Mississippi. Plaintiff argues that Morgan is the agent listed in the subject insurance policy and that he is made a party to this legally binding contract by the language of the subject policy. Plaintiff maintains that Morgan failed to meet his obligation under the insurance contract of offering information to Plaintiff concerning the subject policy. Plaintiff further argues that the allegations that Shelter and Morgan were "apathetic, inattentive, and unsympathetic" support a claim of gross negligence against both Defendants. Plaintiff maintains that Mississippi law imposes a standard of care on insurance agents to use the degree of diligence and care which a reasonably prudent person would exercise in the transaction of his own business, that Plaintiffs allegations in the complaint demonstrate Morgan did not work on Plaintiffs claim, and that this inaction constitutes gross negligence to a degree of malice and reckless disregard for the rights of Plaintiff. Therefore, Plaintiff maintains Morgan is a proper party to this case against whom Plaintiff has alleged a cognizable cause of action and that removal is improper.

         Shelter argues that Morgan was improperly joined in order to destroy diversity jurisdiction and thus that Morgan's citizenship should be disregarded in the diversity jurisdiction determination. Shelter further argues that Plaintiff attempts to impose liability upon Morgan merely because he is a Shelter sales agent, and that Mississippi law bars an action for contractual liability by an agent for a disclosed principal or from an agent, as a non-party to the contract, for breach of the duty of good faith and fair dealing with regard to the performance of the contract. Shelter further argues that Plaintiff has not stated a cognizable gross negligence claim against Morgan because Mississippi law does not allow an action against an insurance adjuster, agent, or other similar entity for simple negligence in connection with his work on a claim. Shelter further argues that Plaintiff fails to allege any facts supporting gross negligence, ...

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