United States District Court, N.D. Mississippi, Greenville Division
OPINION AND ORDER
M. BROWN UNITED STATES DISTRICT JUDGE.
the Court are: (1) the motion to dismiss of Albert G.
Cummins, Jr.; Albert G. Cummins, Jr. Inc.; James Brian
Street; and Rural Insurance Agency, Inc. (“Agent
Defendants”), Doc. #7; (2) Harvey Burchfield's
“Motion to Allow Discovery Prior to Ruling on Motion to
Dismiss, ” Doc. #9; (3) the Agent Defendants'
motion to strike, Doc. #17; and (4) the “Motion of
Foremost Insurance Company Grand Rapids Michigan to Stay Case
and Deem Plaintiff's Response to the Non-Diverse
Defendants' Motion to Dismiss as a Motion to Remand,
31, 2016, Burchfield filed suit in the Circuit Court of
Sunflower County, Mississippi, against Foremost Insurance
Group; Rural Insurance Agency, Inc.; Albert G.
Cummins, Jr. Inc.; Albert Cummins, Jr., individually and in
his capacity as agent of Foremost Insurance Group and Rural
Insurance Agency, Inc.; and James Brian Street, individually
and in his capacity as agent of Foremost Insurance Group and
Rural Insurance Agency, Inc. Doc. #2. In his state court
complaint, Burchfield alleges claims for negligence, gross
negligence, breach of contract, breach of fiduciary duty, and
bad faith arising from the denial of his claim for fire
insurance benefits after the house on real property he owned
sustained a fire loss. Id. at ¶¶ 9-31. On
August 4, 2016, Foremost removed the case to this Court
pursuant to 28 U.S.C. § 1332, asserting that the Agent
Defendants were improperly joined. Doc. #1.
August 16, 2016, the Agent Defendants filed a motion seeking
dismissal pursuant to Federal Rule of Civil Procedure
12(b)(6). Doc. #7. On September 19, 2016, Burchfield filed a
“Motion to Allow Discovery Prior to Ruling on Motion to
Dismiss.” Doc. #9. That same day, Burchfield filed a
response to the Agent Defendants' motion to
dismiss. Doc. #10. On September 28, 2016, the Agent
Defendants filed a response opposing Burchfield's motion
for discovery, a reply in support of their motion to dismiss,
and a motion to strike certain matters in
Burchfield's response to their motion to dismiss. Doc.
#15; Doc. #16; Doc. #17.
October 13, 2016, Foremost filed a “Motion of Foremost
Insurance Company Grand Rapids Michigan to Stay Case and Deem
Plaintiff's Response to the Non-Diverse Defendants'
Motion to Dismiss as a Motion to Remand.” Doc. #20. The
same day, Foremost filed a response to Burchfield's
motion for discovery, Doc. #22; and a “Memorandum Brief
of Foremost Insurance Company Grand Rapids, Michigan in
Rebuttal of Plaintiff's Response to the Motion to Dismiss
Submitted by the Non-Diverse Defendants and in Opposition to
Remand, ” Doc. #23. On October 20, 2016, Burchfield
responded to Foremost's motion to stay. Doc. #24. Five
days later, on October 25, 2016, Foremost replied. Doc. #25.
Also on October 25, the Agent Defendants filed a notice
joining Foremost's motion to stay. Doc. #26. On November
3, 2016, Burchfield filed a response to the Agent
Defendants' motion to strike. Doc. #27.
March 1, 2017, the Court, finding Foremost's conclusory
allegations of improper joinder insufficient, issued an order
requiring Foremost to show cause why this case should not be
remanded due to the lack of diversity jurisdiction. Doc. #30.
Foremost filed an “Amendment to Notice of Removal
Submitted in Response to Order to Show Cause” on March
6, 2017. Doc.#31.
the federal removal statute, a civil action may be removed
from a state court to a federal court on the basis of
diversity. This is so because the federal court has original
subject matter jurisdiction over such cases.”
Int'l Energy Ventures Mgmt., L.L.C. v. United Energy
Grp., Ltd., 818 F.3d 193, 199 (5th Cir. 2016).
“The party seeking to remove bears the burden of
showing that federal jurisdiction exists and that removal was
proper. Any ambiguities are construed against removal and in
favor of remand to state court.” Scarlott v. Nissan
N. Am., Inc., 771 F.3d 883, 887 (5th Cir. 2014)
(internal citations omitted). In this regard, “[i]f 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).
removal notice, Foremost contends that “according to
the Complaint, [Burchfield] is an adult resident citizen of
… Mississippi;” Foremost “is a foreign
corporation organized, existing, and with its principal place
of business in Michigan;” and the amount in controversy
exceeds $75, 000. Doc. #1 at ¶¶ 4-5, 10. Regarding
the Agent Defendants, however, Foremost alleges they
“were improperly joined … for the sole purpose
of attempting to avoid and defeat the removal of this action
to the jurisdiction of this Court. As there is no reasonable
possibility that the Plaintiff can establish h[is] claims
against the Non-diverse [Agent] Defendants, their citizenship
must be disregarded for purposes of determining
jurisdiction.” Id. at ¶ 9.
Diversity Jurisdiction and Fraudulent
jurisdiction requires that there be: (1) complete diversity
between the parties; and (2) an amount in controversy in
excess of $75, 000. 28 U.S.C. § 1332; Caterpillar
Inc. v. Lewis, 519 U.S. 61, 68 (1996). “The
improper joinder doctrine constitutes a narrow exception to
the rule of complete diversity.” McDonal v. Abbot
Labs., 408 F.3d 177, 183 (5th Cir. 2005). Under this
doctrine, “a district court is prohibited by statute
from exercising jurisdiction over a suit in which any party
… has been improperly or collusively joined to
manufacture federal diversity jurisdiction.”
Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572
(5th Cir. 2004) (emphases omitted). The “heavy”
burden of showing improper joinder rests with the removing
party. Cuevas v. BAC Home Loans Servicing, LP, 648
F.3d 242, 249 (5th Cir. 2011).
Fifth Circuit has recognized two ways to establish improper
joinder: “(1) actual fraud in the pleading of
jurisdictional facts, or (2) inability of the plaintiff to
establish a cause of action against the non-diverse party in
state court.” Travis v. Irby, 326 F.3d 644,
647 (5th Cir. 2003). The latter inquiry centers on
“whether the defendant has demonstrated that there is
no possibility of recovery by the plaintiff against a
[non-diverse] defendant, which stated differently means that
there is no reasonable basis for the district court to
predict that the plaintiff might be able to recover against
[the] defendant.” Smallwood, 385 F.3d at 573.
In resolving this question, “[a] district court should
ordinarily ... conduct a Rule 12(b)(6)-type analysis.
However, in cases where the plaintiff has stated a claim, but
‘misstated or omitted discrete facts' the district
court has the discretion to pierce the pleadings and conduct
a summary inquiry.” McDonal, 408 F.3d at 183
n.6. “As a corollary, summary judgment-type evidence
may be considered in an improper-joinder analysis to the
extent the facts ‘clarify or amplify the claims
actually alleged in the petition that was controlling when
the suit was removed.'” Puente v. Tex.
Roadhouse Holdings, LLC, No. 1:13-cv-181, 2014 WL
12617817, at *4 (S.D. Tex. July 15, 2014) (quoting Griggs
v. State Farm Lloyds, 181 F.3d 694, 700 (5th Cir. 1999))
(internal alterations omitted).
party asserting improper joinder bears the burden at each
stage of this inquiry. See Barbee v. Scott, No.
H-10-1797, 2010 WL 3257477, at *7 (S.D. Tex. Aug. 17, 2010)
(“The court concludes, therefore, that under a Rule
12(b)(6)-type analysis the defendants have failed to meet
their burden of establishing improper joinder.”);
see also Veritas Consulting Grp. Inc. v. Gasbuddy Org.,
Inc., No. C-10-147, 2010 WL 2598386, at *3 n.3 (S.D.
Tex. June 24, 2010) (“[E]ven if this Court were to
pierce the pleadings and consider the summary judgment type
evidence, removing Defendants have not met their burden of
proving improper joinder.”).
present case, no party has presented summary judgment type
evidence regarding the claims against the Agent Defendants.
Accordingly, on this record, the Court finds no justification
to pierce the pleadings and conduct a summary
inquiry. The Court will therefore analyze
Burchfield's complaint under the lenient 12(b)(6)
framework. See Smallwood, 385 F.3d at 573
(“decision regarding the procedure necessary …
lie[s] within the discretion of the trial court”).
before February 14, 2014, Burchfield purchased a
“dwelling fire insurance” policy from Foremost
through its agents Albert Cummings, Jr., Albert Cummings,
Jr., Inc., and Rural Insurance Agency, Inc., to cover
property he owned in Drew, Mississippi. Doc. #2 at ¶ 9,
11. The policy “provided in general that upon
consideration of premiums paid to the Defendants[, ] the
Defendants would provide insurance to cover losses of insured
in the event of a fire to said premise.” Id. In
September 2013, Burchfield was informed that James Brian
Street was his new agent. Id. at ¶ 21.
February 14, 2014, the house located on Burchfield's
property “sustained a fire that resulted in a total
loss of the house.” Id. at ¶ 13.
Subsequently, Burchfield filed a fire loss claim with the
defendants but the claim was denied on the basis that the
insurance coverage on the property was non-renewed as of
February 1, 2014. Id. at ¶ 14. Burchfield was
never notified by Foremost's agents that the fire policy
would be nonrenewed on February 1, 2014. Id. at
¶ 15, 17. Foremost did not mail the notice of
cancellation or nonrenewal to Burchfield or Street; rather,
Foremost mailed it to Cummins but Cummins never mailed a copy
of it to Burchfield. Id. at ¶¶ 22-23.