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Divinity v. Allstate Insurance Co.

United States District Court, S.D. Mississippi, Northern Division

October 12, 2017

NICHOLAS DIVINITY PLAINTIFF
v.
ALLSTATE INSURANCE COMPANY, et. al DEFENDANTS

          ORDER

          CARLTON W. REEVES, UNITED STATES DISTRICT JUDGE.

         Nicholas Divinity was injured in a car accident in November 2015.[1] The other driver's insurer paid Divinity the maximum compensation under the relevant policy limits. Believing this payment did not fully compensate him for his injuries, Divinity filed an underinsured motorist claim with his own insurer, Allstate. Allstate subsequently denied Divinity's claim. Divinity filed breach of contract and bad faith claims in state court against Allstate, Allstate's claim handlers, and Allstate agent Gwen Hemphill.[2] Allstate has removed that suit to this Court, and moved to have Hemphill dismissed as an improperly joined defendant.[3] For the reasons stated below, that motion is GRANTED.

         I. Discussion

         The threshold question here is whether Hemphill should be dismissed as an improperly joined defendant. Once this issue is resolved, the remaining question is whether this Court can assert diversity jurisdiction over this case. These questions are addressed below.

         A. Is Hemphill An Improperly Joined Defendant?

         Hemphill will be dismissed as an improperly joined defendant if Divinity “cannot establish” a claim against her.[4] Divinity is presumed to be able to establish such a claim, so long it is “clearly stat[ed]” in his complaint.[5] A claim is clearly stated when it alleges “enough fact to raise a reasonable expectation that discovery will reveal evidence of the necessary claims or element.”[6] This presumption can be rebutted only if Allstate “put[s] forward evidence that would negate a possibility” that Hemphill is liable under that claim.[7]

         Divinity's complaint includes claims for breach of contract and bad faith against Hemphill. Divinity has also articulated a claim against Hemphill for tortious misrepresentation.[8]This claim cannot be considered here, as it was made in a post-removal filing.[9] Therefore, only the two claims alleged in Divinity's complaint are discussed below.

         1. Can Divinity Establish A Breach Of Contract Claim Against Hemphill?

         Divinity's complaint clearly states a breach of contract claim against Hemphill. To be liable on this claim, Hemphill must have breached Divinity's insurance contract.[10] Divinity alleges that Hemphill was a party to that contract, and breached it by failing to pay Divinity's claim as she was obligated to under the contract.[11] This claim alleges enough fact to raise the necessary “reasonable expectation” that subsequent discovery will reveal relevant evidence.

         Allstate, however, has submitted a copy of Divinity's insurance policy, which establishes that Hemphill was not a party to that contract.[12] This evidence negates any possibility that Hemphill could be liable on a breach of contract claim.[13] Divinity thus cannot establish this claim.

         2. Can Divinity Establish A Bad Faith Claim Against Hemphill?

         Divinity's complaint fails to clearly state a bad faith claim against Hemphill. To be liable on this theory, Hemphill must have “deni[ed]” Divinity's insurance claim with “malice [or] gross negligence or reckless disregard for the rights of others.”[14] Hemphill may be liable even if she is not a party to the contract, so long as she had “some direct, personal participation” in the denial.[15]

         Divinity alleges that Allstate - “acting through its agent [Hemphill], officers and employees”- denied Divinity's claim with “malice.”[16] But the only facts included in this allegation establish that Hemphill's role in this dispute was far from “direct” or “personal, ” as she simply sold the relevant insurance contract to Divinity's parents.[17] Even without these facts, the remaining allegation amounts to “little more than a formulaic recitation of the elements of a cause of action, ” which “will not do” to state a claim.[18] As such, Divinity cannot establish a bad faith claim against Hemphill.

         B. Can This Court Assert ...


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