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Boddie v. Walker

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

May 15, 2018




         This cause comes before the court on its own motion, addressing some of the unexpected events which have transpired in this case in recent days and providing guidance for the parties going forward. This court found it necessary to continue this case on the Friday before the scheduled trial, after it developed concerns regarding whether it had jurisdiction.[1] In continuing the case, this court requested Judge Virden to hold a new pretrial conference, at which she should make inquiries regarding the citizenship of the parties on the relevant dates.

         The surprising events in this case have given this court cause to reconsider its approach to the issue of fraudulent misjoinder in uninsured motorist (UM) insurance cases. If it should develop that defendants Cedric Walker and/or Mary Haywood were Mississippi citizens at any time relevant for diversity purposes, then the only way this court could retain jurisdiction over this case would be to find that they were “egregiously” misjoined and accordingly sever and remand the claims against them. It would be exceedingly difficult for this court to find that Walker or Haywood were egregiously misjoined, considering that it signed a pretrial order in which no party, including State Farm, had made any objection to their presence as co-defendants at trial.

         State Farm originally removed this case based on allegations that Walker and Haywood had been egregiously misjoined, but it dropped these objections after it concluded that they were not Mississippi citizens on the relevant date(s) and that their presence at trial accordingly did not destroy diversity jurisdiction. After this court raised jurisdictional questions shortly before trial, State Farm re-asserted its arguments that the claims against Walker and Haywood should be severed, even though it had made no mention of any such objections in the pretrial order. Obviously, the issue of whether claims against these defendants can fairly be litigated alongside those against State Farm should in no way depend upon their state(s) of citizenship. This court was puzzled by State Farm's sudden change in position and determined to take a hard look at the fraudulent misjoinder doctrine which served as the basis for removing this case. In so doing, this court placed particular emphasis upon UM cases in which judges in this district have accepted the misjoinder arguments of insurers, severed and remanded the claims against the alleged tortfeasors, and thereupon litigated claims solely against the UM carriers to trial.

         The result of this court's review is set forth in this order, and it does not, in its view, lend itself to confidence in the misjoinder doctrine, at least in UM cases. As discussed below, this court has previously been receptive to misjoinder arguments made by UM carriers, but it has grown increasingly skeptical of the doctrine's application in this particular context. For the reasons discussed below, this court will, in the future, be very unlikely to find that the joinder of claims against a UM carrier with those against the underlying tortfeasor constitutes “egregious” misjoinder within the meaning of the fraudulent misjoinder doctrine. This issue is an important one not only in this case, but also in others, and this court will accordingly address it at some length.

         Fraudulent misjoinder was first recognized as a ground for diversity jurisdiction by the United States Court of Appeals for the Eleventh Circuit in Tapscott v. Miss. Dealer Serv. Corp., 77 F .3d 1353 (1lth Cir. 1996). In adopting the doctrine, the Eleventh Circuit wrote that:

Misjoinder may be just as fraudulent as the joinder of a resident defendant against whom a plaintiff has no possibility of a cause of action. A defendant's “right of removal cannot be defeated by a fraudulent joinder of a resident defendant having no real connection with the controversy.”

Tapscott, 77 F.3d at 1360, citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 37, 66 L.Ed. 144 (1921). In so writing, the Eleventh Circuit took care to emphasize that “[w]e do not hold that mere misjoinder is fraudulent joinder, but we do agree with the district court that Appellants' attempt to join these parties is so egregious as to constitute fraudulent joinder.” Tapscott, 77 F.3d at 1360. Thus, “egregious” was, and has remained, the watchword for determining whether a particular misjoinder was so improper as to constitute fraudulent misjoinder.

         For its part, the Fifth Circuit has stopped short of adopting the fraudulent misjoinder doctrine, but it has clearly made favorable references to it. In In re Benjamin Moore & Co., 309 F.3d 296 (5th Cir. 2002), for example, the Fifth Circuit wrote, in considering a case involving “seventeen plaintiffs . . . who have nothing in common with each other, ” that “it might be concluded that misjoinder of plaintiffs should not be allowed to defeat diversity jurisdiction.” For the most part, however, the Fifth Circuit's jurisprudence regarding fraudulent misjoinder is very sparse, and it has largely been left to Mississippi district courts to define the scope of the doctrine.

         Most district courts in this state have read Benjamin Moore as an indication that the Fifth Circuit would adopt the fraudulent misjoinder doctrine in an appropriate case, and they have accordingly tended to treat it as a potential ground for jurisdiction. A notable exception is Judge Brown, who recently declined to recognize fraudulent misjoinder as a basis for jurisdiction based on her conclusions that “the removal statute must be strictly construed” and that there is no “clear guidance from the Fifth Circuit or the United States Supreme Court on the application of the fraudulent misjoinder doctrine.” See Wilson v. State Farm Mut. Auto. Ins. Co., No. 4:17-cv-124, 2018 WL 1096836, at *2 (N.D. Miss. Feb. 28, 2018). Judge Brown's view is a minority one among district judges in this circuit, [2] but even the district courts which recognize the doctrine have tended to emphasize, as the Eleventh Circuit did in Tapscott, that it should only apply in cases of truly egregious misjoinder.

         In Cooper v. AIG Claim Servs., Inc., 2009 WL 279101, at *2 (N.D. Miss. Feb. 5, 2009), for example, Judge Aycock wrote that “[f]or this court to accept jurisdiction despite the misjoinder of a non-diverse defendant, the misjoinder must be egregious or grossly improper.” Judge Barbour similarly wrote in Sweeney v. Sherwin Williams Co., 304 F.Supp.2d 868, 872 (S.D.Miss. 2004) that “[t]o constitute fraudulent misjoinder, the misjoinder must represent totally unsupported, or egregious misjoinder.” For its part, this court has likewise written that

Assuming arguendo that the Fifth Circuit would explicitly adopt the Tapscott rationale in an appropriate case, this court would only be able to accept jurisdiction based on the misjoinder of either plaintiffs or defendants if such misjoinder were “egregious.” It is thus apparent that, for Tapscott to be applicable, this court would be required to find a level of misjoinder that was not only improper, but grossly improper.

Walton v. Tower Loan of Miss., 338 F.Supp.2d 691, 695 (N.D. Miss. 2004).

         This court continues to believe that the fraudulent misjoinder doctrine has its place, but it emphasizes once again that it should only be applicable in rather extreme cases of misjoinder. To give one example, if a Mississippi citizen, wishing to avoid federal court, joins his products liability claim against a car manufacturer with a totally unrelated property dispute against his neighbor, then that would clearly seem to be the sort of “egregious” misjoinder that would justify application of the doctrine. In such a hypothetical, there would be no common questions of law or fact between the two claims, and the circumstances of the case would certainly lead one to suspect that the plaintiff was simply trying to defeat federal jurisdiction. In such a situation, this court would have no reservations about finding the fraudulent misjoinder doctrine applicable and severing and remanding the property claim against the non-diverse defendant.

         That brings this court to one particular application of the fraudulent misjoinder doctrine regarding which it has developed increasing reservations; namely, in UM insurance cases. Following the Mississippi Supreme Court's decision in Hegwood v. Williamson, 949 So.2d 728, 730 (Miss. 2007), it has become increasingly common for UM carriers in this state to use fraudulent misjoinder as a basis for removing cases in which contract and bad faith claims against them are joined with tort claims against the tortfeasor. In Hegwood, the Mississippi Supreme Court held that a trial court erred in refusing to sever tort claims against a defendant motorist with breach of contract and bad faith claims against the insurer. In so ruling, the Supreme Court explained that negligence claims against a defendant driver and breach of contract and bad faith claims against an insurer, while arising out of the same accident, “involve different factual issues and different legal issues” and would require different witnesses and proof. Hegwood, 949 So.2d at 731.

         As discussed below, this court regards the arguments against joinder in UM cases to be misplaced, but the crucial point, for misjoinder purposes, is that it does not regard such joinder as egregious. Moreover, it seems clear that equating Hegwood's conclusions about the proper means of handling claims against a tortfeasor and insurer under Miss. R. Civ. P. 20 with a finding of egregious misjoinder under Tapscott is erroneous, since the relevant standards are very different. This court is not the first Mississippi district court to reach this conclusion. In Sampson v. Mississippi Valley Silica Co., 268 F.Supp.3d 918, 923 (S.D.Miss. 2017), for example, Judge Bramlette rejected the application of the fraudulent misjoinder doctrine in the insurance context, writing that “[d]espite [the insurer's] contention that the Mississippi Supreme Court's finding of improper joinder in Hegwood necessitates finding misjoinder in this case, the Court finds that Hegwood and the other cases cited by the defendant are factually distinguishable from the case sub judice.” [Sampson, 268 F.Supp.3d at 925]. This court agrees with Judge Bramlette that Hegwood is distinguishable, largely because it addressed what constituted proper joinder under Mississippi's Rule 20, not what constituted egregious or non-egregious joinder under Tapscott and its progeny. Clearly, these are two different things.[3]

         A UM carrier seeking to argue that it would be “egregious” to join claims against it with those against the tortfeasor must confront the plain language of Miss. Code. Ann. § 83-11- 101(1), which provides that plaintiffs may only recover UM damages if they are “legally entitled to recover as damages for bodily injury or death from the owner or operator of an uninsured motor vehicle.” This is a very significant fact in the misjoinder context, since it means that the same negligence factors (i.e. duty, breach, causation and damages) which apply to determine the liability of the alleged tortfeasor are likewise part of a UM action against the insurer.[4] Simply stated, if the plaintiff is not legally entitled to recover from the tortfeasor, then neither may he recover UM benefits against his insurer. See, e.g. Medders v. U.S. Fid. & Guar. Co., 623 So.2d 979, 989 (Miss. 1993)(limiting UM coverage to cases where “the insured would be entitled at the time of injury to recover through legal action.”) That being the case, it is very difficult to argue that a tort claim and associated UM claim do not share common questions of law or fact, since they almost invariably do, as a matter of statute and, as discussed below, simple reality.

         This court's evolving views on the fraudulent misjoinder doctrine are also based upon its experience that insurance companies have tended to greatly overstate the factual differences between UM claims and the underlying tort claims. In Cartwright v. State Farm Mutual Automobile Insurance Co., No. 4:14-CV-00057, 2014 WL 6959045 (N.D. Miss. Dec. 8, 2014), for example, State Farm made arguments very similar to the ones it made in this case. As in the typical UM case, the plaintiff in Cartwright sued the defendant driver, Valerie Sproull, for negligence, and she also sued her UM carrier State Farm. Id. at *1. In Cartwright, Judge Davidson accepted State Farm's argument that Sproull was fraudulently misjoined, finding that, as to her, the “[p]laintiff will be required to present different proof than will be required to support her claims against State Farm.” Id. at 7. He further wrote that “[a]lthough both sets of claims arguably ‘arose' from the subject motor vehicle accident, they implicate distinct factual and legal issues.” Id. Judge Davidson accordingly severed the plaintiff's claims against Sproull, remanded those claims to state court, and allowed the plaintiff's claims against State Farm to move forward in federal court. Id. at 8.

         Thus, Judge Davidson in Cartwright, like most other district judges in this state, accepted a UM insurer's argument that “[p]laintiff will be required to present different proof than will be required to support her claims against [the insurer].” Id. at *7. In Cartwright, the truth proved otherwise. This court has reviewed the docket in Cartwright, which proceeded to trial, and the pretrial order makes it clear that the only issues at trial involved whether or not the alleged tortfeasor Sproull was negligent, and, if so, the extent of damages suffered by plaintiff. Indeed, State Farm's own description of the disputed issues of fact, in the pretrial order, were as follows:

1. Whether Valerie Sproull was negligent, and if so, to what degree.
2. The nature and extent of damages suffered by [plaintiff] related to the motor vehicle accident, if any.

[Cartwright pretrial order at 4].

         State Farm's description of the disputed issues of law in ...

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