United States District Court, N.D. Mississippi, Greenville Division
CROSTHWAIT PLANTING COMPANY, and A.E. CROSTHWAIT FARMING AND PLANTING INC. PLAINTIFFS
CHARLES E. SNIPES, and ARMTECH INSURANCE SERVICES, INC. DEFENDANTS
ORDER AND MEMORANDUM OPINION
SHARION AYCOCK, JUDGE,
Crosthwait Planting Company, and A.E. Crosthwait Farming and
Planting Inc. originally filed this case in the Circuit Court
of Washington County, Mississippi. The Defendants, Charles E.
Snipes and Armtech Insurance Services, Inc. removed the case
to this Court premising federal jurisdiction on the basis of
diversity of citizenship. See Notice of Removal .
The Parties are not diverse. Both of the Plaintiffs are
citizens of Mississippi, and Defendant Snipes is also a
citizen of Mississippi. Despite this lack of diversity, the
Defendants nevertheless claim removal is proper, arguing that
Defendant Snipes was improperly joined for the express
purpose of defeating diversity jurisdiction. Now before the
Court is the Plaintiffs' Motion to Remand  this case
to the Circuit Court, and two separate Motions to Dismiss
Armtech , and Snipes . The issues are fully briefed
and ripe for review. The Court will take up the
jurisdictional issue first, and then proceed to the motions
to dismiss if necessary.
Jurisdiction & Improper Joinder
joinder can be established in two ways: (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.” Davidson v.
Georgia-Pac., L.L.C., 819 F.3d 758, 765 (5th Cir. 2016)
(citing Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392,
401 (5th Cir. 2013) (internal quotations and alteration
omitted)). Only the second situation is an issue in this
case. The applicable test “is whether the defendant has
demonstrated that there is no possibility of recovery by the
plaintiff against an in-state 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 an in-state defendant.”
Davidson, 819 F.3d at 765 (citing Smallwood v.
Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004)
sets out the procedure for determining whether, in the
absence of actual fraud, a nondiverse defendant was
improperly joined.” Davidson, 819 F.3d at 765;
see Mumfrey, 719 F.3d at 401. “First, a court
looks at the allegations contained in the complaint. See
Id. If a plaintiff can survive a Rule 12(b)(6) challenge
for failure to state a claim, there is ordinarily no improper
joinder.” Davidson, 819 F.3d at 765 (citing
Mumfrey, 719 F.3d at 401; Smallwood, 385
F.3d at 573). When “a complaint states a claim that
satisfies 12(b)(6), but has ‘misstated or omitted
discrete facts that would determine the propriety of joinder
. . . the district court may, in its discretion, pierce the
pleadings and conduct a summary inquiry.'”
Id. (quoting Smallwood, 385 F.3d at 573).
“[T]he decision regarding the procedure necessary in a
given case must lie within the discretion of the trial
burden of persuasion on those who claim [improper] joinder is
a heavy one.” Davidson, 819 F.3d at 765
(citing Travis v. Irby, 326 F.3d 644, 649 (5th Cir.
2003)). With that in mind, the Court views “all
unchallenged factual allegations, including those alleged in
the complaint, in the light most favorable to the
plaintiff” and resolves “[a]ny contested issues
of fact and any ambiguities of state law” in the
plaintiff's favor. Davidson, 819 F.3d at 765. It
“is insufficient that there be a mere theoretical
possibility of recovery; to the contrary, there must at least
be arguably a reasonable basis for predicting that state law
would allow recovery in order to preclude a finding of
fraudulent joinder.” Walton v. Tower Loan of
Miss., 338 F.Supp.2d 691, 692-93 (N.D. Miss. 2004)
(citing Travis, 326 F.3d at 648; Badon v. RJR
Nabisco Inc., 224 F.3d 382, 386 (5th Cir. 2000)
(internal quotations omitted)). Moreover, the Court must
“take into account the ‘status of discovery'
and consider what opportunity the plaintiff has had to
develop its claims against the non-diverse defendant.”
Davidson, 819 F.3d at 765 (citing McKee v. Kan.
City S. Ry. Co., 358 F.3d 329, 334 (5th Cir. 2004)
(quoting Travis, 326 F.3d at 649)).
Plaintiffs in this case are corporations engaged in cotton
growing. In crop year 2013, the Plaintiffs acquired
Multi-Peril Crop Insurance policies through Defendant
insurance provider Armtech. During that crop year, the
Plaintiffs allege that they sustained losses to their cotton
crops in excess of $400, 000.00. The Plaintiffs filed claims
with Armtech for these losses. In January of 2014, Armtech
informed the Plaintiffs that their claims were being treated
as “controversial claims”, and gave the
Plaintiffs an opportunity to provide additional information
and documentation about the crop which the Plaintiffs
provided. Armtech subsequently informed the Plaintiffs that
it was retaining independent expert Charles Snipes to assist
in the evaluation of the Plaintiffs' claims. The
Plaintiffs' claims were eventually denied for failure to
“employ good farming practices in the care,
maintenance, and husbandry of the insured crop.”
their Complaint [1-1], the Plaintiffs assert claims for
fraud, civil conspiracy, fraudulent misrepresentation, gross
negligence, malice, and misrepresentation against Snipes. The
Plaintiffs allege that Snipes failed to discharge his duties
in accordance with any applicable standard, was grossly
negligent in the preparation of his report, conspired with
Armtech to falsify his report in order to ensure that the
claims were denied, and fraudulently represented that he did
not have a business relationship with Armtech. The Plaintiffs
further allege that Snipes made false representations and
conspired with Armtech to deny the claims for his own
personal financial benefit.
Defendants assert two arguments in opposition to remand.
First, they argue that there is no basis in Mississippi law
for a claim or liability against Defendant Snipes. Second,
the Defendants argue that even if there was a basis for
liability, the Plaintiffs failed to allege specific facts
sufficient to support a claim against him.
Mississippi Supreme Court, and this Court, have addressed
this issue on several occasions. Starting with Bass v.
California Life Ins. Co., and continuing to
Gallagher Bassett Servs., Inc. v. Jeffcoat,
the Supreme Court has held that
an insurance adjuster, agent or other similar entity may not
be held independently liable for simple negligence in
connection with its work on a claim. Such an entity may be
held independently liable for its work on a claim if and only
if its acts amount to any one of the following familiar types
of conduct: gross negligence, malice, or reckless disregard
for the rights of the insured.
Gallagher Bassett Servs., Inc. v. Jeffcoat, 887
So.2d 777, 784 (Miss. 2004) (citing Bass v. California
Life Ins. Co., 581 So.2d 1087 (Miss. 1991)).
standard of course raises the question of who qualifies as a
“similar entity”. “The Fifth Circuit has
generally applied the standard from Gallagher to
professionals with whom the insurance company has a paid or
contractual relationship” including independent
engineers, physicians, and experts. Chapman v. Coca-Cola
Bottling Co., No. 4:08-CV-49-HTW, 2011 WL 13192698, at
*7 (S.D.Miss. Aug. 31, 2011). In a factually similar case
directly on point, LC Farms,Inc. v.
McGuffee, this Court found a reasonable basis upon which
plaintiff might be able to support a finding of liability
against an ...