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Stanford v. Liberty Mutual Group Inc.

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

October 22, 2018

JACQUELINE E. STANFORD and ROY STANFORD, SR. PLAINTIFFS
v.
LIBERTY MUTUAL GROUP INC. a/k/a Liberty Mutual Insurance, WARD J. SIMPSON and JOHN DOE DEFENDANTS

          ORDER

          DEBRA M. BROWN UNITED STATES DISTRICT JUDGE.

         Before the Court is Liberty Mutual Group Inc.'s motion to sever and its motion to dismiss. Doc. #15; Doc. #18.

         I Procedural History

         On March 20, 2018, Jacqueline and Roy Stanford filed a complaint in the Circuit Court of Bolivar County, Mississippi, against Liberty Mutual Group Inc., Ward J. Simpson, and “John Doe.” Doc. #2. The complaint alleges that the Stanfords were injured when their car was struck by a vehicle driven by Simpson, an uninsured driver, and that Liberty Mutual, the insurer of the Stanfords' vehicle, has wrongfully failed to pay uninsured driver benefits. Id. at ¶¶ 7, 18-19. A copy of the summons and complaint was served on Liberty Mutual on March 26, 2018. Doc. #1-1 at 1.

         On April 25, 2018, Liberty Mutual, invoking diversity jurisdiction, removed the Stanfords' state court action to this Court. Doc. #1. As grounds for the removal, Liberty Mutual alleged that the amount in controversy exceeds $75, 000; that it, a citizen of Massachusetts, is diverse from the Stanfords, who are citizens of Mississippi; and that Simpson, another citizen of Mississippi, was “fraudulently and/or egregiously misjoined as a Defendant and should be disregarded for purposes of determining diversity jurisdiction.” Id. at 1-2. Specifically, Liberty Mutual argued that the Stanfords' “claim against Ward is distinct from their breach of c ont rac t and bad faith claims against Liberty.” Id. at 3.

         On June 5, 2018, United States Magistrate Judge Jane M. Virden ordered Liberty Mutual to show cause why this case should not be remanded for lack of jurisdiction. Doc. #9; see Doc. #20. Eight days later, on June 13, 2018, Liberty Mutual, citing 28 U.S.C. § 1446(b)(3), filed an “Amended and/or Supplement to Notice of Removal” which reasserts the argument that Simpson was fraudulently misjoined, and adds a new argument that Simpson's citizenship should be disregarded because Simpson was deceased when the original state court complaint was filed. Doc. #10 at 3-6. Eight days later, Liberty Mutual filed a motion seeking to sever Simpson from this action and remand those claims brought against him. Doc. #15; Doc. #16.

         On August 21, 2018, Liberty Mutual filed a motion to dismiss Simpson. Doc. #18. On August 28, 2018, Judge Virden stayed discovery and related proceedings pending resolution of the pending motions. Doc. #20.

         II Analysis

         Federal courts are “duty-bound to examine [their] subject-matter jurisdiction sua sponte.” Burciaga v. Deutsche Bank Nat'l Tr. Co., 871 F.3d 380, 384 n.4 (5th Cir. 2017). In evaluating the existence of jurisdiction, this Court follows the rule that “[t]he party seeking the federal forum has the burden of establishing diversity jurisdiction.” Bynane v. Bank of N.Y. Mellon for CWMBS, Inc. Asset-Backed Certificates Series 2006-24, 866 F.3d 351, 356 (5th Cir. 2017). Generally, jurisdiction in removal actions is determined by reference to the grounds raised in the notice of removal or a properly amended notice of removal. See Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 205 (2d Cir. 2001) (“Where the notice fails to state a proper basis for removal, a defendant generally will not be permitted to amend the notice after the close of the thirty day removal period.”). Accordingly, this Court must resolve two questions-which of Liberty Mutual's two notices of removal is operative, and whether the operative notice of removal establishes jurisdiction.

         A. Operative Notice of Removal

         Under 28 U.S.C. § 1446(b)(1), a defendant may file a notice of removal “within 30 days after … receipt … of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.” Additionally, if

the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

28 U.S.C. § 1446(b)(3).

         Generally, “[w]ithin the [initial] thirty-day period prescribed by § 1446(b), a defendant may freely amend its notice of removal.” Blakeley v. United Cable Sys., 105 F.Supp.2d 574, 578 (S.D.Miss. 2000). Once this time period has passed, “a party may not amend its removal notice … to assert a new ground for ...


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