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Randle v. Primerica Life Insurance Company

United States District Court, N.D. Mississippi

February 28, 2019




         Rhonda Ewing Randle originally filed her Complaint [2] in the Circuit Court of Monroe County, Mississippi asserting various claims against her former husband's life insurance carrier, Primerica Life Insurance Company, and its insurance agent Ida Mae Eacholes. On July 20, 2018 Defendant Primerica removed the case to this Court, premising jurisdiction on the basis of diversity of citizenship. See Notice of Removal [1].

         The Parties in this case are not diverse. Plaintiff Randle is a citizen of Mississippi, and Defendant Eacholes is also a citizen of Mississippi. Now before the Court is Eacholes' Motion to Dismiss [8] requesting dismissal of the Plaintiff's claims against her, and arguing that she was improperly joined as a defendant for the sole purpose of defeating diversity. Also before the Court is the Plaintiff's Motion to Remand [11] this case back to the Circuit Court.

         The issues are fully briefed and ripe for review. The Court will take up the jurisdictional issue first, and then proceed to the Motion to Dismiss if necessary.[1]

         Factual and Procedural Background

         Sometime prior to 2000, Primerica issued a life insurance policy on the life of Jessie Randle with his wife, the Plaintiff, Rhonda Randle as the beneficiary. The two separated sometime in 2009. On June 25, 2015 the policy lapsed due to non-payment. Defendant Eacholes, an insurance agent for Primerica, visited the Plaintiff at her home on October 29, 2015 to discuss the reinstatement of the policy.

         According to the Plaintiff, Eacholes, asked her several questions. Two of the questions posed were whether Jessie Randle used tobacco products in the last twelve months, or in the last five years. According to the Plaintiff, she indicated that she did not know about Jessie Randle's tobacco use because the two separated sometime in 2009. The relevant checkboxes on the reinstatement form indicate “no” as to both questions. According to the Plaintiff, Eacholes filled out a reinstatement form and the Plaintiff signed both her name, and Jessie Randle's name at the bottom at Eacholes direction.

         Jessie Randle died in an automobile accident on October 13, 2016. After his death, the Plaintiff made a claim on the Primerica policy. Primerica denied her claim on the basis that she provided material misstatements on the insurance application. Specifically, that the Plaintiff indicated that Jessie Randle was not a tobacco user, and that medical records reviewed by Primerica indicated that he was.

         The Plaintiff filed this suit against Primerica and Eacholes, asserting claims against Eacholes for breach of contract, bad faith, including negligent and knowing misrepresentation, and intentional infliction of emotional distress. The Plaintiff alleges that Eacholes was grossly negligent in the preparation of the insurance application, and the application process, ultimately resulting in the denial of her claim. The Plaintiff specifically alleges that Eacholes knew about Jessie Randle's tobacco use on June 14, 2015, prior to both the policy lapse and the reinstatement meeting. The Plaintiff further alleges that Eacholes used this prior knowledge to intentionally undermine the validity of the policy, and ultimately to deny her otherwise valid claim. In support of her claim, the Plaintiff points to a letter from Primerica, attached to her Complaint, denying her claim. The letter specifically states that on June 14, 2015 Primerica obtained medical records indicating that Jessie Randle had a history of social tobacco use.

         The Plaintiff now requests that this Court remand the Case back to the Monroe County Circuit Court. The Plaintiff argues that because the Parties are not diverse, this court lacks subject matter jurisdiction. In response, Eacholes argues that the Plaintiff cannot establish any basis for recovery against her under Mississippi law, and that she was improperly joined as a Defendant in this case for the sole purpose of defeating diversity jurisdiction. Eacholes requests that the Court dismiss all the Plaintiff's claims against her, thus perfecting diversity jurisdiction over the Plaintiff's remaining claims against Primerica.

         Diversity Jurisdiction & Improper Joinder

         “Improper 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) (en banc)).

         “Smallwood sets out the procedure for determining whether, in the absence of actual fraud, a non-diverse 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).[2] 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 court.” Id.

         “The 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)). The Court must “take into account the ‘status of ...

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