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Luckett v. Allstate Indemnity Co.

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

March 30, 2019




         BEFORE THIS COURT are the following motions filed by the parties: Motion to Remand by the Plaintiff, Jennifer Luckett (“Luckett”) [Doc. 9]; Motion to Dismiss by the Defendant, Barry Makamson (“Makamson”) [Doc. 16]; and the Motion to Enjoin filed by Allstate Indemnity Company (“Allstate”) [Doc. 14] as an alternative to its request that this Court accept jurisdiction over this action. For the reasons set forth below, this Court denies Luckett's Motion to Remand, and the remaining motions will be addressed in light of the Court's ruling on the Motion to Remand.

         I. PREAMBLE

         The question presented herein is whether the plaintiff in this cause improperly or fraudulently joined one or more defendants to her lawsuit in order to defeat the dictates of federal diversity jurisdiction, as required by Title 28 U.S.C. § 1332[1" name="FN1" id= "FN1">1].

         II. THE PARTIES

         At the commencement of this action, Luckett was an adult resident of Durant, Holmes County, Mississippi [Doc. 1-5].

         Allstate was and is an insurance company which is incorporated in the State of Illinois and which has its principal place of business in the State of Illinois [Doc. 1, p. 2');">p. 2]. Allstate is duly licensed in the State of Mississippi. Id.

         Makamson is an adult resident of Greenwood, Mississippi and named in the Complaint as “an agent, employee, and servant” of Allstate [Doc 1-5 at p.1]. Prior to the commencement of this action, Makamson was Luckett's insurance agent [Doc. 1-5].

         Wilbur Jordan (“Jordan”) is an adult resident of Gulfport, Harrison County, Mississippi [Doc. 1-5, p. 2');">p. 2]. Plaintiff Luckett names Jordan in the Complaint as “an agent, employee, and servant” of Allstate. Allstate, without objection, has identified Jordan as an adjuster. Plaintiff has not challenged Allstate's description of Jordan's job title.


         On March 11, 2016, Luckett commenced against Allstate[2] in the Circuit Court of Holmes County, Mississippi, a civil action (“the first lawsuit”) to recover damages for an alleged breach of contract and alleged bad faith breach of contract [Doc. 1, ¶ 1]. This lawsuit was structured on a fire loss and Allstate's alleged refusal to honor the dictates of its policy, which proceeds would pay fire damage costs to Luckett.

         On April 26, 2016, contending that this lawsuit has a federal character under diversity jurisdiction, of Title 28 U.S.C. § 1332[3], Allstate removed[4] this first cause of action to the United States District Court for the Southern District of Mississippi. The cause number was 3:16-cv-207-TSL-RHW, with Judge Tom S. Lee presiding. Unhappy with the removal to federal court, Luckett filed a Motion to Remand this litigation back to state court. The parties then commenced a removal/remand dispute.

         Under § 1332, the parties must be diverse in citizenship, a condition for federal jurisdiction met by the Complaint[5" name="FN5" id= "FN5">5]. Section 1332 also requires that the amount in controversy exceed the sum of $75, 000, exclusive of costs and interest. This condition was not readily ascertainable from the Complaint. To resolve the dispute, Judge Lee first remarked by order that the Plaintiff's Complaint was “hopefully ambiguous as to the amount of damages plaintiff is seeking to recover” [Doc. 1 at ¶ 4]. Judge Lee added, though, that if Luckett filed an affidavit agreeing not to accept a sum greater than $75, 000, the court would grant Luckett's motion to remand and send the case back to state court. Luckett then filed an affidavit certifying that she would not accept an award greater than $75, 000, and that her Complaint did not seek an award of damages in excess of $75, 000 [Doc. 1, ¶ 2]. On June 3, 2016, Judge Lee remanded the first lawsuit to state court based upon the Plaintiff's affidavit.

         On August 25, 2017, Luckett, now back in state court, filed a second Complaint in the Circuit Court of Holmes, County, Mississippi, against Allstate. She added two individuals: Makamson and Jordan, identified by Luckett as agents, employees and servants of Allstate (“the second lawsuit”) [Doc. 1, ¶ 3].

         The second lawsuit asserts the exact same factual allegations and claims against Allstate which are included in the first lawsuit. Both lawsuits arose out of the exact same fire loss and insurance claim which Allstate denied [Doc. 1, ¶ 3].

         On November 6, 2017, Luckett filed a motion to dismiss her first lawsuit. On April 3, 2018, the state court granted Luckett's motion to dismiss the first lawsuit. That left pending only the second lawsuit [Doc. 1, ¶ 4].

         The Complaint filed in the second lawsuit, akin to the first lawsuit, did not specify the amount of damages sought. As a result, on March 29, 2018, Allstate served requests for admissions, as authorized by Rule 36[6] of the Mississippi Rules of Civil Procedure, asking Luckett to admit that the damages sought were no greater than $75, 000 [Doc. 1, ¶ 4].

         On April 17, 2018, Luckett served her responses to the requests for admissions. She denied that she was not seeking more than $75, 000 in that second lawsuit, despite her previous affidavit, wherein she had sworn that she would not seek such an amount [Doc. 1, ¶ 4].

         On April 30, 2018, Allstate filed, in this Court, Allstate's Second Notice of Removal [Doc. 1], again stating that this Court has subject matter jurisdiction over this action which, said Allstate, features complete diversity of citizenship between the properly joined parties, and the requisite jurisdictional amount in controversy being in excess of $75, 000, exclusive of interest and costs. Allstate predicated this second removal upon 28 U.S.C. § 1446(b)(3)[7], triggered by Luckett's responses to the requests for admissions.

         In her second lawsuit, Luckett seeks: damages for an insurance claim with an alleged value in excess of $40, 000; an unspecified amount of punitive damages; and an unspecified amount of damages for anxiety, worry, mental and emotional distress, and attorney's fees [Doc. 1-1].

         The second lawsuit alleges that Makamson and Jordan are citizens of the State of Mississippi, a circumstance that may be fatal to diversity of citizenship jurisdiction under 28 U.S.C. §1332. Allstate argues, though, that while Makamson and Jordan are citizens of Mississippi, their citizenship should be disregarded for the following reasons:

“(1) Both [Makamson and Jordan] are fraudulently joined and Plaintiff is entitled to no recovery against them; (2) The Complaint is not clear as to what allegations are asserted against specific defendants because the Complaint at times lumps all defendants together and, at other times, references a defendant without identifying the defendant referenced; and (3) The Complaint filed in the second lawsuit is ‘as hopelessly ambiguous as that filed in the first lawsuit'.”

[Doc. 1, at ¶ 5].

         Allstate provides multiple reasons in support of (1), improper joinder: namely, lack of specific allegations; improper service of process; and complete failure to serve the Complaint.

         Luckett, in response to Allstate's statements, asserts that both Makamson and Jordan are properly joined and that both were properly served with process. Their rightful presence here, says Luckett, destroys diversity jurisdiction under § 1332, with the result that this case should be remanded to state court [Doc. 9].

         IV. FACTS

         A fire loss is the operative event for the birth of this lawsuit. On June 9, 2015, a fire engulfed where Luckett was living and caused damages. Prior to the fire, Luckett had purchased what the parties agree was a renters insurance policy from Allstate. According to Luckett, after the fire, she filed “a claim for benefits under said policy with Allstate . . . .” [Doc. 1-5]. Her Complaint further alleges that on November 4, 2015, Allstate wrongfully and in bad faith denied Luckett's fire loss claim and refused to pay benefits due under the policy. Id.

         Allstate's adjuster, Wilbur Jordan, defendant herein, in a denial letter to Luckett, states the following reasons for Allstate's denial of Luckett's claims for insurance coverage:

“Our investigation into your claim indicates that you concealed and/or misrepresented material facts and circumstances. During our investigation, we were notified that you unlawfully moved into the [subject] house…without the owner's knowledge…you misrepresented that you were renting the subject house” [Doc. 9-1 at p. 1].
“Based upon our investigation of your claim, we concluded that you made misrepresentations regarding your financial condition and regarding material aspects of your claim. Additionally, there have been discrepancies in the information you have provided us in your claim. Also…we have concluded that you intentionally overstated the value of your property damaged by the fire…that you submitted claims for losses which were not incurred…” [Doc. 9-1 at p.1].
“Allstate…requested through our attorney that you produce certain documents. Despite repeated requests, you have failed to produce all of the requested documents” [Doc. 9-1 at p. 2');">p. 2].

         Unable to reach any settlement with Allstate, Luckett filed the above-discussed two lawsuits, the first only against Allstate, which lawsuit has been dismissed. This second lawsuit which brought in Makamson and Jordan alleges the following causes of action against Makamson: (1) fraud; (2) breach of duty of good faith and fair dealing; and (3) negligence. Luckett submits against Jordan the theories of: (1) negligence; and (2) gross negligence [Doc. 1-5].

         V. REMOVAL

         “…[D]iversity jurisdiction requires complete diversity-if any plaintiff is a citizen of the same State as any defendant, then diversity jurisdiction does not exist. If the plaintiff improperly joins a non-diverse defendant, however, then the court may disregard the citizenship of that defendant, dismiss the non-diverse defendant from the case, and exercise subject matter jurisdiction over the remaining diverse defendant.” Flagg v. Stryker Corp., 819 F.3d 132, 136 (5th Cir. 2016). “[T]he [district] court has the obligation to determine whether a plaintiff has improperly joined a party that defeats federal diversity jurisdiction.” Flagg, 819 F.3d at 136.

         To determine whether a party is fraudulently joined for removal purposes, the district court is required to be obedient to a telling test: whether plaintiff has a possibility of recovery against the in-state defendant. Id. Two different roads may lead to a conclusion. First, the Court may evaluate whether the plaintiffs' complaint states a valid claim against the resident defendants under the federal pleading standards set forth in Fed.R.Civ.P. 8.[8] See International Energy Ventures Management, L.L.C. v. United Energy Group, Ltd., 18 F.3d 193');">818 F.3d 193, 200 (5th Cir. 2016). Secondly, the Court may exercise its discretion to pierce the pleadings and consider outside evidence to evaluate whether a plaintiff has a claim against the resident defendant. A court may choose to use either of these two analyses, but must use one and only one of them. International Energy Ventures Management, L.L.C., 818 F.3d at 207.

         The Court may choose the second option to pierce the pleadings “where a complaint states a claim that satisfies 12(b)(6)[9], but has misstated or omitted discrete facts that would determine the propriety of joinder . . . .” Mumfrey v. CVS Pharm., Inc., 19 F.3d 392');">719 F.3d 392, 401 (quoting Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004)).

         At the hearing on Luckett's Motion to Remand, Luckett asked the Court to permit her to conduct remand-related discovery, so that the Court could consider evidence outside of the pleadings. The plaintiff, though, did not identify any discovery she would be seeking that would shed light on the Court's jurisdictional question. The plaintiff's request, thus, appeared to be just an effort to conduct a “fishing expedition” in hopes of defeating federal jurisdiction. The Court, therefore, will not allow remand-related discovery; instead, this Court ...

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