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Ohio Security Insurance Co. v. K R Enterprises Inc.

United States District Court, S.D. West Virginia, Bluefield

March 27, 2017

OHIO SECURITY INSURANCE COMPANY, Plaintiff,
v.
K R ENTERPRISES, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          David A. Faber Senior United States District Judge.

         Pending before the court is plaintiff's motion to appoint a guardian ad litem for Jeremy Evans or to issue another appropriate order. (ECF No. 23). For reasons expressed more fully below, the motion to appoint a guardian ad litem is GRANTED.

         Plaintiff Ohio Security Insurance Company (“Ohio Security”) is an insurance company organized under the laws of New Hampshire with its principal place of business in Boston, Massachusetts. See Amended Complaint ¶ 5. Defendant K R Enterprises, Inc. (“K R Enterprises”) is a Virginia corporation with its principal place of business located in Martinsville, Virginia. See id. at ¶ 6. Defendant Jackson Hewitt, Inc. is a Virginia corporation with its principal place of business in Parsippany, New Jersey. See id. at ¶ 7. During the relevant time period, Ohio Security issued a BusinessOwners Liability Policy to K R Enterprises, Policy Number BZS (15) 56 08 16 29. See Amended Complaint at ¶ 60. The Ohio Security Policy also included Data Compromise and CyberOne Coverage endorsements. See id. at ¶¶ 73 and 75.

         The instant dispute centers on fraudulent tax returns filed by defendant Jeremy Evans, a former employee of defendant K R Enterprises, doing business as Jackson Hewitt.[1] Specifically, former customers of K R Enterprises have alleged that Evans improperly accessed the records of K R Enterprises to obtain their personal and confidential information for the purpose of fraudulently filing their 2014 income tax returns. All of the former customers had sought assistance preparing their 2013 tax returns from K R Enterprises and their confidential information had been saved in the company's database.

         Upon discovering Evans' conduct, these customers of K R Enterprises filed suit in the Circuit Court of McDowell County, West Virginia, against Evans, K R Enterprises, and Jackson Hewitt raising various state law claims including, but not limited to, Breach of Fiduciary Duty, Negligence, and Invasion of Privacy. There are six of these lawsuits currently pending in the McDowell County Circuit Court. All of the state lawsuits allege that Evans was arrested on or about February 4, 2015, at a K R Enterprise location and that Evans admitted to police that he had used the customers' 2013 tax return information to fraudulently file 2014 tax returns in their names. For his part, Evans faces criminal charges of identity theft, attempted felony, forgery, uttering, petit larceny, and fraudulent schemes.

         On December 18, 2015, Ohio Security Insurance Company filed the instant declaratory judgment action on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332 and, on March 14, 2016, it filed an amended complaint. Ohio Security asks this court to determine that it has no duty to defend or indemnify K R Enterprises, Evans, or Jackson Hewitt under the BusinessOwners liability coverage and/or the Data Compromise and CyberOne coverage for the six underlying lawsuits.

         Because Jeremy Evans is incarcerated, he is not legally competent to consent to service and thus cannot be properly served. Under Federal Rule of Procedure 17(b)(1), the capacity of an individual to be sued is determined by the law of the individual's domicile.” At the time Ohio Security filed the instant motion, this court had found that Evans was domiciled in West Virginia. See Memorandum Opinion and Order, Sacra, et al. v. Jackson Hewitt, Inc., et al., 1:15-cv-16265 (S.D. W.Va. Feb. 19, 2016) (ECF No. 23 at p.9).

         As this court has found on another occasion,

“[F]or an individual who is not acting in a representative capacity, ” the individual's capacity to be sued is determined “by the law of the individual's domicile[.]” Fed.R.Civ.P. 17(b)(1). As stated in this Court's prior Order, Defendant Davis' domicile is West Virginia and he is incarcerated in West Virginia. Thus, the Court must look to West Virginia law to determine what protections, if any, Defendant Davis is entitled to receive.
In considering this precise issue, the Fourth Circuit ruled in Siers v. Greiner, No. 92-6501, 1993 WL 3475 (4th Cir. Jan. 11, 1993), that the district court erred in not appointing a guardian ad litem for an inmate whose ex-wife sought to enforce outstanding judgments against him by intervening in a civil action in which he was awarded $15, 000. 1993 WL 3475, at *1. In reaching this result, the Fourth Circuit relied upon West Virginia Code § 28-5-36 and the West Virginia Supreme Court's interpretation of that statute in Craigo v. Marshall, 175 W.Va. 72, 331 S.E.2d 510 (W.Va. 1985).

Branch Banking and Trust Co. v. Davis, Civil Action No. 3:04-01055, 2008 WL 5099627, *2 (S.D. W.Va. Dec. 2, 2008).

         The West Virginia Rules of Civil Procedure require that when a civil suit is brought against an incarcerated person, service be made on

that person's committee, guardian, or like fiduciary resident in the State; or, if there be no such committee, guardian, or like fiduciary . . . service of process shall be made ...

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