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Massey v. 21st Century Centennial Insurance Company

United States District Court, S.D. West Virginia, Charleston Division

July 31, 2017




         Pending is Plaintiff Rebecca Massey's Motion to Remand. (ECF No. 4.) For the reasons that follow, the motion is DENIED.

         I. BACKGROUND

         This case arises from an automobile collision near Racine, West Virginia on July 16, 2014. According to the Complaint filed in the Circuit Court of Boone County, West Virginia on May 21, 2015, Plaintiff Rebecca Massey was driving her vehicle in an easterly direction when a westbound vehicle operated by Christopher Tully[1] crossed left of center and struck Plaintiff's vehicle. The original Defendants to the Complaint were Tully and 21st Century Centennial Insurance Company, Plaintiff's insurer.[2]

         On March 16, 2017, the West Virginia state court entered a partial dismissal order dismissing Tully as a Defendant due to settlement. The dismissal eliminated the only in-state defendant from the suit and created complete diversity of citizenship among the parties. On that basis, the remaining Defendant 21st Century removed the case to this Court on March 17, 2017. Plaintiff moved to remand on April 14, 2017, citing the one-year time limitation on removal of suits from state to federal court based on diversity of citizenship. 28 U.S.C. § 1446(c). The motion has been fully briefed and is ready for disposition.


         United States district courts “have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different States.” 28 U.S.C. § 1332(a)(1). The right to remove a case from state to federal court derives from 28 U.S.C. § 1441, which states that “any civil action brought in a state court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” A party removing a case bears the burden to demonstrate that federal jurisdiction exists at the time of removal, and remand is required when jurisdiction is in doubt. Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (citation omitted); Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993) (noting “Congress' clear intention to restrict removal and to resolve all doubts about the propriety of removal in favor of retained state court jurisdiction”) (citation omitted).

         Section 1446(b)(3) governs when a case that was not initially removable based on the pleadings later becomes so. Section 1446(b) provides, “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.” When removal under § 1446(b)(3) is based on diversity jurisdiction, § 1446(c) adds a limitation. In that scenario, removal is not permitted “more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” § 1446(c).


         Defendant 21st Century removed the instant action to federal court within 30 days of receiving an Agreed Order of Partial Dismissal executed by Plaintiff's counsel and dismissing Plaintiff's claims against Christopher Tully, the non-diverse Defendant. Because 21st Century removed this proceeding more than one year after Plaintiff brought suit, the issue before the Court is whether Plaintiff acted in bad faith to prevent the case from becoming removable earlier.[3]Defendant 21st Century argues that Plaintiff named Tully as a Defendant to the suit for the purpose of destroying diversity but never pursued her case against him. As further evidence of bad faith, 21st Century alleges that Plaintiff received a settlement offer from Tully's insurer prior to initiating this civil action but refused to act on the offer until long after the one-year deadline had passed.

         The Fourth Circuit has not defined the contours of bad faith for purposes of § 1446(c). Within this district, however, the case law provides some clarity. This Court has held that “strategic avoidance” of federal jurisdiction is not bad faith, rather, “[t]o prove bad faith, a defendant must show ‘forum manipulation.'” Hackney v. Golden Girl, No. 3:16-cv-06569, 2016 WL 6634898, at *2 (S.D. W.Va. Nov. 8, 2016) (Chambers, J.) (quoting Johnson v. HCR Manorcare LLC, No. 1:15-cv-189, 2015 WL 6511301, at *4 (N.D. W.Va. Oct. 28, 2015)); accord Ramirez v. Johnson & Johnson, No. 2:15-cv-09131, 2015 WL 4665809, at *3 (S.D. W.Va. Aug. 6, 2015) (Goodwin, J.) (citations omitted).

         Determining whether the plaintiff manipulated the forum has been described as a two-step process, one this Court has adopted previously.[4] Ramirez, 2015 WL 4665809, at *4 (citing Aguayo v. AMCO Ins. Co., 59 F.Supp.3d 1225, 1277 (D.N.M. 2014)). The first step and central inquiry is “whether the plaintiff actively litigated against the removal spoiler.” Aguayo, 59 F.Supp.3d at 1264. “A finding that the plaintiff did not actively litigate against the removal spoiler constitutes bad faith, and the Court will retain jurisdiction over the case.” Id. at 1228. On the other hand, active litigation against the non-diverse defendant creates a presumption of good faith. Id. at 1229. The presumption may be rebutted at step two by a showing that “the plaintiff kept the removal spoiler in the case to defeat removal.” Id.; see also Ramirez, 2015 WL 4665809, at *7 (requiring a defendant relying on the bad faith exception “‘to show either that the plaintiff did not litigate at all, or engaged in a mere scintilla of litigation against the removal spoiler; or (ii) that the defendant has strong, unambiguous evidence of the plaintiff's subjective intent, for which the plaintiff cannot offer any plausible alternative explanation.'” (quoting Aguayo, 59 F.Supp.3d at 1277)). Plainly, the presence or absence of bad faith will depend on the unique circumstances of each case.

         The Court will clarify one point before proceeding further. Plaintiff argues that she is entitled to a presumption of good faith because Tully was liable for the damages incurred in the vehicle accident. In doing so, Plaintiff confuses the bad faith standard with the standard for proving fraudulent joinder. Fraudulent joinder is demonstrated by proof that “there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court.” Harltey v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999) (citation and internal quotation marks omitted). A plaintiff may pursue a valid claim in bad faith. Further, § 1446(c) focuses not on the validity of the plaintiff's claim against a non-diverse party at the time the action was filed, but whether “the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” The Court proceeds to consider whether Plaintiff kept Tully in the state court case for the sole purpose of defeating removal.

         i. Active Litigation against the Non-Diverse Defendant

         Active litigation is defined broadly. “Any non-token amount of discovery or other active litigation against a removal spoiler entitles the plaintiff to the presumption [of good faith].” Aguayo, 59 F.Supp.3d at 1275. In evaluating whether discovery or litigation is non-token, courts look to “(i) the amount of time the spoiler spent joined to the case, [and] (ii) the size and money value of the case.” Id. Active litigation can be determined by whether a plaintiff “keeps the removal spoiler joined to obtain discovery from him or her, to force a settlement, to pressure the removal spoiler to testify on the ...

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