United States District Court, S.D. West Virginia, Charleston Division
PATRICIA A. LYLES, Plaintiff,
FTL LTD, INC., et al., Defendant.
MEMORANDUM OPINION AND ORDER
E. JOHNSTON, CHIEF JUDGE
before the Court is Plaintiff's Motion to Remand and for
Attorney Fees. (ECF No. 5.) For the reasons stated herein,
the Court DENIES the Motion.
case arises out of an insurance claim involving a commercial
vehicle collision in the Southern District of West Virginia
between a car driven by Plaintiff and a truck driven by Neil
Hasen. (See ECF No. 1 at 1-2; ECF No. 1-2 at 5-7.)
The truck was owned by K&K Trucking, Inc.
(“K&K”) and subject to an agreement entered
into between K&K and FTL Ltd., Inc. (“FTL”).
(See ECF No. 1-2 at 6.) Under the agreement, K&K
provided commercial hauling services to FTL, which was made
possible by FTL permitting K&K to use the DOT Number
issued to FTL on K&K's truck. (See id.)
Defendant National Casualty Company (“NCC”)
denied coverage under FTL's liability insurance policy
because the truck involved in the accident was not listed as
a covered vehicle. (See id. at 6-7.) The policy also
contained a Form MCS-90 Endorsement as required by the
Federal Motor Carrier Safety Regulations, which provided
primary coverage for FTL in the amount of $750, 000.00.
(See Id. at 7) On January 24, 2017, Plaintiff
accepted $945, 679.55 from NCC “in exchange for full
and complete Release of all claims against FTL, Neil Hasen,
and K&K, ” resulting in Neil Hasen and K&K
being dismissed from the civil action, and FTL remaining as
qualified by the Release. (See ECF No. 1 at 2.)
Plaintiff is a resident of West Virginia, (ECF No. 1-2 at 1),
Defendant FTL is a West Virginia corporation, (id.),
and Defendant NCC is an Arizona corporation, (id. at
February 14, 2017, Plaintiff filed her Complaint for
Declaratory Judgment in the Circuit Court of Kanawha County,
West Virginia. (Id. at 4.) The Complaint states that
Defendant NCC “has denied coverage under Defendant
FTL's liability insurance policy.” (See
id. at 8.) It alleges that coverage is due to Plaintiff
as provided under the Form MCS-90 endorsement to Defendant
FTL's liability insurance policy. (See id.) The
Complaint requests “a declaration that coverage is
available to Plaintiff under the Form MCS-90 endorsement to
Defendant FTL's liability insurance policy issued by
Defendant NCC.” (See id at 9.)
removed the case to this Court on March 22, 2017. NCC asserts
that Plaintiff has raised a federal question pursuant to 28
U.S.C. § 1331 by seeking coverage under the Form MCS-90
endorsement, and that the parties are diverse and the amount
in controversy exceeds $75, 000 in satisfaction of 28 U.S.C.
§ 1332. (See ECF No. 1 at 3-9.) NCC argues that
although FTL is a West Virginia corporation, FTL's
citizenship should be disregarded because FTL is a nominal
and fraudulently joined party. (See id. at 4-8.)
Plaintiff filed the current Motion to Remand on April 21,
2017, in which she asserts that this Court lacks federal
question jurisdiction because coverage under Form MCS-90 does
not present a substantial federal question, it lacks
diversity jurisdiction over the matter because FTL is a West
Virginia corporation, and FTL's failure to join in the
Notice of Removal violates the Rule of Unanimity.
(See ECF No. 6 at 2-8.) Defendant responded to the
motion on May 5, 2017, (ECF No. 9), and Plaintiff filed her
reply brief on May 12, 2017, (ECF No. 11). As such, this
motion is fully briefed and ripe for adjudication.
III of the United States Constitution provides, in pertinent
part, that “[t]he judicial Power shall extend . . . to
Controversies . . . between Citizens of different
States.” U.S. Const. art. III, § 2. “The
district courts shall 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.
provided a right to remove a case from state to federal court
under 28 U.S.C. § 1441. This statute states, in relevant
Except as otherwise expressly provided by Act of Congress,
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.
28 U.S.C. § 1441(a). Because removal of civil cases from
state to federal court infringes state sovereignty, federal
courts strictly construe the removal statute and resolve all
doubts in favor of remanding cases to state court. See
Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,
109 (1941); see also Mulcahey v. Columbia Organic Chems.
Co., 29 F.3d 148, 151 (4th Cir. 1994) (“Because
removal jurisdiction raises significant federalism concerns,
we must strictly construe removal jurisdiction.”
(citation omitted)). The party asserting federal jurisdiction
bears the burden of proof. Landmark Corp. v. Apogee Coal
Co., 945 F.Supp. 932, 935 (S.D. W.Va. 1996). In
evaluating a party's claim to federal jurisdiction, a
court should look toward the circumstances as they existed at
the time the notice of removal was filed. See Dennison v.
Carolina Payday Loans, Inc., 549 F.3d 941, 943 (4th Cir.
2008) (“[F]ederal jurisdiction . . . is fixed at the
time the . . . notice of removal is filed.” (citation
Supreme Court has long “read the statutory formulation
‘between . . . citizens of different States'”
in Section 1332(a)(1) “to require complete diversity
between all plaintiffs and all defendants.” Lincoln
Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (citing
Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996)).
“[T]he ‘complete diversity' rule clarifies
that the statute authorizing diversity jurisdiction over
civil actions between a citizen of a state where the suit is
brought and a citizen of another state permits jurisdiction
only when no party shares common citizenship with any party
on the other side.” Mayes v. Rapoport, 198
F.3d 457, 461 (4th Cir. 1999) (citation omitted). “This
. . . rule . . . makes it difficult for a defendant to remove
a case if a nondiverse defendant has been party to the suit
prior to removal.” Id.
are, however, certain limited exceptions to the complete
diversity requirement.” Mansfield v. Vanderbilt
Mortg. & Fin., Inc., 29 F.Supp.3d 645, 651 (E.D.
N.C. 2014). “One such exception is for so-called
‘nominal parties.'” Id. (citation
omitted). “Early in its history, [the Supreme] Court
established that the ‘citizens' upon whose
diversity a plaintiff grounds jurisdiction must be real and
substantial parties to the controversy.” Navarro
Sav. Ass'n v. Lee, 446 U.S. 458, 460 (1980)
(citation omitted). “Thus, a federal court must
disregard nominal or formal parties and rest jurisdiction
only upon the citizenship of real parties to the
controversy.” Id. (citation omitted).
“This ‘nominal party exception' ensures that
only those parties with a palpable interest in the outcome of
a case, and not those without any real stake, determine
whether a federal court can hear a case.” Hartford
Fire Ins. Co. v. Harleysville Mut. Ins. Co., 736 F.3d
255, 259 (4th Cir. 2013) (citation omitted). “This
exception helps to prevent a party from overriding
congressionally prescribed bases for removal through
strategic pleading.” Id.
purposes of this exception, “[n]ominal means simply a
party having no immediately apparent stake in the litigation
either prior or subsequent to the act of removal.”
Id. at 260. “In other words, the key inquiry
is whether the suit can be resolved without affecting the . .
. nominal defendant in any reasonably foreseeable way.”
Id. Examples of situations where courts found that a
party was a nominal party include the following: (1) the
plaintiff sought no form of relief against the nominal party
and all claims against that party were settled, see
Id. at 261; see also Allen v. Monsanto Co., 396
F.Supp.2d 728, 733 (S.D. W.Va. 2005) (noting that courts
found that a party was a nominal party where it had
“already settled” with the opposing parties
(citation omitted)); (2) the party was identified only as an
“unknown John Doe, ” Allen, 396
F.Supp.2d at 733 (citation omitted); (3) the party was an
“insurance company simply holding funds until” a
court directed “which parties should receive the funds,
” id. (citation omitted); (4) “the party
was not involved in the activities charged in the complaint,
” Wayne J. Griffin Elec., Inc. v. Travelers Prop.
Cas. Co. of Am., No. 1:13CV882, 2014 WL 842983, at *2
(M.D. N.C. Mar. 4, 2014) (citation omitted); and (5)