Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Lyles v. FTL Ltd., Inc.

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

February 7, 2018

FTL LTD, INC., et al., Defendant.



         Pending 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.

         I. BACKGROUND

         This 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 2).

         On 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.)

         NCC 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.


         Article 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. § 1332(a)(1).

         Congress provided a right to remove a case from state to federal court under 28 U.S.C. § 1441. This statute states, in relevant part:

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 omitted)).

         The 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.

         “There 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.

         For 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) ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.