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Caleb Banks v. Nationwide Property & Casualty Insurance Co.

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

July 13, 2018

CALEB BANKS, Plaintiff,



         Pending before the Court is Plaintiff's Motion to Remand, (ECF No. 9), and Defendants Kenneth Conaway (“Mr. Conaway”), Betsy Ross (“Ms. Ross”), and Lisa McGahan's (“Ms. McGahan”) (collectively “Nationwide Adjusters”) Motion to Dismiss, (ECF No. 4). For the reasons stated herein, the Court DENIES Plaintiff's Motion to Remand and GRANTS Nationwide Adjusters' Motion to Dismiss.[1]

         I. BACKGROUND

         This case arises out of an insurance claim involving a house fire in the Southern District of West Virginia of a residence owned by Plaintiff and insured by Defendant Nationwide Property & Casualty Insurance Company (“Nationwide”). (See ECF No. 1 at 4-7.) On October 22, 2017, a house fire occurred at Plaintiff's residence resulting in severe damage to the dwelling and the personal property inside. (Id. at 5.) Plaintiff insured his residence through Nationwide and submitted a claim for insurance benefits to Nationwide following the fire. (Id.) Upon Plaintiff's submission, Nationwide began its investigation, which included Plaintiff having to produce certain materials and documents, execute releases and authorizations, and submit to an examination under oath. (Id. at 6.) Nationwide additionally interviewed Plaintiff's neighbors and acquaintances. (Id.) Having complied with Nationwide's requests but not having received his payment, Plaintiff was dismayed and took legal action. (ECF No. 11 at 3.)

         On December 29, 2017, Plaintiff filed his Complaint in the Circuit Court of Kanawha County, West Virginia. (ECF No. 1-1 at 4.) The Complaint states that despite Plaintiff's full cooperation and timely filing of his claim, Nationwide denied his claim and failed to properly settle the claim, and as a result, he “has been deprived of the use and enjoyment of [his residence], as well as his personal property, and . . . has not been compensated and paid by Defendant Nationwide for the covered losses and damages.” See Compl. ¶¶ 1-20, 29. The Complaint further alleges that these actions by the Defendants were “part of a general business practice and constitutes unfair claims settlement practices under applicable consumer protection statutes and regulations.” See Compl. ¶¶ 28-38. The Complaint demands compensatory damages for Plaintiff's net economic damages, for “Defendants' business practice of violating the Unfair Trade Practices Act, ” interest, costs and attorney's fees, and punitive damages against Nationwide. (See ECF No. 1-1 at 11.)

         Defendants removed the case to this Court on February 5, 2018. (ECF No. 1.) Defendants assert 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.) Defendants argue that although Ms. Ross is a West Virginia citizen, her citizenship should be disregarded because she is a nominal and fraudulently joined party. (See id. at 5-8.) Plaintiff filed the current Motion to Remand on February 26, 2018, in which he asserts that this Court lacks diversity jurisdiction over the matter because Ms. Ross is a West Virginia citizen and was not fraudulently joined. (See ECF No. 10 at 3-7.) Defendant Nationwide responded to the motion on March 12, 2018, (ECF No. 15), and Plaintiff filed his reply brief on March 19, 2018, (ECF No. 17). Defendant Nationwide Adjusters filed the current Motion to Dismiss Count III on February 12, 2018, (ECF No. 4), asserting that Plaintiff has failed to allege sufficient facts against any of the Nationwide Adjusters to support a claim under the Unfair Trade Practices Act. (See ECF No. 5 at 1.) Plaintiff responded to the motion on February 26, 2018, (ECF No. 11), and Defendant Nationwide Adjusters filed their reply brief on March 5, 2018, (ECF No. 13). As such, these motions are fully briefed and ripe for adjudication.


         A. Jurisdiction

         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 exception to the complete diversity requirement is fraudulent joinder. The Fourth Circuit lays a “heavy burden” upon a defendant claiming fraudulent joinder. Johnson v. Am. Towers, LLC, 781 F.3d 693, 704 (4th Cir. 2015) (quoting Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999)). “The removing party must show either ‘outright fraud in the plaintiff's pleading of jurisdictional facts or that there is no ...

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