United States District Court, S.D. West Virginia, Charleston
BIBLE BAPTIST CHURCH by DARRELL BAKER, HOWARD PREAST, and MICHAEL V. MINNICK, trustees, and JAMES WALDECK, Plaintiffs,
BROTHERHOOD MUTUAL INSURANCE COMPANY, CHURCH INSURANCE CONSULTANTS, INC., and STEPHEN PETERS, Defendants.
MEMORANDUM OPINION AND ORDER
T. Copenhaver, Jr. United States District Judge.
is the plaintiffs' motion to remand, filed on January 18,
2018. Inasmuch as Church Insurance Consultants, Inc.
(“CIC”) is a West Virginia corporation and
Stephen Peters is a West Virginia resident, the plaintiffs,
who are also from West Virginia, contend that the court does
not have diversity jurisdiction under 28 U.S.C. § 1332.
case was filed in the Circuit Court of Kanawha County, West
Virginia, on September 23, 2017. Brotherhood Mutual Insurance
Company (“Brotherhood”) removed this action to
this court on December 22, 2017. Brotherhood objects to
remand, asserting that the two West Virginia defendants were
fraudulently joined to defeat diversity and arguing that
there is no viable claim against CIC and Peters. As the
Fourth Circuit has explained, “The burden on the
defendant claiming fraudulent joinder is heavy: the defendant
must show that the plaintiff cannot establish a claim against
the nondiverse defendant even after resolving all issues of
fact and law in the plaintiff's favor.”
Marshall v. Manville Sales Corp., 6 F.3d 229, 232-33
(4th Cir. 1993). Thus, the court looks to see whether any
viable claims have been asserted against the nondiverse
Waldeck, a plaintiff, serves as pastor of Bible Baptist
Church, located in Belva, Nicholas County, West Virginia. The
church operates a boarding school in Clendenin, Kanawha
County, known as Blue Creek Academy. Through the agency of
CIC and its employee Peters, the church obtained a liability
insurance policy from Brotherhood, first effective June 13,
2015, a lawsuit was brought in the Circuit Court of Kanawha
County against Bible Baptist Church and others alleging that
A.B., a student at Blue Creek Academy, was physically and
sexually abused at the school. According to the allegations
of the child's guardian, Waldeck negligently and
carelessly failed to protect A.B. from such abuse, and the
church negligently failed to supervise the staff at Blue
Creek. Compl. at ¶ 12. Later, a second suit was filed on
behalf of another student, K.R.L., which added a negligent
hiring claim to the allegations made on behalf of A.B.
Id. at ¶ 13.
January 2016, Brotherhood filed in this court Civil Action
No. 2:16-cv-00341, a declaratory judgment action seeking to
establish that its policy did not provide coverage for claims
relating to A.B. and K.R.L. Id. at ¶ 15. In its
complaint in that action, Brotherhood asserted that plaintiff
Waldeck had falsely represented that the church “had no
other facility than the church” and that, in
particular, it did not operate a school. Id. at
admitted in his deposition in that declaratory judgment
action that Waldeck had never tried to conceal anything about
the school from him, and Peters further acknowledged that he
had received an email from Brotherhood specifically directing
him to meet with Waldeck on March 10, 2011, at Blue Creek
Academy. Id. at ¶ 19. Peters also
testified that he had visited the school and took photographs
and measurements, which he submitted to Brotherhood.
Id. at ¶ 20. He obtained information from
Waldeck “to complete an application for both the Bible
Baptist Church and the school and submitted that information
to Brotherhood such that Brotherhood was clearly aware of the
existence of Blue Creek Academy from the time of the Bible
Baptist Church's initial application.” Id.
at ¶ 21. Peters admitted that subsequent to the initial
application which included a request for coverage for both
the church and the school, he submitted a second application
seeking coverage only for the church, which application
falsely indicated that there was no school affiliated with
the Bible Baptist Church. Id. at ¶ 22. Peters
also admitted that Waldeck did not request the submission of
the second application, which contained false information,
and that the church and Waldeck never received any
documentation to indicate that the coverage did not include
the school. Id. at ¶ 23.
to Peters' deposition, Brotherhood's counsel asked
him to sign an affidavit, which Brotherhood then attached
with its motion for summary judgment in that case.
Id. at ¶¶ 24-25. According to the
plaintiffs, the affidavit falsely represented that Waldeck
had declined the quote for coverage for the entire property
on account of the amount of premium and instead opted for
coverage for the church only. Id. at ¶ 24.
During his deposition, Peters acknowledged that his affidavit
had been composed by Brotherhood's counsel and that he
had not reviewed the documents it referenced. Id. at
¶ 26. In his deposition, Peters testified under oath
that “I no longer want to stand by my Affidavit any
longer.” Id. at ¶ 27.
memorandum opinion and order entered by Judge Thomas E.
Johnston in that case on December 7, 2017, judgment was
entered for defendants, declaring Brotherhood's
obligation under its insurance policy to cover the
occurrences designated in the order, which resulted in $2
million in coverage for the claims of A.B. and K.R.L.
Contrary to its complaint in that case, Brotherhood has
acknowledged that its policy does provide liability coverage
for the claims asserted against the Bible Baptist Church and
plaintiff Waldeck for A.B. and K.R.L. Id. at ¶
28. Fifteen days after the adverse judgment in its
declaratory judgment action, Brotherhood removed this action
on December 22, 2017.
Claims against the Nondiverse Defendants in this Action
bring a claim of negligence in procuring coverage against CIC
and Peters (Count I), breach of contract against CIC (Count
II), breach of fiduciary duty against both (Count III), and
fraud against both (Count VIII). Brotherhood is joined,
inter alia, in the fraud count. Plaintiffs demand
compensatory damages, damages “in connection with. . .
embarrassment, humiliation, annoyance and inconvenience,
” net economic losses, punitive damages and
attorney's fees. Id. at ¶ 87.
action must be remanded to state court if any of those
grounds for relief against CIC or Peters is viable, in which
event CIC and Peters could not be deemed to have ...