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LLC v. Bridgeport Benefits, Inc.

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

February 11, 2019

EMPLOYERS' INNOVATIVE NETWORK, LLC, et al., Plaintiffs,
v.
BRIDGEPORT BENEFITS, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGER UNITED STATES DISTRICT JUDGE SOUTHERN DISTRICT OF WEST VIRGINIA

         The Court has reviewed Employers' Innovative Network, LLC (“EIN”) and Jeff Mullins' (“Mr. Mullins”) (hereinafter the “Plaintiffs”) Motion to Remand (Document 21) and Memorandum of law in Support of Motion to Remand (Document 22), Capital Security, Ltd. (“Capital Security”), Universal Risk Intermediaries, Inc. (“Unirisk”) and Jeana Nordstrom (“Ms. Nordstrom”) (collectively “Nordstrom Defendants”) Response of Defendants Capital Security, Ltd., Universal Risk Intermediaries, Inc. and Jeana Nordstrom to Plaintiffs' Motion to Remand (Document 32). In addition, the Court has reviewed the Plaintiffs' Complaint (Document 1-4), and the Notice of Removal (Document 1) together with the exhibits. For the reasons stated herein, the Court finds that the motion should be denied.

         PROCEDURAL HISTORY AND FACTUAL BACKGROUND

         On April 2, 2018, the Plaintiffs filed a Complaint and Petition for Declaratory Judgment against Bridgeport Benefits, Inc. (“Bridgeport”), Capitol Administrators, Inc. (“Capitol Administrators”), Capital Security, Lucent Health Solutions, Inc. (“Lucent”), Unirisk, Voluntary Benefits Specialist, LLC (“VBS”), Stephen Salinas, Wayne Blasman, Mike Tate, Alex Arnet, Ms. Nordstrom, and Casey Blasman.

         The complaint alleges: unauthorized practice of insurance, breach of fiduciary duty, slander, negligence, breach of contract, fraud in the inducement, fraud in the performance, and civil conspiracy. The Plaintiffs allege that in 2016, EIN sought an insurance policy to cover its employees. Steven Nordstrom, then President of Capital Security and Unirisk, introduced EIN to Mr. Salinas, the Director of Benefits at Bridgeport, which is an insurance broker. Mr. Salinas and Wayne Blasman, the President of Bridgeport, offered to broker a policy for EIN with Capital Security, a Bermuda insurance company. The Plaintiffs allege that they informed the Defendants that the policy had to be fully insured and that the Defendants represented that the policy was a fully insured policy. EIN entered into the policy with the belief that they had no financial liability for claims under the plan after the payment of the monthly premiums, because Capital Security would be responsible for paying any claims that could not be paid by EIN's premiums. In November 2017, EIN switched insurance.

         The Plaintiffs further allege that in early January 2018, Capitol Administrators, a company retained by Capital Security as a third-party administrator to administer claims on the policy, accidently sent EIN a report, which revealed over five million dollars of unpaid claims that Capitol Administrators did not pay, nor disclose to EIN. As a result of the report, EIN contacted Capital Security, who informed EIN that Capital Security was not responsible for the unpaid claims because the policy was self-insured, not fully insured. In January 2018, EIN alleges it was made aware that its employees, covered under the policy, were receiving third-party collection notices for medical bills that were submitted to Capitol Administrators but had not been paid.[1] Finally, the complaint alleges that neither Bridgeport, Capitol Administrators, nor Capital Security are registered with the West Virginia Insurance Commission or licensed to conduct insurance business in the state.

         On June 27, 2018, the Nordstrom Defendants, with the consent of the other Defendants, filed their Notice of Removal. The Notice of Removal was filed eight days after Ms. Nordstrom and Unirisk were served and five days after Capital Security was served. The Notice of Removal asserts that this Court has diversity jurisdiction over this matter because the amount in controversy exceeds $75, 000, and because there is complete diversity amongst the Plaintiffs, who are citizens of West Virginia, and the Defendants, who are citizens of California, Bermuda, Delaware, Florida, Nevada, and Tennessee.

         STANDARD OF REVIEW

         An action may be removed from state court to federal court if it is one over which the district court would have had original jurisdiction. 28 U.S.C. § 1441(a).[2] This Court has original jurisdiction of all civil actions between citizens of different states or between citizens of a state and citizens or subjects of a foreign state where the amount in controversy exceeds the sum or value of $75, 000, exclusive of interests and costs. 28 U.S.C. § 1332(a)(1)-(2). Generally, every defendant must be a citizen of a state different from every plaintiff for complete diversity to exist. Diversity of citizenship must be established at the time of removal. Higgins v. E.I. Dupont de Nemours & Co., 863 F.2d 1162, 1166 (4th Cir.1998).

         Section 1446 provides the procedure by which a defendant may remove a case to a district court under Section 1441. Section 1446 requires that “[a] defendant or defendants desiring to remove any civil action from a State court shall file . . . a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). Additionally, Section 1446 requires a defendant to file a notice of removal within thirty (30) days after receipt of the initial pleading. It is a long-settled principle that the party seeking to adjudicate a matter in federal court, through removal, carries the burden of alleging in its notice of removal and, if challenged, demonstrating the court's jurisdiction over the matter. Strawn et al. v. AT &T Mobility, LLC et al., 530 F.3d 293, 296 (4th Cir. 2008); Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (“The burden of establishing federal jurisdiction is placed upon the party seeking removal.”) (citation omitted).

         Accordingly, in this case, the removing defendant has the burden to show the existence of diversity jurisdiction by a preponderance of the evidence. See White v. Chase Bank USA, NA., Civil Action No. 2:08-1370, 2009 WL 2762060, at *1 (S.D. W.Va. Aug. 26, 2009) (Faber, J.) (citing McCoy v. Erie Insurance Co., 147 F.Supp.2d 481, 488 (S.D. W.Va. 2001)). Where the amount in controversy is not specified in the complaint, the defendant must “demonstrate that it is more likely than not that the amount in controversy exceeds the jurisdictional amount.” Landmark Corp. v. Apogee Coal Co., 945 F.Supp. 932, 935 (S. D. W.Va. 1996) (Copenhaver, J.) In deciding whether to remand, because removal by its nature infringes upon state sovereignty, this Court must “resolve all doubts about the propriety of removal in favor of retained state jurisdiction.” Hartley v. CSX Transp., Inc., 187 F.3d 422, 425 (4th Cir. 1999).

         DISCUSSION

         The Plaintiffs argue that the Nordstrom Defendants' Notice of Removal is defective because it does not demonstrate that it was timely filed or that there is complete diversity among the Plaintiffs and Defendants. Additionally, the Plaintiffs rely on various abstention doctrines to argue that the Court should abstain from hearing this case and remand it to state court. The Court will address each of these arguments.

         A. Alleged Defects in the Notice of Removal 28 U.S.C. § 1446(b)(1) provides that:

The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

(Emphasis added). “The receipt of an initial pleading starts the thirty-day period, however, only where the initial pleading reveals a ground for removal.” Tolley v. Monsanto Co., 591 F.Supp.2d 837, 845 (S.D. W.Va. 2008) (citing Lovern v. Gen. Motors Corp., 121 F.3d 160, 162 (4th Cir. 1997)) (Goodwin. J.). Courts must “rely on the initial pleading . . . to determine when the defendant had notice of the grounds for removal” and “requir[e] that those grounds be apparent within the four corners of the initial pleading.” Lovern, 121 F.3d at 162.

         The Plaintiffs argue that the Nordstrom Defendants cannot represent that the filing of the Notice of Removal was timely until the Defendants identify the first date that they received the Complaint, and further contend that the 30-day period begins to run upon receipt from any source. The Nordstrom Defendants argue that pursuant to 28 U.S.C § 1446(b) and the Supreme Court's decision in Murphy Brothers Inc. v. Michetti Pipe Stringings, Inc. 526 U.S. 334 (1999), the Notice of Removal was timely filed, because the Notice of Removal was filed within thirty (30) days of service.

         In Murphy Brothers, the Supreme Court addressed “whether the named defendant must be officially summoned to appear in the action before the time to remove begins to run. Or, may the 30-day period start earlier, on the named defendant's receipt, before service of official process, of a ‘courtesy copy' of the filed complaint ...


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