United States District Court, W.D. Louisiana, Monroe Division
THE ESTATE OF JESSE CLARENCE BROWN, SR.
NEW YORK LIFE INSURANCE COMPANY, ET AL.
G. JAMES, JUDGE
REPORT AND RECOMMENDATION
L. HAYES, UNITED STATES MAGISTRATE JUDGE
the undersigned Magistrate Judge, on reference from the
District Court, are two motions: 1) a motion to remand filed
by plaintiffs, the heirs of the estate of Jesse Clarence
Brown, Sr.; and 2) a motion to dismiss for failure to state a
claim upon which relief can be granted [doc. # 10] filed by
defendant, Jim Donelon, in his capacity as Commissioner of
Insurance. The motions are opposed. For reasons assigned
below, it is recommended that both motions be denied, and
that plaintiffs' claims against Jim Donelon, in his
capacity as Commissioner of Insurance, be dismissed, without
prejudice, for lack of subject matter jurisdiction.
October 6, 2017, the heirs of the Estate of Jesse Clarence
Brown, Sr.: Jesse Clarence Brown, Jr.; Rene Felippe Brown;
Delicia Carrie Marshall; and Danna Derrell Brown, filed the
instant petition for damages for breach of contract, fraud,
and for unfair and deceptive insurance practices in the
6th Judicial District Court for the Parish of
Tensas, State of Louisiana, against defendants, New York Life
Insurance Company (“NYLife”) and Jim Donelon, in
his capacity as Commissioner of Insurance. (Petition).
Plaintiffs allege that their now-deceased father Jesse
Clarence Brown, Sr., had life insurance polices with NYLife,
but that NYLife failed to pay sums due under the policies
within 60 days after March 15, 2017, - the date that
plaintiffs notified NYLife of their father's October 6,
2016, passing. Id., ¶¶ I, V-VIII.
Plaintiffs further allege that Jim Donelon, in his capacity
as Commissioner of Insurance, was aware of certain actions by
NYLife that formed the basis of a putative class action on
behalf of policy holders who purchased life insurance polices
from NYLife between 1982 through 1994. See Banks v. New
York Life Ins. Co., 737 So.2d 1275, 1278 (La. 1999);
Petition, ¶¶ XIII-XVII. Plaintiffs contend that
they each are entitled to damages in an amount in excess of
$328, 954, plus penalties, and attorney's fees.
(Petition, ¶ XII).
November 13, 2017, NYLife removed the suit to federal court
on the sole basis of diversity jurisdiction, 28 U.S.C. §
1332. (Notice of Removal). NYLife is a mutual insurance
company incorporated under the laws of New York,
with its principal place of business in said state.
See 1st Amend. Notice of Removal, ¶
Plaintiffs are citizens of Louisiana or Texas. (Petition,
Preamble). Moreover, Jim Donelon, in his capacity as
Commissioner of Insurance, is considered, for purposes of
diversity, either a citizen of Louisiana, or not a citizen at
To overcome the patent lack of complete diversity and
obstacle to removal presented by the inclusion of the
Commissioner of Insurance as a defendant in the suit, NYLife
argued in its removal notice that plaintiffs have no
reasonable possibility of recovery against the Commissioner,
and therefore, he was improperly joined in an effort to
defeat diversity and removal jurisdiction.
disagree with NYLife's assessment of their claims against
the Commissioner, and on December 5, 2017, filed the instant
motion to remand for lack of subject matter jurisdiction
because of the presence of the
non-diverse/diversity-destroying defendant. Plaintiffs also
argued that defendants waived their right to remove the
matter to federal court because of their pre-removal
activities in state court. In addition, plaintiffs asserted
that their suit is a probate matter, and therefore, the
federal court may not exercise its jurisdiction.
filed its opposition to the motion to remand on December 21,
2017. [doc. # 7]. The next day, the Commissioner of Insurance
filed his opposition to the motion to remand, together with
an incorporated motion to dismiss plaintiffs' claims
against him for failure to state a claim upon which relief
can be granted. Fed.R.Civ.P. 12(b)(6). On December 28, 2017,
plaintiffs filed a reply brief in support of their motion to
remand. [doc. # 17]. Thus, the matter is ripe.
Motion to Dismiss Under Rule 12(b)(6)
2016, the Fifth Circuit recognized that as long as a
non-diverse party “remains joined, the only issue the
court may consider is that of jurisdiction itself.”
Int'l Energy Ventures Mgmt., L.L.C. v. United Energy
Grp., Ltd., 818 F.3d 193, 209 (5th Cir.2016)
(“IEVM”). Thus, were this court to
determine that plaintiffs enjoy a viable cause of action
against the non-diverse/diversity-destroying defendant, then
the court would lack subject matter jurisdiction over the
entire case, and remain unable to reach a merits-based Rule
12(b)(6) motion. Id. Alternatively, were the court
to find that plaintiffs improperly joined the Commissioner of
Insurance, then the court would be obliged to dismiss him,
without prejudice, because it would lack jurisdiction over
that defendant for purposes of an adjudication on the merits.
See IEVM, supra. In other words, no matter how the court
resolves the improper joinder issue, the Rule 12(b)(6) motion
must be denied.
Motion To Remand
Removal and Improper Joinder Principles
defendant may remove an action from state court to federal
court, provided the action is one in which the federal court
may exercise original jurisdiction. Manguno v. Prudential
Property and Cas. Ins. Co., 276 F.3d 720, 723
(5th Cir. 2002) (citing 28 U.S.C. § 1441(a)).
The removing defendant bears the burden of establishing
federal subject matter jurisdiction and ensuring compliance
with the procedural requirements of removal. Id.
Because federal courts are courts of limited jurisdiction, a
suit is presumed to lie outside this limited jurisdiction
unless and until the party invoking federal jurisdiction
establishes to the contrary. Howery v. Allstate Ins.
Co., 243 F.3d 912, 916 (5th Cir. 2001) (citation
omitted). The removal statutes are strictly construed in
favor of remand. Manguno, supra.
recited earlier, NYLife invoked this court's subject
matter jurisdiction via diversity, which requires an amount
in controversy greater than $75, 000, and complete diversity
of citizenship between plaintiffs and defendants, 28 U.S.C.
§ 1332(a). It is manifest that plaintiffs' claims
each exceed the jurisdictional minimum. See
Petition, ¶ XII. Thus, the sole jurisdictional issue is
whether the parties are completely diverse.
diversity jurisdiction statute presupposes a civil action
between “citizens of different states, ” where
all plaintiffs are diverse from all defendants. 28 U.S.C.
§ 1332; Farrell Const. Co. v. Jefferson Parish,
La., 896 F.2d 136, 139-140 (5th Cir. 1990).
Again, removing defendant, NYLife, and plaintiffs are
citizens of different states. However, some of the plaintiffs
and defendant, the Commissioner of Insurance, potentially
share common Louisiana citizenship, or alternatively,
plaintiff's official capacity claims against the
Commissioner render him an arm of the state, and thus, a
non-citizen for purposes of diversity.
disregard the Commissioner of Insurance's citizenship (or
lack of citizenship), NYLife must establish that he is but a
nominal defendant/improperly joined. The improper joinder
doctrine affords a “‘narrow exception' to the
rule of complete diversity, and the burden of persuasion on a
party claiming improper joinder is a ‘heavy
one.'” Campbell v. Stone Ins., Inc., 509
F.3d 665, 669 (5th Cir.2007) (citing McDonal v. Abbott
Laboratories, 408 F.3d 177, 183 (5thCir.
2005)). To establish improper joinder, the removing party
must demonstrate “(1) actual fraud in the pleading of
jurisdictional facts, or (2) inability of the plaintiff to
establish a cause of action against the non-diverse party in
state court.” McDonal, supra (citing
Travis v. Irby, 326 F.3d 644, 647 (5th Cir.2003)).
case sub judice, there are no allegations of actual
fraud. Accordingly, the court must determine whether removing
defendant has demonstrated that plaintiffs have “no
possibility of recovery” against the
diversity-destroying defendant, i.e. that there is
“no reasonable basis” for the district court to
predict that plaintiffs might recover against him.
Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568
(5th Cir. 2004) (en banc). The court may resolve this issue
in one of two ways: 1) the court can look at the allegations
of the complaint to determine whether the complaint states a
claim against the non-diverse defendant under state law
(Fed.R.Civ.P. 12(b)(6) analysis); or 2) in the few cases
where the plaintiff has stated a claim, but has misstated or
omitted discrete facts that would determine the propriety of
joinder, the court may, in its discretion, pierce the
pleadings and conduct a summary inquiry. Smallwood,
supra. However, the “summary inquiry is
appropriate only to identify the presence of discrete and
undisputed facts that would preclude plaintiff's recovery
against the in-state defendant.”
court may choose to use either one of these two
analyses, but it must use one and only one of them,
not neither or both.” IEVM, 818 F.3d at
207-208. Here, defendants contend that plaintiffs'
complaint fails to state a claim against the Commissioner of
Insurance. Accordingly, the court will employ a Rule
12(b)(6)- type analysis, which requires application of the
federal pleading standard. Id.