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Godfrey v. First American Title Insurance Co.

United States District Court, W.D. Louisiana, Monroe Division

February 5, 2019

JARRELL E. GODFREY, JR., ET AL., Plaintiffs
v.
FIRST AMERICAN TITLE INSURANCE CO., Defendant

          DOUGHTY, JUDGE.

          REPORT AND RECOMMENDATION

          Joseph H.L. Perez-Montes, United States Magistrate Judge

         Before the Court is a Motion to Remand (Doc. 14) filed by Plaintiffs, Jarrell E. Godfrey, Jr. (“Godfrey”) and Margaret Anne Hines (“Hines”) (collectively referred to as “Plaintiffs”).[1] Plaintiffs claim the Court lacks diversity jurisdiction over this action. (Doc. 14). Defendant First American Title Insurance Company (“First American”) opposes the motion. (Doc. 23). Because there is complete diversity of citizenship among the parties and the amount in controversy exceeds $75, 000, it is recommended that Plaintiffs' Motion to Remand (Doc. 14) be DENIED.

         I. Background

         Plaintiffs filed a Petition[2] in the Sixth Judicial District Court, Tensas Parish, against First American. (Doc. 1-1). Plaintiffs' Petition was jointly filed by Godfrey, pro se, and through counsel for Hines. (Doc. 1-1). Plaintiffs allege Godfrey and Hines are married but separate in property. (Doc. 1-1). Plaintiffs claim they purchased as undivided owners lots 61, 62, and 63 (“Lots 61-63”) of the Osceola Subdivision, Second Addition, Tensas Parish, Louisiana from Michael and Jennifer Jenkins (the “Jenkinses”). (Doc. 1-1). Plaintiffs assert First American issued them a title insurance policy (“the Policy”) through its agent, Marathon Title Company, LLC (“Marathon”). (Doc. 1-1). Plaintiffs further assert the Policy guaranteed Plaintiffs' title to Lots 61-63 was good, valid, and merchantable. (Doc. 1-1). Plaintiffs claim Section 7[3] of the Policy is an unenforceable adhesion provision, included in the terms of the contract they did not sign. (Doc. 1-1). Plaintiffs seek a declaratory judgment striking Section 7 from the policy.

         Plaintiffs claim they acquired Lot 60 from the Jenkinses on July 21, 2007. (Doc. 1-1). Plaintiffs allege Marathon issued a First American title insurance commitment (“the Commitment”) guaranteeing the Lot 60 title was good, valid, and merchantable. (Doc. 1-1). Plaintiffs claim neither Marathon nor First American have issued a policy for Lot 60 to date. (Doc. 1-1). Plaintiffs seek a mandatory injunction requiring First American to issue to Plaintiffs a title insurance policy covering Lot 60. (Doc. 1-1). Alternatively, Plaintiffs seek the value of their loss with respect to Lot 60, plus damages, penalties, and attorney's fees under La. R.S. 22:1973 C. (Doc. 1-1).

         Plaintiffs allege First American became aware of defects in the title to Lots 60-63 on about March 11, 2018 when its in-house counsel was advised of the defects by Marathon representatives. (Doc. 1-1).

         Plaintiffs further claim Gloria Hill Harper (“Harper”) acquired full ownership of Lots 57-66 from Osceola Development Company, LLC on August 17, 2004. (Doc. 1-1). Plaintiffs allege Harper transferred fifty percent of Lots 57-66 to the Kenneth J. Smith and Elizabeth Adams Smith (the “Smiths”) on August 27, 2004. (Doc. 1-1). Plaintiffs claim the Jenkinses acquired Lots 57-66 from the Smiths and Harper on December 19, 2004. (Doc. 1-1). However, Plaintiffs allege Harper was married to A. Delbert “Buddy” Harper, III (“Mr. Harper”), and that there was no claim that her interest sold was her separate property. (Doc. 1-1).

         Plaintiffs claim that in all acts of acquisition or ownership, Harper stated her status to be a “married woman.” (Doc. 1-1). Plaintiffs allege Mr. Harper did not consent to, and was not aware of, Harper's sales of Lots 57-66. (Doc. 1-1). The Harper marriage ended in divorce on March 30, 2007, with a settlement of community property. (Doc. 1-1). Mr. Harper died in July of 2008. (Doc. 1-1). Mr. Harper was survived by Harper and two children of the marriage, Jennifer Harper Hudak (“Mrs. Hudak”) and Stanley Delbert Harper (“Stanley Harper”). (Doc. 1-1). Plaintiffs allege no succession has been opened for Mr. Harper's estate. (Doc. 1-1). Plaintiffs allege Mrs. Hudak and Stanley Harper were not aware of the sales prior to March of 2018. (Doc. 1-1).

         Plaintiffs claim they were advised by First American's in-house counsel on March 13, 2018 that they need not take any action, as any claims to set aside the transfers of Harper's community interest in Lots 57-66 had prescribed. (Doc. 1-1). Plaintiffs further allege they were told any claim filed with First American would be denied as there was no defect in the title. (Doc. 1-1).

         Plaintiffs claim they filed a formal notice of claim with First American, with sufficient proof of loss, dated March 16, 2018. (Doc. 1-1). Plaintiffs allege First American acknowledged that it received the claim on March 20, 2018, via letter dated April 2, 2018. (Doc. 1-1). Plaintiffs claim they filed an additional proof of claim on April 11, 2018 and amended on April 19, 2018. (Doc. 1-1). Plaintiffs allege First American acknowledged the two additional proofs of claim via email on April 19, 2018. (Doc. 1-1). Plaintiffs claim First American has yet to send them a claims determination letter. (Doc. 1-1).

         Plaintiffs allege First American breached its fiduciary duty as an insurer to its policyholders, as set forth in La. R.S. 22:1973(B)(4)-(6). (Doc. 1-1). Plaintiffs seek penalties under La. R.S. 22:1973, and reasonable attorney's fees. (Doc. 1-1).

         Plaintiffs seek a mandatory injunction against First American requiring it to issue a title insurance policy covering Lot 60 pursuant to the Commitment. (Doc. 1-1). Alternatively, Plaintiffs seek a reformed or restated Commitment into a standard form First American title insurance policy, or that First American pay them the full value of their loss suffered with respect to Lot 60. (Doc. 1-1). Plaintiffs also seek damages compensating them for losing ownership of an undivided one-half (50%) ownership interest in Lots 60-63; emotional distress from others having an ownership interest or actionable claims to their retirement home; reasonable attorney's fees and costs for this action and any curative actions; and reasonable attorney's fees for any action against Plaintiffs seeking partition of Lots 60-63. (Doc. 1-1). Plaintiffs also seek a declaratory judgment striking Section 7 from the Policy. (Doc. 1-1).

         On June 7, 2018, First American was served with the Petition and Citation through the Louisiana Secretary of State. (Doc. 1-2). On June 26, 2018, Plaintiffs moved for entry of default judgment against First American. (Doc. 1-3). On July 3, 2018, the Sixth Judicial District Court entered a judgment of default against First American. (Doc. 1-3).

         On July 6, 2018, prior to confirmation of default in state court, First American answered and asserted various affirmative defenses. (Doc. 1-4). On that same date, First American removed the action based on diversity jurisdiction and removal jurisdiction. (Doc. 1). First American asserts the amount in controversy exceeds $75, 000.00, exclusive of interest and costs. Specifically, First American asserts Plaintiffs claim damages based on its title insurance policy, which has a limit of $180, 000. (Doc. 1). First American asserts Plaintiffs claim at least half of that amount, as they allege they do not have title to fifty percent of the undivided ownership of the property covered by the policy. (Doc. 1). First American asserts Plaintiffs also claim penalties and attorney's fees under La. R.S. 22:1892 and 22:1973. (Doc. 1). First American states Exhibit G to Plaintiffs' Petition asserts damages in the amount of $845, 241.56 in lost property interests, emotional distress, and attorney's fees; $796, 356.92 in improvements to the property; and/or potential liability to others in the amount of $976, 730.14. (Doc. 1).

         First American further asserts the parties are completely diverse in citizenship. (Doc. 1). First American alleges Plaintiffs are domiciliaries of Louisiana. (Doc. 1). First American further alleges it is a company incorporated under the laws of Nebraska, with its principal place of business in California. (Doc. 1).

         Plaintiffs responded to removal with a “Motion to Amend/Correct Complaint” under Fed.R.Civ.P. 15(a)(2) (Doc. 13), and a Motion to Remand (Doc. 14), both filed August 4, 2018. Plaintiffs assert their First Amended Complaint adds new facts and allegations, but no additional parties. (Doc. 13). Plaintiffs assert their First Amended Complaint has no effect on jurisdiction. (Doc. 13). The Court granted leave on ...


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