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Brumfield v. Burde

United States District Court, E.D. Louisiana

September 13, 2019

CLARK DAVID BRUMFIELD
v.
KAMATH L. BURDE, MEGHANA HEMPHILL, AND JAMES RIVER INSURANCE COMPANY

         SECTION “R” (1)

          ORDER AND REASONS

          SARAH S. VANCE UNITED STATES DISTRICT JUDGE.

         Before the Court is plaintiff Clark David Brumfield's motion to remand to state court.[1] Because complete diversity does not exist, the Court grants the plaintiff's motion.

         I. BACKGROUND

         On April 2, 2019, the plaintiff filed suit in Louisiana state court against defendants Burde Kamath, [2] Meghana Hemphill, and the James River Insurance Company (“James River”), for damages that the plaintiff allegedly suffered in a car collision. The plaintiff alleges that Burde Kamath negligently drove into the plaintiff's car, causing the plaintiff substantial injury.[3] Kamath's car was owned by Hemphill.[4] As a result, plaintiff sued both Kamath and Hemphill. Brumfield also sued his own insurance company, James River, which is incorporated in Ohio and headquartered in Virginia.[5] Kamath's and Hemphill's primary insurers-Progressive and Geico-respectively, paid out their policy limits.[6] Brumfield signed a limited release with Kamath and Hemphill, settling his claims against them except to the extent necessary to pursue any claims against an excess insurer.[7]

         On May 30, 2019, James River removed the suit to federal court.[8]While acknowledging that the plaintiff and defendants Kamath and Hemphill are all residents and domiciliaries of Louisiana, James River contended that this Court has diversity jurisdiction over the action because Kamath and Hemphill were improperly joined.[9] Specifically, James River argues that because the plaintiff entered a settlement with Kamath and Hemphill, plaintiff cannot state a viable cause of action against Kamath or Hemphill under Louisiana law, and they are therefore improperly joined.[10]

         Shortly after the defendant's removal of this case, Kamath signed an affidavit in which he attested that he was insured by Allstate, and not only Progressive, at the time of the accident.[11] Brumfield subsequently amended his state court complaint to add Allstate as a defendant, although the state court was deprived of jurisdiction upon removal, rendering the amendment void.[12] On June 28, 2019, the plaintiff filed a motion to remand this matter to state court, arguing that this Court is without subject-matter jurisdiction because plaintiff still has a valid claim against Kamath, who resides in the same state as the plaintiff.[13] Brumfield contends he has such a claim because he signed only a limited release with the defendants and specifically reserved an action against an insured defendant to the extent necessary to assert claims against an excess insurer.[14]

         II. LEGAL STANDARD

         The plaintiff's remand motion is governed by the standard for improper joinder, set forth below.

         A defendant may generally remove a civil action filed in state court if the federal court has original jurisdiction over the action. See 28 U.S.C. § 1441(a). The removing party bears the burden of showing that federal jurisdiction exists. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). “The jurisdictional facts that support removal must be judged at the time of removal.” Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000). In assessing whether removal is appropriate, the Court is guided by the principle that removal statutes should be strictly construed because federal courts are courts of limited jurisdiction. See, e.g., Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Accordingly, “[a]ny ambiguities are construed against removal.” Id.

         For diversity jurisdiction to exist, the amount in controversy must exceed $75, 000, and there must be complete diversity between plaintiffs and defendants. See 28 U.S.C. § 1332(a); Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978). Here, the parties do not dispute that the amount-in-controversy requirement is satisfied. However, complete diversity is contested. Ordinarily, having a plaintiff and a defendant who reside in the same state would destroy complete diversity. See McLaughlin v. Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004). And when a nondiverse party is properly joined as a defendant, no defendant may remove the case under 28 U.S.C. § 1332. But a defendant may remove by showing that the nondiverse party was joined improperly. Smallwood v. Ill. Cent. R.R. Co., 352 F.3d 220, 222-23 (5th Cir. 2003).

         The burden of demonstrating improper joinder is a heavy one, as the doctrine is a narrow exception to the rule of complete diversity. Smallwood, 352 F.3d at 222. A defendant may establish improper joinder by showing either “(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.” Id. at 222-23. Here, there is no allegation that plaintiff fraudulently pleaded jurisdictional facts; accordingly, only the second prong of the improper joinder test is at issue. To determine whether the individual defendants were improperly joined under the second prong, the Court asks whether “there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved.” Id. at 223 (quoting Jernigan v. Ashland Oil Inc., 989 F.2d 812, 816 (5th Cir. 1993)) (internal quotation marks omitted).

         “In analyzing whether a plaintiff has demonstrated a reasonable possibility of recovery, the district court may ‘conduct a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant.” Menendez v. Wal-Mart Stores, Inc., 364 Fed.Appx. 62, 69 (5th Cir. 2010) (per curiam) (quoting Smallwood, 385 F.3d at 573). The scope of the inquiry for improper joinder, however, is even broader than that for 12(b)(6) because the Court may “pierce the pleadings” and consider whether summary judgment-type evidence determines whether the plaintiff has a basis in fact for his or her claim. Smallwood, 352 F.3d at 223 n.8 (citing Travis v. Irby, 326 F.3d 644, 648-49 (5th Cir. 2003)); see also Menendez, 364 Fed.Appx. at 69. In conducting this inquiry, the Court must “take into account all unchallenged factual allegations, including those alleged in the complaint, in the light most favorable to the plaintiff.” Travis, 326 F.3d at 649. So, too, must the Court resolve all contested issues of fact and all ambiguities of state law in favor of the party opposing removal. See id.; Elam v. Kan. City S. Ry. Co., 635 F.3d 796, 813 (5th Cir. 2011).

         III. ...


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