United States District Court, W.D. Oklahoma
REBECCA L. AKE, Plaintiff,
CENTRAL UNITED LIFE INSURANCE CO., a foreign insurance company, and CAROL GATLIN, an Oklahoma resident, Defendants.
L. RUSSELL, UNITED STATES DISTRICT JUDGE
the Court is Plaintiff's Motion to Remand. Doc. 5.
Defendant has responded. Doc. 6. For the reasons that follow,
Plaintiff's Motion is GRANTED.
Rebecca Ake filed this action against Defendants in the
District Court of Oklahoma County, Oklahoma, on November 2,
2016. Nearly a decade before that, in July 1997, Defendant
Central United Life Insurance Company (“Central
United”) issued an insurance policy to Ms. Ake. The
policy provided for benefits if Ms. Ake or her spouse
contracted cancer. When Ms. Ake's spouse contracted
cancer, Central United refused to pay benefits under the
policy. In response, Ms. Ake sued Central United for breach
of contract and the duty to deal in good faith. She also has
sued Central United's agent, Defendant Carol Gatlin, whom
Ms. Ake alleges made fraudulent or at least negligent
representations about the policy.
diversity jurisdiction per 28 U.S.C. § 1332, Central
United removed this action under 28 U.S.C. § 1441 on May
9, 2017. Ms. Ake moves to remand, arguing that Defendants
have not established the requisite amount in controversy and
that Defendant Carol Gatlin-an Oklahoma citizen like Ms.
Ake-spoils complete diversity. Because the Court agrees that
Ms. Gatlin's presence in this case destroys jurisdiction
under 28 U.S.C. § 1332, it will remand the case to state
Diversity Jurisdiction under § 1332(a)
district courts of the United States . . . are courts of
limited jurisdiction.” Exxon Mobil Corp. v.
Allapattah Servs., Inc., 545 U.S. 546, 552 (2005)
(quotes omitted). Diversity jurisdiction under 28 U.S.C.
§ 1332(a) requires that complete diversity exist between
plaintiffs and defendants and that the amount in controversy
exceeds $75, 000, exclusive of interests and costs. Section
§ 1332(a) demands that the citizenship of all defendants
must be different from the citizenship of all plaintiffs.
McPhail v. Deere & Co., 529 F.3d 947, 951 (10th
Cir. 2008). “For purposes of diversity jurisdiction, a
person is a citizen of a state if the person is domiciled in
that state . . . [a]nd a person acquires domicile in a state
when the person resides there and intends to remain there
indefinitely.” Middleton v. Stephenson, 749
F.3d 1197, 1200 (10th Cir. 2014). In regard to §
1332(a)'s amount in controversy requirement, that amount
is simply “an estimate of the amount that will be put
at issue in the course of the litigation.”
McPhail, 529 F.3d at 956 (10th Cir. 2008). It is the
party invoking diversity jurisdiction, in this case Central
United, who has the “burden of proving [diversity
jurisdiction] by a preponderance of the evidence.”
Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th
Cir. 2014). The removing party may rely on, among other
things, affidavits, interrogatories or admissions in state
court, and calculations from the complaint's allegations.
McPhail, 529 F.3d at 954.
Amount in Controversy
first question, then, is whether Defendant Central United has
established that this dispute meets § 1332(a)'s
amount in controversy requirement-a sum greater than $75,
000-by a preponderance of the evidence. Id.
“The general federal rule has long been to decide what
the amount in controversy is from the complaint itself,
unless it appears or is in some way shown that the amount
stated in the complaint is not claimed ‘in good
faith'.” Marchese v. Mt. San Rafael Hosp.,
24 Fed.Appx. 963, 964 (10th Cir. 2001) (citing Horton v.
Liberty Mut. Ins. Co., 367 U.S. 348, 353 (1961));
see also St. Paul Mercury Indem. Co. v. Red Cab Co.,
303 U.S. 283, 288 (1938) (“[U]nless the law gives a
different rule, the sum deemed by the plaintiff controls if
apparently made in good faith.”). Once the party
asserting federal jurisdiction has done that, the
“St. Paul Mercury standard comes to the
fore”-that is, “the case stays in federal court
unless it is legally certain that the controversy is worth
less than the jurisdictional minimum.”
McPhail, 529 F.3d at 954. In a sense, then, the
burden shifts to the party seeking remand, who must then
prove to a legal certainty that the amount in controversy is
less than $75, 000.
the amount in controversy requirement is clearly met: Ms.
Ake's Petition seeks “judgment against the
Defendant or Defendants in a sum in excess of Seventy-Five
Thousand Dollars . . . .” Doc. 1, Ex. 1, at 3. A
“[p]laintiff cannot defeat jurisdiction by backtracking
on [her] allegations.” Chen v. Dillard Store
Servs., Inc., 579 F.Appx. 618, 621 (10th Cir. 2014),
which is precisely what Ms. Ake is attempting to do here by
asserting, for the first time, that the amount in controversy
requirement is not satisfied. Her Petition says the opposite.
This is not to say that a party moving to remand could never
argue that the amount sought in the Petition does not fairly
represent the amount in controversy. If that were the case,
the party would have the burden of proving to a legal
certainty that the amount in dispute is $75, 000 or less. Ms.
Ake, though, has not done that, and her conclusory
allegations fail to carry her burden. Nor is the Court
convinced otherwise by Johnson v. Wal-Mart Stores,
Inc., 953 F.Supp. 351 (N.D. Okla. 1995), which Ms. Ake
cites for the idea that when the amount sought is uncertain,
Defendant will not have established the requisite amount in
controversy. Ms. Ake, however, omits that in Johnson
the plaintiff's petition sought damages “in excess
of $10, 000”-plainly less than § 1332(a)'s
jurisdictional threshold. Id. at 353.
Diversity of Citizenship
issue of diversity between the parties is a tad trickier.
Again, under 28 U.S.C. § 1332(a) the citizenship of all
defendants must be different from the citizenship of all
plaintiffs. See, e.g., McPhail, 529 F.3d at 951
(10th Cir. 2008). No one is disputing the alleged citizenship
of the named parties. Plaintiff Ake is a citizen of Oklahoma.
Defendant Central United is a citizen of Arkansas (its state
of incorporation) and Texas (its principal place of
business). What the parties dispute is whether Defendant
Carol Gatlin, a citizen of Oklahoma, spoils diversity because
she has not been properly served.
United's theory is this: once a plaintiff has filed a
petition in Oklahoma state court, she has 180 days to serve a
defendant with process. Okla. Stat. tit. 12, §
2004(I). If she fails to serve “and the
plaintiff cannot show good cause why such service was not
made within that period, the action shall be deemed dismissed
as to that defendant without prejudice.” Id.
Central United Argues that the 180-day period for Ms. Ake to
serve Gatlin with summons and a copy of the Petition lapsed
on May 1, 2017. Her failure to serve Gatlin within the
six-month period thus shows that Ms. Ake fraudulently joined
Ms. Gatlin for the sole purpose of spoiling diversity
jurisdiction. And because a “defendant's right of
removal cannot be defeated by a fraudulent joinder[,
]”, see, e.g., Estes v. Airco Serv., Inc., No.
11-CV-776-GKF-FHM, 2012 WL 1899839, at * 1 (N.D. Okla. May
24, 2012), this case has been properly removed to federal
United's argument tees up an uncomplicated question for
the Court: does an unserved defendant's citizenship count
for diversity purposes? Nearly every court has said yes. That
is, even if a named defendant has not been properly served,
that defendant can still spoil diversity. “[T]he law is
clear that the citizenship of all named defendants, whether
served with process or not, must be considered in determining
whether complete diversity exists, thereby providing a
jurisdictional basis for removal under 28 U.S.C. §
1441(a).” Ott v. Consol. Freightways Corp. of
Delaware, 213 F.Supp.2d 662, 664 (S.D.Miss. 2002). This
rule comes from blackletter law requiring a court to
“examine the face of the complaint to determine whether
a party has adequately presented facts sufficient to
establish diversity jurisdiction.” Gaines v. Ski
Apache, 8 F.3d 726, 729 (10th Cir. 1993). It ...