United States District Court, W.D. Oklahoma
NATALIE K. LOWE, Plaintiff,
UNITED SERVCIES AUTOMOBILE ASSOCIATION, et al., Defendants.
Court of Oklahoma County, Oklahoma, Case No. CJ-2019-1917
TIMOTHY D. DEGIUSTI, CHIEF UNITED STATES DISTRICT JUDGE.
the Court is Plaintiff's Motion for Remand [Doc. No. 14],
filed pursuant to 28 U.S.C. § 1447(c), contesting the
jurisdictional basis for removal of this state-law case to
federal court. Defendant USAA General Indemnity Company
(“GIC”) has timely opposed the Motion, which is
fully briefed and ripe for consideration.
and Procedural Background
brought suit in state court to recover damages for breach of
contract and breach of an insurer's duty of good faith
and fair dealing after she was denied uninsured/ underinsured
motorist benefits for an automobile accident allegedly caused
by a nonparty. She sued GIC and Defendant United Services
Automobile Association (“USAA”), alleging that
they “operate as alter-egos and are engaged in the
single enterprise or joint venture of the sale of insurance
policies.” See Pet. [Doc. No. 1-4], ¶ 6.
USAA is an unincorporated association with members having the
same Oklahoma citizenship as Plaintiff. See Tuck v.
United Servs. Auto. Ass'n, 859 F.2d 842, 844-45
(10th Cir. 1988).
removed the case to federal court based on diversity
jurisdiction under 28 U.S.C. § 1332 by alleging that
Plaintiff had fraudulently joined USAA to defeat removal so
USAA's citizenship should be disregarded. See
Notice of Removal [Doc. No. 1], ¶¶ 14, 18-24.
Specifically, GIC asserted that it was Plaintiff's
insurer; that Plaintiff has not alleged the existence of any
direct relationship with USAA, which is GIC's parent
company; that Plaintiff's allegation of a joint
enterprise or venture in the sale of insurance policies has
no bearing on Plaintiff's claims, which are not based on
the sale of her policy; and that Oklahoma law does not permit
an action against a parent company for the acts of a
subsidiary until the subsidiary's liability is
established and the judgment goes unsatisfied. See
Okla. Stat. tit. 12, § 682(B). GIC alleged that
Plaintiff's petition lacks sufficient facts to state a
viable claim against USAA under either a contractual or
tort-based theory of recovery and, thus, “USAA should
be ignored for purposes of determining diversity of the
parties.” Notice of Removal, ¶¶ 23, 24.
asserts in her Motion that she has stated or can state
plausible claims against USAA. Plaintiff argues that USAA is
a reciprocal insurance exchange that operates and controls
GIC and its affiliates, and that GIC's handling of her
insurance claim “is the result of a pattern and
practice instituted by USAA.” See Mot. Remand
at 3, 6. Plaintiff also contends USAA could be held liable
under Oklahoma law in light of circumstances similar to ones
found in Oliver v. Farmers Insurance Group, 941 P.2d
985 (Okla. 1997). Plaintiff alleges that USAA is an
“umbrella entity under which several companies offer
insurance, banking, investment and retirement products”
and these “companies operating under the USAA umbrella
are operated as a single unit.” See Mot.
Remand at 6. She presents “the following facts, which
are known at this time, ” accompanied by exhibits from
publicly available sources: USAA maintains one website for
all its companies; a person applying for insurance submits a
general USAA application form and USAA selects an affiliate
to issue the policy; an insured who suffers a loss submits a
claim to USAA rather than the issuing affiliate; USAA holds
itself out as a diversified company that offers a wide
variety of products to its members through its subsidiaries,
presenting “them as mere divisions or departments
rather than separate entities;” profits from all
subsidiaries are shared with USAA's members; and USAA and
GIC share common officers, directors, and executives. See
id. at 6-7.
matter jurisdiction over this case turns on the doctrine of
fraudulent joinder. “To establish fraudulent joinder,
the removing party must demonstrate either: 1) actual fraud
in the pleading of jurisdictional facts, ¶ 2) inability
of the plaintiff to establish a cause of action against the
non-diverse party in state court.” Dutcher v.
Matheson, 733 F.3d 980, 988 (10th Cir. 2013) (internal
quotation omitted); Long v. Halliday, 768 Fed.Appx.
811, 814 (10th Cir. 2019) (unpublished). GIC relies solely
on the second basis. As the removing party, GIC must
establish federal jurisdiction. See McPhail v. Deere
& Co., 529 F.3d 947, 955 (10th Cir. 2008).
defendant seeking removal bears a heavy burden of proving
fraudulent joinder, and all factual and legal issues must be
resolved in favor of the plaintiff.” Dutcher,
733 F.3d at 988 (internal quotation omitted); Long,
768 Fed.Appx. at 814. In this case, GIC must show
“there is no possibility that [Plaintiff] would be able
to establish a cause of action against [USAA] in state
court.” See Montano v. Allstate Indem., No.
99-2225, 2000 WL 525592, *1 (10th Cir. April 14, 2000)
(unpublished) (internal quotation omitted). The nonliability
of a defendant alleged to be fraudulently joined must be
“established with complete certainty.” See
Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378
F.2d 879, 882 (10th Cir. 1967); Dodd v. Fawcett
Publ'ns, Inc., 329 F.2d 82, 85 (10th Cir. 1964).
“This standard is more exacting than that for
dismissing a claim under Fed.R.Civ.P. 12(b)(6).”
Montano, 2000 WL 525592 at *2.
assessing fraudulent joinder, “the court may pierce the
pleadings, consider the entire record, and determine the
basis of joinder by any means available.”
Dodd, 329 F.2d at 85 (citations omitted); see
Smoot, 378 F.2d at 881-82 (“it is well settled
that upon allegations of fraudulent joinder designed to
prevent removal, federal courts may look beyond the pleadings
to determine if the joinder, although fair on its face, is a
sham or fraudulent device to prevent removal”);
accord Brazell v. Waite, 525 Fed.Appx. 878, 881
(10th Cir. 2013) (unpublished). “[T]he court must
decide whether there is a reasonable basis to believe the
plaintiff might succeed in at least one claim against the
non-diverse defendant.” Nerad v. AstraZeneca
Pharm., Inc., 203 Fed.Appx. 911, 913 (10th Cir. 2006)
(unpublished); see Brazell, 525 Fed.Appx. at 881
(“In general, the removing party must show that the
plaintiff has no cause of action against the fraudulently
joined defendant.”) (internal quotation omitted).
consideration, the Court finds that GIC has failed to carry
its burden to show that Plaintiff has no possible claim
against USAA. To the extent GIC seeks to limit the inquiry
solely to Plaintiff's state-court petition, GIC's
arguments are inconsistent with the standard of decision,
which authorizes the consideration of matters outside the
pleadings. As recognized by GIC, the general rule is that a
plaintiff cannot raise a new legal theory or make different
factual allegations after removal to defeat a claim of
fraudulent joinder. See Smart v. Pohl, No.
CIV-14-813-D, Order at 4-5 (W.D. Okla. Oct. 8, 2014)
(“post-removal filings may not be considered when or to
the extent that they present new causes of action or theories
not raised in the controlling petition filed in state
court”) (internal quotation omitted) (available on
Westlaw under an incorrect name, Smith v. Pohl, 2014
WL 5039966, at *2). GIC asserts that Plaintiff improperly
raises new matters in her Motion that should be disregarded
in deciding whether USAA has been fraudulently joined.
Court finds that GIC gives an overly restrictive reading to
Plaintiff's petition and that the general rule does not
preclude the arguments presented by Plaintiff in support of
her Motion. Plaintiff merely provides more detailed
allegations of facts existing at the time of removal that are
fully consistent with her asserted theories of recovery
against USAA. Plaintiff's pleading was filed in state
court, where it was required to satisfy only the notice
pleading standard of Okla. Stat. tit. 12, § 2008. In
moving for remand, Plaintiff supplies additional facts to