United States District Court, N.D. Oklahoma
OPINION AND ORDER
E. DOWDELL CHIEF JUDGE UNITED STATES DISTRICT COURT
Court has for its consideration Plaintiffs' Motion to
Remand (Doc. 10). Defendant State Farm Fire and Casualty
Company opposes remand, arguing that Plaintiffs Leemon Howard
Johnson and Kimberly Ann McIntire fraudulently joined State
Farm's adjuster, Defendant Michael Hopkins, in order to
defeat removal. (See State Farm's Notice of
Removal, Doc. 2; State Farm's Response to Plaintiffs'
Motion to Remand, Doc. 13). For the reasons set out below,
the Court concludes that joinder of Mr. Hopkins was proper.
Plaintiffs' Motion to Remand is, therefore, granted.
dispute arose after a fire destroyed the home of Mr. Johnson
and Ms. McIntire, leading them to file a claim under their
policy with State Farm. Mr. Hopkins, a State Farm employee,
investigated the claim. (Doc. 2-14 at 1-2). After the
adjustment process ended at loggerheads, Mr. Johnson and Ms.
McIntire filed suit in Osage County District Court. The
initial petition's three-counts pleaded breach of
contract and bad faith against State Farm and intentional
infliction of emotional distress against Mr. Hopkins. (Doc.
2-2 at 3-5). Mr. Johnson and Ms. McIntire later amended the
petition to add an allegation of tortious interference with
contract against Mr. Hopkins. (Doc. 2-8 at 6-7). Shortly
thereafter, State Farm filed a Notice of Removal with the
Court (Doc. 2).
Johnson and Ms. McIntire timely filed this Motion to Remand
(Doc. 10), arguing that the Court lacks jurisdiction to hear
this case. Mr. Johnson and Ms. McIntire are citizens of
Oklahoma, and Mr. Hopkins is also a citizen of Oklahoma.
(Doc. 10 at 1). Because the claims are based in state law,
and Mr. Hopkins is a non-diverse defendant, Mr. Johnson and
Ms. McIntire argue that the Court lacks subject matter
jurisdiction over the action and must, therefore, remand it
to state court.
Legal Standards: Removal and Fraudulent Joinder
plaintiff brings a civil action in state court, but a federal
district court has proper jurisdiction to hear it, a
defendant may remove the case to federal court. 28 U.S.C.
§ 1441(a). The relevant jurisdictional grant in this
case, 28 U.S.C. § 1332(a), provides that district courts
shall have original jurisdiction over civil actions between
citizens of different states. Jurisdiction is proper,
however, only where there is complete diversity of
citizenship; no plaintiff can be a citizen of the same state
as any of the defendants. Caterpillar, Inc. v.
Lewis, 519 U.S. 61, 68 (1996). Additionally, where
federal jurisdiction is based in diversity, the so-called
forum-defendant rule bars removal when any of the
“properly joined” defendants is a citizen of the
state where the action was originally brought. 28 U.S.C.
defendant may nevertheless remove a case to federal court
based on diversity if the plaintiff fraudulently joined the
nondiverse defendant in order to defeat federal jurisdiction.
Wilson v. Republic Iron & Steel Co., 257 U.S.
92, 97 (1921); Am. Nat'l Bank & Trust Co. of
Sapulpa v. Bic Corp., 931 F.2d 1411, 1412-13 (10th Cir.
1991). To establish fraudulent joinder, “the removing
party must demonstrate 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.” Dutcher v.
Matheson, 733 F.3d 980, 988 (10th Cir. 2013) (quoting
Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d
242, 249 (5th Cir. 2011)). “The 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.” Id.
not entirely clear what the removing party must prove in
order to “demonstrate” a plaintiff's
“inability to establish a cause of
action.” Dutcher did not announce a
standard of proof, and the Tenth Circuit, in a pair of
recent, unpublished cases, seemed to announce contradictory
standards. In Montano v. Allstate Indemnity, the
court held that the party alleging fraudulent joinder must
prove the plaintiff “ha[s] no possibility of
recovery” against the nondiverse defendant. No.
99-2225, 2000 U.S. App. LEXIS 6852, at *12 (10th Cir. Apr.
14, 2000) (emphasis added). In Nerad v. AstraZeneca
Pharm., Inc., however, the court said fraudulent joinder
turned on “whether there is a reasonable basis
to believe the plaintiff might succeed in at least one claim
against the nondiverse defendant.” Id. 203
Fed.Appx. 911, 913 (10th Cir. 2006) (emphasis added) (citing
Badon v. RJR Nabisco, Inc., 224 F.3d 282, 293 (5th
Cir. 2000)). “A ‘reasonable basis', ”
the court said, “means just that: the claim need not be
a sure-thing, but it must have a basis in the alleged facts
and the applicable law.” Id.
daylight separates the two standards. Belief in a
plaintiff's eventual success may be unreasonable even as
a possibility of recovery, however slim, remains.
Consequently, the Court must determine which standard will
guide its inquiry. A careful read of the cases shows
Montano to be the weightier authority.
Montano, the plaintiffs sued their insurer and its
agent, whom they alleged had negligently failed to procure
insurance coverage as directed. 2000 U.S. App. LEXIS 6852, at
*2- 3, *6. Although joinder of the agent destroyed complete
diversity, the insurance company successfully removed the
case based on fraudulent joinder. Id. at *3. On
appeal, the Tenth Circuit reversed.
court brushed aside the insurance company's argument
that, under New Mexico law, an insurance agent was not an
agent of the insured and could therefore not be held liable
to him. After reviewing state law, the court concluded that
this immunity was not absolute. Id. at *8-9. Proving
fraudulent joinder, the court explained, requires more than a
showing that recovery is unlikely in state court:
This standard is more exacting than that for dismissing a
claim under Fed.R.Civ.P. 12(b)(6); indeed, the latter entails
the kind of merits determination that, absent fraudulent
joinder, should be left to the state court where the action
commenced. “A claim which can be dismissed only after
an intricate analysis of state law is not so wholly
insubstantial and frivolous that it may be disregarded for
purposes of diversity jurisdiction.”
Id. at *5-6 (citation omitted) (quoting Batoff
v. State Farm Ins. Co., 977 F.2d 848, 851-53 (3d Cir.
1992). Because the state's agent-immunity rule was not
absolute, the insurance company had failed to prove that the