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Jonnada v. Liberty Insurance Corp.

United States District Court, W.D. Oklahoma

November 18, 2019



          TIMOTHY D. DeGIUSTI Chief United States District Judge

         Before the Court is Plaintiff's Motion to Remand [Doc. No. 7], in which Plaintiff argues that diversity jurisdiction is lacking. Defendant Liberty Insurance Corporation (“Liberty”) has timely opposed the motion [Doc. No. 8].[1] The matter is fully briefed and at issue.


         On March 21, 2019, Plaintiff filed breach of contract and bad faith claims against Liberty Mutual Insurance Company (“Liberty Mutual”) in state court. [Doc. No. 1-2]. Liberty Mutual removed the case to this Court on May 20, 2019, based on diversity of citizenship under 28 U.S.C. § 1332. [Doc. No. 1]. Following removal, Liberty Mutual moved to dismiss Plaintiff's Petition [Doc. No. 5], arguing that Liberty was the proper defendant in this action. During the pendency of that motion, Plaintiff filed an Amended Complaint [Doc. No. 6], naming Liberty and Engineering, Inc. (“Engineering”) as defendants. Plaintiff asserts that Engineering, like Plaintiff, is a citizen of Oklahoma; thus, the parties to the Amended Complaint lack complete diversity of citizenship. Liberty asserts that diversity jurisdiction does exist because Engineering has been fraudulently joined, and Plaintiff has no possibility of recovery against Engineering.


         Subject 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). Liberty relies on the second basis. Liberty bears the burden to establish that its removal of Plaintiff's case to federal court was proper. See Huffman v. Saul Holdings Ltd. P'ship, 194 F.3d 1072, 1079 (10thCir. 1999).


         “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.” Dutcher, 733 F.3d at 988 (internal quotation omitted). Under the circumstances of this case, Liberty must show there is no possibility that Plaintiff would be able to establish a cause of action against the resident defendant, Engineering. The non-liability of the defendant alleged to be fraudulently joined must be established with “complete certainty.” Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378 F.2d 879, 882 (10th Cir. 1967); Dodd v. Fawcett Publ'n, Inc., 329 F.2d 82, 85 (10th Cir. 1964). “But upon specific allegations of fraudulent joinder the court may pierce the pleadings, consider the entire record, and determine the basis of joinder by any means available.” Smoot, 378 F.2d at 882 (internal citations omitted).

         Plaintiff asserts claims of breach of contract, bad faith, negligence, and fraud against Engineering. Plaintiff alleges that Engineering is an agent of Liberty, and that Liberty issued Plaintiff an insurance policy in March 2013 for homeowners' insurance coverage. On April 4, 2017, Plaintiff allegedly discovered severe wind and hail damage to his roof and accompanying water intrusion. Plaintiff alleges that the policy was in effect at the time, all premiums had been paid, and all conditions precedent for coverage had been met by Plaintiff.

         Plaintiff informed Liberty of the alleged damage and requested that Liberty evaluate Plaintiff's losses and pay the claim. Plaintiff alleges that Liberty denied the claim without conducting a meaningful investigation. After Plaintiff disputed the claim, Liberty retained Engineering to investigate and evaluate the damage to Plaintiff's home. Plaintiff alleges that Liberty and Engineering conducted an unfair, incomplete, and inadequate investigation, and as a result, Liberty incorrectly concluded that Plaintiff's loss was not an insured event.

         Liberty contends that following receipt of Plaintiff's claim, its employee inspected the home and concluded that the roof damage was not storm-related and that the interior damage did not exceed Plaintiff's deductible. When Plaintiff disagreed with these conclusions, Liberty retained a third-party consultant, Shawn Thompson with Engineering, to re-inspect Plaintiff's home. On May 31, 2017, Thompson issued a report, concurring with Liberty that there was no storm damage to the home's roof. Liberty shared Thompson's report with Plaintiff. On March 1, 2019, a second engineer with Engineering, Robert Chynoweth, completed a report in which he concurred with Thompson's prior conclusions. On March 11, 2019, Liberty reiterated its partial denial in a letter to Plaintiff's counsel.

         On March 21, 2019, Plaintiff sued Liberty Mutual in state court. [Doc. No. 1-2]. Plaintiff asserted claims against Liberty Mutual for breach of contract and bad faith. Id. Plaintiff alleged that Liberty Mutual and its agents conducted an unfair and inadequate investigation and evaluation of his claim. Id. Plaintiff did not name any other defendants in his Petition.

         On May 20, 2019, Liberty Mutual removed the action to this Court based on diversity jurisdiction, and filed a motion to dismiss on May 28, 2019, alleging that Plaintiff had sued the wrong entity. [Doc. Nos. 1, 5]. Liberty Mutual alleged that Liberty issued the policy, not Liberty Mutual. Plaintiff subsequently filed an Amended Complaint, naming Liberty and Engineering as defendants. [Doc. No. 6]. Plaintiff asserts in his motion to remand, that upon receiving Liberty Mutual's motion to dismiss, Plaintiff “was forced to reevaluate his potential claims against [Liberty Mutual] and other parties, including [Liberty].” [Doc. No. 7 at 1-2].

         Liberty asserts that Plaintiff added Engineering as a defendant, following Liberty Mutual's removal of the case, solely to defeat diversity jurisdiction. Further, Liberty asserts that Plaintiff has been in possession of the facts underlying his alleged claims against Engineering for more than two years. Moreover, Liberty asserts that Plaintiff's claims against Engineering fail to state a ...

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