Nationalcare Corp. v. St. Paul Property & Casualty Insurance

22 F. Supp. 2d 558, 1998 U.S. Dist. LEXIS 15195
CourtDistrict Court, S.D. Mississippi
DecidedSeptember 11, 1998
DocketCivil Action 3:98CV462LN
StatusPublished
Cited by5 cases

This text of 22 F. Supp. 2d 558 (Nationalcare Corp. v. St. Paul Property & Casualty Insurance) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nationalcare Corp. v. St. Paul Property & Casualty Insurance, 22 F. Supp. 2d 558, 1998 U.S. Dist. LEXIS 15195 (S.D. Miss. 1998).

Opinion

MEMORANDUM OPINION AND ORDER

TOM S. LEE, Chief Judge.

The plaintiffs in this cause, Nationalcare Corporation, Inc., American Group of Companies, Inc., The Nationalcare Companies, Inc. (collectively “Nationalcare”), Gordon L. Sullivan, individually, the Estate of John V. Sullivan, and Nancy Gage, individually, have moved the court to remand this case to the Circuit Court of Hinds County, Mississippi, First Judicial District, from which the case was removed. Defendants St. Paul Property and Casualty Company (St.Paul) and Mutual Protective Insurance Company (MPIC) have responded in opposition to the motion and have filed their own motions to dismiss, or more accurately, MPIC has moved to dismiss at least some of the plaintiffs’ claims, and St. Paul has moved to dismiss, for judgment on the pleadings or for summary judgment as to all the claims of all the plaintiffs. The parties have fully briefed these various motions *560 and the court, having considered the parties’ submissions on the motions, concludes that plaintiffs’ motion to remand should be denied, that MPIC’s motion to dismiss should be granted, and that St. Paul’s motion to dismiss or for summary judgment should be granted in part and denied in part, all for the reasons explained as follows.

In February 1993, Nationalcare became a General Agent of MPIC pursuant to a “Regional General Agent Agreement” executed between those parties. Shortly thereafter, in March 1993, with Nationalcare’s assistance, defendant Irving Parks became affiliated with MPIC as an agent and began selling insurance on behalf of MPIC. It should be noted at this point that the parties vigorously dispute the nature of Parks’ affiliation with MPIC. The plaintiffs insist on the one hand that Nationalcare merely recruited Parks to be a district managing agent solely for MPIC and that he had no agency or other relationship whatsoever with Nationalcare, but MPIC and St. Paul contend that Parks was an agent/employee of Nationalcare and a soliciting agent for MPIC based on his association with Nationalcare. Whatever the nature of Parks’ relationship with the other parties, it is undisputed that Parks, following his affilation with MPIC, wrote a substantial number of insurance policies for MPIC but, after collecting the initial premiums due under the policies, failed to remit the premium payments to MPIC and instead converted the money — totalling over $96,000 — to his own use.

During this time, there was in effect a fidelity bond issued by St. Paul to MPIC by which St. Paul had agreed to indemnify “the Insured” for, inter alia, “[l]oss resulting directly from any dishonest or fraudulent act(s) committed by a General Agent ... [or] ... a Soliciting Agent acting alone or in collusion with others.” Upon discovering Parks’ theft of the premium money, MPIC made a claim under the bond for the losses caused by Parks. St. Paul ultimately paid the claim, or approximately $96,000 of the claim, and obtained an assignment of MPIC’s claims on account of the loss. St. Paul then sued Parks in the Circuit Court of Harrison County, Mississippi, and obtained a default judgment in the amount of $98,995.29 (apparently representing'the amount converted by Parks, together with attorneys’ fees and costs). St. Paul separately sued Nationalcare in the Harrison County Circuit Court alleging that Parks was a soliciting agent of Nationalcare and that therefore, under the terms of Na-tionalcare’s general agency agreement with MPIC, Nationalcare was bound to indemnify St. Paul, as MPIC’s assignee/subrogee, for the losses caused by Parks. Nationalcare, which claimed that it, too, had sustained losses on account of Parks’ misfeasance since it was deprived of “overwrite commissions” which it would otherwise have received from MPIC on the business written by Parks, responded with a counterclaim against St. Paul for alleged bad faith breach of St. Paul’s fidelity bond provisions. 1

Following the Harrison County Circuit Court’s denial of Nationalcare’s motion to transfer venue to Hinds County, National-care, joined by Nationalcare’s owners/stoek-holders (namely the Estate of John V. Sullivan, Nancy Gage and Gordon Sullivan), filed the present action against St. Paul and MPIC in Hinds County Circuit Court asserting basically the same claims as had comprised Nationalcare’s counterclaim in the Harrison County litigation. The plaintiffs subsequently amended their complaint to add Parks as a defendant, alleging a claim for indemnity.

On October 16, 1997, St. Paul and MPIC removed the case to this court, asserting that neither defendant Parks nor plaintiff Gordon Sullivan, both Mississippi residents, is a proper party to the lawsuit and that there is diversity jurisdiction over the case. 2 Follow *561 ing removal, St. Paul promptly filed a motion to dismiss, for judgment on the pleadings or for summary judgment, and MPIC moved to dismiss two of the claims alleged against it by plaintiffs. Plaintiffs responded to that motion and contemporaneously moved to remand. Both of those motions are now pending before the court. Because the motion to remand challenges subject matter jurisdiction, it will be addressed first.

As the court has indicated, defendants removed this case contending not only that Irving Parks, a resident defendant, was fraudulently joined to defeat diversity, but also that Gordon Sullivan, the one plaintiff whose citizenship is not diverse from that of Parks, lacks standing to bring any claim against any defendant relating to the subject matter of this litigation. For reasons which will become apparent infra, before reaching the question of plaintiffs’ alleged fraudulent joinder of Parks, the court considers whether Gordon Sullivan has any viable claim to assert in this action.

In support of their contention that Gordon Sullivan is a proper plaintiff with standing to assert the various claims set forth in the complaint, plaintiffs appear to take the position that he has standing to sue in his capacity as an agent of MPIC, arguing that just as Parks’ policyholder victims could have sued both MPIC and Irving Parks for the losses caused by Parks even though Parks is but an agent of his disclosed principal, MPIC, Parks’ agent victims, presumably including Gordon Sullivan, could sue him for the losses they have sustained as a consequence of his wrongdoing, 3 and could likewise sue St. Paul for the losses they have sustained as a consequence of its failure to pay under its policy for the losses caused them by Parks. The problem with this argument is that there is no allegation or intimation anywhere in the complaint that Gordon Sullivan was at any time an agent of Nationalcare or of MPIC or that he sustained any loss in his capacity as such an agent.

With respect to Gordon Sullivan specifically, plaintiffs allege only that he “served as Secretary and Treasurer of Nationalcare Corp. on various relevant occasions.” The only individual actually identified as an agent of MPIC who is alleged to have had a right to receive premium commissions on the policy sales by Parks is John Y. Sullivan; and in fact, plaintiffs’ factual allegations concerning Gordon Sullivan relate solely to Gordon Sullivan’s efforts to secure payment of commissions to Nationalcare and John V. Sullivan,

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Cite This Page — Counsel Stack

Bluebook (online)
22 F. Supp. 2d 558, 1998 U.S. Dist. LEXIS 15195, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nationalcare-corp-v-st-paul-property-casualty-insurance-mssd-1998.