Thomas Machinery, Inc. v. Everest National Insurance Company

CourtDistrict Court, S.D. Florida
DecidedMay 22, 2020
Docket0:20-cv-60459
StatusUnknown

This text of Thomas Machinery, Inc. v. Everest National Insurance Company (Thomas Machinery, Inc. v. Everest National Insurance Company) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomas Machinery, Inc. v. Everest National Insurance Company, (S.D. Fla. 2020).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO. 20-60459-CIV-ALTMAN/Hunt

THOMAS MACHINERY, INC.,

Plaintiff, v.

EVEREST NATIONAL INSURANCE COMPANY, et al.,

Defendants. ________________________________/ ORDER

Thomas Machinery, Inc. (“Thomas”) was sued in state court. See Compl. [ECF No. 1-1] ¶¶ 12–15 (discussing the “underlying lawsuit”). When Thomas tendered the claim, its insurer, Everest National Insurance Company (“Everest”), denied coverage. Id. ¶¶ 16–19. Alleging that this denial cost it over $200,000 in defense costs, plus an as-yet-undisclosed sum it paid to settle the underlying lawsuit, id. ¶ 22, Thomas sued Everest—and, alternatively, its insurance agent, Wilson, Washburn & Forster, Inc. (“Wilson”)—in state court. In its Complaint, Thomas avers that Everest breached the terms of the insurance policy by denying coverage (Count I). Id. ¶¶ 25–28. Alternatively, Thomas contends that, if the insurance policy did not cover its claim, then Wilson should be liable for failing to procure adequate coverage on its behalf (Counts II, III, IV). Id. ¶¶ 29–50. All parties agree that Thomas’ case against Wilson is contingent on a court’s initial determination that the insurance policy did not cover the underlying lawsuit. See Opposition to Motion to Remand [ECF No. 11] at 9; Reply in Further Support of Motion to Remand [ECF No. 13] at 1–2. Put another way, if the insurance policy did cover Thomas for the underlying lawsuit, then Thomas would have no claim against Wilson. Everest timely removed the case to federal court. See Notice of Removal [ECF No. 1] ¶ 8. Everest acknowledges that the parties are not completely diverse: Thomas and Wilson, after all, are both citizens of Florida. Id. ¶ 13.1 Nevertheless, Everest argues that Wilson’s citizenship is irrelevant for purposes of establishing diversity jurisdiction because (1) Wilson was “fraudulently

joined” as a defendant, and (2) Wilson is a “nominal party.” Id. Disputing both contentions, Thomas filed a Motion to Remand, in which it says that this Court lacks subject-matter jurisdiction over the case. See Motion to Remand [ECF No. 6] at 7. Wilson, for its part, has filed a Motion to Dismiss the Complaint, in which it maintains that Thomas’ claims against it are not yet ripe because they are contingent on the outcome of Thomas’ separate—and contradictory—claim against its insurer. See Memorandum in Support of Motion to Dismiss [ECF No. 7] at 3. Thomas opposes the Motion to Dismiss—but only in part. See Partial Opposition to Motion to Dismiss [ECF No. 10] (“MTD Opposition”) at 1. Although Thomas agrees that Wilson has no current role in this litigation, it asks the Court to stay—rather than dismiss—the case against Wilson. Id.

This leaves the Court with two issues to adjudicate: First, does the Court have subject- matter jurisdiction over this case? Second, if so, should this Court dismiss or stay Thomas’ claims against Wilson? For the reasons set out below, the Court concludes that it does have subject-matter jurisdiction over this case and that Thomas’ claims against Wilson should be dismissed. ANALYSIS A. The Motion to Remand “A defendant may remove a case from state court to federal court if the federal court has

1 Thomas is a Florida corporation with its principal place of business in Florida; Everest is a Delaware corporation with its principal place of business in New Jersey; and Wilson is a Florida corporation with its principal place of business in Florida. See Notice of Removal ¶¶ 10–12. original jurisdiction over the case.” Smith v. Comcast Corp., 786 F. App’x 935, 939 (11th Cir. 2019) (citing 28 U.S.C. § 1441(a)). The burden rests on the removing party to establish jurisdiction. See Friedman v. N.Y. Life Ins. Co., 410 F.3d 1350, 1353 (11th Cir. 2005); see also Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994) (noting that “uncertainties are resolved in

favor of remand”). A removing party may meet its burden by showing that the court has diversity jurisdiction over the case. See, e.g., Smith, 786 F. App’x at 939. Notably, jurisdiction is assessed as of the time of removal. See Ehlen Floor Covering, Inc. v. Lamb, 660 F.3d 1283, 1287 (11th Cir. 2011). Federal courts have diversity jurisdiction over civil actions when (1) the amount in controversy exceeds $75,000 and (2) the parties are “citizens of different States.” 28 U.S.C. § 1332. Ordinarily, this requires complete diversity—that is, “the citizenship of each plaintiff must be different from that of each defendant.” Holston Invs., Inc. B.V.I. v. LanLogistics Corp., 677 F.3d 1068, 1070 (11th Cir. 2012). But, in certain circumstances, courts will disregard the citizenship of a party while assessing diversity. As relevant here, the Eleventh Circuit has

described two such circumstances. First, federal courts must “disregard the citizenship of fraudulently joined parties in determining whether diversity jurisdiction exists.” Martin v. SmithKline Beecham Corp., 2006 WL 8433438, at *2 (S.D. Fla. Aug. 15, 2006); see also Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998) (holding that “an action may nevertheless be removable if the joinder of the non-diverse party . . . were fraudulent”). Second, courts must “disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.” Thermoset Corp. v. Bldg. Materials Corp of Am., 849 F.3d 1313, 1317 (11th Cir. 2017) (quoting Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461 (1980)). The parties appear to agree that their dispute satisfies the amount-in-controversy requirement. And this agreement is unsurprising: Thomas, after all, seeks over $200,000 in damages for defense costs alone—well beyond the $75,000 threshold. See Compl. ¶ 22. The parties do disagree, however, about whether Everest has established complete diversity.

1. Fraudulent Joinder “Fraudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity.” Triggs, 154 F.3d at 1287. A plaintiff has fraudulently joined a defendant when “there is no possibility that the plaintiff can prove a cause of action against the resident (non-diverse) defendant.” Id. The Eleventh Circuit has said that the removing party’s burden of establishing fraudulent joinder is a “heavy one,” and that courts “must resolve any uncertainties about state substantive law in favor of the plaintiff.” See Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). Indeed, “[i]f there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that joinder was proper and remand the case to state court.” Id. (quoting Coker v.

Amoco Oil Co., 709 F.2d 1433, 1440–41 (11th Cir.1983)).

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154 F.3d 1284 (Eleventh Circuit, 1998)
Susan J. Friedman v. New York Life Ins. Co.
410 F.3d 1350 (Eleventh Circuit, 2005)
In Re Egidi
571 F.3d 1156 (Eleventh Circuit, 2009)
Navarro Savings Assn. v. Lee
446 U.S. 458 (Supreme Court, 1980)
Ehlen Floor Covering, Inc. v. Lamb
660 F.3d 1283 (Eleventh Circuit, 2011)
Jacqueline Burns v. Windsor Insurance Co.
31 F.3d 1092 (Eleventh Circuit, 1994)
Holston Investments, Inc. v. Lanlogistics Corp.
677 F.3d 1068 (Eleventh Circuit, 2012)
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Coker v. Amoco Oil Co.
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Thomas Machinery, Inc. v. Everest National Insurance Company, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thomas-machinery-inc-v-everest-national-insurance-company-flsd-2020.