Montanaro v. State Farm Mutual Automobile Insurance
Montanaro v. State Farm Mutual Automobile Insurance
Opinion of the Court
ORDER
This matter is before the Court on Plaintiff David Montanaro, Susan Mon-tanaro, and Coastal Collision Works, LLC’s (“Coastal”) (collectively “Plaintiffs”) Motion to Remand pursuant to 28 U.S.C. § 1447. For the reasons set forth herein, Plaintiffs’ Motion to Remand is granted.
BACKGROUND
This action arises out of a business dispute between Plaintiffs and State Farm Mutual Automobile' Insurance Company and State Farm Fire and Casualty Company (collectively “State Farm”). Plaintiffs allege that in January 2013, David and Susan Montanaro (collectively “Montana-ros”) opened Coastal, an automotive body repair shop in Charleston, South Carolina, after having previously operated a body repair shop in the Atlanta, Georgia area. As a body repair shop, Coastal repairs cars insured by State Farm and other insurers. Since January 2013, Plaintiffs and State Farm have disagreed over the reasonableness of the scope and cost of .repairs performed by Coastal on automobiles of State Farm’s insureds and claimants under State Farm policies.
On March 7, 2014, Plaintiffs commenced this, action against Defendants in the Charleston County Court of Common Pleas, alleging the following causes of action: (1) defamation, (2) violation of the South Carolina Unfair Trade Practices Act (“SCUTPA”), and (3) breach of contract.
Defendants filed a Notice of Removal on April 7, 2014, asserting that this Court has diversity jurisdiction over the matter. Defendants admit that Fields, who consents to removal, is a resident' of the State of South Carolina, but they contend that this fact does not defeat diversity jurisdiction because Fields was fraudulently joined as a “sham” defendant. After Defendants answered the Complaint, Plaintiffs filed the instant Motion to Remand on April 17, 2014, maintaining that Fields is not a “sham” defendant and that this Court lacks diversity jurisdiction under 28 U.S.C. § 1332. Defendants filed their Response in Opposition to Plaintiffs’ Motion to Remand on May 2, 2014. Plaintiffs’ Motion to Remand is now ripe for consideration.
STANDARD OF REVIEW
The burden of demonstrating jurisdiction resides with “the party seeking removal.” Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (citing Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994)). District courts are obliged to construe removal jurisdiction strictly because of the “significant federalism concerns” implicated. Id. Section 1447 of the United States Code provides that, “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). Therefore, “[i]f federal jurisdiction is doubtful, a remand [to state court] is necessary.” Dixon, 369 F.3d at 816; see also Hartley v. CSX Transp., Inc., 187 F.3d 422, 425 (4th Cir. 1999) (“[C]ourts should ‘resolve all doubts about the propriety of removal in favor of retained state court jurisdiction.’ ” (quoting Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993))).
ANALYSIS
Defendants removed this matter from state court pursuant to 28 U.S.C. §§ 1441 and 1446. Section 1441 provides that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court' of the United States for the district and division embracing the place where such action is pending.” § 1441(a). Defendants aver that removal is proper in this instance because the District Court has original jurisdiction to hear Plaintiffs’ case pursuant to 28 U.S.C. § 1332. Under § 1332, federal district courts have original jurisdiction over a case if the action involves citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs. § 1332(a). The complete diversity rule of § 1332 requires that the citizenship of each plaintiff be different from
Plaintiffs assert that this Court lacks subject matter jurisdiction because Defendant Fields, like Plaintiffs, is a citizen and resident of South Carolina. Defendants, however, contend that Fields is fraudulently joined' — named solely to prevent Defendants from claiming diversity jurisdiction — and thus, that removal was proper. Therefore, the relevant question before the Court is whether Fields is fraudulently joined such that this action may be maintained in federal court.
“To show fraudulent joinder, the removing party must demonstrate either (1) outright fraud in the plaintiffs pleading of jurisdictional facts or (2) that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court.” Hart-ley, 187 F.3d at 424 (internal quotation marks omitted). Defendants do not allege or identify any bad faith in Plaintiffs’ pleading of jurisdictional facts, so the Court need only inquire into whether Plaintiffs have any possibility of recovery against Defendant Fields. Where no such fraud in pleading is alleged, the party seeking the federal forum “bears a heavy burden — it must show that the plaintiff cannot establish a claim even after resolving all issues of law and fact in the plaintiffs favor.” Id. “This standard is even more favorable to the plaintiff than the standard for ruling on a motion to dismiss under Fed.R.Civ.P. 12(b)(6).” Id.; see also Beaufort Cnty. Sch. Dist. v. United Nat. Ins. Co., 519 F.Supp.2d 609, 614 (D.S.C. 2007) (describing the standard as “among the most liberal in all of the law”); Fleming v. United Teachers Assocs. Ins. Co., 250 F.Supp.2d 658, 662 (S.D.W.Va. 2003) (referring to the standard as “draconian”). The plaintiff need not establish that he will ultimately succeed on his claims; “[t]here need be only a slight possibility of a right to relief.” Hartley, 187 F.3d at 426. In order to determine whether a pleading is fraudulent, the court is not bound by the allegations of the pleadings, but instead it may consider the entire record and may determine the basis of joinder by any means available. AIDS Counseling & Testing Ctrs. v. Grp. W Television, Inc., 903 F.2d 1000, 1004 (4th Cir. 1990) (quoting Dodd v. Fawcett Publ’ns, Inc., 329 F.2d 82, 85 (10th Cir. 1964)).
The first cause of action Plaintiffs allege in their Complaint is for defamation. South Carolina courts “require a plaintiff to prove the following four elements to state a claim for defamation: ‘(1) a false and defamatory statement was made; (2) the unprivileged publication was made to a third party; (3) the publisher was at fault; and (4) either actionability of
[T]he defendants have defamed plaintiffs and wrongfully discouraged its policyholders and claimants from using plaintiffs’ services by writing and verbally contacting persons who were considering using the plaintiffs’ services and falsely and with malice telling these prospective customers that plaintiffs “may charge more than the prices that are competitive in the market area or certain fees and costs that are not reimbursable by us (State Farm).” And that the customer “may be responsible for these charges[.”]
Pis.’ Compl. ¶ 11, ECF 1-1. Further, Plaintiffs claim that Defendants
The Court concludes that these allegations are sufficient to find that Fields is not fraudulently joined. See Legette v. Nucor Corp., 2:12-CV-1020-PMD, 2012 WL 3029650, at *3-4 (D.S.C. July 25, 2012). Plaintiffs have identified the subject matter of the statements allegedly made by Defendants and the third parties to which these statements were purportedly communicated. Moreover, Plaintiffs claim that these statements were false and defamatory and, as a result, served to deter potential customers. Having reviewed the record, the Court finds that, with the benefit of discovery, there is “at least some possibility” that Plaintiffs could establish their defamation claim against Fields at trial. Hartley, 187 F.3d at 423. Because federal courts are courts of limited jurisdiction, if there is any doubt as to whether Fields is an actual party in interest to this action, the matter should be remanded. The Court reemphasizes that the burden is not on Plaintiffs to show a great likelihood of eventual recovery from Fields, but rather the burden falls to Defendants to show that Plaintiffs have no likelihood whatsoever of recovering from Fields. See, e.g., Marshall, 6 F.3d at 233 (“The burden on the defendant claiming fraudulent joinder is heavy: the defendant must show that the plaintiff cannot establish a claim against the nondiverse defendant even after resolving all issues of fact and law in the plaintiffs favor.”). Therefore, at this juncture, the Court cannot say that Plaintiffs have “no chance of establishing the facts necessary to support [their] tort claim[ ].” Hartley, 187 F.3d at 425.
Defendants argue that the Complaint does not state a colorable claim of defamation against Fields because Plaintiffs failed to plead any of the elements of defamation specifically with regard to Fields and because Plaintiffs similarly neglected to allege any supporting facts. In particular, Defendants note that Plaintiffs’ Complaint
Defendants also cite and seek to rely on multiple cases dismissing defamation actions where the plaintiffs failed to plead their claims with sufficient particularity.
As noted by tbe Fourth Circuit, jurisdictional rules are designed to “direct judicial traffic” and “steer litigation to the proper forum with a minimum of preliminary fuss.” Hartley, 187 F.3d at 425. In the context of removal, the jurisdictional rules are to be strictly construed, with any and all doubts regarding the propriety of federal jurisdiction resolved in favor of returning the matter to state court. See Marshall, 6 F.3d at 232. With these “rules of the road” in mind, the Court concludes that Defendants have not established that Plaintiffs fraudulently joined Fields in this action simply to avoid traveling in federal court. See id. (“The best way to advance th[e] objective [of the jurisdictional rules] is to accept the parties joined on the face of the complaint unless joinder is clearly improper. To permit extensive litigation of the merits of a case while determining jurisdiction thwarts the purpose of jurisdictional rules.”).
Accordingly, after considering the allegations in the Complaint and resolving all resulting issues of law and fact in Plaintiffs’ favor, the Court finds that Defendants have failed to carry their heavy bur
CONCLUSION
Therefore, for the foregoing reasons, it is ORDERED that Plaintiffs’ Motion to Remand is GRANTED.
AND. IT IS SO ORDERED.
. Although the Complaint asserts all three causes of action against the “State Farm Defendants,” Plaintiffs concede in their Memorandum in Support of their Motion to Remand that they have not alleged a cause of action for breach of contract as to Mr. Fields.
With regard to jurisdictional facts, Plaintiffs allege that Coastal is a limited liability company organized and existing under the laws of the State of South Carolina by the Montana-ros, who are also residents of South Carolina; that the State Farm Defendants are corporations organized and existing under the laws of a state other than South Carolina; that Snel-grove is a resident of a state other than South Carolina; and that Fields is a resident of the State of South Carolina. The Parties do not appear to dispute that the amount in controversy exceeds the jurisdictional amount.
. Plaintiffs refer to Defendants collectively as "the defendants,” "State Farm,” and "State Farm Defendants,” interchangeably.
. Indeed, discovery could reveal that Fields made the same or similar statements either in his individual capacity or on behalf of State Farm.
. Defs.’ Mem. Supp. of Pis.’ Mot. Remand 3 (citing Simmons v. Sci. Int’l Applications Corp., CIV.A. 5:11-1426-TLW, 2012 WL 761716, at *3-4 (D.S.C. Feb. 13, 2012), report and recommendation adopted, CA 5:11-1426-TLW-JRM, 2012 WL 761726 (D.S.C. Mar. 8, 2012); Sellers v. S.C. Autism Soc., Inc., CIV.A. 3:11-2163-CMC, 2012 WL 1015807, at *6 (D.S.C. Feb. 22, 2012), report and recommendation adopted as modified, 861 F.Supp.2d 692 (D.S.C. 2012); McNeil v. S.C. Dep’t of Corr., 404 S.C. 186, 743 S.E.2d 843, 848 (2013)).
Reference
- Full Case Name
- David MONTANARO, Susan Montanaro, and Coastal Collision Works, LLC v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, State Farm Fire and Casualty Company, Becky Snelgrove, and Steve Fields
- Cited By
- 1 case
- Status
- Published