Opinion
Civil Action No. 02-3317
January 27, 2003
MINUTE ENTRY
Before the Court is Plaintiffs', Shirley and Janet Nero's ("Plaintiffs") Motion to Remand. On November 4, 2002, Defendant Unitrin Specialty Lines Insurance ("Unitrin") filed a timely notice of removal pursuant to 28 U.S.C. § 1446(b) alleging fraudulent joinder of non-diverse defendant, LA Independent Insurance Agencies, Inc. ("Independent"). For the following reasons Plaintiffs' Motion to Remand is DENIED.
The party seeking removal of a matter from state to federal court bears the burden of establishing the existence of federal jurisdiction. See Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992) (citing B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981)). "Where charges of fraudulent joinder are used to establish this jurisdiction, the removing party has the burden of proving the claimed fraud." Dodson, 951 F.2d at 42. A claim or fraudulent joinder shall be analyzed under the same standards used to assess a motion for summary judgment. See Badon v. R J R Nabisco, Inc., 224 F.3d 382, 393 (5th Cir.), op. after certified question declined, 236 F.3d 282 (5th Cir. 2000).
Consequently, a court must resolve any factual controversies in favor of the nonremoving party, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts. [The court shall] not, however, in the absence or any proof, assume that the nonmoving party could or would prove the necessary facts." Id. (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)
The court must then "determine whether that party has any possibility of recovery against the party whose joinder is questioned." Dodson, 951 F.2d at 42 (citing Carriere v. Sears, Roebuck and Co., 893 F.2d 98, 100 (5th. Cir.), cert. denied 498 U.S. 817, 112 L.Ed.2d 35, 111 S.Ct. 60 (1990)). The most crucial issue for the Court to determine is whether any recovery is possible because if "that possibility exists, then `a good faith assertion of such an expectancy in a state court is not a sham . . . and is not fraudulent in fact or in law.'" Dodson, 951 F.2d at 43 (quoting B., Inc., 663 F.2d at 550). "There can be no fraudulent joinder unless it be clear that there can be no recovery under the law of the state on the cause alleged." Parks v. New York Times Co., 308 F.2d 474, 479 (5th Cir. 1962), cert. denied 376 U.S. 949, 11 L.Ed.2d 969, 84 S.Ct. 964 (1964).
In this case, Plaintiffs are suing Unitrin and Independent for failure to pay a timely claim submitted to Unitrin for damages to their vehicle when it was stolen and later discovered burned and totally destroyed. The Complaint alleges that Unitrin received timely satisfactory notice of loss, vet failed to pay the claim in violation of La. R.S. 22:1220(b). The Complaint further alleges that Independent also breached its contract with Plaintiffs in violation of La. R.S. 22:1220(b).
Plaintiffs have failed to state a claim against Independent under § 1220 because the statute imposes duties on insurers and does not mention insurance agents. See Yates v. Southwestern Life Insurance Co., Civ. A. No. 97-3204, 1998 WL 61033, at *4 (E.D. La. Feb. 12, 1998). Further, because the statute is penal in nature, it must be strictly construed. Id., citing Matter of Hanover Corp., 67 F.3d 70 (5th Cir. 1995).
Likewise, Plaintiffs have failed to state a claim under contract theory. In their motion to remand, Plaintiffs submit that Independent "breach[ed] its fiduciary obligation or contract by suggesting to plaintiffs that they purchase [car] insurance from a questionable company, defendant Unitrin." (Rec. Doc. 4, p. 3). Under Louisiana law, an agent for a known principal cannot be held personally liable for breach of contract unless the agent personally binds itself or exceeds its authority. See La. C.C. art. 3016 ("[a] mandatary who contracts in the name of the principal within the limits of his authority does not bind himself personally for the performance of the contract"); La. C.C. art. 3019 ("[a] mandatary who exceeds his authority is personally bound to the third person with whom he contracts, unless that person knew at the time the contract was made that the mandatary had exceeded his authority or unless the principal ratifies the contract"). Plaintiffs fail to state a claim in contract against Independent, because they fail to allege that Independent "exceeded its authority, made personal guarantees as to the performance of the contract, or personally bound itself." Bertucci v. LaFayette Ins. Co., Civ. A. No. 01-608 01-980, 2001 WL 1223587, at *2 (E.D. La., Oct. 12, 2001) (vacated in part, on other grounds).
Unitrin has carried its burden of proof that there is no possibility of recovery against Independent under state law. Thus, Independent's presence will be ignored for jurisdictional purposes, and complete diversity exists between the parties. Because the parties are diverse, the Court must now determine whether the requisite minimum jurisdictional amount in controversy is met.
Unitrin, as the removing party, must establish by a preponderance of the evidence that the jurisdictional amount is satisfied either (1) by demonstrating that it is apparent from the race or the petition that the claims are likely to exceed $75,000 or (2) by setting forth facts in controversy that support a finding of the requisite mount. See Simon v. Wal-Mart Stores, Inc., 193 F.3d 848, 850 (5th Cir. 1999); Luckett v. Delta Airlines, Inc., 171 F.3d 295 (5th Cir. 1999).
The value or the allegedly destroyed automobile is not stated in the Complaint, however, in a letter dated, July 19, 2002, counsel for Plaintiff's demanded $31,074.32 plus $7.70 per diem for every day after that date until the claim is paid. ( See Rec. Doc. 1, Ex. A) In addition, the Complaint seeks punitive relief under La. R.S. 22:1220(c), which provides for a 200% statutory penalty and attorney's fees. Thus, a value of approximately $31,000 plus an additional 200% penalty of $62,000 totals $93,000, not including attorney's fees. Therefore, Unitrin has established that at the time of removal the amount in controversy exceeded the $75,000 jurisdictional minimum.
According to Plaintiffs' counsel, this sum reflects a $26,074.32 "pay-off" for the value of the car at the time it was allegedly destroyed plus two $5,000 amounts debited from Plaintiffs' bank account to pay on the note and maintain insurance coverage. ( See Rec. Dec. 1. Ex. A)
Because the parties are completely diverse and the requisite amount in controversy exists, the Court finds that it has diversity jurisdiction over the instant case. Accordingly, IT IS ORDERED that the Motion to Remand is hereby DENIED.