Opinion
CV 00-PWG-2902-W
March 26, 2001
MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATION
This matter is before the court for consideration of plaintiffs Motion to Remand (document #6) and related motions of the defendants.
Defendants have filed the following: Defendant American General has filed a Motion to Dismiss (document #2), Motion of Diana Dobson to Dismiss (document #3), defendant's Motion to Defer Ruling (document #8), defendant's Motion for Extension of Time to Respond to Motion to Remand (document #10) and defendant's Motion to Supplement Record (document #21). Plaintiff has filed a Supplemental Motion in response to defendant's notice of additional authority (document #20) and Response and Motion to Strike (document #22). The motions to dismiss (documents #2 and #3) will be MOOT in this court. Defendant's Motion for Extension of Time (document #10) is MOOT. Defendant's Motion to Supplement Record (document #21) is GRANTED. The plaintiffs Supplemental Motion (document #20 )and defendant's Motion to Defer Ruling (document #8) are DENIED. Plaintiffs Response and Motion to Strike (document #22) is DENIED.
Mary Helen Colvin initiated this civil action by filing a civil complaint in the Circuit Court of Greene County, Alabama on September 11, 2000. In her complaint Ms. Colvin alleges that the defendant American General Life and Accident Insurance Company maintains its principle place of business in the State of Tennessee and does business by agent in Greene County, Alabama. The complaint also alleges that Diana Dobson is a resident of Greene County, Alabama and "at all times pertinent hereto Diana Dobson was acting as the agent and/or employee for American General in the marketing and sale of industrial life insurance to plaintiff, as well as the collection of premiums." The factual allegations which underlie plaintiffs complaint set out at paragraphs 6-26 do not mention the name of defendant Diana Dobson. The ten counts of the complaint which enumerate the plaintiffs theories of relief likewise never mention Diana Dobson.
Ms. Colvin identifies her action as one "seeking damages and redress resulting from defendant's fraudulent scheme and common course of conduct involving deceptive sales practices, unconscionable and outrageous conduct, over-reaching fraud and deception by American General and certain life insurance companies acquired by it relating to the marketing, sale and administration of industrial life insurance policies." (Complaint at ¶ 6). The complaint identifies Ms. Colvin as the owner of ". . . industrial life insurance policies issued bydefendants [which by terms of the complaint must refer to American General and certain life insurance companies acquired by it] and whose policies were marketed, sold, and issued, and administered as part of the unlawful and unconscionable scheme . . ." (Complaint at ¶ 7). Industrial life insurance is further identified as a life insurance product with a low face value and premium payments designed to appear modest to the policyholder. Ms. Colvin observed that "these premium payments have been historically collected on a weekly or monthly basis by American General agents." (Complaint at ¶ 9). Ms. Colvin avers that American General targets minorities and low income segments of the population for the industrial life insurance product charging African American individuals higher premiums for those policies than similarly situated whites. (Complaint at ¶ 10). Ms. Colvin states that "uponpurchasing industrial life insurance policies from American General, plaintiff was not shown any rate book. Plaintiff was not shown any document that would indicate the premiums paid by African American policy holders were higher than premiums paid by white policy holders. [She] was not told that the white policy holders paid lower premiums based solely on racial preference. [She] received no information either in writing, verbal, or otherwise which would reveal that white policy holders paid lesser premiums for the same coverage." (Complaint at ¶ 11). (Emphasis added). Ms. Colvin contends that defendants have at all times "continued to defraud plaintiff by concealing this fact as well as the fact of other fraudulent, deceptive and unconscionable business practices of the defendants, . . . ." Moreover, that "defendants have continued up to the present to conceal their fraudulent, deceptive and unconscionable business practices, and plaintiff has never received any information, written, verbal or otherwise, which reveal these practices. Since plaintiffs policies were issued, defendants have refused to release or provide information about its discrimination against plaintiff so that plaintiff reasonably could have discovered the discrimination." Ms. Colvin states that although the initial decision to discriminate against African Americans and conceal the discrimination were made in the early 1940's,American General has repeatedly made the decision to continue the fraudulent concealment of its discriminatory practices and has continued this practice to present. (Complaint at ¶ 12). Plaintiff also avers that "to effectuate the sale and administration of industrial policies on a 'debit' basis, American General agents were trained to personally visit the homes of policy owners residing on their routes to collect the premiums and develop a personal relationship with a policy owner that would facilitate the sale of additional insurance products in the future. American General trained its agents to market and sale these policies as 'burial' protection to manipulate the emotions of prospective policy holders by installing in or playing on a sense of shame and leaving their loved ones without funds to pay for a funeral at the time of their death. In designing, developing, and marketing the sale these policies, American General and agents knowingly targeted a disadvantaged segment of the population which was unsophisticated with respect to insurance and ill-equipped to understand the unfamiliar and technical language of the policies, as well as the complex actuarially methods of determine premium payments. American General and its agents knew that to these prospective policy holders, the premiums appeared small and affordable, and the death benefit totaled more than these disadvantaged individuals could conceive of saving in their lifetime. At the same time American General knew that these targeted, unsophisticated prospective policy holders did not know that the small premiums would far exceed the face value of the policies over the normal life expectancy of these policy holders." (Complaint at ¶ 13).
Ms. Colvin seeks compensation for unjust enrichment (count one); money had and received (count two); deceit and fraudulent deceit (count three); fraud (count four); suppression of material facts (count five); fraudulent concealment (count six); continuing misrepresentations and suppressions (count seven); conversion (count eight); outrage (count nine); breach of fiduciary duty (count ten); and violation of Alabama Code § 27-12-11 (count eleven) referring to discriminatory practices in life, annuity and disability contracts. (Document #1).
"61. Defendants, both named and fictitiously described, continuously from the inception of the policies described herein until the present, engaged in a pattern or course of conduct by which said defendants continued to perpetrate the original frauds, misrepresentations, suppressions, deceit and fraudulent deceit against plaintiffs as described hereinabove." This paragraph is the only paragraph which appears to link the general allegations directed to agents and the allegations made against defendants defined as American General and companies acquired by it.
The only individual defendant identified in the complaint is Diana Dobson. Ms. Dobson has filed a motion to dismiss this action, together with a memorandum in support of her motion which argues that Ms. Colvin has failed to satisfy the requirements of Federal Rules of Civil Procedure 9(b) and, further, that claims made against her are barred by the Alabama statute of limitations. (Alabama Code, § 6-2-38(1) (1975)). (Document #3). In reply Ms. Colvin has stated under oath that she ". . . had many personal dealings with Agent Dobson over the years regarding [her] policies, and Agent Dobson collected premiums from [her]. [She] [has] paid the premiums from the date the policies were purchased up to the present. If I had received any information advising that the premiums I was being charged were based on my race, I would not have continued to pay the premiums to Agent Dobson or any other person." (Exhibit B to plaintiffs brief in support of motion to remand, document #7). In addition to plaintiffs motion for remand, American General has filed a Motion to Dismiss or, in the Alternative, for More Definite Statement (document #2) and a Motion to Defer Ruling on Plaintiff's Motion to Remand Pending Jurisdictional Discovery. (Document #8). Plaintiff has filed an Opposition to the Relief Sought by Each Defendant. (Document #11).
GENERAL PRINCIPLES
The United States District Court for the Northern District of Alabama as a creature of Congress possesses only that portion of the constitutionally permissible field of Article III jurisdiction specifically granted to it by Congress. The contours of its jurisdiction must not, and may not, be expanded by judicial usurpation. Snyder v. Harris, 394 U.S. 332, 341, 89 S.Ct. 1053, 1059, 22 L.Ed.2d 319 (1969). Congress has granted subject matter jurisdiction to the district courts over "all civil actions where the matter in controversy exceeds the sum or value of $75,000" provided that complete diversity exists between the parties. 28 U.S.C. § 1332(a); Strawbridge v. Curtiss, 3 Cranch (7 U.S.) 267, 2 L.Ed. 435 (1806). The rule of complete diversity holds that generally diversity jurisdiction may be sustained only where "there is no plaintiff or no defendant who are citizens of the same state." Wisconsin Department of Corrections v. Schacht, 524 U.S. 381, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998). However, a narrowly defined exception to this requirement is found in the doctrine of fraudulent joinder. See Cabalceta v. Sandard Friut Co., 883 F.2d 1553 (11th Cir. 1989). The citizenship of a resident defendant fraudulently joined should not be considered by a court for the purpose of determining diversity jurisdiction. The removing party bears the burden of proving that the joinder of the resident defendant was fraudulent. See Coker v. AMOCO Oil Company, 709 F.2d 1433, 1440 (11th Cir. 1983). In order to establish fraudulent joinder, the removing party must show either "[1] that there is no possibility that the plaintiff would be able to establish a cause of action against the resident defendant in state court or [2] there has been outright fraud in the plaintiffs pleading of jurisdictional facts." Id., see also Cabalceta, 883 F.2d at 1561. Furthermore, "[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 the joinder was proper and remand the case to state court." Coker, 709 F.2d at 1440-41. The court must evaluate all factual issues and questions of controlling substantive law in favor of the plaintiff. See Cabalceta, 883 at 1561. Therefore, the burden to the removing party is a "heavy one." "Where a plaintiff states even a colorable claim against the resident defendant, joinder is proper and the case should be remanded to state court." Pacheco de Perez v. AT T Co., 139 F.3d 1368, 1380 (11th Cir. 1998). The court must evaluate all factual allegations in the light most favorable to the plaintiff' and must resolve all uncertainties regarding the applicable law in favor of the plaintiff. Id. It is significant, however, that a federal district court making a determination of fraudulent joinder may consider affidavits and deposition transcripts submitted by the parties. Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). The assessment of the evidence is controlled by the admonition that all factual considerations are to be resolved in favor of the plaintiff. The defendant, however, under appropriate circumstances has a right to pursue relevant evidence related directly to the question of the court's jurisdiction.
It is for that reason that plaintiff's citation to remand orders in related cases with similar allegations is only marginally relevant. The court has an obligation to either permit discovery in order to determine whether the defendant can satisfy its "heavy burden" or in a principled analysis clearly set out the reason it concludes that no amount of discovery would affect the outcome whether another judge has chosen to analyze the allegation. The expedient of a mere recitation to a "heavy burden" fails to perform that task.
In addition to general principles of remand, this analysis implicates both Rule 12(b)(6) and Rule 9(b), Federal Rules of Civil Procedure. A Rule 12(b)(6) motion questions the legal sufficiency of a complaint. In assessing the merits of Rule 12(b)(6) motion, the court must assume all the factual allegations set forth in the complaint are true. See e.g. United States v. Gaubert, 499 U.S. 315, 327, 111 S.Ct. 1267, 113 L.Ed.2d 335 (1991); Powell v. Lennon, 914 F.2d 1459, 1563 (11th Cir. 1990). Moreover, factual allegations are construed in the light most favorable to the plaintiff. See e.g. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Cannon v. Macon County, 1 F.3d 1558, 1565 (11th Cir. 1993); see also Brower v. County of Inyo, 489 U.S. 593, 598, 109 S.Ct. 1378, 103 L.Ed.2d 628 (1989).
On a motion to dismiss for failure to state a claim upon which relief may be granted, the movant ". . . The movant must sustain a very high burden." In re Johannessen, 76 F.3d 347, 349 (11th Cir. 1996) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "Motions to dismiss for failure to state a claim should be denied unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of its claims." Johannessen, 76 F.3d at 349. See also Hishon v. King Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). It is a basic tenet of federal jurisprudence that the rules of civil procedure generally allow for liberal pleadings: "A pleading which sets forth a claim for relief . . . shall contain (1) a short and plain statement of the grounds upon which the court's jurisdiction depends . . . (2) a short and plain statement of the claim showing that the pleader is entitled to relief and (3) a demand for judgment for the relief the pleader seeks." Federal Rules of Civil Procedure 8; see also Crowe v. Coleman, 113 F.3d at 1539. (Noting that "under the liberal requirements of notice pleading, '[n]o technical forms of pleading . . . are required.'") quoting Federal Rule of Civil Procedure 8(a).
As a result of the general liberal pleading requirement of Rule 8(a), many courts have concluded that the general use of the term "defendants" is sufficient to satisfy the notice requirements of Rule 12. For instance, in Crowe, supra, the Eleventh Circuit considered whether the plaintiffs had sufficiently stated a cause of action against a non-diverse defendant alleged by diverse defendants to have been fraudulently joined. The complaint referred to "defendants" generally, rather than specifying an individual defendant by name. The Eleventh Circuit held that, "[w]hen multiple defendants are named in a complaint, the allegations can and usually are to be read in such a way that each defendant is having the allegation made about him individually." Id. When a plaintiff alleges fraud and conspiracy to commit fraud, however, the Federal Rules of Civil Procedure impose a heightened pleading requirement. "In all averment of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Federal Rule of Civil Procedure 9(b); see also Cooper v. Blue Cross and Blue Shield, 19 F.3d 562, 568 (11th Cir. 1994). In General Cigar Company v. C.R. Carriers, Inc., 948 F. Supp. 1030, 1037 (M.D. Ala. 1996), Judge Albritton concluded that because the essential purpose of Rule 9(b) is to ensure that the defendants are notified of the conduct complained of. Alleged fraudulent acts need not be attributed to certain defendants if the complaint "sufficiently describes the acts and provides defendants with sufficient information to answer the allegations." Id., citing Hinsdale Women's Clinic, S.C. v. Women's Health Care, 690 F. Supp. 658, 663 (N.D. Ill. 1988). Judge Albritton concluded that "even if a plaintiff does not indicate by which of the two individual defendants [a fraud was committed] the defendants are able to answer the allegations." Id. at 1037-1038.
American General contends that the Eleventh Circuit authorizes this court to dismiss the complaint on grounds that the alleged absence of specificity is an example of "shotgun pleading" citing inter alia Pelletier v. Zweifel, 921 F.2d 1465, 1517-18 (11th Cir. 1991). The argument is an extension of the Rule 9(b) analysis in the sense that the defendants contend that because a complaint may be dismissed as to the resident defendant, the remaining allegations of the complaint state a cause of action only against the non-resident defendant insuring diversity jurisdiction. American General's contentions involve a two-step process. First, the court must determine that the plaintiff cannot "actually" state a claim against an Alabama citizen and then proceed to dismiss those claims. The former question, according to American General, is the proper subject of discovery in order to learn (1) whether the plaintiff has a factual basis for contending that the resident defendant has committed a tortious action; (2) whether those facts provide a legal basis for the claim: and (3) if so, whether the claim is barred by the statute of limitations under Alabama law.
STATUTE OF LIMITATIONS
For the purpose of the jurisdictional inquiry it must recognized that the statute of limitations under Alabama law is an affirmative defense. That is, the limitation period is relevant only after the initial legal validity of the claim is established. Ex parte Alabama ex rel State of Ohio and P.C., 718 So.2d 669, 670 (Ala. 1998) ("The defense of the statute of limitations must be affirmatively pleaded, and if an answer does not include that affirmative defense that defense is deemed to have been waived.") (Emphasis added). In determining federal jurisdiction it is clear that the existence of a meritorious defense is not itself a matter of jurisdiction but one of proof in the appropriate forum. Here, plaintiff has alleged a continuing tort. The ultimate viability of that claim is material only to the assessment of the defense, not to the jurisdiction of the court. To resolve the statute of limitations issue one way or the other is to address the merits of the law suit without first firmly establishing jurisdiction. This court may not consider the statute of limitation, perhaps, a viable defense available to the defendants under Alabama law, as a bar to plaintiffs claims under the facts presented here. Nor may the court properly conclude that the existence of such a defense establishes jurisdiction by barring those claims against the individual defendant.
JURISDICTIONAL DISCOVERY
This court has on other occasions authorized jurisdictional discovery when a complaint alleged no claim against an individual resident defendant. In the present case, however, in the event discovery were permitted, the most the defendants could hope to accomplish would be for plaintiff to contradict her affidavit in the record. (Document #7, Attachment). Such a contradiction, if any, would perhaps identify an issue of fact. The presence of such an issue of fact, however, is not the province of a jurisdictional inquiry. The fact question could not be resolved in the court's analysis of its own jurisdiction. While the undersigned does not, indeed, could not accept the plaintiffs assertion that jurisdictional discovery under Eleventh Circuit authority is proper only in consideration of the jurisdictional amount in controversy, the factual allegations made here, albeit general in nature do not warrant jurisdictional discovery. When a plaintiff may have known of a particular fact is relevant only to the affirmative defense of the statute of limitations. The ultimate "truth" of plaintiffs assertions are material only to an assessment of the merits of the claim. Neither issue resolves or confers jurisdiction.
Ultimately the question in this case is not whether plaintiff "actually" intends to seek a judgment against Diana Dobson. This Circuit's fraudulent joinder jurisprudence establishes that the court is constrained from conducting such an inquiry. See Crowe v. Coleman, supra. The fraudulent joinder test as currently extant in the Eleventh Circuit — whether a cause of action exists against the resident defendant — obviates the need to look to the actual motive of plaintiff or her attorney. ". . . The plaintiffs intent is [while] not 'irrelevant to the fraudulent joinder inquiry; [is excluded from the analysis because of the] difficulty inherent in obtaining it.'" Wright v. Metropolitan Life Insurance Company, 74 F. Supp. 1150, 1152 (M.D. Ala. 1999). Whether this court "suspects," "assumes," or "knows" that plaintiff does not "actually" seek to recover against Diana Dobson is irrelevant to the jurisdictional inquiry under controlling authority. Accordingly, it is RECOMMENDED that plaintiffs motion for remand be GRANTED.
The parties are DIRECTED to Rule 72(b), Federal Rules of Civil Procedure.