Opinion
1:02-CV-1636-LJM-WTL
March 11, 2003
ORDER ON PLAINTIFF'S MOTION TO REMAND
This cause is now before the Court on a motion to remand filed by the plaintiff, Bradley W. Lehr ("Lehr"). Lehr, an Indiana resident, filed this action in Madison Indiana Superior Court on August 30, 2001, naming Dianna McCord ("McCord"), an Indiana resident, as the sole defendant. On September 24, 2002, Lehr amended his complaint and added American Family Mutual Insurance Co. ("American Family") as a defendant.
American Family filed its Notice of Removal in this Court on October 24, 2002, asserting that the cause was properly removed under the Court's diversity jurisdiction because McCord is a nominal defendant. Lehr filed the instant motion to remand on November 18, 2002, arguing that this Court lacks subject matter jurisdiction because McCord is a real party in interest, and, as an Indiana resident, defeats diversity jurisdiction. In the alternative, Lehr argues that the cause is not properly removed because American Family filed its Notice of Removal more than one year after he filed his suit, which violates 28 U.S.C. § 1446(b).
For the foregoing reasons, the Court finds that Lehr's motion to remand should be GRANTED.
I. FACTUAL BACKGROUND
Lehr's suit arises out of an automobile accident that occurred on March 17, 2000, in which Lehr sustained injuries. Compl. Count I, ¶¶ 1-2. Lehr alleges that McCord caused his injuries by negligently rear-ending his stopped vehicle. Id. ¶ 1. Lehr's complaint seeks from McCord damages for his injuries, including medical expenses, and lost personal time and wages. Id. ¶¶ 3-4. McCord was uninsured at the time of the accident. Id. Count II, ¶ 3.
At the time of the accident, Lehr was employed by Bob Myers Buick. Id. ¶ 5. Bob Myers Buick had a $50,000.00 uninsured motorist policy issued by Sentry Insurance Company ("Sentry"). Id. Apparently, Lehr was operating a company vehicle at the time of the accident, because on January 22, 2002, Sentry agreed to pay its limits under the uninsured motorist policy and issued a check to Lehr. Id. Lehr also received Worker's Compensation benefits in the amount of $51,134.61. Id. ¶ 7.
Lehr has brought two claims against American Family. His complaint states that he owns an automobile insurance policy issued by American Family for his 1993 Ford Aerostar. Id. ¶ 2. He notified American Family of his possible uninsured motorist claim on July 3, 2001. Id. ¶ 4. On August 10, 2001, Lehr requested that American Family send him a copy of his policy. Id. ¶ 8. Lehr received the copy on December 11, 2001. Id. The policy limit for uninsured motorist coverage is $100,000.00. Id. ¶ 9.
On March 15, 2002, American Family advised Lehr to accept the uninsured motorist coverage issued by Sentry. Id. ¶ 6. Lehr attempted to negotiate an agreement with American Family for payment under the insurance policy, but on September 12, 2002, American Family advised Lehr that it would deny his claim for coverage. Id. ¶ 9.
Lehr asserts that American Family's denial of uninsured motorist coverage under the insurance policy is a breach of contract. Id. ¶ 11. Under this claim, Lehr seeks the $100,000.00 policy limit from American Family. Id.
Lehr also asserts that American Family's refusal to pay under the policy is a breach of American Family's duty of good faith and fair dealing. Id. Count III, ¶ 4. Lehr avers that American Family is obligated by law to pay him under the policy. Id. ¶¶ 4-5 (citing Ind. Code § 27-7-5-2; Beam v. Wausau Ins. Co., 765 N.E.2d 524 (Ind. 2002)). Therefore, Lehr asserts that when American Family denied him benefits, it acted with malice, fraud, gross negligence and oppressiveness, which would entitle him to punitive damages. Id. ¶ 8.
American Family denies the substantive allegations in Lehr's complaint. See generally Ans. In addition, American Family asserts that its obligations are set forth in the insurance contract, as are its defenses. Id. Aff. Defs. ¶¶ 5-6. The company also states that McCord may have been confronted with a sudden emergency not of her own making. Id. ¶ 3. American Family also asserts other defenses such as comparative fault, set-off, and failure to mitigate.
II. STANDARD
A federal court may remove to its jurisdiction a civil suit filed in state court so long as the district court has original jurisdiction. See Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993) (citing 28 U.S.C. § 1441). Courts should interpret the removal statute narrowly and presume that the plaintiff may choose his or her forum. Id. (citing Illinois v. Kerr-McGee Chem. Corp., 677 F.2d 571, 576 (7th Cir.), cert. denied, 459 U.S. 1049 (1982)). Any doubt regarding jurisdiction should be resolved in favor of the states. Id. (citing Jones v. Gen. Tire Rubber Co., 541 F.2d 660, 664 (7th Cir. 1976). The party seeking removal bears the burden of establishing federal jurisdiction. Id. (citing Wilson v. Republic Iron Steel Co., 257 U.S. 92 (1921)).
III. DISCUSSION
Lehr asserts that American Family improperly removed this case. He argues that McCord is a real party in interest, and is an Indiana resident like Lehr himself. McCord as a party in this action destroy's diversity jurisdiction; therefore, this Court lacks subject matter jurisdiction over the cause. Lehr argues that McCord is a necessary party because his negligence case is predicated on the accident with her. Pl.'s Mot. to Remand, at 2. Lehr states: "[I]f a judgment for damages is not obtained by the plaintiff against Dianna McCord, then American Family . . . may not be responsible for plaintiff's damages." Id. Lehr asserts that because McCord may be liable and has an interest in the subject matter litigated, she is a real party in interest. Id. (citing Shaw v. Dow Brands, Inc., 994 F.2d 364 (7th Cir. 1993); S.E.C. v. Cherif, 933 F.2d 403 (7th Cir. 1991)).
American Family asserts that McCord is a nominal party; therefore, her citizenship should be ignored for purposes of the diversity jurisdiction requirement. Specifically, American Family argues that McCord is not a necessary party. Def.'s Mem. in Opp'n, at 5. Lehr received uninsured benefits from his employer, which American Family asserts, proves McCord's liability for the accident. Id. Moreover, Lehr can proceed directly against American Family according to the Indiana Supreme Court in Sullivan v. American Casualty Co. of Reading, Pennsylvania, 605 N.E.2d 134 (Ind. 1992). In other words, Lehr can obtain complete relief from American Family standing in the shoes of McCord, the tortfeasor. Def.'s Mem. in Opp'n, at 5.
The presence of a "nominal party" cannot defeat removal because that party does not affect diversity. See Selfix, Inc. v. Bisk, 867 F. Supp. 1333, 1335 (N.D.Ill. 1994) (citing Shaw v. Dow Brands, Inc., 994 F.2d 364, 369 (7th Cir. 1993)). Therefore, whether removal was proper in this case turns on whether McCord is a "nominal" defendant. In S.E.C. v. Cherif, the Seventh Circuit defined a nominal defendant:
A nominal defendant is not a real party in interest because he has no interest in the subject matter litigated. His relation to the suit is merely incidental and `it is no moment [to him] whether the one or the other side in [the] controversy succeed[s].' Because of the non-interested status of the nominal defendant, there is no claim against him and it is unnecessary to obtain subject matter jurisdiction over him once jurisdiction over the defendant is established.933 F.2d at 414 (quoting Bacon v. Rives, 106 U.S. 99, 104 (1882) (alteration by Cherif court)) (other citation omitted). In other words, a nominal defendant has no interest in the property that is the subject matter of the litigation. Id.
With this standard in mind, the Court finds that McCord is not a nominal defendant. American Family relies upon Sullivan v. American Casualty Co. of Reading, Pennsylvania, 605 N.E.2d 134 (Ind. 1992), for the proposition that it can stand in the shoes of McCord or that McCord is not a necessary defendant. The Court disagrees with American Family's reading of that case. Sullivan merely finds that an insured need not join an insurer in a negligence action against a tortfeasor. "[P]laintiffs . . . have the option to join the uninsured motorist and the insurer in a single action or to sue them in separate actions, depending upon the circumstances of each case." Id. at 138. Clearly, a plaintiff may sue the tortfeasor for damages, regardless of whether or not she has insurance. Although the Court recognizes that the theories of recovery in this case are different, yet related by the occurrence of the tort, the possibility that Lehr may not be able to recover an appreciable amount of his damages from McCord does not prohibit him from naming her as a defendant. As Lehr points out, notwithstanding her ability to pay damages, McCord may be held liable for her negligence. Therefore, McCord is not a nominal party as that term is defined by Seventh Circuit precedent.
Because the Court has found that McCord is not a nominal party, the fact that she is an Indiana resident destroys diversity in this suit. Therefore, this Court lacks subject matter jurisdiction over this action and the cause should be remanded to Madison County Superior Court.
Because the Court has found that it lacks subject matter jurisdiction over this action, it will not address Lehr's alternative argument that the cause is properly remanded.