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Duck Village Outfitters v. Nationwide Mutual Insurance Co.

United States District Court, E.D. North Carolina, Northern Division

February 10, 2015

DUCK VILLAGE OUTFITTERS; TANYA HOVEY; and ROBERT HOVEY, Plaintiffs,
v.
NATIONWIDE MUTUAL INSURANCE COMPANY and DANNY BROWN, Defendants.

ORDER

LOUISE W. FLANAGAN, District Judge.

This matter comes before the court on plaintiffs' motion to remand this action to the Dare County, North Carolina, Superior Court pursuant to 28 U.S.C. § 1447(c). (DE 13). Also pending is defendants' motion to dismiss for failure to state a claim upon which relief can be granted, under Federal Rule of Civil Procedure 12(b)(6), or in part for a more definite statement under Rule 12(e). (DE 14). The issues raised have been fully briefed and are ripe for ruling. For the reasons stated herein, plaintiffs' motion to remand is granted.

BACKGROUND

Plaintiffs, owners of a commercial property located in Duck, North Carolina, commenced this action against defendants Nationwide Insurance Company ("Nationwide") and Danny Brown, a insurance adjuster employed by Nationwide, ("Brown") in Dare County Superior Court on August 25, 2014. Service was made on defendants on September 11, 2014.

Plaintiffs allege that their property was damaged by Hurricane Irene on or about August 27, 2011. Thereafter, plaintiffs submitted a claim to Nationwide, to which Brown was assigned as adjuster. Plaintiffs contend that in the course of the adjustment, defendant Brown performed a substandard investigation, ultimately concluding that a substantial amount of damage sustained during the storm was not covered under plaintiffs' insurance policy. The complaint asserts claims against both defendant Nationwide and defendant Brown. As relevant here, plaintiffs complain against defendant Brown and allege he violated the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1, et seq., and committed the tort of negligent misrepresentation.

Defendants filed a notice of removal in this court on October 10, 2014. On December 9, 2014, plaintiffs filed the instant motion to remand the case to state court for lack of subject matter jurisdiction. It is undisputed there is no federal question in this case. It is further undisputed plaintiffs and defendant Nationwide are diverse. However, defendant Brown and plaintiffs are not diverse, where they are all domiciliaries of North Carolina. Nevertheless, defendants contend this court may exercise its diversity jurisdiction, pursuant to 28 U.S.C. § 1332, because defendant Brown was fraudulently joined and, thus, his citizenship is of no consequences. After plaintiffs filed their motion to remand, defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted, or in the alternative, a partial motion for a more definite statement addressing plaintiffs' removed complaint, on December 17, 2014. Plaintiffs then filed an amended complaint, on January 6, 2015, presumably to provide more factual specificity regarding their complaint.

DISCUSSION

A. Motion for Remand

1. Standard of Review

A civil action which is brought in state court, but over which the federal courts have original jurisdiction, may be removed by a defendant to the district court embracing the place where the action is pending. 28 U.S.C. § 1441(a). To properly remove a case, the defendant must file a notice of removal in the district court within thirty 30 days of receipt of a copy of the initial pleading setting forth the claim for relief in the action. Id. § 1446(b). The defendant must also file a copy of the notice of removal in state court. Id. § 1446(d). At any time prior to final judgment, plaintiff may move to remand the case on the basis of lack of subject matter jurisdiction. Id. § 1447(c).

"Because removal jurisdiction raises significant federalism concerns, [federal courts] must strictly construe removal jurisdiction. If federal jurisdiction is doubtful, a remand is necessary." Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (internal citations omitted). This presumption against removal jurisdiction places the "burden of establishing federal jurisdiction... upon the party seeking removal." Id.

Where, as here, a party asserts fraudulent joinder to claim jurisdiction on the basis of diversity of citizenship, the burden is on the removing party to "demonstrate either outright fraud[, sometimes called bad faith, ] in the plaintiffs' pleading of jurisdictional facts' or 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.'" Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999) (quoting Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir.1993)) (emphasis in original). This court should resolve all legal and factual issues in favor of remanding the case, and the "very fact that courts may differ in their resolution[]" of the viability of plaintiffs' claims in state court highlights the propriety of remand. See id. at 425.

Although plaintiffs have filed an amended complaint, the facts alleged therein are irrelevant to the court's analysis, as the propriety of federal jurisdiction is determined at the time the case is removed. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-91 (1938); see also Porsche Cars N. Am., Inc. v. Porsche.net, 302 F.3d 248, 255-56 (4th Cir. ...


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