United States District Court, D. South Carolina, Orangeburg Division
Wallace A. Henzler and Brenda Henzler, Plaintiffs,
South Carolina Farm Bureau Mutual Insurance Company; Depositors Insurance Company; Stratford Insurance Company; Larry Joyner; Jessie L. Davis; and Davis Brothers Farm, LLC, Defendants. South Carolina Farm Bureau Mutual Insurance Company, Counterclaim-Plaintiff,
Wallace A. Henzler and Brenda Henzler, Counterclaim-Defendants. South Carolina Farm Bureau Mutual Insurance Company, Crossclaim-Plaintiff,
Larry Joyner; Jessie L. Davis; and Davis Brothers Farm, LLC; Depositors Insurance Company; Stratford Insurance Company, Crossclaim-Defendants.
ORDER AND OPINION
MICHELLE CHILDS, District Judge.
This matter is before the court pursuant to a motion by Plaintiffs Wallace A. Henzler and Brenda Henzler (collectively "Plaintiffs") to remand the case to the Orangeburg County (South Carolina) Court of Common Pleas. (ECF No. 16.) Southern Farm Bureau Casualty Insurance Company ("SFBCIC") opposes Plaintiffs' motion to remand and moves the court to realign Defendants Larry Joyner ("Joyner"), Jessie L. Davis ("Davis"), and Davis Brothers Farm, LLC ("DBF"), (collectively the "Davis Brothers Farm Defendants") as party-plaintiffs on the basis that their interests coincide with the interests of Plaintiffs. (ECF Nos. 11, 35.) For the reasons set forth below, the court GRANTS Plaintiffs' motion to remand and DENIES AS MOOT SFBCIC's motion to realign the parties.
I. RELEVANT BACKGROUND OF PENDING MOTIONS
Plaintiffs allege that on December 22, 2012, Wallace Henzler suffered severe injuries in a traffic accident when his truck was struck by a truck and trailer being driven by Joyner. (ECF No. 1-1 at 6 ¶ 8-7 ¶ 10.) Plaintiffs further allege that at the time of the accident, (1) Wallace Henzler was driving a 2004 Chevy truck owned by Rite Temp Heating and Air, LLC, and insured by Defendant Depositors Insurance Company ("DIC"); (2) Joyner was driving a 2000 Peterbilt truck owned by Davis and insured by Defendant Stratford Insurance Company ("SIC"); and (3) Joyner's truck was pulling a 1995 Land LBHY trailer owned by DBF and insured by Defendant South Carolina Farm Bureau Mutual Insurance Company ("SCFBMIC"). ( Id. at 7 ¶¶ 9-10.)
On November 25, 2013, Plaintiffs filed a declaratory judgment action against SCFBMIC, DIC, SIC, and Davis Brothers Farm Defendants in the Court of Common Pleas of Orangeburg County, South Carolina to ascertain "the rights, status and other legal relations of the parties under policies of automobile insurance" issued by SCFBMIC and DIC. (ECF No. 1-1 at 6 ¶ 6.) For jurisdictional purposes, Plaintiffs allege that they are citizens of the State of South Carolina; SCFBMIC is incorporated in the State of South Carolina; and Davis Brothers Farm Defendants are citizens of the State of South Carolina. (ECF No. 1-1 at 5 ¶ 1-6 ¶ 5.)
SCFBMIC received a copy of the amended complaint on or about December 4, 2013. (ECF No. 1-1 at 64.) Thereafter, on December 19, 2013, SFBCIC removed the case to the United States District Court for the District of South Carolina pursuant to 28 U.S.C. § 1446(b). (ECF No. 1 at 2 ¶ 3.) In the notice of removal, SFBCIC asserted that removal was proper because the court possessed diversity jurisdiction over the matter since (1) it was improperly and incorrectly identified as SCFBMIC, a South Carolina corporation; (2) it is incorporated in the State of Mississippi; (3) Plaintiffs are citizens of the State of South Carolina; (4) SIC is incorporated in the State of New Jersey; (5) DIC is incorporated in the State of Iowa; and (6) SIC and Davis Brothers Farm Defendants are sham/nominal defendants whose citizenship should not be considered for removal purposes because Plaintiffs failed to assert any claims and/or allegations against them. ( Id. at 3 ¶ 5-4 ¶ 9.) SFBCIC further asserted that the amount in dispute exceeds the requisite sum of $75, 000.00. ( Id. at 5 ¶ 12.)
On December 20, 2013, SFBCIC filed a motion to realign certain parties asserting that the court should realign the parties according to their primary interests which would result in SFBCIC, DIC, and SIC being identified as the only party-defendants. (ECF No. 11.) SFBCIC contends that when the parties are properly aligned, "there is complete diversity amongst the parties and, therefore, this District Court has jurisdiction to consider this matter under 28 U.S.C. § 1332." (ECF No. 11-1 at 3.) Thereafter, on January 6, 2014, Plaintiffs moved the court to remand the matter to state court on the basis that (1) the court lacks subject matter jurisdiction because complete diversity does not exist among the parties and (2) SFBCIC is not a party to the litigation and lacks standing to remove the case to federal court. (ECF No. 16.) Plaintiffs and SFBCIC filed responses opposing each other's motions respectively. (See ECF Nos. 15, 35.)
II. LEGAL STANDARD AND ANALYSIS
A. Removing Actions from State Court by way of Diversity Jurisdiction
Federal courts are courts of limited jurisdiction. A defendant is permitted to remove a case to federal court if the court would have had original jurisdiction over the matter. 28 U.S.C. § 1441(a). A federal district court has "original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between - (1) citizens of different States;...." 28 U.S.C. § 1332(a). Section 1332 requires complete diversity between all parties. Strawbridge v. Curtiss , 7 U.S. 267, 267 (1806). Complete diversity requires that "no party shares common citizenship with any party on the other side." Mayes v. Rapoport , 198 F.3d 457, 461 (4th Cir. 1999).
In cases in which the district court's jurisdiction is based on diversity of citizenship, the privilege of removal is further limited in that a federal court may exercise jurisdiction only if no defendant is a citizen of the state where the action has been initiated. Caterpillar Inc. v. Lewis , 519 U.S. 61, 68 (1996). Furthermore, the party invoking federal jurisdiction has the burden of proving the jurisdictional requirements for diversity jurisdiction. See Strawn v. AT & T Mobility LLC , 530 F.3d 293, 298 (4th Cir. 2008) (holding that in removing case based on diversity jurisdiction, party invoking federal jurisdiction must allege same in notice of removal and, when challenged, demonstrate basis for jurisdiction). Because federal courts are forums of limited jurisdiction, any doubt as to whether a case belongs in federal or state court should be resolved in favor of state court. See Auto Ins. Agency, Inc. v. Interstate Agency, Inc. , 525 F.Supp. 1104, 1106 (D.S.C. 1981) (citations omitted).
Removal requires the consent of all defendants, unless the defendant is a nominal party. See 28 U.S.C. § 1446(b)(2)(A); Hartford Fire Ins. Co. v. Harleysville Mut. Ins. Co. , 736 F.3d 255, 259 (4th Cir. 2013). Moreover, in evaluating citizenship for purposes of determining whether complete diversity exists, the court considers only the citizenship of real and substantial parties to the litigation and does not take into account nominal or formal parties that have no real interest in the litigation. Navarro Sav. Ass'n v. Lee , 446 U.S. 458, 460-61 (1980). Whether a party is nominal for removal purposes depends on whether the party has an "immediately apparent stake in the litigation either prior or subsequent to the act of removal." Hartford Fire Ins. Co. , 736 F.3d at 260. "In other words, the key inquiry is whether the suit can be resolved without affecting the non-consenting nominal defendant in any reasonably foreseeable way." Id.
B. The Court's Review
SFBCIC removed this case based on diversity jurisdiction. For this removal to have been proper, the court must agree with SFBCIC on both of the following assertions: (1) SFBCIC is the correct and only insurer of the Land LBHY trailer; and (2) Davis Brothers Farm Defendants are not real parties in interest, but sham/nominal defendants. In this regard, if the court finds that SCFBMIC is a proper party-defendant in this matter or ...