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Del Webb Communities Inc. v. American Home Assurance Co.
United States District Court, D. South Carolina, Beaufort Division
September 28, 2016
Del Webb Communities, Inc., Plaintiff,
American Home Assurance Company, AIG Specialty Insurance Company f/k/a Chartis Specialty Insurance Company f/k/a American International Specialty Lines Insurance Company, Crum & Forster Specialty Insurance Company, Interstate Fire & Casualty Company, Maryland Casualty Company, National Union Fire Insurance Company of Pittsburgh PA, Commerce & Industry Insurance Company, Everest National Insurance Company, Burlington Insurance Company, The Liberty Mutual Insurance Company, Zurich American Insurance Company, The Insurance Company of the State of Pennsylvania, Mt. Hawley Insurance Company, American Empire Insurance Company, American Empire Surplus Lines Insurance Company, First Mercury Insurance Company, ANSE, Inc., Archer Exteriors, Inc., D.J. Construction Co., LLC d/b/a Leor Company, LLC, Georgia State Plastering, LLC, Integrity Wall Systems, LLC, MASCO Contractor Services Central, Inc. a/k/a MASCO Corporation and its subsidiaries a/k/a Gale Industries, Inc. a/k/a Gale Fiberglass Installations a/k/a Gale Contractor Services a/k/a Fiberglass Installations, Inc. a/k/a L&H Insulation, LLC a/k/a L&H Insulation a/k/a Builder Services Group, Inc., Ramiro Rodriquez a/k/a Ram Construction, and South Carolina State Plastering, Defendants.
PATRICK MICHAEL DUFFY, United States District Judge.
matter is before the Court on Plaintiff Del Webb Communities,
Inc.'s motion to remand (ECF No. 43). For the reasons
stated herein, Del Webb's motion is granted.
action arises out of an insurance dispute between Del Webb
and its subcontractors' insurance companies concerning
Del Webb's Sun City project. Several homeowners have sued
Del Webb and its subcontractors in state court, alleging
defects in the homes it built during its Sun City project.
Del Webb has brought this action for a declaratory judgment
of its rights to defense and indemnity in those cases as an
alleged additional insured under the insurance policies
issued to its subcontractors.
Liberty Mutual Insurance Company removed this action from the
Court of Common Pleas for Beaufort County on April 18, 2016.
Del Webb filed its motion to remand on May 18, 2016. Liberty
Mutual filed a response in opposition on June 20 and
Defendant Mt. Hawley filed a similar response on June
Del Webb filed its reply on July 14. Accordingly, these
matters are now ripe for consideration.
burden of demonstrating jurisdiction resides with “the
party seeking removal.” Dixon v. Coburg Dairy,
Inc., 369 F.3d 811, 816 (4th Cir. 2004) (citing
Mulcahey v. Columbia Organic Chems. Co., 29 F.3d
148, 151 (4th Cir. 1994)). District courts are obliged to
construe removal jurisdiction strictly because of the
“significant federalism concerns” that removal
implicates. Id. “If at any time before final
judgment it appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.” 28
U.S.C. § 1447(c). Therefore, “[i]f federal
jurisdiction is doubtful, a remand [to state court] is
necessary.” Dixon, 369 F.3d at 816; see
also Hartley v. CSX Transp., Inc., 187 F.3d 422, 425
(4th Cir. 1999) (“[C]ourts should ‘resolve all
doubts about the propriety of removal in favor of retained
state court jurisdiction.'” (quoting Marshall
v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir.
Court initially notes that Liberty Mutual and the other
insurer defendants do not contest Del Webb's allegations
as to the citizenship of any of the non-diverse subcontractor
defendants. Thus, whether remand is appropriate in this case
turns on two related, but distinct questions. First, the
Court must determine whether the subcontractors were
fraudulently joined as defendants in order to defeat this
Court's diversity jurisdiction. If the Court determines
that the subcontractors were not fraudulently joined, the
Court must then decide whether the subcontractors are nominal
parties such that they should be excepted from the complete
diversity requirement of 28 U.S.C. § 1332. If the
subcontractors were fraudulently joined or if they are
nominal parties, then the Court has jurisdiction and should
retain this case. In contrast, if the subcontractors were not
fraudulently joined and are also not nominal parties, then
the Court must grant Del Webb's motion to remand.
Webb named four non-diverse defendants in its complaint.
“Normally, this would defeat removal on the basis of
diversity jurisdiction under 28 U.S.C. § 1332 because
complete diversity of citizenship . . . is necessary for a
federal court to exercise diversity jurisdiction.”
Johnson v. Am. Towers, LLC, 781 F.3d 693, 704 (4th
Cir. 2015) (citing Mayes v. Rapoport, 198 F.3d 457,
464 (4th Cir. 1999)). However, under the fraudulent-joinder
doctrine, “naming non-diverse defendants does not
[necessarily] defeat diversity jurisdiction.”
Id. Instead, the doctrine “‘effectively
permits a district court to disregard, for jurisdictional
purposes, the citizenship of certain non[-]diverse
defendants, and thereby retain jurisdiction.'”
Id. (quoting Mayes, 198 F.3d at 461).
“‘The party alleging fraudulent joinder bears a
heavy burden-it must show that the plaintiff cannot establish
a claim [against the non-diverse defendant(s)] even after
resolving all issues of law and fact in the plaintiff's
favor.'” Id. (quoting Hartley,
187 F.3d at 424). “‘The removing party must show
either outright fraud in the plaintiff's 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.'” Id. (quoting Hartley,
187 F.3d at 424) (emphasis added).
the insurer defendants rely on the “no
possibility” avenue. They argue that Del Webb's
complaint does not assert any claims against the
subcontractor defendants and that Del Webb's requested
declarations relate only to its own status as an additional
insured under the policies issued to the subcontractors by
the insurer defendants. The Court disagrees.
Webb's complaint contains twenty-seven different counts
requesting declaratory relief against the insurer defendants.
Each of those counts, however, includes a request that the
Court determine whether the named insureds on the insurer
defendants' policies are the subcontractors or their
privies. Importantly, Del Webb also requests that the Court
determine whether those subcontractors have coverage under
the insurer defendants' policies with respect to the
underlying litigation. Although these requested declarations are
not expressly directed at the subcontractors in each
count's heading, there is no question that the