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Zambito v. Occidental Fire & Casualty Co. of North Carolina

United States District Court, D. South Carolina, Charleston Division

December 15, 2016

SALVATORE A. ZAMBITO, II, AS POWER OF ATTORNEY FOR SALVATORE A. ZAMBITO I, SALVATORE A. ZAMBITO I, and RITA A. ZAMBITO Plaintiffs,
v.
OCCIDENTAL FIRE & CASUALTY COMPANY OF NORTH CAROLINA, IAT INSURANCE GROUP, INC., OCWEN FINANCIAL CORPORATION, OCWEN LOAN SERVICING, LLC, ALTISOURCE SOLUTIONS, INC., and HILTON HEAD PLANTATION PROPERTY OWNERS ASSOCIATION, INC., Defendants.

          ORDER

          DAVID C. NORTON UNITED STATES DISTRICT JUDGE.

         This matter is before the court on plaintiffs Salvatore A. Zambito, II, Salvatore A. Zambito, I, and Rita A. Zambito (“the Zambitos”) motion to remand, ECF No. 9. For the reasons set forth below, the court grants the Zambitos' motion to remand.

         I. BACKGROUND

         The instant suit arises from an alleged unlawful intrusion, theft, and disposal of personal property in August 2014 from the residence located at 11 Sundew Court, Hilton Head Island, South Carolina (“the House”) in the gated Hilton Head Plantation community (“the Plantation”). Compl. ¶¶ 10, 24, 77. Plaintiffs Salvatore A. Zambito, I, and Rita A. Zambito were the lawful owners of the House and owners of the personal property contained within the House at the time of the alleged theft. Id. ¶ 11. The Zambitos had recently become the owners of the house as a result of a prior foreclosure proceeding initiated by Salvatore A. Zambito I, who had issued a loan to the prior owner that was secured by a second mortgage. Id. ¶ 11-24. The Zambitos allege that defendant Altisource gained unauthorized entry to the Plantation where it removed personal property from the House and changed the locks on the doors. Id. ¶¶ 26, 79.

         The Zambitos initiated this action on July 27, 2016 in the Beaufort County Court of Common Pleas. ECF No. 1. The Zambitos allege: (i) breach of contract against Defendant Occidental Fire & Casualty Company of North Carolina (“Occidental”); (ii) declaratory judgment against Occidental; (iii) bad faith refusal to pay insurance claim against Occidental and IAT Insurance Group, Inc. (“IAT Insurance”); (iv) violation of the South Carolina Unfair Trade Practices Act against Occidental and IAT Insurance; (v) conversion against Defendants Ocwen Financial Corporation and Ocwen Loan Servicing LLC (“the Ocwen defendants”) and Defendant Altisource Solutions, Inc. (“Altisource”); (vi) trespass against the Ocwen Defendants and Altisource; (vii) negligence against Defendant Hilton Head Plantation Property Owners Association, Inc. (“HHPPOA”); (viii) intentional infliction of emotional distress against the Ocwen defendants and Altisource; (ix) violation of the South Carolina Unfair Trade Practices Act against the Ocwen Defendants and Defendant Altisource; and (x) negligence against the Ocwen Defendants and Defendant Altisource. ECF No. 1.

         On September 7, 2016, the Ocwen defendants removed the case to this court, arguing that HHPPOA was fraudulently joined for the purpose of defeating diversity jurisdiction. ECF No. 1. The Zambitos filed a motion to remand on October 11, 2016. ECF No. 9. The Ocwen defendants filed a response on October 26, 2016. ECF No. 17. HHPPOA filed a response on November 7, 2016. ECF No. 24. The Zambitos filed a reply to Ocwen's response on November 7, 2016. ECF No. 25. The Zambitos filed a reply to HHPPOA's response on November 17, 2016. ECF No. 27. The motion has been fully briefed and is ripe for the court's review.

         II. STANDARD

         A. Motion to Remand

         As the parties seeking to invoke the court's jurisdiction, defendants have the burden of proving jurisdiction upon motion to remand. Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (citing Mulcahy v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994)). In deciding the motion, the federal court should construe removal jurisdiction strictly in favor of state court jurisdiction. Id. “If federal jurisdiction is doubtful, a remand is necessary.” Mulcahy, 29 F.3d at 151 (citations omitted).

         III. DISCUSSION

         A civil case that is otherwise removable solely on the basis of diversity jurisdiction “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C.A. § 1441(b)(2). HHPPOA is a nonprofit organization organized under the laws of South Carolina. Compl. ¶ 8. The Ocwen defendants filed a notice of removal claiming that HHPPOA was fraudulently joined for the purpose of defeating diversity jurisdiction. ECF No. 1. The Zambitos contend in the motion before the court that the fraudulent joinder grounds on which the Ocwen defendants filed a notice of removal to this court are improper and so the case should be remanded to state court. Pls.' Mot. 3

To establish fraudulent joinder of a nondiverse defendant,
the removing party must establish either: [t]hat there is no possibility that the plaintiff would be able to establish a cause of action against the instate defendant in state court; or [t]hat there has been outright fraud in the plaintiff's pleading of jurisdictional facts.

Mayes v. Rapoport, 198 F.3d 457, 464 (4th Cir. 1999) (quoting Marshall v. ManvilleSales Corp., 6 F.3d 229, 232 (4th Cir. 1993)) (emphasis in original). “‘The burden on the defendant claiming fraudulent joinder is heavy: the defendant must show that the plaintiff cannot establish a claim against the nondiverse defendant even after resolving all issues of fact and law in the plaintiff's favor.'” Id. (quoting Marshall, 6 F.3d at 232-33). “This standard is even more favorable to the plaintiff than the standard for ruling on a motion to dismiss under Fed.R.Civ.P. 12(b)(6).” Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999) (citation omitted). When determining whether attempted joinder is fraudulent, the court is “not bound by the allegations of the pleadings, but may instead consider ...


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