United States District Court, D. South Carolina, Beaufort Division
PATRICK MICHAEL DUFFY United States District Judge.
matter is before the Court on Plaintiff Aye Aung's motion
to remand (ECF No. 5). Aung argues Defendants GEICO and
Sharon Cogdill improperly removed this case from state court
because Aung and Cogdill are both South Carolina citizens.
For the reasons set forth herein, the Court grants Aung's
motion but denies her request for fees and costs.
AND PROCEDURAL HISTORY
2010, Aung was severely injured in an automobile collision
caused by Meredith Daley. Daley's liability insurance
carrier paid Aung roughly the limits of Daley's policy,
but the payment did not fully compensate Aung for her various
losses. Aung therefore made a claim for underinsured motorist
(“UIM”) benefits on a policy she had purchased
from GEICO, a corporate citizen of Maryland. Negotiations on
the claim were unsuccessful, so Aung sued Daley in state
court. GEICO assumed Daley's defense.
point, Cogdill, an adjuster employed by GEICO, became
involved in the handling of Aung's UIM claim and
Daley's defense. According to Aung, Cogdill improperly
investigated and evaluated Aung's claim, leading GEICO to
make unreasonably low settlement offers that never exceeded
was not successful. Aung alleges Cogdill attended mediation
without having appropriate settlement authority or discretion
over the resolution of the claim. She also contends
Cogdill's lack of authority and unwillingness to mediate
in good faith was a violation of South Carolina state-court
mediation rules that unnecessarily prolonged the litigation
by forcing a trial.
case against Daley went to trial in February 2014. The jury
returned a $250, 000 verdict for Aung. A post-trial award of
costs, pre-judgment interest, and penalties increased the
judgment to nearly $275, 000. GEICO has paid Aung $50, 000
but refuses to pay any remaining portion of the judgment.
February 1, 2017, Aung sued GEICO and Cogdill in state court,
asserting causes of action against them for negligence and
insurance bad faith for the manner in which they handled her
UIM claim. She also asserted a declaratory judgment cause of
action against GEICO alone.
and Cogdill removed the case to this Court on March 31.
Acknowledging that Aung and Cogdill are both citizens of
South Carolina, the defense contended that the Court
nonetheless has jurisdiction over this case because
Cogdill's joinder was fraudulent. On April 17, Aung moved
to remand. GEICO and Codgill filed a response on May 1, to
which Aung replied on May 4. Accordingly, this matter is now
ripe for consideration.
Aung's Request to Remand
in “diversity” cases-those in which citizens of
different states litigate only state-law claims worth more
than $75, 000-may remove their litigation from state court to
federal district court. See 28 U.S.C. § 1441(a)
(giving federal district courts removal jurisdiction over
state-court cases); 28 U.S.C. § 1332(a)(1) (giving
courts original jurisdiction over cases between citizens of
different states if the amount in controversy exceeds $75,
000). The required diversity of citizenship exists only when
“no party shares common citizenship with any party on
the other side” of the v. Mayes v.
Rapoport, 198 F.3d 457, 461 (4th Cir. 1999). If that
requirement is not met, the federal court lacks jurisdiction
and must remand the case to state court. See 28
U.S.C. § 1447(c).
and Cogdill are both South Carolinians, it appears that
diversity of citizenship does not exist. GEICO, however,
contends this Court may disregard Cogdill's citizenship
because Aung fraudulently joined her as a defendant. GEICO
and Cogdill bear the burden of proving that contention.
See Hartley v. CSX Transp., Inc., 187 F.3d 422, 424
(4th Cir. 1999).
citizenship of a fraudulently joined defendant does not count
in the complete-diversity analysis. See Mayes, 198
F.3d at 461. Fraudulent joinder occurs when the plaintiff
engages in “outright fraud” in her pleading of
jurisdictional facts or when “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, 187 F.3d at 424
(citation and quotation marks omitted). Proving the
latteris “a heavy burden”-the
removing parties “must show that the plaintiff cannot
establish a claim even after resolving all issues of law and
fact in the plaintiff's favor.” Id.
(citation omitted). This standard is even more favorable to
plaintiffs than the one for Rule 12(b)(6) motions.
Id. A “glimmer of hope” of recovery is
enough to prevent the removing parties from meeting their
burden. Id. at 426 (citation omitted); see also
Addison v. Travelers Indem. Co. of Am., No.