Breen v. Ivantage Select Agency Inc.

          ORDER

          R. Bryan Harwell, Chief United States District Judge

         This matter is before the Court on Plaintiff Pamela Breen's motion to remand this case to state court. See ECF No. 7. The Court grants the motion for the reasons herein.^[1]

         Background

          Plaintiff originally filed this action in the Horry County Court of Common Pleas on January 25, 2019. See Summons & Complaint [ECF No. 1-1]. In her complaint, Plaintiff alleges she owns a South Carolina Flood Insurance Policy issued by Defendant Ivantage Select Agency, Inc. insuring property located in Myrtle Beach, South Carolina. Compl. at ¶¶ 4-5. Plaintiff claims Defendant erroneously classified the insured property as a “second home, ” has refused her requests to reclassify it as a “primary residence, ” and has failed to refund the “overpayment of fees, costs, assessments, etc.” that she has paid Defendant for several years. Id. at ¶¶ 7-11, 14. Plaintiff asserts two state-law causes of action-(1) violation of the South Carolina Unfair Trade Practices Act^[2] and (2) negligence-and seeks a judgment not exceeding $75, 000. Id. at ¶¶ 12-20.

         Defendant removed the action to this Court asserting federal question jurisdiction was available under 28 U.S.C. § 1331.^[3] See ECF No. 1. Defendant subsequently filed an answer. See ECF No. 4. Plaintiff then filed the instant motion to remand, and Defendant filed a response in opposition. See ECF Nos. 7 & 12.

         Discussion

          Plaintiff argues remand to state court is required because the Court lacks subject matter jurisdiction. Defendant contends federal question jurisdiction exists under § 1331 because Plaintiff seeks a refund of premiums involving a federal flood insurance policy.^[4]

         The party seeking to remove a case to federal court bears the burden of establishing federal subject matter jurisdiction. Mulcahey v. Columbia Organic Chemicals Co., 29 F.3d 148, 151 (4th Cir. 1994). Thus, Defendant bears the burden to establish federal jurisdiction is proper in this case. “Because removal jurisdiction raises significant federalism concerns, [the Court] must strictly construe removal jurisdiction. If federal jurisdiction is doubtful, a remand is necessary.” Id. (internal citation omitted).

         A state court defendant may remove a civil action to a federal district court having original jurisdiction over the action. 28 U.S.C. § 1441(a). Federal district courts have original jurisdiction over all civil actions arising under federal law. 28 U.S.C. § 1331 (federal-question jurisdiction). “The presence or absence of federal-question jurisdiction is governed by the ‘well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987).

Under the well-pleaded complaint rule, as the Supreme Court has explained, “a case can ‘aris[e] under' federal law in two ways.” See Gunn v. Minton, 568 U.S. 251, 257 (2013). First, “a case arises under federal law when federal law creates the cause of action asserted.” Id. Second, as relevant here, § 1331 confers jurisdiction over a “special and small category” of claims that originate in “state rather than federal law.” Id. at 258 (internal quotation marks omitted). In such situations, as the Court has recognized, “arising under” jurisdiction will only exist over a state-law claim if a “federal issue” is “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Id. (relying on Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005)).

Virginia ex rel. Hunter Labs., L.L.C. v. Virginia, 828 F.3d 281, 286-87 (4th Cir. 2016) (emphases added). In several recent decisions, the Fourth Circuit has adhered to the “four-part Grable test.” See, e.g., id.; Burrell v. Bayer Corp., 918 F.3d 372 (4th Cir. 2019); Pressl v. Appalachian Power Co., 842 F.3d 299 (4th Cir. 2016); Flying Pigs, LLC v. RRAJ Franchising, LLC, 757 F.3d 177 (4th Cir. 2014). Failure to satisfy any part of the Grable test precludes federal jurisdiction over a state-law claim. Gunn, 568 U.S. at 258; Pressl, 842 F.3d at 303. Following the 2005 Grable decision, both the Fourth Circuit and “the Supreme Court ha[ve] emphasized [that] § 1331 confers federal jurisdiction over state-law causes of action only in a ‘special and small' class of cases.” Burrell, 918 F.3d at 376 (quoting Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006)).^[5] “[P]ost-Grable decisions, including Empire HealthChoice . . ., hold that a federal role in insurance is not enough to establish that a state-law suit really arises under federal law.” Hartland Lakeside Joint No. 3 Sch. Dist. v. WEA Ins. Corp., 756 F.3d 1032, 1034 (7th Cir. 2014).

         Here, the first part of the Grable test-that the federal issue be “necessarily raised”-is not satisfied. See generally Burrell, 918 F.3d at 381 (“A federal question is ‘necessarily raised' for purposes of § 1331 only if it is a necessary element of one of the well-pleaded state claims.” (some internal quotation marks omitted)); Flying Pigs, 757 F.3d at 182 (“[A] plaintiff's right to relief for a given claim necessarily depends on a question of federal law only when every legal theory supporting the claim requires the resolution of a federal issue.”). Specifically, Plaintiff's two state-law causes of action-negligence and violation of the South Carolina Unfair Trade Practices Act (UTPA)^[6]-do not necessarily raise federal issues. Although her claims mention a federal flood insurance policy, the real issue in this case is whether the insurer (Defendant) breached any duty and/or engaged in any unfair trade practice that resulted in Plaintiff overpaying the premium on the policy, with damages determined by the amount of overpayment. For either the negligence or UTPA claim, “it is clear . . . that [Plaintiff] can establish all the necessary elements entirely independently of federal law, ” Burrell, 918 F.3d at 382 (emphasis added), and “[t]he most one can say is that a question of federal law is lurking in the background, but that does not make the claims into ones arising under federal law.” Flying Pigs, 757 F.3d at 183 (brackets, internal quotation marks, and ellipsis omitted).

         “Accordingly, the ‘necessarily raised' requirement for a ‘significant' federal issue-formulated and explained by the Supreme Court in Grable and Gunn-has not been satisfied.” Flying Pigs, 757 F.3d at 182-83. Because the first requirement of Grable is not satisfied, the Court need not address the remaining parts of the test.^[7]See, e.g., Hunter Labs., 828 F.3d at 288 & n.9 (declining to address the remaining three prongs of the Grable test because the first one was not satisfied); Flying Pigs, 757 ...