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DHW Purchasing Group, LLC v. Hub International Midwest Ltd.

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

October 30, 2019

DHW PURCHASING GROUP, LLC dba Carolina Pour House and DANIEL WELLS, Plaintiffs,



         Through this action, Plaintiffs Daniel Wells (“Wells”) and DHW Purchasing Group, LLC (“DHW”) (collectively “Plaintiffs”) seek recovery for claims arising from the purchase of insurance and subsequent denial of coverage for two lawsuits. Those lawsuits arose from incidents at The Carolina Pour House (“Pour House”), a business owned and operated by DHW. ECF Nos. 1-1 (Original Complaint); ECF No. 22 (Second Amended Complaint).

         The action was removed to this court on the basis of diversity jurisdiction, 28 U.S.C. § 1332. ECF No. 1. The claim of complete diversity depended, in part, on an assertion “KeenanSuggs Insurance” is a trade name rather than a legal entity, and consequently is not a Defendant whose citizenship may be considered. The removal papers also asserted the entity that has done business under that trade name since August 1, 2016, is diverse from Plaintiffs as are the two other Defendants.

         The action is before the court on Plaintiffs' motion to remand. Plaintiffs argue removal was improper because they are both citizens of South Carolina and “Defendant Keenan Suggs [sic] Insurance is the operating name of a South Carolina entity or entities and remains a citizen and resident of the State of South Carolina[.]” ECF No. 58 at 1, 2.[1]

         Defendants The Burlington Insurance Company (“TBIC”) and Hub International Midwest Limited (“HUB”) filed opposing memoranda. ECF Nos. 59, 60.[2] These Defendants argue removal was proper because KeenanSuggs Insurance is only a trade name, not the name of any existing legal entity and, consequently, cannot be considered a party for purposes of determining whether complete diversity exists.[3]

         For reasons set forth below, the court concludes KeenanSuggs Insurance should either be disregarded as a fictitious party or treated as a misnomer for HUB. Because either alternative results in complete diversity, Plaintiffs' motion to remand is denied.


         Challenges to subject matter jurisdiction may be raised at any time, by the court or parties. See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008). Doubts should be resolved in favor of remand because “[r]emoval jurisdiction is not a favored construction; [the courts] construe it strictly in light of the federalism concerns inherent in that form of federal jurisdiction.” In re Blackwater Security Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006). Thus, “[i]f federal jurisdiction is doubtful, a remand is necessary.” Mulcahey v. Columbia Organic Chemicals Co., Inc. 29 F.3d 148, 151 (4th Cir. 1994).

         Where removal is based on diversity jurisdiction, the removing party “bears the burden of proof, by a preponderance of the evidence, to show the parties' citizenship [is] diverse.” Zoroastrian Ctr. v. Rustam Guiv Found'n of N.Y., 822 F.3d 739, 748 (4th Cir. 2016). In a removed action, a majority of courts determine diversity based on the parties' citizenship at the time of removal, while a minority require diversity to exist both when the action is commenced in state court and at the time of removal. See Wright & Miller, 13E Fed. Prac. & Proc. Juris. § 3608 (3d ed.) (“It has long been hornbook law, applied by courts at all levels of the federal judiciary throughout the nation, that whether federal diversity of citizenship jurisdiction exists is determined by examining the citizenship of the parties at the time the action is commenced by filing the complaint with the court” and discussing split of authority as to removal). The Fourth Circuit allows a change after the complaint was filed to support removal on the basis of diversity only if attributable to the plaintiff. See generally Yarnevick v. Brinck's Inc., 102 F.3d 753, 754-55 (4th Cir. 1996) (holding diversity could be created after filing of the complaint by plaintiff's voluntary action, though it could not be created by a defendant's actions).[4]

         Pursuant to the removal statute, “[i]n determining whether a civil action is removable on the basis of jurisdiction under section 1332(a) of this title, the citizenship of defendants sued under fictitious names shall be disregarded.” 28 U.S.C. § 1441(b)(1). This rule has been applied to deny remand based on the alleged citizenship of a party identified only by trade name. See Frith v. Blazon-Flexible Flyer, Inc., 512 F.2d 899, 900 (5th Cir. 1975) (stating case was “lawfully” removed where arguably non-diverse party “was only a trade name and not a legal entity”); see also Snowden v. CheckPoint Check Cashing, 290 F.3d 631, 634 (4th Cir. 2002) (a trade name “is not a separate legal entity capable of being sued”).


         Original Complaint and Service. The Original Complaint, which was not amended prior to removal, named three Defendants: KeenanSuggs Insurance (“KeenanSuggs”), All Risks, Ltd. (“All Risks”), and TBIC. ECF No. 1-1 (capitalization modified). No “Hub International” entity was named as a Defendant, though the first paragraph referencing KeenanSuggs alleged KeenanSuggs “is a South Carolina Insurance agency” and “an operating entity of HUB International, Southeast, Inc. which owns the property, maintains [an] office and does business within the state of South Carolina.” Id. ¶ 3.

         Plaintiffs attempted to serve both KeenanSuggs Insurance and an entity identified in a separate summons as “HUB INTERNATIONAL C/O KEENANSUGGS INSURANCE, REGISTERED AGENT” by having a process server hand-deliver the summonses and complaint to Angela Meetone at 1330 Lady Street, Columbia South Carolina 29201. Id. at 64, 65 (affidavits of service dated April 10, 2019). This is the address at which Plaintiffs had done business with the entity using the trade name KeenanSuggs. See ECF No. 58-1 at 3 (“Plaintiffs served KeenanSuggs at the Lady Street address provided on correspondence from it to Plaintiff[s].”).

         Pre-Removal Motion to Dismiss. Before the action was removed from state court, HUB made a limited appearance for the purpose of filing a motion to dismiss the claims asserted against KeenanSuggs (including to the extent they might be relied on to pursue claims against HUB). ECF No. 3 at 1 (filed in state court on April 26, 2019). HUB asserted “‘KeenanSuggs Insurance' is a non-existent entity” and argued the matter should be dismissed because “a judgment against KeenanSuggs Insurance will not be enforceable against Hub International.” Id.[5] The motion also argued allowing the action to proceed against KeenanSuggs “is highly prejudicial against Hub International due to the uncertainty of which entity Plaintiffs seek relief from.” Id. HUB also argued service of process was improper. Id. at 1, 2.

         Removal. TBIC removed the matter to this court on April 29, 2019. ECF No. 1. It asserted complete diversity existed for the following reasons:

8. Defendant KeenanSuggs Insurance (“KeenanSuggs”) as named in the Complaint is a non-entity. Compl. ¶ 3. Rather, KeenanSuggs is a trade name for the insurance operations of HUB International Midwest Limited (“HUB”), which is a corporation organized and existing under the laws of the State of Illinois, with its principal place of business in the State of Indiana.
9. Accordingly, the Plaintiffs are citizens and residents of South Carolina; and Defendant TBIC is a citizen and resident of Illinois and North Carolina, Defendant All Risks is a citizen and resident of Maryland, and Defendant KeenanSuggs (to the extent properly named as a defendant in this action) is a citizen and resident of Illinois and Indiana. Therefore, there is complete diversity of citizenship between the Plaintiffs and the Defendants in this action.

         ECF No. 1 at 3, 4 (also asserting “Defendants All Risks and KeenanSuggs have consented and join in this removal”).[6]

         Post-Removal Motion to Dismiss by HUB. Several days after the matter was removed to this court, HUB filed a renewed motion to dismiss claims against KeenanSuggs under Rules 12(b)(1), (2), (4), (5), and (6) of the Federal Rules of Civil Procedure. ECF No. 8 (filed May 3, 2019). Though the arguments were somewhat expanded, the central premise of this motion was the same as the pre-removal motion to dismiss: KeenanSuggs is a trade name under which HUB had operated since August 1, 2016, rather than a distinct legal entity. ECF No. 8 at 3, 4 (explaining HUB had operated under this name since purchasing substantially all the assets of Keenan & Suggs, Inc., and Keenan Suggs Bowers Elkins, LLC on August 1, 2016). HUB attached two pages from the August 1, 2016 asset purchase agreement. ECF No. 8-2 (arguing the agreement could be considered on motion to dismiss because the purchase was referenced in the Original Complaint). The attached pages list the parties to the agreement including the two entities referenced in the motion, ...

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