GRIFFIN v. ACCORDIA LIFE AND ANNUITY COMPANY (2020)

ORDER

This matter is before the Court on Plaintiff's motion to remand (Doc. 6) and supporting brief (Doc. 7) and the response thereto of Defendant, Accordia Life and Annuity Company (“Accordia”) (Doc. 9). Also before the Court is a Motion to Appoint an Administrator ad Litem (Doc. 13), a Motion to Strike a Supplement to Motion to Remand (Doc. 15), two Motions for Extension of Time (Docs. 18 and 19), a Motion to Substitute Party (Doc. 20), and a Motion to Strike Brief in Support of Motion to Remand (Doc. 26). The Court finds it has diversity jurisdiction and denies Plaintiff's Motion to Remand for the reasons stated here and stated more specifically on the record when these matters were heard on March 19, 2020. The Court addressed the remaining pending motions during the hearing and will dispose of those motions below.

I. BACKGROUND

On October 24, 2019, Plaintiff filed suit in the Circuit Court of Perry County, Alabama, against Defendants Accordia and Frank Spell (“Spell”). The Complaint alleges claims of fraudulent representation (Count I) and suppression (Count II) concerning Plaintiff's purchase of an insurance policy in January, 2002. Accordia and Spell were served on October 29, 2019. Spell passed away on November 10, 2019. On November 26, 2019, Accordia removed based on diversity of citizenship, claiming that the citizenship of Spell should be disregarded to determine diversity because he was fraudulently joined to this suit solely to defeat diversity jurisdiction.

Along with Removal, Accordia Answered the Compliant, denying all claims. (Doc. 3). On January 29, 2020, Plaintiff filed an Amended Complaint, adding a breach of contract claim (Count III) against Accordia only. (Doc. 12). Plaintiff also filed a Motion to Appoint Administrator Ad Litem (Doc. 13) and a Supplement to Motion to Remand (Doc. 14). Since the issues relevant to jurisdiction were joined, Accordia filed a Motion to Strike Plaintiff's Amended Complaint (Doc. 15), a Response in Opposition to Plaintiff's Supplement to Motion to Remand (Doc. 16), and a Response in Opposition to Plaintiff's Motion to appoint an Administrator Ad Litem (Doc. 17). Finally, Plaintiff has moved for Leave to File a Motion to Amend the Complaint Out of Time (Doc. 18), a Motion to Amend the Complaint (Doc. 19), and a Motion for Substitution of Parties (Doc. 20). Plaintiff also filed a Supplemental Brief in Support of Remand (Doc. 24) which Accordia has Moved to Strike (Doc. 26).

II. DISCUSSION

Federal courts are courts of limited jurisdiction; therefore, remand statutes are construed narrowly and jurisdictional uncertainties are resolved in favor of remand. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). Diversity jurisdiction, as a general rule, requires complete diversity - every plaintiff must be diverse from every defendant. Strawbridge v. Curtiss, 3 Cranch (7 U.S.) 267, 2 L. Ed. 435 (1806); 28 U.S.C. § 1332(a)(1). In evaluating a motion to remand, the removing party must demonstrate federal jurisdiction. Pacheco De Perez v. AT &T Co., 139 F.3d 1368, 1373 (11th Cir. 1998).

A. Time for Determining the Citizenship of the Parties.

In the present action, Spell passed away shortly after being served with the Complaint but before Accordia's removal. This circumstance creates an unusual posture for the Court determining the citizenship of the parties. Plaintiff and the Defendant Accordia cite competing caselaw to instruct the Court about the time the citizenship of the parties must be measured. Plaintiff would have this Court consider the citizenship of the parties on the date he filed his lawsuit in the state court. Accordia argues citizenship should be measured on the date of removal. Although both parties advocate competing positions each sometimes correct, neither clearly articulates the rule. This is so because Plaintiff cites a case originally filed in the federal court while Accordia cites a case which was removed. Both assess citizenship based on different events and both correctly state the law for their particular situation.

For clarity, the Court suggests the proper inquiry is the citizenship of the parties on the date Federal jurisdiction is invoked. In the present case, that is the date of removal as articulated by Accordia because federal jurisdiction was invoked when the case was removed on November 26, 2019. On that date, Spell was deceased and no motion to substitute had been filed.

B. Fraudulent Joinder of Spell.

Accordia contends Spell is fraudulently joined as a defendant. Accordia's position is based on two theories of fraudulent joinder. First, Accordia maintains that at the time of removal, because Spell was deceased and his estate had not been substituted, his citizenship should not spoil complete diversity. Second, Accordia argues Plaintiff's fraudulent representation and suppression claims against Spell are barred by the statute of limitations and thus Plaintiff cannot state a claim against him.

In a removal case alleging fraudulent joinder, the removing party must prove either: (1) there is no possibility the plaintiff can establish a cause of action against the resident defendant; (2) the plaintiff has fraudulently pled jurisdictional facts to bring the resident defendant into state court; or (3) where a diverse defendant is joined with a nondiverse defendant, there is no joint, several or alternative liability and the claims against the diverse defendant has no real connection to the claim against the nondiverse defendant. Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997); Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). The removing party's burden is heavy. “A defendant must assert with particularity that a joinder is fraudulent and support the claim by clear and convincing evidence.” Everett v. MTD Products, Inc., 947 F.Supp. 441, 445 (N.D. Ala.1996) (citing Parks v. New York Times Co., 308 F.2d 474, 478 (5th Cir.1962), cert. denied, 376 U.S. 949, 84 S.Ct. 964, 11 L.Ed.2d 969 (1964)). “The federal court makes these determinations based on the plaintiff's pleadings at the time of removal; but the court may consider affidavits and deposition transcripts submitted by the parties.” Crowe, 113 F.3d at 1538 (citing B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981)). Moreover, “[w]here a plaintiff states even a colorable claim against the resident defendant, joinder is proper and the case should be remanded to state court.” Pacheco De Perez, 139 F.3d at 1380. Or in other words, “if there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court.” Coker v. Amoco Oil Co., 709 F.2d 1433 (11th Cir. 1983), superceded by statute on other grounds as stated in Wilson v. General Motors Corp., 888 F.2d 779 (11th Cir. 1989).

1. Effect of Spell's Death on Removal.

Citizenship for federal jurisdiction is measured when it is invoked. Accordia correctly notes that is the citizenship of the parties on November 26, 2019, the date of removal to this Court. See Tillman v. R.J. Reynolds Tobacco, 253 F.3d 1302, 1306 n. 1 (11th Cir.2001)(“For purposes of considering the specific jurisdictional question before us, we consider only the original complaint, however, because the question of diversity subject matter jurisdiction is determined on the plaintiff's pleadings at the time of removal.”) (citations omitted); See also Fulford v. Mkt. St. Mortg. Corp., No. CIV.A. 305CV336WWO, 2005 WL 3263884, at *3 (M.D. Ala. Dec. 1, 2005)(holding non-diverse defendant who died prior to removal was properly not considered for determining diversity jurisdiction). The Court finds that Spell should not be considered for diversity purposes on the date of removal.

2. Operation of Statute of Limitations for Counts I and II.1

Plaintiff asserts that he can maintain a claim against Spell ² for fraudulent representation and suppression. Specifically, Plaintiff claims that Defendant Spell misrepresented and suppressed information at the point of sale about the policy Plaintiff purchased and the manner premiums would be charged.

In its Notice of Removal (Doc. 1) (and in response to the Motion to Remand (Doc. 7)), Accordia points out these allegations are inconsistent with the express terms of the insurance policy. Accordia also demonstrates Plaintiff specifically acknowledged receipt of the insurance policy on April 10, 2002. Further, in response to Plaintiff's request for an additional copy of his insurance policy, Accordia sent an additional copy to him on December 16, 2016. Both of these events occurred over two years before Plaintiff filed this lawsuit in the Circuit Court of Perry County, Alabama.

The Court finds that both of the above claims are barred by the statute of limitations.

“If the only claims against a resident defendant are barred by the statute of limitations, then there ‘is no possibility the plaintiff can establish a cause of action against the resident defendant.’ In such a situation, the resident defendant is deemed to be fraudulently joined.” Whitlock v. Jackson Nat'l Life Ins. Co., 32 F.Supp.2d 1286, 1290 (M.D. Ala.1998); see also Levett v. Indep. Life & Acc. Ins. Co., 814 F.Supp. 1053, 1058 (M.D. Ala.1993).

Bullock v. United Benefit Ins. Co., 165 F. Supp. 2d 1255, 1258 (M.D. Ala. 2001). The statute of limitations for all of Plaintiff's claims against Spell is two years. See ALA. CODE §§ 6-2-3, 6-2-38. The representations or omissions claimed by Plaintiff occurred at or around the date Plaintiff purchased the policy, in 2002. This action was filed October 24, 2019, over seventeen years after the alleged misrepresentations and suppression took place. In addition, the Supreme Court of Alabama has foreclosed the possibility of the time period being tolled in this case. Bullock, 165 F.Supp.2d at 1258 (citing Foremost Ins. Co. v. Parham, 693 So.2d 409, 421 (Ala.1997)).

The Foremost decision reestablished that the objective standard for determining the accrual date for a fraud claim imposes a duty to read documents received in connection with a particular transaction. Id. at 421. Therefore, fraud claims accrue upon the earlier of: (1) actual discovery of the alleged fraud; or (2) receipt of a document or contract alerting the plaintiff to the possibility of fraud, if the plaintiff could have read and understood such document and chose to ignore its written terms. Id. The Foremost court held that, if applied retroactively to the plaintiff, who had not even completed high school, the objective reasonable reliance standard would require a finding that such a plaintiff should have discovered the alleged oral misrepresentations upon signing and receiving the sales documents. Id. at 422. Thus, the court concluded that, under the objective standard, plaintiff's claims of fraud would be barred if not filed within two years of the plaintiff's receipt of the policy. Id.

Id. Here, the Plaintiff signed indicating his receipt of documents which provided the information allegedly suppressed or misrepresented. To the extent Spell misrepresented or suppressed the terms, Plaintiff was put on notice of the contradictory terms both times he received a copy of the policy. The statute of limitations would have begun to run in 2002, when Plaintiff purchased and received the policy, and the period expired two years later, in 2004.³

Because the Court finds there is no possibility Plaintiff can establish a cause of action against Spell, the Court finds he was fraudulently joined and his citizenship will not be considered for diversity jurisdiction. Plaintiff's claims against Spell are dismissed with prejudice and Plaintiff's Motion to Remand (Doc. 6) is DENIED.

C. Remaining Matters.

Based on the Court's ruling above and the additional reasons stated on the record during the March 19, 2020 hearing, the remaining pending motions are disposed of as follows:

1. Plaintiff's Motion for Appointment of an Administrator Ad Litem (Doc. 13) is DENIED.

2. Accordia's Motion to Strike Plaintiff's Amended Complaint (Doc. 15) is DENIED. Plaintiff shall file a new Amended Complaint combining all three causes of action he has asserted against Accordia into one pleading.

3. Plaintiff's Motion for Leave to File a Motion to Amend the Complaint Out of Time (Doc. 18) is GRANTED.

4. Plaintiff's Motion for Leave to file a Motion to Amend the Complaint Out of Time (Doc. 18) is GRANTED.

5. Plaintiff's Motion for Substitution of Parties (Doc. 20) is DENIED based on the Court's finding that Spell was fraudulently joined.

6. Motion to Strike Plaintiff's Supplemental Brief in Support of Remand (Doc. 26) is DENIED. Counsel for Plaintiff is directed to the Local Rules of this Court and the Federal Rules of Civil Procedure generally. All parties shall follow said rules as this litigation continues.

DONE and ORDERED this 26th day of March, 2020.

FOOTNOTES

2.   In fact, Plaintiff has moved to substitute Spell's personal representative in this action. Because Accordia also raised fraudulent joinder of Spell, the Court analyzes this argument.

3.   Even if this period were to run from the date Plaintiff received a second copy of his policy documents, the present lawsuit was filed outside the statute of limitations for claims against Spell.

JEFFREY U. BEAVERSTOCK, UNITED STATES DISTRICT JUDGE