CATHERINE BERNTHEIZEL v. SAFECO INSURANCE COMPANY OF ILLINOIS ROBERT JOHN TIGGES JR SARA TIGGES ENGINEERED SERVICES INC AUTO CLUB INSURANCE COMPANY OF FLORIDA (2023)

ORDER GRANTING DEFENDANTS’ COMBINED MOTION TO STRIKE AND DISMISS

THIS CAUSE comes before the Court upon the Combined Motion to Strike and Dismiss brought by Safeco Insurance Company of Illinois (“Safeco”), Engineered Services, Inc. (“Engineered Services”), and Auto Club Insurance Company of Florida (“Auto Club”) [ECF No. 57]. Plaintiff filed a Response in Opposition [ECF No. 62], and Safeco, Engineered Services, and Auto Club filed Replies in Support of the Combined Motion [ECF Nos. 63, 64, 65]. The Court also held a hearing on the Combined Motion on March 31, 2023 [ECF No. 68]. For the following reasons, the Combined Motion [ECF No. 57] is GRANTED to the extent it seeks to strike the Amended Complaint and dismiss from this action Defendants Robert John Tigges, Jr., Sara Tigges, Engineered Services, and Auto Club.

BACKGROUND

This case arises out of a January 7, 2019, automobile accident involving Plaintiff Catherine Berntheizel (“Plaintiff”) and Defendant Sara Tigges [ECF No. 34 ¶ 12]. Defendants Robert Tigges and Engineered Services owned the motor vehicle operated by Sara Tigges when Sara Tigges caused the accident [ECF No. 34 ¶ 12]. Defendant Auto Club is Robert Tigges's insurer for the vehicle involved in the accident [ECF No. 34 ¶ 8]. Plaintiff subsequently sued Robert Tigges, Sara Tigges, and Engineered Services in the Nineteenth Judicial Circuit in and for Martin County, Florida, for her injuries arising out of the automobile accident (the “State Court Lawsuit”) [ECF No. 34 ¶ 30]. As Plaintiff's insurer, Safeco fronted Plaintiff $100,000 while the State Court Lawsuit was pending, and in doing so preserved Safeco's subrogation rights under Section 627.727(6)(b) of the Florida Statutes [ECF No. 34 ¶ 17].¹ Safeco also paid Plaintiff an additional $90,000 to settle Plaintiff's underinsured motorist coverage claim [ECF No. 34 ¶ 21].

At some point, Safeco informed Plaintiff that it would seek repayment of the $100,000 it fronted to Plaintiff while Plaintiff pursued the State Court Lawsuit [ECF No. 34 ¶ 30]. That led Plaintiff to file the instant lawsuit against Safeco and Robert Tigges in state court on November 5, 2021, seeking a declaration that she does not have to repay Safeco the $100,000 that Safeco fronted her pursuant to both the subrogation provision of her insurance policy and Florida law [ECF No. 1-3 pp. 7–10]. On November 16, 2021, Plaintiff served Safeco with a copy of the complaint [ECF No. 1 ¶ 3]. Safeco then timely removed the Complaint to this Court, invoking the Court's diversity jurisdiction [ECF No. 1 ¶ 7]. In its Notice of Removal, Safeco argued that Plaintiff fraudulently joined Robert Tigges to defeat diversity jurisdiction, and that without Tigges, there is complete diversity of citizenship and more than $75,000 in controversy, thus satisfying the requirements of 28 U.S.C. § 1332 [ECF No. 1 ¶¶ 10–20].

On January 14, 2022, Plaintiff filed a Motion to Remand disputing Safeco's suggestion of fraudulent joinder as to Robert Tigges and seeking remand based on Robert Tigges's non-diverse status [ECF No. 13]. Safeco opposed remand and also moved, in the alternative, to realign the parties to the extent the Court disagreed with Safeco's fraudulent joinder argument as to Robert Tigges [ECF Nos. 15, 16]. After those Motions were briefed, and upon a full review of the record, the Court stayed the case pending resolution of the State Court Lawsuit and also denied the motions to remand and/or realign parties [ECF No. 23].

On June 15, 2022, Florida Circuit Court Judge Gary L. Sweet, in the State Court Lawsuit, entered an order dismissing the claims against Defendants Robert Tigges and Sarah Tigges with prejudice pursuant to a Joint Stipulation of Dismissal between the Tigges defendants and Plaintiff [ECF No. 24-1]. Auto Club, as Robert Tigges's insurer (although not a party to the State Court lawsuit), paid Plaintiff $100,000 to settle the State Court Lawsuit with respect to Robert and Sarah Tigges [ECF No. 57 pp. 20–21]. The state court also granted summary judgment in favor of Engineered Services and dismissed Plaintiff's claim against it with prejudice [ECF No. 34 ¶ 14 n.1; ECF No. 62 p. 10; ECF No. 64 p. 3].

Following resolution of the State Court Lawsuit, and upon motion by Safeco, the Court reopened the case and held a status conference to assess the development of the case going forward in light of the earlier motions [ECF Nos. 24, 28]. After the conclusion of that hearing, the Court ordered counsel for Plaintiff, Safeco, and Robert Tigges to meaningfully confer about “the need for amendment of Plaintiff's complaint, Defendants’ position with respect to proper alignment of the parties, Defendant [Robert] Tigges's current interest in this litigation, and any possible resolution of these matters” [ECF No. 31]. The parties subsequently conferred and filed a status report agreeing generally that Plaintiff needed to file an Amended Complaint but reporting continued disagreement as to Robert Tigges's current interest in the litigation [ECF No. 32]. The Court then ordered Plaintiff to “file an Amended Complaint” by December 1, 2022 [ECF No. 33]. Neither the Joint Status Report nor the Court's order instructing Plaintiff to file an Amended Complaint mentioned the possibility of Plaintiff joining additional parties.

Plaintiff timely filed an Amended Complaint on November 30, 2022 [ECF No. 34]. The Amended Complaint for the first time added non-diverse parties Sara Tigges, Engineered Services, and Auto Club as defendants to this action but sought the same declaration as sought previously in the original complaint—namely that “Safeco has no right to recover monies paid to preserve its subrogation right from its insured” [ECF No. 34 p. 7]. Robert and Sarah Tigges filed individual Answers and Affirmative Defenses based on the doctrine of res judicata, citing the full resolution of Plaintiff's claims against them in the State Court Lawsuit [ECF Nos. 41, 47]. And Defendants Safeco, Engineered Services, and Auto Club filed the instant Combined Motion to Strike and Dismiss [ECF No. 57].

In the present Motion, Safeco argues that Plaintiff's Complaint should be stricken in its entirety pursuant to Rule 12(f)(2) of the Federal Rules of Civil Procedure and Rule 7.1(a) of the Local Rules for the Southern District of Florida, because Plaintiff never moved this Court to add non-diverse defendants following removal, as required by 28 U.S.C. § 1447(e) [ECF No. 57 pp. 1–15]. 28 U.S.C. § 1447(e) (“If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.”)]. For their part, Defendants Engineered Services and Auto Club argue, inter alia, that they should be dismissed from this action because there is no adverse interest between them and Plaintiff regarding Plaintiff's insurance dispute with Safeco [ECF No. 57 pp. 15–24]. In other words, as Defendants Engineered Services and Auto Club assert, Plaintiff is seeking a declaration of her rights with respect to Safeco—not against Engineered Services or Auto Club [ECF No. 57 pp. 18, 21]. The Motion is ripe for adjudication [ECF Nos. 62–65].

LEGAL STANDARD

Rule 21 of the Federal Rules of Civil Procedure provides that, “[o]n motion or on its own, the court may at any time, on just terms, add or drop a party.” Fed. R. Civ. P. 21. “Dropping or adding a party to a lawsuit pursuant to Rule 21 is left to the sound discretion of the trial court.” Lampliter Dinner Theater, Inc. v. Liberty Mut. Ins. Co., 792 F.2d 1036, 1045 (11th Cir. 1986) (citing Williams v. Hoyt, 556 F.2d 1336, 1341 (5th Cir. 1977), cert denied, 435 U.S. 946 (1978)). When determining whether dropping a party would be “just” under Rule 21, courts evaluate whether dismissal of parties would cause substantial prejudice. See Carucel Invs., L.P. v. Novatel Wireless, Inc., 157 F. Supp. 3d 1219, 1223 (S.D. Fla. 2016) (citing Hartley v. Clark, 2010 WL 1187880, at *4 (N.D. Fla. Feb. 12, 2010)).

Fraudulent joinder, on the other hand, “is a judicially created doctrine that provides an exception to the requirement of complete diversity.” Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). Joinder is deemed fraudulent in two situations, only the first of which is relevant here—(1) “when there is no possibility that the plaintiff can prove a cause of action against the resident (non-diverse) defendant,” and (2) “when there is outright fraud in the plaintiff's pleading of jurisdictional facts.” Id. (internal citations omitted). To establish fraudulent joinder under the “no possibility” prong, a party must prove by clear and convincing evidence that there is no reasonable possibility that the plaintiff can establish a cause of action against the resident defendant. See Henderson v. Wash. Nat. Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006) (quoting Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997)).

DISCUSSION

Upon review, the Court exercises its discretion under Rule 21 of the Federal Rules of Civil Procedure and determines that Defendants Sara Tigges, Engineered Services, and Auto Club are due to be dismissed from this action. The Court reaches this determination because Plaintiff never moved to join these defendants as required by 28 U.S.C. § 1447(e), and in any event, dismissal of these parties will not prejudice Plaintiff.

To recap, Plaintiff initially sued Safeco and Robert Tigges in state court, following which Safeco removed the action to this Court [ECF No. 1]. Plaintiff thereafter timely moved to remand, relying in that motion on Robert Tigges's Florida citizenship as a basis to defeat the Court's diversity jurisdiction [ECF No. 13]. In opposition to remand, Safeco responded that Plaintiff had fraudulently joined Robert Tigges, because Robert Tigges was neither a party to the insurance contract between Plaintiff and Safeco nor an indispensable party [ECF No. 15 pp. 4–5]. And upon review of these filings—given the pendency of the State Court Lawsuit and Safeco's alternative request to “realign” Robert Tigges as a Plaintiff—the Court elected to stay the case pending resolution of the State Court Lawsuit [ECF No. 23]. The stay remained in effect for approximately seven months until the State Court Lawsuit concluded, at which point the matter of realignment and fraudulent joinder resurfaced as reflected in subsequent filings [ECF Nos. 26, 27]; the Court held a status conference [ECF No. 30]; and the Court ordered the parties to confer meaningfully on the path forward, including the need for amendment of Plaintiff's complaint [ECF No. 31]. As directed, the parties then submitted a Joint Status Report agreeing only that Plaintiff needed to amend her pleading—but making no reference to the addition of new parties [ECF No. 32]. The Court thus directed Plaintiff to file an amended complaint by December 1, 2022, saying nothing about the addition of new parties in that brief order [ECF No. 33].

Importantly, never in this procedural sequence did Plaintiff file a motion to add additional non-diverse defendants, as would have been required under Rule 7(b) of the Federal Rules of Civil Procedure and Rule 7.1(a) of the Local Rules, see Fed. R. Civ. P. 7(b); S.D. Fla. L.R. 7.1(a). And never did the Court give such permission. Indeed, for the Court to have authorized such joinder would have required an analysis of the factors outlined in Hensgens v. Deere & Co., 833 F.2d 1179 (5th Cir. 1987), as relate to 28 U.S.C. § 1447(e). See id. at 1182 (directing courts, upon request to join non-diverse parties, to consider (1) “the extent to which the purpose of the amendment is to defeat diversity jurisdiction”; (2) “whether plaintiff has been dilatory in asking for amendment”; (3) “whether plaintiff will be significantly injured if amendment is not allowed,” and (4) “any other factors bearing on the equities”). See also Hickerson v. Enter. Leasing Co. of Georgia, LLC, 818 F. App'x 880, 885 (11th Cir. 2020). Yet Plaintiff never filed such a motion in this case; the parties never briefed the propriety of adding additional non-diverse parties; the Court never applied the four-factor test from Hensgens to determine if joinder of Sara Tigges, Engineered Services, and Auto Club was proper; and, in any event, the four-factors weigh in favor of denying joinder of Sarah Tigges, Engineered Services, and Auto Club.²

In any event, even if the Court's order instructing Plaintiff to file an Amended Complaint could be interpreted somehow as authorizing Plaintiff, sub silentio, to add non-diverse defendants—a proposition inconsistent with the record—the Court exercises its discretionary authority under Rule 21 to dismiss these defendants from this action. See Andreasen v. Progressive Express Ins. Co., 276 F. Supp. 3d 1317, 1333–34 (S.D. Fla. 2017). As the record makes clear, and as Plaintiff has not meaningfully refuted, this is a contractual dispute between Safeco and Plaintiff involving the rights afforded to each other under their insurance agreement and Florida law. None of the defendants in this case—aside from Safeco—is a party to that insurance contract, and Plaintiff does not have a cognizable cause of action against any of the defendants aside from Safeco. Plaintiff already resolved her claims against Robert Tigges and Sarah Tigges via a payment by Robert Tigges's insurer, Auto Club in the State Court Lawsuit. And the state court granted summary judgment in favor of Engineered Services in the State Court Lawsuit. All told, given the resolution of the State Court Lawsuit, whatever the outcome of the dispute between Plaintiff and Safeco, neither Plaintiff nor the other defendants reasonably can sue each other for any future recovery related to the January 17, 2019, automobile accident. Plaintiff's attempt at the hearing to argue that the resolution of the present dispute somehow might affect how much Safeco theoretically could collect from those other defendants in some future lawsuit brought by Safeco is entirely speculative and is an unauthorized attempt to assert claims on behalf of Safeco. At bottom, dismissing Sara Tigges, Engineered Services, and Auto Club will not cause discernible prejudice to Plaintiff. Dismissal under Rule 21 is proper.

As to Defendant Robert Tigges, the Court determines that he is also due to be dismissed from this action under both Rule 21 and the doctrine of fraudulent joinder. For Robert Tigges to be a proper party to this declaratory judgment lawsuit from the outset, Plaintiff was required to “allege ultimate facts showing a bona fide adverse interest between [Plaintiff and Robert Tigges] concerning a power, privilege, immunity or right of the plaintiff.” Floyd v. Guardian Life Ins. Co., 415 So.2d 103, 104 (Fla. Dist. Ct. App. 1982). Plaintiff failed to do so. As discussed, this lawsuit is an insurance dispute between Plaintiff and Safeco about whether Plaintiff must return to Safeco the $100,000 that Safeco fronted to Plaintiff to preserve Safeco's subrogation rights. As a non-party to that insurance contract, Robert Tigges has no rights under the contract. Furthermore, the ultimate resolution of the present dispute does not now, nor did it ever, have any effect on the amount that Plaintiff could have recovered from Robert Tigges for the January 17, 2019, accident. Accordingly, Plaintiff cannot show a bona fide adverse interest between herself and Robert Tigges regarding the instant dispute. Put more simply, Plaintiff is not seeking any declaration of rights as between herself and Robert Tigges; she is seeking a declaration of rights only as between herself and Safeco. And, in any event, Plaintiff's claims against Robert Tigges were resolved in the State Court Lawsuit.

CONCLUSION

For the foregoing reasons, it is hereby ORDERED AND ADJUDGED as follows:

1. Defendants’ Combined Motion to Strike and Dismiss [ECF No. 57] is GRANTED to the extent it seeks that the Amended Complaint [ECF No. 34] be stricken and to the extent it seeks dismissal of Defendants Robert John Tigges, Jr., Sara Tigges, Engineered Services, and Auto Club.

2. Defendants Robert John Tigges, Jr., Sarah Tigges, Engineered Services, Inc., and Auto Club Insurance Company of Florida are DISMISSED from this action.

3. The Clerk SHALL TERMINATE Defendants Robert John Tigges, Jr., Sarah Tigges, Engineered Services, Inc., and Auto Club Insurance Company of Florida on the docket.

4. On or before April 18, 2023, Plaintiff shall file an Amended Complaint against Defendant Safeco only. Plaintiff shall not name any other party in its forthcoming Amended Complaint.

DONE AND ORDERED in Chambers at Fort Pierce, Florida, this 4th day of April 2023.

FOOTNOTES

1.   See Fla. Stat. § 627.727(6)(b) (“If an underinsured motorist insurer chooses to preserve its subrogation rights by refusing permission to settle, the underinsured motorist insurer must, within 30 days after receipt of the notice of the proposed settlement, pay to the injured party the amount of the written offer from the underinsured motorist's liability insurer. Thereafter, upon final resolution of the underinsured motorist claim, the underinsured motorist insurer is entitled to seek subrogation against the underinsured motorist and the liability insurer for the amounts paid to the injured party.”).

2.   Plaintiff already resolved her claims against Sarah Tigges via a payment by Auto Club following a stipulation in the State Court Lawsuit, and Engineered Services was granted summary in that same suit. Under these circumstances, it appears as though Plaintiff is attempting to join these defendants, post-state settlement, to defeat diversity jurisdiction in this proceeding. Furthermore, neither Plaintiff nor the other defendants has any cause of action against one another for damages arising out of the automobile accident—again reinforcing that Plaintiff will not be damaged by denying joinder of these parties at this juncture.

AILEEN M. CANNON UNITED STATES DISTRICT JUDGE