Opinion
No. 1:01CV349-D-D
April 10, 2002.
OPINION DENYING MOTION TO REMAND
Presently before the court is the Plaintiffs' motion to remand this cause to the Circuit Court of Clay County, Mississippi. Upon due consideration, the court finds that the motion should be denied because diversity jurisdiction exists pursuant to 28 U.S.C. § 1332(a).
Also pending before the court is the Defendants' motion to stay these proceedings pending the outcome of a related action filed by the Defendants in this court. The court finds that the Defendants' motion to stay is without merit. The Defendants willingly removed this cause to this court, and the fact that they have now filed a separate and related action is of no consequence. Accordingly, the Defendants' motion to stay these proceedings shall be denied.
A. Factual Background
The Plaintiffs in this action are three individuals who separately entered into various loan and insurance agreements with the Defendants. The Plaintiffs filed suit in the Circuit Court of Clay County, Mississippi, on August 20, 2001, alleging that the Defendants' conduct in connection with the subject loan and insurance transactions renders them liable under various state law causes of action including fraudulent misrepresentation and negligence. On September 18, 2001, the Defendants removed the action to this court on the basis of, inter alia, federal diversity jurisdiction as set forth in 28 U.S.C. § 1332(a), asserting that the Plaintiffs have fraudulently joined the individual Defendants Robin Pennington and Freda Weeks in order to defeat this court's diversity jurisdiction. Thereafter, the Plaintiffs motioned the court to remand this matter to state court contending that because the individual Defendants are properly joined, complete diversity does not exist and this court lacks jurisdiction over the case.
B. Standard for Remand
The Judiciary Act of 1789 provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441 (a). After removal of the case, the plaintiff may move for remand, and "[if] it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." See 28 U.S.C. § 1447(c).
Original federal diversity jurisdiction exists "where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs, and is between . . . citizens of different States." 28 U.S.C. § 1332(a); Sid Richardson Carbon Gasoline Co. v. Interenergy Res., Ltd., 99 F.3d 746, 751 (5th Cir. 1996). In this case, the Plaintiffs assert both that the amount in controversy potentially may not exceed $75,000.00, and that the court does not possess diversity jurisdiction because this action is not between citizens of different states.
C. Discussion 1. Fraudulent Joinder and Diversity of Citizenship
The Plaintiffs and the individual Defendants Pennington and Weeks are indisputably resident citizens of Mississippi. This fact, however, will not destroy federal diversity jurisdiction if the Plaintiffs fraudulently joined both of the individual Defendants in order to defeat diversity. Rodriguez v. Sabatino, 120 F.3d 589, 591 (5th Cir. 1997). But, if the court finds that either of the individual Defendants have not been fraudulently joined, then federal diversity jurisdiction is lacking, and the court must remand this matter to state court. See Whalen v. Carter, 954 F.2d 1087, 1094 (5th Cir. 1992) (federal diversity jurisdiction exists only if no plaintiff is a citizen of the same state as any defendant); Wright v. Combined Ins. Co. of America, 959 F. Supp. 356, 361 (N.D. Miss. 1997).
The party alleging fraudulent joinder bears the burden of persuasion, and that burden is quite stringent. See Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir. 2000) ("The burden of persuasion placed upon those who cry `fraudulent joinder' is indeed a heavy one."). In order to prove that a non-diverse party has been fraudulently joined by a plaintiff hoping to defeat diversity, the removing party must demonstrate either "outright fraud in the plaintiff s recitation of jurisdictional facts," or that there is "absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant[s] in state court." Hart, 199 F.3d at 246.
The Defendants here do not allege outright fraud, so the court must determine whether there is absolutely no possibility that the Plaintiffs will be able to establish a cause of action against the individual Defendants in state court. In making this determination, the court evaluates all of the factual allegations in the Plaintiffs' pleadings in the light most favorable to the Plaintiffs, and the court examines relevant state law and resolves all uncertainties in favor of the Plaintiffs. Hart, 199 F.3d at 246. Further, the court does not focus on whether the Plaintiffs will prevail on the merits of their claims. Instead, the court determines whether there is a possibility that the Plaintiffs will be able to state a claim against the allegedly fraudulently joined defendants, in this case Robin Pennington and Freda Weeks. Rodriguez, 120 F.3d at 591.
Whether a case states a cognizable claim against a defendant is determined by reference to the allegations made in the plaintiff's original pleadings, although the court may "pierce" those pleadings in making its determination. B, Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981); Wheeler v. Frito Lay, Inc., 743 F. Supp. 483, 485 (S.D. Miss. 1990). In the case at bar, the Plaintiffs allege that the Defendants Pennington and Weeks committed the torts of, inter alia, fraudulent misrepresentation and negligence in connection with the Plaintiffs' entrance into various loan and insurance agreements with the Defendants.
Under Mississippi law, an agent for a disclosed principal can be held personally liable for her own tortious acts committed within the scope of her employment, and a tort claim can be maintained against that agent so long as the foundation of the agent's liability is her own individual wrongdoing. Hart, 199 F.3d at 247; Turner v. Wilson, 620 So.2d 545, 548 (Miss. 1993). The agent is subject to personal liability when she "directly participates in or authorizes the commission of a tort." Hart, 199 F.3d at 247 (quoting Mississippi Printing Co., Inc. v. Maris, West Baker, Inc., 492 So.2d 977, 978 (Miss. 1986)). In other words, the agent must have had more than simply a "peripheral involvement" in the alleged tort. Mozingo v. Correct Mfg. Corp., 752 F.2d 168, 174 (5th Cir. 1985).
In piercing the pleadings to determine whether there is a possibility that a state court would find a cause of action stated on the facts alleged by the plaintiff, it is axiomatic that where a plaintiff's complaint is devoid of any factual allegations suggesting a basis for recovery against a particular defendant, there can be no ground for concluding that a claim has been stated. See, e.g., Addison v. Allstate Ins. Co., 58 F. Supp.2d 729, 732 (S.D. Miss. 1999). Failure to specify a factual basis for recovery against a nondiverse party, therefore, constitutes a fraudulent joinder of that party. Addison, 58 F. Supp.2d at 732.
Here, the Plaintiffs merely allege, in very general and conclusory terms, that the Defendants Pennington and Weeks engaged in tortious conduct. There are no specific factual allegations in the complaint, in the Plaintiffs' deposition testimony, nor in the Plaintiffs' motion to remand concerning the individual Defendants' participation in the alleged tortious acts, much less any factual allegations that would tend to suggest that their involvement was anything other than merely peripheral. Therefore, without a factual basis for concluding that the individual Defendants directly, personally, or actively participated in the alleged tortious conduct, the court finds that the Plaintiffs have no possibility of establishing a cause of action against the individual Defendants in state court, and that they were fraudulently joined to defeat diversity. See, e.g., Addison, 58 F. Supp.2d at 733 (denying motion to remand where, "other than a bare allegation, plaintiffs have factually alleged nothing" that would satisfy required elements of claim against resident defendants); Christmon v. Allstate Ins. Co., 57 F. Supp.2d 380, 382 (S.D. Miss. 1999).
2. Amount in Controversy
It is axiomatic that when, as here, the plaintiff's complaint does not allege a specific amount of damages, the removing defendants must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000. DeAguilar v. Boeing Co., 47 F.3d 1404, 1409 (5th Cir. 1995). This burden is deemed to be met if it is "facially apparent" from the plaintiff's complaint that the amount in controversy exceeds the jurisdictional minimum. Allen v. R H Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). The court determines whether it is facially apparent that the amount in controversy exceeds the jurisdictional minimum by simply examining the complaint and ascertaining whether the amount in controversy is likely to exceed $75,000. Allen, 63 F.3d at 1336. In conducting this analysis, the court may refer to the types of claims alleged by the plaintiff, as well as the nature of the damages sought. Id.
Once the removing defendant has established that the amount in controversy exceeds $75,000, removal of the cause is deemed proper unless the plaintiff shows that, as a matter of law, it is certain that he will not be able to recover more than $75,000.Allen, 63 F.3d at 1335-36; DeAguilar, 47 F.3d at 1411. In other words, once the removing defendant has established by a preponderance of the evidence that the federal jurisdictional minimum has been met, it must appear to a "legal certainty" that the plaintiff's claim is for less than the jurisdictional amount; otherwise, the federal jurisdictional amount is deemed to have been met. DeAguilar, 47 F.3d at 1412.
Here, the Plaintiff is not seeking a specified amount of damages. Instead, the complaint simply requests that the Plaintiff be awarded "actual, statutory, and compensatory damages in an amount for each Plaintiff to be determined by a Jury, as well as an amount to be determined by a jury in punitive damages for each Plaintiff; costs of suit; reasonable attorneys' fees; pre-judgment and post-judgment interest . . ." See Complaint at 23.
It is well settled that claims for punitive damages are included in the calculation of the amount in controversy. St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998); Myers v. Guardian Life Ins. Co. of America, Inc., 5 F. Supp.2d 423, 428-29 (N.D. Miss. 1998). Here, in ascertaining whether the Plaintiffs claim for damages actually exceeds $75,000, so as to meet the federal jurisdictional minimum, the court notes that punitive damages awards against finance and insurance companies in Mississippi routinely exceed that amount.See, e.g., Independent Life Acc. Ins. Co. v. Peavy, 528 So.2d 1112 (Miss. 1998) (affirming jury award of $250,000 in punitive damages); Andrew Jackson Life Ins. Co. v. Williams, 566 So.2d 1172 (Miss. 1990) (affirming jury award of $200,000 in punitive damages). Further, federal courts in Mississippi have consistently held that a claim for an unspecified amount of punitive damages under Mississippi law is deemed to exceed the amount necessary for federal jurisdiction. See, e.g., St. Paul Reinsurance Co., Ltd., 134 F.3d at 1255; Marcel v. Pool Co., 5 F.3d 81, 84-85 (5th Cir. 1993); Myers, 5 F. Supp.2d at 428-29;Allstate Ins. Co. v. Hilbun, 692 F. Supp. 698, 701 (S.D. Miss. 1988).
As such, the court finds that the Defendants have proven by a preponderance of the evidence that the amount in controversy in this action exceeds $75,000. The Defendants' removal of this cause is therefore proper unless the Plaintiffs can show that, as a matter of law, it is legally certain that they will not be able to recover the jurisdictional minimum. Allen, 63 F.3d at 1335-36;DeAguilar, 47 F.3d at 1411-12. The Plaintiffs, however, have indisputably made no effort to establish their inability to recover more than $75,000.
Accordingly, considering the Plaintiffs' claims for punitive damages, the court finds that it is facially apparent that the amount in controversy in this action is greater than $75,000. Federal diversity jurisdiction, therefore, is present and the Plaintiffs' motion to remand shall be denied.
D. Conclusion
In sum, because the individual Defendants Pennington and Weeks were fraudulently joined to defeat diversity, and the amount in controversy requirement has been satisfied, the court finds that federal subject matter jurisdiction pursuant to 28 U.S.C. § 1332 exists. The matter in controversy exceeds the sum of $75,000, and is between citizens of different states. As such, this court possesses subject matter jurisdiction to adjudicate this cause and the Plaintiffs' motion to remand shall be denied.
A separate order in accordance with this opinion shall issue this day.
ORDER DENYING MOTION TO REMAND
Pursuant to an opinion issued this day, it is hereby ORDERED that
(1) the Plaintiffs' motion to remand this cause to the Circuit Court of Clay County, Mississippi (docket entry 5), is DENIED;
(2) the Defendants' motion to stay (docket entry 18) is DENIED; and
(3) this cause of action remains in the jurisdiction of the United States District Court for the Northern District of Mississippi.
SO ORDERED, this the 10 day of April 2002.