Heath v. Jackson National Life Insurance Company, No. 2:2017cv02494 - Document 24 (W.D. Tenn. 2017)
Court Description: ORDER granting 12 Motion to Remand to State Court. Signed by Judge Samuel H. Mays, Jr on 10/26/2017. (Mays, Samuel)
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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION GREGORY A. HEATH, ) ) Plaintiff, ) ) v. ) ) JACKSON NATIONAL LIFE INSURANCE ) COMPANY AND JOHN FINLEY, ) ) Defendants. ) No. 2:17-cv-02494-SHM ORDER Before the Court is Plaintiff Gregory A. Heath’s Motion to Remand for lack of subject matter jurisdiction, dated August 14, 2017. (ECF No. 12; cf. ECF No. 14.) Defendant Jackson National Life Insurance Company responded on August 28, 2017. (ECF No. 17.) For the following reasons, the Motion to Remand is GRANTED. I. Background Defendant Jackson National Life Insurance Company (“Defend- ant Jackson”) issued a life insurance policy to Kathryn Finley (“Ms. Finley”). (ECF No. 14 at 117.)1 Finley’s life in the amount of $150,000. 1 The policy insured Ms. (Id.) Plaintiff and Unless otherwise noted, all pin cites for record citations are to the “PageID” page number. Defendant John Finley (“Defendant Finley”) were the designated beneficiaries of the policy. (Id.) The policy provided that policyholders could submit Change of Beneficiary forms by fax. (Id. at 118.) On May 19, 2015, Ms. Finley submitted a Change of Beneficiary form by fax to Defendant Jackson. (Id.) Ms. Finley re- quested that, after her death, Plaintiff should receive 67% of the proceeds and Defendant Finley should receive 33% of the proceeds.2 would (Id.) receive $49,500. Based on Ms. Finley’s $150,000 policy, Plaintiff $100,500 and Defendant Finley would receive (Id.) Ms. Finley died on June 14, 2015. (Id.) Defendant Jackson issued a check to Plaintiff for $49,535.10 and a check to Defendant Finley for $100,500. (Id. at 118-19.) After receiving his check, Plaintiff contacted Defendant Jackson to protest the amount he had received. (Id. at 119.) In a letter dated Sep- tember 18, 2015, Defendant Jackson informed Plaintiff that the May 19, 2015 Change of Beneficiary form submitted by Ms. Finley had been declined. (Id.) Thus, Plaintiff’s portion of the pol- icy proceeds had not been changed to 67%. Plaintiff’s counsel, acting on (Id.) Plaintiff’s behalf, asked Defendant Jackson to provide Plaintiff with a copy of the insur2 The record does not indicate the portions of Ms. Finley’s policy that Plaintiff and Defendant Finley were to receive before May 19, 2015. 2 ance policy and all correspondence between Defendant Jackson and Ms. Finley. refused. (Id.) Plaintiff represents that Defendant Jackson (Id.) On May 23, 2017, Plaintiff filed a Complaint for Declaratory Judgment in the Chancery Court for Shelby County, Tennessee, against Defendant Jackson and Defendant Finley. 1-3 at 19-26.) (Id.; ECF No. The Complaint alleges that Defendant Jackson has breached its contract with Plaintiff by: (1) refusing to provide Plaintiff with a copy of the policy and correspondence between Defendant Jackson and Ms. Finley; (2) refusing to honor Ms. Finley’s May 19, 2015 Change of Beneficiary form; and (3) paying Plaintiff 33% instead of 67% of the policy proceeds. 1-3 at 23-25.) (ECF No. On July 24, 2017, Defendant Jackson filed a No- tice of Removal to this Court on the basis of diversity. (ECF No. 1.) On August 14, 2017, Plaintiff filed a Motion to Remand. (ECF No. 12; cf. ECF No. 14.) Plaintiff argues that the Court does not have subject matter jurisdiction because there is not complete diversity between the parties and the amount in controversy does not exceed $75,000. (ECF No. 14 at 120-22.) ant Jackson responded on August 28, 2017. II. Defend- (ECF No. 17.) Standard of Review 28 U.S.C. § 1441 grants defendants in civil suits the right to remove cases from state courts to federal district 3 courts when the latter would have had original jurisdiction. Jerome–Duncan, Inc. v. Auto–By–Tel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999). To permit removal, “there must be complete di- versity of citizenship both at the time the case is commenced and at the time that the notice of removal is filed.” Id. “‘When a non-diverse party has been joined as a defendant, then in the absence of a substantial federal question[,] the removing defendant may avoid remand only by demonstrating that the non-diverse party was fraudulently joined.’” tations omitted). Id. (internal quo- The burden of proving fraudulent joinder of a non-diverse defendant is “a heavy one” and lies on the removing party. (6th Walker v. Philip Morris USA, Inc., 443 F. App'x 946, 953 Cir. 2011) (internal quotations omitted); Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 948–949 (6th Cir. 1994). “To prove fraudulent joinder, the removing party must present sufficient evidence that plaintiff could not have established a cause of action against non-diverse defendants under state law.” Coyne v. American Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999). One basis for remand is failure to state a colorable claim for recovery against a non-diverse defendant. Id. “[A] claim is colorable ‘if the state law might impose lia- bility on the resident defendant under the facts alleged.’” Kent State Univ. Bd. of Trs. v. Lexington Ins. Co., 512 F. App'x 4 485, 489 (6th Cir. 2013) (internal quotations omitted). In de- ciding whether a defendant has been fraudulently joined, the district court must resolve “all disputed questions of fact and ambiguities in the controlling . . . state law in favor of the nonremoving party.” Coyne, 183 F.3d at 493 (internal quotations omitted). III. Analysis Plaintiff and Defendant Finley are citizens of Tennessee. (ECF No. 1 at 4-5; ECF No. 1-3 at 19.) Defendant Jackson is a foreign place corporation Michigan. with (Id. at 5.) its principal of business in There is no diversity on the face of the complaint because Plaintiff and Defendant Finley are citizens of the same state. Defendant Jackson argues that Plaintiff fraudulently joined Defendant Finley to defeat diversity jurisdiction. at 137.) (ECF No. 17 Defendant Jackson argues that joinder was fraudulent because “Plaintiff has asserted no colorable claims or alleged any facts giving rise to a cause of action against Defendant Finley.” (Id.) “If Plaintiff is able to prove that he is enti- tled to the additional death benefit, his recovery will only be against [Defendant Jackson], not Defendant Finley.” 138.) 5 (Id. at The “colorable claim” standard is not the only standard for analyzing whether a non-diverse defendant has been fraudulently joined. Federal courts . . . have found that a non-diverse defendant was not fraudulently joined, even though no colorable claim was asserted against it and no relief was sought from that party, where it was a necessary party to the action under state law because its interests would be substantially [a]ffected by a judgment. Scott v. State Farm Fire & Cas. Co., No. 1313287, 2014 WL 3054784, at *4 (E.D. Mich. July 7, 2014) (citing cases in support of the proposition). Although Plaintiff alleges no claim against Defendant Finley, Defendant Finley is a necessary party. Tenn. Code Ann § 29-14-107(a) requires that, in a declaratory action, all persons who have a claim or interest be made parties. Accord Huntsville Util. Dist. of Scott County v. Gen. Trust Co., 839 S.W.2d 397, 403 (Tenn. Ct. App. 1992) (“Because of the nature of declaratory relief, the Declaratory Judgments Act makes it incumbent that every person having an affected interest be given notice and an opportunity to be heard before declaratory relief may be granted.”). Defendant Finley has an interest in the matter because he will lose $50,964.90 of the proceeds he has received from Defendant Jackson if Plaintiff prevails. (ECF No. 14 at 122; ECF No. 17 at 139.) Under Ten- nessee law, Defendant Finley must be joined as a necessary party 6 to Plaintiff’s declaratory judgment action. Defendant Finley was not fraudulently joined. The parties are not completely diverse because Plaintiff and Defendant Finley are both citizens of Tennessee. at 4-5; ECF No. 1-3 at 19.) (ECF No. 1 The Court lacks subject matter ju- risdiction. IV. Conclusion For the foregoing reasons, Plaintiff’s Motion to Remand is GRANTED. So ordered this 26th day of October, 2017. /s/ Samuel H. Mays, Jr. ____ SAMUEL H. MAYS, JR. UNITED STATES DISTRICT JUDGE 7
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