Evans v. Government Employees Insurance Company et al, No. 3:2014cv00659 - Document 24 (E.D. Va. 2014)
Court Description: MEMORANDUM OPINION. Signed by District Judge James R. Spencer on 12/2/2014. (sbea, )
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Evans v. Government Employees Insurance Company et al Doc. 24 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION EULERIC EVANS, by his Assignee, CRAIG L. COLES Plaintiff, v. Action No. 3:14-CV-659 GEICO GENERAL INSURANCE COMPANY, et al., Defendants. MEMORAN D U M OPIN ION THIS MATTER is before the Court on a Motion for Leave to Am end Notice of Rem oval (“Motion to Am end”) (ECF No. 16) filed by Defendants Governm ent Em ployees Insurance Com pany, GEICO General Insurance Com pany, GEICO Indem nity Com pany, GEICO Casualty Com pany, GEICO Advantage Insurance Com pany, and GEICO Choice Insurance Com pany (collectively “GEICO”) and Eric Rappaport, Tony Parkes, and J esse J ones (collectively “the individual defendants”). Plaintiff Euleric Evans (“Evans”), by his assignee, Craig L. Coles (“Coles’”) opposes the Motion to Am end. For the following reasons, the Motion for Leave to Am end will be GRANTED. ECF No. 16. I. Factu al an d Pro ce d u ral Ba ckgro u n d This action arises out of a m otor vehicle accident on April 9, 20 10 , involving both Coles and Evans. As a result of the collision, Coles sustained serious bodily injury. Evans purchased an autom obile liability insurance policy from GEICO. See ECF No. 1 Ex. 1 Com plaint (“Com pl.”) ¶1; see also id. Ex. L (“Assignm ent”). First, on October 8, 20 10 , Coles filed suit against Evans in the Circuit Court of Henrico County seeking com pensation for the injuries he sustained in the crash. See Com pl. ¶ 14. Prior to trial, Coles attem pted to settle his claim s against Evans through negotiations with several GEICO adjusters—i.e., the individual defendants— who have been individually nam ed in the instant lawsuit. Com pl. ¶¶ 15-16. 20 , 221 Dockets.Justia.com 31. On March 20 , 20 12, the case was tried on dam ages and the jury returned a verdict of $ 275,0 0 0 .0 0 . Com pl. ¶ 32. On October 7, 20 13, Evans assigned and transferred his rights, claim s, and causes of actions against “GEICO General Insurance Com pany,” Com pl. Ex. L. (“Assignm ent”), “to the [p]laintiff in the instant action, Craig L. Coles,” Com pl. ¶ 33. Then, on August 25, 20 14, Coles filed this case in the Circuit Court for the City of Richm ond, Virginia, against GEICO and the individual defendants seeking to collect on an insurance policy they issued to Evans. Mem orandum in Support of Defendants’ Motion for Leave to Am end Notice of Rem oval (“Defs.’ Mem . Supp. Mot. to Am end”) at 2. The Com plaint, essentially arising out of the $ 275,0 0 0 jury verdict, alleges the following: Breach of Contract (“Count I”); Breach of the Im plied Covenant of Good Faith and Fair Dealing (“Count II”); Unfair Claim Settlem ent Practice Under Va. Code Ann. § 38.2-510 (“Count III”); and Bad Faith Failure to Pay a Motor Vehicle Insurance Claim of More Than $ 3,50 0 .0 0 Under Va. Code Ann. § 8 .0 166.1(D)(1) (“Count IV”). GEICO and the individual defendants were served with the Com plaint on Septem ber 2, 20 14 and Septem ber 3, 20 14, respectively. Id. On Septem ber 25, 20 14, GEICO and the individual defendants filed a Notice of Rem oval, with the initial Com plaint and other exhibits attached, pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. ECF No. 1 (“Notice of Rem oval”). On October 10 , 20 14, Coles m oved to rem and this case. ECF No. 4. On October 17, 20 14, GEICO and the individual defendants, together, filed a m em orandum in opposition, ECF No. 9, to Plaintiff’s Motion to Rem and. Coles filed a Reply on October 22, 20 14. ECF No. 14. On October 24, 20 14, GEICO and the individual defendants, together, filed the instant Motion to Am end. ECF No. 16. On Novem ber 4, 20 14, Coles opposed the Motion to Am end. ECF No. 22. Finally, GEICO and the individual defendants replied on Novem ber 7, 20 14. ECF No. 23. II. Le gal Sta n d ard “Federal courts are courts of lim ited jurisdiction . . . [and] possess only that power 2 authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am ., 511 U.S. 375, 377 (1994). Federal district courts have original jurisdiction over civil actions that arise under the Constitution, laws, or treaties of the United States pursuant to 28 U.S.C. § 1331, where the am ount in controversy exceeds $ 75,0 0 0 .0 0 , and the m atter is between citizens of different states pursuant to 28 U.S.C. § 1332. Federal diversity jurisdiction only exists under § 1332 where there is com plete diversity, that is, “when no party shares com m on citizenship with any party on the other side.” May es v. Rapport, 198 F.3d 457, 461 (4th Cir. 1999) (internal citations om itted). A defendant m ay rem ove a case from state to federal court if the federal court has original jurisdiction over the m atter, but if a case is rem ovable based solely on diversity jurisdiction, the case m ay not be rem oved if any of the defendants is a citizen of the state where the action was brought. 28 U.S.C. §§ 1441(a), (b). The party seeking rem oval has the burden of establishing federal jurisdiction. Mulcahey v. Colum bia Organic Chem s. Co., 29 F.3d 148, 151 (4th Cir. 1994). Because rem oval of a case from state court im plicates “significant federalism concerns,” rem oval jurisdiction m ust be strictly construed, and “if federal jurisdiction is doubtful, a rem and is necessary.” Mulcahey , 29 F.3d. at 151. If at any tim e before final judgm ent it appears the district court lacks jurisdiction, the court m ust rem and the case. 28 U.S.C. § 1447(c). “[R]em oval jurisdiction raises significant federalism concerns.” Mulcahey , 29 F.3d at 151. “Subject-m atter jurisdiction cannot be conferred by the parties, nor can a defect in subject-m atter jurisdiction be waived by the parties. Accordingly, questions of subject-m atter jurisdiction m ay be raised at any point during the proceedings and m ay (or, m ore precisely, m ust) be raised sua sponte by the court.” Brickw ood Contractors, Inc. v. Datanet Eng’g, Inc., 369 F.3d 385, 390 (4th Cir. 20 0 4) (en banc) (citation om itted). To rem ove to federal court, the defendant m ust file “a notice of rem oval . . . containing a short and plain statem ent of the grounds for rem oval, together with a copy of all process, pleadings, and orders served upon such defendant . . . in such action.” 28 U.S.C. § 1446(a). Additionally, “when diversity of citizenship is a basis of rem oval jurisdiction, it m ust exist both 3 at the tim e the original action is filed in the state court and at the tim e the rem oval is sought.” Hubbard v. Tripp, 611 F. Supp. 895, 896 (E.D. Va. 1985) (quoting 14A Charles Alan Wright et al., Federal Practice and Procedure, Jurisdiction 2d § 3723 (1985)) (internal quotation m arks om itted). Further, “a corporation shall be deem ed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.” 28 U.S.C. §1332(c)(1). Accordingly, properly alleging the citizenship of a corporation for purposes of rem oval requires alleging four tem porally and geographically distinct facts: the corporation’s (1) state of incorporation and (2) principal place of business at the tim e the com plaint is filed and the corporation’s (3) state of incorporation and (4) principal place of business at the tim e the notice of rem oval is filed. Even though “there is no statutory definition of an individual's state of citizenship, courts have held that it is the state of the individual's dom icile, i.e. the state he considers his perm anent hom e.” Dy er v. Robinson, 853 F. Supp. 169, 172 (D. Md. 1994) (citing Gilbert v. David, 235 U.S. 561, 569 (1914); Galva Foundry Co. v. Heiden , 924 F.2d 729, 730 (7th Cir. 1991)). In the State of Virginia, “[d]om icile is residence or physical presence accom pan ied by an intention to rem ain for an unlim ited tim e.” Sm ith v. W ellberg (In re W ellberg), 12 B.R. 48 (Bankr. E.D. Va. 1981) (citing Sm ith v. Sm ith, 122 Va. 341 (1918); Lay ton v. Pribble, 20 0 Va. 40 5, 10 5 S.E.2d 864 (1958)). Dom icile is distinguished from residence, in that an individual m ay have m ore than one residence but only one dom icile. Com m ’r of Internal Revenue v. Nubar, 185 F.2d 584, 587 (4th Cir. 1950 ) (citing In re N ew com b's Estate, 192 N.Y. 238, 84 N.E. 950 , 954 (190 8)). Thus, the concept of “citizenship” is the sam e, except in nam e, as “dom icile.” Further, the Fourth Circuit has recognized that a rem oval petition containing an allegation regarding citizenship m ade upon inform ation and belief is “sufficient as a m atter of law to allege subject m atter jurisdiction.” SunTrust Bank v. Vill. at Fair Oaks Ow ner, LLC, 766 F. Supp. 2d 686, 693 (E.D. Va. 20 11) (quoting Ellenburg v. Spartan Motors Chassis, Inc., 519 F. 3d 192 (4th Cir. 20 0 8)). 4 Accordingly, properly alleging the citizenship of an individual for purposes of rem oval requires specifying his dom icile (1) at the tim e of filing the com plaint and (2) at the tim e rem oval is sought. III. AN ALYSIS Coles argues that GEICO and the individual defendants insufficiently alleged the citizenship of all of the parties in the Notice of Rem oval because the rem oval notice om its allegations establishing the double designation requirem ent. Therefore, says Coles, that defect as to all parties involved is fatal, and necessitates rem and of the case to the state court. Furtherm ore, Coles raises an issue concerning whether GEICO and the individual defendants m ay am end its rem oval notice, as the 30 -day rem oval period has expired. See 28 U.S.C. §1446(b). Therefore, Coles’ contention raises two questions: first, whether GEICOs’ and the individual defendants’ Notice of Rem oval sufficiently alleged the basis or ground for rem oval, and second, assum ing the Notice of Rem oval is deficient, whether GEICO and the individual defendants are perm itted to am end their Notice of Rem oval despite the passage of the 30 -day rem oval period. Assum ing GEICO and the individual defendan ts’ Notice of Rem oval is inadequate, the question presented would then be whether they im perfectly proffered allegations supporting the claim of diversity jurisdiction as the basis or ground for rem oval, or whether they, by am ending the notice, would be attem pting to allege a new jurisdictional basis or ground for rem oval that was absent from the original rem oval notice. As this Court has previously said, [t]he line between allegations of a jurisdictional ground or basis for rem oval which are ‘m issing’ from a notice of rem oval as opposed to allegations that are m erely ‘im perfectly stated’ is not always entirely distinct. Federal courts, including courts in this district, have interpreted this principle as allowing defendants to am end their rem oval notices only when they are elaborating on an existing basis or ground for subject m atter jurisdiction, but not where a defendant seeks to introduce a new ground or basis for subject m atter jurisdiction 5 Arlington, 20 14 WL 5529668, at *7 (citing W ood, 764 F.3d at 323 (“Courts have no discretion to perm it am endm ents furnishing new allegations of a jurisdictional basis. ”) (em phasis added); USX Corp. v. Adriatic Ins. Co., 345 F.2d 190 , 20 5 (3d Cir. 20 0 3) (am endm ent was proper because defendant “did not rely on a basis of jurisdiction different from that originally alleged” and did not seek to create an “entirely new basis for jurisdiction”); W hitm ore v. Victus, Ltd., 212 F.3d 885, 890 (5th Cir. 20 0 0 ) (“[A]llowing a party to am end its pleadings to inform the court of an existing basis for subject m atter jurisdiction” was proper)). In Tincher v. Ins. Co. of State of Pa., 268 F.Supp.2d 666 (E.D. Va. 20 0 3), the court found that the defendant could not allege fraudulent joinder as a basis for subject m atter jurisdiction both because this allegation was not present in the defendant's notice of rem oval and was “substantial and m aterial.” Id. at 667– 68. Likewise, in Iceland Seafood, the court did not perm it the defendant to am end its notice of rem oval to allege jurisdiction based on 12 U.S.C. § 30 12(6), instead of diversity jurisdiction, which was the only basis for subject m atter jurisdiction in the defendant's notice of rem oval. Iceland Seafood, 285 F.Supp.2d at 727. In contrast, in M uhlenbeck v. KI, LLC, 30 4 F.Supp.2d 797 (E.D.Va.20 0 4), the court properly allowed the defendant to am end its notice of rem oval when the defendant alleged diversity jurisdiction but did not allege specifically the citizenship of plaintiff, an LLC, because the defendant did not “om it [ ] com pletely” a ground for rem oval, and thus, was not seeking a new basis for subject m atter jurisdiction. Id. at 8 0 0 – 0 1. In sum , am endm ents to a rem oval notice are perm issible past the 30 – day lim it where they elaborate on an existing basis or ground for subject m atter jurisdiction already stated; by contrast, am endm ents to a rem oval notice are im perm issible where they seek to inject a new basis or ground for subject m atter jurisdiction. 6 A. W hether the Original N otice of Rem oval Passes Muster Under § 1446(a), and, If N ot, W hether this Court Can Grant An Am endm ent. The first question this Court m ust address is whether GEICO sufficiently alleges citizenship for purposes of diversity as to (1) Coles; (2) the GEICO; and (3) the individual defendants. i. Coles 1. Notice of Rem oval Plus Com plaint Looking to the Notice of Rem oval as well as to the Com plaint, there can be no doubt that the Notice of Rem oval is adequate. As to Coles, the state court Com plaint alleges: Plaintiff, Craig L. Coles, (“Plaintiff”), was at all m aterial tim es, a resident of the County of Henrico, Virginia. Defendant, GEICO, is a corporation doing business in Virginia and organized and existing under and by virtue of the law of Maryland, m aintaining its principal place of business in Chevy Chase, Maryland Com pl.¶¶ 3-4. First, the allegation concerning Coles does not specifically allege citizenship but instead m erely residency. However, the Notice of Rem oval provides, Upon inform ation and belief, Plaintiff is a resident and dom icile of the Com m onwealth of Virginia. Governm ent Em ployees Insurance Com pany, GEICO General Insurance Com pany, GEICO Indem nity Com pany, and GEICO Casualty Com pany are Maryland corporations with their principal places of business in Chevy Chase, Maryland, and, thus, are citizens of Maryland for purposes of determ ining diversity. GEICO Advantage Insurance Com pany and GEICO Choice Insurance Com pany are Nebraska corporations with their principal places of business in Chevy Chase, Maryland, and, thus, are citizens of Nebraska and Maryland for purposes of determ ining diversity. Defendants Rappaport and Parkes are citizens of the Com m onwealth of Virginia. Defendant J ones is a citizen of the State of Texas. The presence of Rappaport and Parkes in this action does not destroy diversity because they are nom inal parties and/ or were fraudulently joined parties. ECF No. 1 (“Notice of Rem oval”) ¶ 5-9. The cases cited by Coles, him self, underm ine his position, and establish that the Court should look to the state Com plaint for any “m issing” jurisdictional allegations. One of the principal cases on which Coles relies for his argum ent that 7 a defendant is required to m eet the double designation requirem ent is Hubbard. Coles has overlooked the fact that, in deciding to rem and the case for failure to satisfy the double designation requirem ent, the court in Hubbard noted that “[n]either the com plaint filed in State court nor the petition filed in this Court specifies the citizenship of either defendant or plaintiff as of the tim e of the filing of the Com plaint.” Hubbard, 611 F.Supp. at 896 (em phasis added). The court therefore acknowledged that it reviewed both the face of the notice of rem oval filed in that case and the state com plaint before finding that the rem oval was defective. Unlike the facts of Hubbard, where the defendant failed to aver the citizenship of either party as of the tim e the suit was filed in State court, the facts in the instant case are akin to those presented in Herod v. Fisher & Son Co., Inc., 3:12CV712, 20 12 WL 572910 6 (E.D. Va. Nov. 15, 20 12). In Herod, the Court held that, taken in com bination, the state Com plaint and the Notice of Rem oval satisfied the double designation requirem ent. Id. at 4. In that case, the defendant pleaded the followin g grounds for rem oval: 4. Fisher & Son is a corporation incorporated in Pennsylvania, having its principal place of business in Pennsylvania. For purposes of diversity jurisdiction, Fisher & Son is therefore considered a citizen of Pennsylvania. Fisher & Son is not a citizen of Virginia. 5. According to his allegations, Plaintiff is a citizen of Virginia. (Com pl.¶ 1.) Thus, com plete diversity of citizenship exists for purposes of 28 U.S.C. § 1332. Herod v. Fisher & Son Co., No. 3:12CV712, 20 12 WL 572910 6, at *1 (E.D. Va. Nov. 15, 20 12). The original Com plaint in Herod contained the following allegations concerning the citizenship of the parties: 1. Herod is a Virginia resident residing in the County of Henrico, Virginia. 2. Upon inform ation and belief, Fisher is a corporation operating un der the laws of the Com m onwealth of Pennsylvania. At all tim es relevant to this suit, Fisher is and was registered to transact business within the Com m onwealth of Virginia. Id. Coles is correct that there is abundant case law holding that citizenship cannot be inferred from allegations of residence alone. See, e.g., Axel Johnson, Inc. v. Carroll Carolina Oil Co. Inc., 145 F.3d 660 (4th Cir. 1998) (“[S]tate citizenship for purposes of diversity jurisdiction 8 depends not on residence, but on national citizenship and dom icile, and the existence of such citizenship cannot be inferred from allegations of m ere residence, standing alone.” ); Com m . of Internal Revenue v. Nubar, 185 F.2d 584, 587 (4th Cir. 1950 ) (“When these words, ‘dom icile’ and ‘residence’ are technically used by persons skilled in legal sem antics, their m eanings are quite different.”). Yet, here, there are not sim ply allegations of residency alone. These facts are sim ilar to those presented in Herod. Like the court in Herod reasoned, the facts here are different from those presented in Hubbard. Accordingly, the Notice of Rem oval is adequate as to Coles, there has been no im perfect proffer, and thus requires no am endm ent. Arguendo, even if the Notice of Rem oval is inadequate, there is no doubt that GEICO and the individual defendants m ay am end its Notice of Rem oval as to Coles because they do not seek to add a new basis or ground for subject m atter jurisdiction, but sim ply seek to elucidate, with further facts, an already stated rem oval basis or ground. See e.g., Nutter v. New Rents, Inc., 945 F.2d 398, at *2 (4th Cir. 1991) (noting that ultim ately “jurisdiction ought to depend m ore upon the truth of defendant’s allegation of diversity than upon the . . . choice of verbiage.”); Muhlenbeck, 30 4 F. Suppl. 2d at 797 (perm itting the addition of allegations of LLC m em ber’s citizenship in the place of a corporate citizenship designation, but still indicating that am endm ent adding allegations that were “m issing entirely” or that “m aterial[ly] and substantia[ly]” changed the notice of rem oval would be denied.) ii. GEICO 1. Notice of Rem oval Plus Com plaint Coles argues that GEICO insufficiently alleged its citizenship in the Notice of Rem oval because it om its its corporate citizenship at the tim e the Com plaint was filed. The Notice of Rem oval states the following with regard to GEICO’s citizenship: 7. Governm ent Em ployees Insurance Com pany, GEICO General Insurance Com pany, GEICO Indem nity Com pany, and GEICO Casualty Com pany are Maryland corporations with their principal places of business in Chevy Chase, Maryland, and, thus, are citizens of Maryland for purposes of determ ining diversity. 9 8. GEICO Advantage Insurance Com pany and GEICO Choice Insurance Com pany are Nebraska corporations with their principal places of business in Chevy Chase, Maryland, and, thus, are citizens of Nebraska and Maryland for purposes of determ ining diversity. ECF No. 1 (“Notice of Rem oval”) ¶¶ 7-8.1 Here, Coles’ argum ent is persuasive that the Notice of Rem oval, alone, is insufficient to allege corporate citizenship at the tim e the Com plaint was filed. However, as to those entities in paragraph 7 of the Notice of Rem oval, the Com plaint supplies the jurisdictional allegations m issing from the face of the Notice of Rem oval. See Com pl. ¶ 4. Therefore, as to the GEICO entities with their state of incorporation and principal place of business as Chevy Chase, Maryland, the double designation requirem ent has been satisfied. Accordingly, no am endm ent is needed and the Notice of Rem oval is adequate in this respect. On the other hand, as to those entities in paragraph 8 of the rem oval notice, the Com plaint does not supply the jurisdictional allegation m issing from the face of the Notice of Rem oval—that is, at the very least, see Com pl. ¶ 4, the state of incorporation (i.e., Nebraska) of the entities in paragraph 8 at the tim e the Com plaint was filed. The insufficiency of these allegations, though, is best seen as an “im perfect statem ent” of presently undisputed jurisdictional facts rather than an om ission. Nevertheless, the allegations are unclear so an am endm ent is needed. The Court is persuaded to find am endm ent perm issible as to the GEICO entities listed in paragraph 8. Indeed, GEICO and the individual defendants should be allowed to am end the Notice of Rem oval, as the rem oval notice states accurately, if perhaps im perfectly, that diversity jurisdiction is the basis or ground for rem oval. GEICO and the individual defendants m erely seek to elucidate the reasons for the existence of diversity jurisdiction. Im portantly, they would not be asserting a new basis or ground for subject m atter jurisdiction in 1 GEICO and the individual defendants also plead that the amount in controversy exceeds $75,000.00, and Coles concedes that this allegation is sufficient. See Memorandum in in Support of Plaintiff’s Motion to Remand (“Coles’ Mem. Supp. Remand”) at 3. 10 am ending the Notice of Rem oval. Therefore, GEICO and the individual defendants m ay am end the Notice of Rem oval. iii. The Individual Defendants 1. Notice of Rem oval Plus Com plaint Coles argues that GEICO and the individual defendants insufficiently alleged the individual defendants’ citizenship in the Notice of Rem oval as the rem oval notice fails to satisfy the double designation requirem ent due to om ission of their citizenship at the tim e the state court Com plaint was filed. Coles further underscores that the Com plaint is silent on this as well. As to Rappaport and Parkes, they are alleged to be citizens of Virginia and therefore nondiverse as to the Plaintiff. The allegation of fraudulent joinder m ust be proven to save diversity as a basis for rem and. However, this substantive issue is not really relevant to the Motion for Leave to Am end. As to J ones, the Notice of Rem oval, even considered in com bination with the Com plaint, is inadequate because there are m issing jurisdictional facts concerning the individual his citizenship at the tim e the original Com plain t was filed. However, am endm ent is perm issible because GEICO’s and the individual defendants’ argum ent to am end its Notice of Rem oval in this case sim ply seeks to explain the reasons for the existence of diversity jurisdiction already stated in the rem oval notice. As such, this case is sim ilar to Muhlenbeck, where the defendant was perm itted to am end its notice of rem oval in alleging the citizenship of a com pany. The am endm ent in Muhlenbeck, like the am endm ent allowed here, did not inject a new basis or ground for subject m atter jurisdiction. M uhlenbeck, 30 4 F.Supp.2d at 80 1. Hence, this Court allows am endm ent to “elucidate, with further facts, an already stated rem oval basis or ground.” See Arlington, 20 14 WL 5529668, at *6. IV. Co n clu s io n The Court has reviewed and considered all of the pleadings of the parties regarding the Motion for Leave to Am end their Notice of Rem oval and the Court has determ ined that oral argum ent will not aid the decisional process. E.D. Va. Loc. Civ. 7(J ). 11 For all of the above reasons, the Motion for Leave to Am end Notice of Rem oval is hereby GRANTED, ECF No. 16, and the Clerk is DIRECTED to file the Am ended Notice of Rem oval, which is attached to the instant Motion, ECF No. 17-1. Let the Clerk send a copy of this Order to all counsel of record. ____________________/s/_________________ James R. Spencer Senior U. S. District Judge It is SO ORDERED. ENTERED this _ 2nd day of Decem ber 20 14. 12
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