KAREN L. HAYES, Magistrate Judge.
Before the undersigned Magistrate Judge, on reference from the District Court, are two motions: 1) a motion to remand filed by plaintiffs, the heirs of the estate of Jesse Clarence Brown, Sr.; and 2) a motion to dismiss for failure to state a claim upon which relief can be granted [doc. # 10] filed by defendant, Jim Donelon, in his capacity as Commissioner of Insurance. The motions are opposed. For reasons assigned below, it is recommended that both motions be denied, and that plaintiffs' claims against Jim Donelon, in his capacity as Commissioner of Insurance, be dismissed, without prejudice, for lack of subject matter jurisdiction.
On October 6, 2017, the heirs of the Estate of Jesse Clarence Brown, Sr.: Jesse Clarence Brown, Jr.; Rene Felippe Brown; Delicia Carrie Marshall; and Danna Derrell Brown, filed the instant petition for damages for breach of contract, fraud, and for unfair and deceptive insurance practices in the 6th Judicial District Court for the Parish of Tensas, State of Louisiana, against defendants, New York Life Insurance Company ("NYLife") and Jim Donelon, in his capacity as Commissioner of Insurance. (Petition). Plaintiffs allege that their now-deceased father Jesse Clarence Brown, Sr., had life insurance polices with NYLife, but that NYLife failed to pay sums due under the policies within 60 days after March 15, 2017, — the date that plaintiffs notified NYLife of their father's October 6, 2016, passing. Id., ¶¶ I, V-VIII. Plaintiffs further allege that Jim Donelon, in his capacity as Commissioner of Insurance, was aware of certain actions by NYLife that formed the basis of a putative class action on behalf of policy holders who purchased life insurance polices from NYLife between 1982 through 1994. See Banks v. New York Life Ins. Co., 737 So.2d 1275, 1278 (La. 1999); Petition, ¶¶ XIII-XVII. Plaintiffs contend that they each are entitled to damages in an amount in excess of $328,954, plus penalties, and attorney's fees. (Petition, ¶ XII).
On November 13, 2017, NYLife removed the suit to federal court on the sole basis of diversity jurisdiction, 28 U.S.C. § 1332. (Notice of Removal). NYLife is a mutual insurance company incorporated under the laws of New York, with its principal place of business in said state. See 1st Amend. Notice of Removal, ¶ 6.
Plaintiffs disagree with NYLife's assessment of their claims against the Commissioner, and on December 5, 2017, filed the instant motion to remand for lack of subject matter jurisdiction because of the presence of the non-diverse/diversity-destroying defendant.
NYLife filed its opposition to the motion to remand on December 21, 2017. [doc. # 7]. The next day, the Commissioner of Insurance filed his opposition to the motion to remand, together with an incorporated motion to dismiss plaintiffs' claims against him for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). On December 28, 2017, plaintiffs filed a reply brief in support of their motion to remand. [doc. # 17]. Thus, the matter is ripe.
In 2016, the Fifth Circuit recognized that as long as a non-diverse party "remains joined, the only issue the court may consider is that of jurisdiction itself." Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 209 (5th Cir.2016) ("IEVM"). Thus, were this court to determine that plaintiffs enjoy a viable cause of action against the non-diverse/diversitydestroying defendant, then the court would lack subject matter jurisdiction over the entire case, and remain unable to reach a merits-based Rule 12(b)(6) motion. Id. Alternatively, were the court to find that plaintiffs improperly joined the Commissioner of Insurance, then the court would be obliged to dismiss him, without prejudice, because it would lack jurisdiction over that defendant for purposes of an adjudication on the merits. See IEVM, supra.
A defendant may remove an action from state court to federal court, provided the action is one in which the federal court may exercise original jurisdiction. Manguno v. Prudential Property and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (citing 28 U.S.C. § 1441(a)). The removing defendant bears the burden of establishing federal subject matter jurisdiction and ensuring compliance with the procedural requirements of removal. Id. Because federal courts are courts of limited jurisdiction, a suit is presumed to lie outside this limited jurisdiction unless and until the party invoking federal jurisdiction establishes to the contrary. Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001) (citation omitted). The removal statutes are strictly construed in favor of remand. Manguno, supra.
As recited earlier, NYLife invoked this court's subject matter jurisdiction via diversity, which requires an amount in controversy greater than $75,000, and complete diversity of citizenship between plaintiffs and defendants, 28 U.S.C. § 1332(a). It is manifest that plaintiffs' claims each exceed the jurisdictional minimum. See Petition, ¶ XII. Thus, the sole jurisdictional issue is whether the parties are completely diverse.
The diversity jurisdiction statute presupposes a civil action between "citizens of different states," where all plaintiffs are diverse from all defendants. 28 U.S.C. § 1332; Farrell Const. Co. v. Jefferson Parish, La., 896 F.2d 136, 139-140 (5
To disregard the Commissioner of Insurance's citizenship (or lack of citizenship), NYLife must establish that he is but a nominal defendant/improperly joined. The improper joinder doctrine affords a "`narrow exception' to the rule of complete diversity, and the burden of persuasion on a party claiming improper joinder is a `heavy one.'" Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 (5th Cir.2007) (citing McDonal v. Abbott Laboratories, 408 F.3d 177, 183 (5
In the case sub judice, there are no allegations of actual fraud. Accordingly, the court must determine whether removing defendant has demonstrated that plaintiffs have "no possibility of recovery" against the diversity-destroying defendant, i.e. that there is "no reasonable basis" for the district court to predict that plaintiffs might recover against him. Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568 (5th Cir. 2004) (en banc). The court may resolve this issue in one of two ways: 1) the court can look at the allegations of the complaint to determine whether the complaint states a claim against the non-diverse defendant under state law (Fed.R.Civ.P. 12(b)(6) analysis); or 2) in the few cases where the plaintiff has stated a claim, but has misstated or omitted discrete facts that would determine the propriety of joinder, the court may, in its discretion, pierce the pleadings and conduct a summary inquiry. Smallwood, supra. However, the "summary inquiry is appropriate only to identify the presence of discrete and undisputed facts that would preclude plaintiff's recovery against the in-state defendant." Id.
"[A] court may choose to use either one of these two analyses, but it must use one and only one of them, not neither or both." IEVM, 818 F.3d at 207-208. Here, defendants contend that plaintiffs' complaint fails to state a claim against the Commissioner of Insurance. Accordingly, the court will employ a Rule 12(b)(6)—type analysis, which requires application of the federal pleading standard. Id.
The Federal Rules of Civil Procedure sanction dismissal where the plaintiff fails "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). To withstand challenge, "a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955 (2007)). A claim is facially plausible when it contains sufficient factual content for the court "to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Plausibility does not equate to possibility or probability; it lies somewhere in between. See Iqbal, supra. Plausibility simply calls for enough factual allegations to raise a reasonable expectation that discovery will reveal evidence to support the elements of the claim. Twombly, 550 U.S. at 556, 127 S.Ct. at 1965. Assessing whether a complaint states a plausible claim for relief is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, supra (citation omitted). A well-pleaded complaint may proceed even if it strikes the court that actual proof of the asserted facts is improbable, and that recovery is unlikely. Twombly,
Although the court must accept as true all factual allegations set forth in the complaint, the same presumption does not extend to legal conclusions. Iqbal, supra. A pleading comprised of "labels and conclusions" or "a formulaic recitation of the elements of a cause of action" does not satisfy Rule 8. Id. Moreover, courts are compelled to dismiss claims grounded upon invalid legal theories even though they might otherwise be well-pleaded. Neitzke v. Williams, 490 U.S. 319, 109 S.Ct. 1827 (1989).
On the other hand, "[t]he notice pleading requirements of Federal Rule of Civil Procedure 8 and case law do not require an inordinate amount of detail or precision." Gilbert v. Outback Steakhouse of Florida Inc., 295 Fed. Appx. 710, 713 (5th Cir. 2008) (citations and internal quotation marks omitted). Further, "a complaint need not pin plaintiff's claim for relief to a precise legal theory. Rule 8(a)(2) of the Federal Rules of Civil Procedure generally requires only a plausible `short and plain' statement of the plaintiff's claim, not an exposition of [her] legal argument." Skinner v. Switzer, 562 U.S. 521, 131 S.Ct. 1289, 1296 (2011). Indeed, "[c]ourts must focus on the substance of the relief sought and the allegations pleaded, not on the label used." Gearlds v. Entergy Servs., Inc., 709 F.3d 448, 452 (5th Cir. 2013) (citations omitted). In the end, however, plaintiff must "allege facts sufficient to state all the elements of h[is] claim." Stone v. Louisiana Dep't of Revenue, 590 Fed. Appx. 332, 339 (5th Cir.2014) (citations omitted).
At the outset, the court emphasizes that jurisdiction is assessed on the basis of claims in the state court complaint as it existed at the time of removal. Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir.1995). As the Fifth Circuit explained,
Id.
Consequently, the court cannot credit any post-removal attempts by plaintiffs, via memoranda, to amend their complaint to assert additional facts or claims against the Commissioner of Insurance.
Having properly limited the scope of the jurisdictional inquiry to the face of plaintiffs' complaint, it is manifest that plaintiffs do not state a claim for relief against the Commissioner of Insurance. The court observes that ¶¶ XIII-XVII of the complaint, which include the allegations against the Commissioner of Insurance, are copied almost verbatim from the Louisiana Supreme Court's decision (and the dissent) in Banks v. New York Life Ins. Co., 737 So.2d 1275, 1283 (La. 1999). As detailed above, Banks focused upon a putative class action of NYLife policyholders who purchased insurance from 1982 through 1994. Banks, supra. Plaintiffs do not allege in their complaint that their father purchased his life insurance polices during the foregoing period. Thus, there are no facts alleged to plausibly suggest that NYLife's failure to timely approve payment of the subject policies was related to the activities that formed the basis for the Banks suit.
Moreover, the complaint does not allege how the Commissioner of Insurance breached any duty owed the plaintiffs. While plaintiffs mention in their prayer for relief that the Commissioner of Insurance is empowered to examine and investigate insurance companies for unfair acts or deceptive practices, see Louisiana Revised Statutes §§ 22:1964 and 1967, plaintiffs do not set forth facts to show how they were harmed by the Commissioner's alleged failure to act. As plaintiffs acknowledged in their petition, the statutory scheme authorizes the Commissioner to issue a cease and desist order, and then, if the offending party fails to comply, issue a fine, or suspend/revoke the party's license. La. R.S. §§ 1967-1970.
Here, plaintiffs alleged that the Commissioner was notified of NYLife's "failure" on, or about March 15, 2017. (Petition, ¶ XIII). Plaintiffs do not allege or even explain how a cease and desist order, fines, and/or suspension of NYLife's license — after their father already had passed away, thereby triggering coverage under the policies — would have obviated the harm that they presently assert, which, according to the petition, consists of NYLife's alleged failure to pay them sums due under the policies. See Petition. Indeed, they do not seek injunctive relief. Stated differently, plaintiffs do not set forth any facts to establish how any alleged failure of the Commissioner to exercise his authority to issue cease and desist orders was a cause-in-fact of NYLife's alleged "failure" to pay them the proceeds under their father's life insurance polices.
In sum, plaintiffs do not state a tort claim, or any other theory of recovery, against the Commissioner of Insurance.
Under these circumstances, the court lacks subject matter jurisdiction to entertain the action against the Commissioner of Insurance, thus compelling his dismissal, without prejudice. IEVM, supra.
Plaintiffs contend that NYLife waived its right to remove by filing an answer in state court prior to removal.
Insofar as plaintiffs argue that removal was untimely, the court observes that a defendant must file a notice of removal, inter alia, within 30 days after the defendant receives, through service or otherwise, a copy of the initial pleading setting forth the claim for relief, or the summons, whichever period is shorter. 28 U.S.C. § 1446(b)(1). Here, NYLife was served with the petition, through the Louisiana Secretary of State, no earlier than October 20, 2017. See Notice of Removal, Exh. 5. NYLife timely removed the case to federal court less than 30 days later on November 13, 2017.
Plaintiffs also contend that this suit involves probate matters, and therefore the probate exception precludes this court's exercise of federal jurisdiction. See e.g., Marshall v. Marshall, 547 U.S. 293, 308-09, 126 S.Ct. 1735, 1746 (2006) (discussing probate exception). As here, however, a suit that seeks to add assets to the decedent's estate does not interfere with the probate court's control over and administration of the estate, and does fall within the probate exception to federal jurisdiction. See Gustafson v. zumBrunnen, 546 F.3d 398, 400 (7th Cir.2008); Marshall, supra.
For the above-assigned reasons,
IT IS RECOMMENDED that the motion to remand [doc. # 7] filed by plaintiffs, the heirs of the estate of Jesse Clarence Brown, Sr., be DENIED
IT IS FURTHER RECOMMENDED that the motion to dismiss for failure to state a claim upon which relief can be granted [doc. # 10] filed by defendant, Jim Donelon, in his capacity as Commissioner of Insurance, be DENIED.
IT IS FURTHER RECOMMENDED that plaintiffs' claims against Jim Donelon, in his capacity as Commissioner of Insurance, be DISMISSED, without prejudice.
Under the provisions of 28 U.S.C. §636(b)(1)(C) and Fed. R. Civ. P. 72(b), the parties have
On February 27, 2018, NYLife amended its notice of removal to reassert that it was a mutual insurance company, but added that it was organized under the laws of the State of New York. (1st Amend. Notice of Removal). NYLife further explained that federal courts consistently treat it as "tantamount to a New York corporation." Id.
Courts do treat mutual insurance companies as corporations for purposes of the diversity statute — at least where the law of the state where the mutual insurance company is organized so provides. See Pastor v. State Farm Mut. Auto. Ins. Co, 487 F.3d 1042, 1048 (7th Cir.2007); Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, Ltd. Liab. Corp., 757 F.3d 481, 483 (5th Cir.2014) (citing Pastor with approval); Thorne v. State Farm Mut. Auto. Ins. Co., No. 14-827, 2015 WL 809530, at *3 (M.D. Fla. Feb. 25, 2015) (citing 16 COUCH ON INSURANCE, § 229:22).
New York law contemplates that mutual insurance companies are corporations. N.Y. Ins. Law § 1211 (McKinney); see also Fid. & Cas. Co. of New York v. Metro. Life Ins. Co., 42 Misc.2d 616, 617, 248 N.Y.S.2d 559, 561 (Sup. Ct.1963) (mutual insurance company was incorporated under the laws of this state); Klonick v. Equitable Life Assur. Soc. of U. S., 77 Misc.2d 246, 248, 353 N.Y.S.2d 372, 375 (Sup. Ct.1974) (policyholder in a mutual company is a member of the corporation).
Id.
