M. HANNAH LAUCK, District Judge.
This matter comes before the Court on Plaintiff Kenneth L. Rockwell's Motion to Remand, (ECF No. 5.), and Defendant State Farm Mutual Automobile Insurance Company's ("State Farm") Motion to Dismiss Count II. (ECF No. 3.) Rockwell seeks remand of this case to the Circuit Court of Chesterfield County ("Chesterfield Circuit Court") for lack of subject matter jurisdiction. State Farm opposes remand. (ECF No. 6.) Rockwell does not oppose the Motion to Dismiss Count II. The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. The matter is ripe for disposition. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332.
This breach of contract action arises from a May 13, 2015 automobile accident. On that date, Rockwell was involved in a motor vehicle collision and sustained injuries resulting in medical expenses totaling $267,539.66. (Compl. ¶ 2-4, ECF No. 1-1.) At the time of the accident, Rockwell "was the listed operator and owner of an automobile policy provided by State Farm, policy number 081-9245-B11-48J." (Id. ¶ 1.)
Rockwell alleges that the policy provided for "Medical Expense Benefits payments up to $50,000.00" to be paid out for injuries resulting from an accident. (Id. ¶ 7.) According to Rockwell, State Farm ignored repeated letters requesting the payout and has paid Rockwell only $7,027.39. (Id. ¶ 8-11.) Rockwell seeks the remaining $42,972.61. (Id. ¶ 13.)
In his Complaint, Rockwell also brings a claim for "Arbitrary Refusal of Motor Vehicle Insurance Claim" under Virginia Code § 8.01-66.1
On March 5, 2019, Rockwell filed the Complaint in the Chesterfield Circuit Court. The Complaint identifies two causes of action: (1) breach of contract; and, (2) arbitrary refusal of motor vehicle insurance. (Id. 1-3.) On March 14, 2019, Rockwell served State Farm. State Farm filed various responsive pleadings at the state level.
On April 5, 2019, Rockwell filed this Motion to Remand, claiming that the "direct action" provision of 28 U.S.C. § 1332(c)(1)(A) deems State Farm a citizen of Virginia.
Following removal, State Farm filed a Motion to Dismiss Count II of the Complaint. (ECF No. 3.) Rockwell filed a document purporting to represent both a Response to State Farm's Motion to Dismiss Count II and a renewed Motion to Remand.
Under 28 U.S.C. § 1441(a),
"The party seeking removal bears the initial burden of establishing federal jurisdiction." Abraham v. Cracker Barrel Old Country Store, Inc., No. 3:11cv182, 2011 WL 1790168, at *1 (E.D. Va. May 9, 2011) (citing Mulcahey v. Columbia Organic Chem. Co., 29 F.3d 148, 151 (4th Cir. 1994)). No presumption favoring the existence of federal subject matter jurisdiction exists because federal courts have limited, not general, jurisdiction. Id. (citing Pinkley Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999)). In deference to federalism concerns, courts must construe removal jurisdiction strictly. Id. (citing Mulcahey, 29 F.3d at 151). "If federal jurisdiction is doubtful, a remand is necessary." Id. (quoting Mulcahey, 29 F.3d at 151).
A federal district court has diversity jurisdiction over "all civil actions where the matter in controversy exceeds ... $75,000 ... and is between ... [c]itizens of different States." 28 U.S.C. § 1332(a)(1). When diversity of citizenship provides the grounds for removal, then "the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy...." 28 U.S.C. § 1446(c)(2) (emphasis added).
The parties' jurisdictional disagreement pertains to whether diversity of citizenship exists and whether conceding dismissal of Count II of the Complaint (thereby reducing the amount in controversy below $75,000 post-removal) destroys this Court's jurisdiction. The Court finds that parties are diverse and the amount in controversy exceeded $75,000 at the time of removal. Because State Farm properly removed the case to this Court, the Court will deny the Motion to Remand.
The parties do not contest Rockwell's Virginia citizenship. In general, the citizenship of a corporation, such as State Farm, includes its state(s) of incorporation and its principal place of business. 28 U.S.C. § 1332(c). State Farm has its principal place of business in, and is incorporated in, Illinois. (Not. Removal ¶ 8, ECF No. 1.)
However, Rockwell asserts that State Farm is a Virginia resident for purposes of diversity jurisdiction because his claim is a "direct action" pursuant to 28 U.S.C. § 1332(c)(1):
28 U.S.C. § 1332(c)(1)(A) (emphasis added). (ECF No. 5.) Rockwell contends that State Farm, as his insurer, should be deemed a citizen of every state where Rockwell is deemed a citizen, destroying diversity. (Mot. Remand ¶¶ 5-6, ECF No. 5.)
But in arguing lack of diversity, Rockwell misinterprets the language of § 1332(c)(1)(A) and binding circuit precedent, which unambiguously mandate that the "direct action" provision does not apply to the present case.
The United States Court of Appeals for the Fourth Circuit's decisions in Gateway and Elliott control the Court's decision regarding the diversity of the parties. In Elliott, the plaintiff brought suit against her insurance company for what she called unfair claims settlement practice in violation of North Carolina state law. Elliot, 883 F.3d at 388. When her insurance company removed the case to federal court citing diversity jurisdiction, the plaintiff moved to remand challenging both the timeliness of removal and the diversity of the parties. Id. Like Rockwell, the plaintiff in Elliott asked the court to treat the suit as a "direct action" and remand the case for lack of diversity. Id. Looking to its sister circuits for guidance, the Fourth Circuit rejected the plaintiff's contention and held that the "direct action" provision does not apply to a suit brought by the insured against her or his own insurer for the insurer's own alleged misconduct. Id. at 395.
Just over a year after deciding Elliott, the Fourth Circuit reaffirmed Elliott's holding in Gateway, declaring again that the "direct action" provision applies only to those cases in which the plaintiff has sued the insurance provider of the tortfeasor, in place of the tortfeasor directly. Gateway, 917 F.3d at 273 ("[T]he `key feature' of a direct action is `the plaintiff's ability to skip suing the tortfeasor and sue directly [her or] his insurance carrier.'") (quoting Kong v. Allied Prof'l Ins., 750 F.3d 1295, 1300-01 (11th Cir. 2014)).
The present suit is not a direct action under § 1332(c), meaning State Farm does not adopt Rockwell's citizenship. State Farm, incorporated in Illinois and having its principal place of business there, is a citizen of Illinois. See 28 U.S.C. § 1332(c). This lawsuit pits a Virginia plaintiff against an Illinois defendant, satisfying 28 U.S.C. § 1332(a)'s diversity requirement.
At the time of removal, Rockwell's Complaint sought $142,972.61 in damages. In his Response to the Motion to Dismiss and Renewed Motion to Remand, Rockwell agrees to voluntarily dismiss Count II, thereby reducing the amount in controversy to $42,972.61.
Contrary to Rockwell's position, the originally-claimed figure of $142,972.61 controls the analysis, thus satisfying the amount in controversy. The Fourth Circuit has addressed this issue squarely:
Porsche Cars N. Am., Inc. v. Porsche.net, 302 F.3d 248, 255-56 (4th Cir. 2002) (quoting Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428 (1991)). "[T]he case is not to be remanded if it was properly removable upon the record as it stood at the time that the petition for removal was filed." Brown v. E. States Corp., 181 F.2d 26, 28-29 (4th Cir. 1950) (citing 28 U.S.C. § 1447(c)); see also Hatcher v. Lowe's Home Ctrs., Inc., 718 F.Supp.2d 684, 689 (E.D. Va. 2010) (noting that allowing parties to defeat jurisdiction through post-removal amendment could "encourage future litigants to wrongly influence proceedings and needlessly open the door to forum or judge shopping").
It follows that "a post-removal event—such as amending a complaint in order to reduce the amount in controversy below the jurisdictional limit—does not deprive a federal court of diversity jurisdiction." Hatcher, 718 F. Supp. 2d at 687;
In sum, the Court evaluates removal based on the claims of Rockwell's Complaint at the time State Farm filed its petition for removal. At that time, Rockwell's Complaint unambiguously alleged two causes of action and sought $142,972.61 in damages. (Compl. 3-4, ECF No. 1-1.) Because the amount in controversy exceeded $75,000 and Rockwell's subsequent amendment does not divest this Court of jurisdiction, State Farm properly removed the case.
State Farm timely removed this matter pursuant to 28 U.S.C. § 1332(a), and did so properly asserting diversity jurisdiction. 28 U.S.C. § 1332(a)(1). The parties are diverse: Rockwell is a resident of Virginia, State Farm is a resident of Illinois, and 28 U.S.C. § 1332(c)(1)'s "direct action" provision does not apply here. At the time of removal—the legally relevant time—the amount in controversy exceeded $75,000. This Court has jurisdiction to preside over the matter.
For the foregoing reasons, the Court will deny the Motion to Remand, (ECF No. 5), and grant the Motion to Dismiss Count II, (ECF No. 3). An appropriate order shall issue.
VA. CODE ANN. § 8.01-66.1(D)(1).
28 U.S.C. § 1332(c)(1)(A).
28 U.S.C. § 1441(a).
The Gateway court also observed that no "direct action" could take place in the Commonwealth of Virginia, because Virginia requires that a party obtain a judgment against a tortfeasor before bringing suit against her or his insurance company. Id. Thus, in Virginia, a plaintiff could never meet § 1332(c)'s requirement that a plaintiff file suit against the tortfeasor's insurance company in lieu of the tortfeasor. See id. The Court need not address that alternative reasoning here.
Congress then amended § 1332(c), adding the current "direct action" provision to ensure that when a tortfeasor's insurance company stands in the same shoes as the tortfeasor had she or he been sued, the insurer adopts the citizenship of the insured tortfeasor. Id. at 272-73. This new provision ensured that the merits of state tort claims would generally be resolved by state courts. Id. at 273.
Hatcher involved a state law negligence claim, originally seeking $3,000,000 in damages. Id. After the defendant removed the action based on diversity jurisdiction, the plaintiff amended the complaint to reduce the amount sought to $74,500, and sought remand. Id. Although the defendant agreed to the remand, the district court denied the remand motion, relying on Porsche and Brown. Id. at 687 ("[A]s a general rule, the amount in controversy in an action that is removed because of diversity of citizenship should be measured `at both the time of commencement [of the action in state court] and the time of removal.'" (quoting Sayers v. Sears Co., 732 F.Supp. 654, 656 (W.D. Va. 1990)).
