WILLIAM E. CASSADY, Magistrate Judge.
This cause is before the Magistrate Judge for issuance of a report and recommendation, pursuant to 28 U.S.C. § 636(b), on the notice of removal (Doc. 1), plaintiff's motion to remand and memorandum of law in support of the motion (Docs. 5 & 7), the defendants' response (Doc. 21), and plaintiff's reply brief (Doc. 24). Upon consideration of the foregoing pleadings, the Magistrate Judge recommends that the Court
Prior to Hurricane Ivan, Hermitage Insurance Company ("Hermitage") issued an insurance policy to St John's Deliverance Temple ("St. John's") providing for wind damage coverage. (See Doc. 1, Exhibit A, COMPLAINT at ¶¶ 6-7.) St. John's was damaged by wind during Hurricane Ivan and made a timely claim under the policy issued by Hermitage. (See id. at ¶¶ 5 & 7.) Plaintiff's claim was adjusted and a check was issued to plaintiff for its "purported wind damage[]" (id. at ¶ 7); St. John's, however, disagreed with the amount tendered by Hermitage and, in accordance with policy provisions, demanded an "`appraisal' of the damage." (Id. at ¶ 8.) Those policy provisions read, in relevant part, as follows:
It there is an appraisal, we will still retain our right to deny the claim.
(Doc. 7, Exhibit A, E.2.)
Hermitage identified as its appraiser Skip Macon ("Macon") but after numerous unsuccessful attempts by St. John's appraiser to communicate with Macon from November, 2010 through January 26, 2011, Hermitage agreed to appoint a new appraiser, David Coggin ("Coggin") of South Alabama Claims Service ("SACS"). (See Doc. 1, Exhibit A, COMPLAINT, at ¶ 9.) Coggin and St. John's appraiser eventually agreed upon an umpire, Dan Cushing, Esquire. (Id. at ¶ 10.)
On September 23, 2011, an appraisal award in the amount of $236,775.00 was made and concurred in by the umpire, Dan Cushing, and St. John's appraiser, Michael Bena. (See id., Attached Appraisal of Insurance Claim.) Subsequent to entry of the award, counsel for Hermitage informed plaintiff's counsel that Hermitage planned to contest the award "and not pay within the time limits required by the policy." (Doc. 1, Exhibit A, COMPLAINT, at ¶ 12.)
On October 5, 2011, St. John's filed this specific performance, negligence, wantonness, and civil conspiracy action defendants Frontier Adjusters ("Frontier"), Macon, SACS, Coggin, and Hermitage in the Circuit Court of Mobile County, Alabama. (Doc. 1, Exhibit A, COMPLAINT) Plaintiff asserts its specific performance claim only against the insurer, Hermitage, not against any of the other defendants. (See id. at 3.) Therefore, the complaint, as to Frontier, Macon, SACS, and Coggin, reads, in relevant part, as follows:
(Id. at 4-7.)
The defendants timely removed this action to this Court on November 4, 2011 in accordance with the first paragraph of 28 U.S.C. § 1446(b). (See Doc. 1.) In the removal petition, the removing defendants argue that all citizenship, save that of Hermitage, need be disregarded by this Court because "[p]laintiff cannot establish any of the four (4) alleged causes of action against Defendants[.]" (See Doc. 1, at ¶ 10.) In addition, the removing defendants argue that the requisite jurisdictional amount is readily deducible from the complaint "since St. John's seeks specific performance in an award of $236,775." (Id. at ¶ 12.)
Plaintiff filed its motion to remand and memorandum of law in support of the motion on November 8 & 9, 2011 (Docs. 5 & 7). Plaintiff argues that the defendants have not carried their heavy burden of establishing fraudulent joinder inasmuch as it certainly has a possibility of establishing its tort and conspiracy claims against the resident defendants. (See Doc. 7, at 3-7.)
(Id. at 3, 4, 4-5 & 5 (many internal citations omitted; emphasis in original).) Regarding the amount in controversy, plaintiff makes no specific argument but does contend that the defendant has waited too long to challenge the appraisal award (of $236,775) (see id. at 7-9), thereby implicitly acknowledging that the amount in controversy exceeds $75,000, exclusive of interest and costs.
In opposition to plaintiff's motion to remand, the removing defendants contend that plaintiff has not shown "that a cause of action against an appraiser in the insurance contract context exists in Alabama law." (Doc. 21, at 9; see also id. at 10-11 ("Plaintiff has failed to locate or cite any case law from Alabama that recognizes its alleged causes of action. Since no such case law is available, and since Alabama does not incorporate any statutory provisions on the subject, it is clear that Plaintiff fails to state a cognizable legal claim against the fraudulently joined Defendants and that Removal is appropriate.").)
(Id. at 11-12 & 14-16 (internal citations and footnotes omitted).)
In reply, plaintiff argues that "this action should be remanded because case law cited by Hermitage recognizes existence of a duty by the appraisers appointed pursuant to an insurance contract appraisal clause, and there is more than a possibility that Alabama law recognizes a tort claim against the appraisers for breach of duty." (Doc. 24, at 1.)
(Id. at 2 (emphasis in original).)
There can be no doubt but that "[f]ederal courts are courts of limited jurisdiction, and there is a presumption against the exercise of federal jurisdiction, such that all uncertainties as to removal jurisdiction are to be resolved in favor of remand." Russell Corp. v. American Home Assurance Co., 264 F.3d 1040, 1050 (11th Cir. 2001) (citation omitted); see also Allen v. Christenberry, 327 F.3d 1290, 1293 (11th Cir.) ("[R]emoval statutes should be construed narrowly, with doubts resolved against removal."), cert. denied, 540 U.S. 877, 124 S.Ct. 277, 157 L.Ed.2d 140 (2003); University of South Alabama v. American Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999) ("Because removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly. . . . Indeed, all doubts about jurisdiction should be resolved in favor of remand to state court."); see Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994) ("Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree[.]" (internal citations omitted)). Moreover, the removing defendant must bear "the burden of demonstrating federal jurisdiction." Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 n.4 (11th Cir. 1998) (citation omitted); see also McCormick v. Aderholt, 293 F.3d 1254, 1257 (11th Cir. 2002) ("[T]he party invoking the court's jurisdiction bears the burden of proving, by a preponderance of the evidence, facts supporting the existence of federal jurisdiction."). Stated differently, because federal courts are courts of limited jurisdiction "[i]t is . . . presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction[.]" Kokkonen, supra, 511 U.S. at 377, 114 S.Ct. at 1675 (internal citations omitted).
Where, as here, jurisdiction is predicated on diversity of citizenship pursuant to 28 U.S.C. § 1332 (see Doc. 1, at ¶¶ 12 & 14 ("In addition to diversity of citizenship among the real and proper parties to this cause, this Court has jurisdiction under 28 U.S.C. § 1332, and removal is proper pursuant to 28 U.S.C. § 1441, in that there is a sufficient basis that the jurisdictional amount in controversy has been met, since St. John's seeks specific performance in an award of $236,775. . . . This Court has original jurisdiction of the above-entitled action pursuant to 28 U.S.C. § 1332, and since Defendant Hermitage is not a resident citizen of the State of Alabama, wherein the above-entitled action is pending, and Defendants . . . have been fraudulently joined, removal of this action to this Court is proper pursuant to 28 U.S.C. § 1441.")),
As previously indicated, the diversity statute, 28 U.S.C. § 1332, demands complete diversity, such that plaintiff may not be a citizen of the same state as any defendant. See, e.g., Florence v. Crescent Resources, LLC, 484 F.3d 1293, 1297 (11th Cir. 2007) (recognizing "necessary corollary" of diversity jurisdiction that "complete diversity of citizenship" is required); Legg v. Wyeth, 428 F.3d 1317, 1320 n.2 (11th Cir. 2005) ("28 U.S.C. § 1332 requires `complete diversity'-the citizenship of every plaintiff must be diverse from the citizenship of every defendant.").
"Fraudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity." Triggs, supra, 154 F.3d at 1287. Notwithstanding the complete diversity requirement, non-diverse defendants who are fraudulently joined do not destroy jurisdiction because their citizenship is properly excluded from the diversity equation. Under well-settled law, a finding of fraudulent joinder is appropriate in circumstances presented here only if "`there is no possibility the plaintiff can establish a cause of action against the resident defendant[s].'" Henderson v. Washington Nat'l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006) (emphasis supplied; citation omitted); see also Florence, supra, 484 F.3d at 1299 ("[I]f there is any possibility that the state law might impose liability on a resident defendant under the circumstances alleged in the complaint, the federal court cannot find that joinder of the resident defendant was fraudulent, and remand is necessary."); Triggs, 154 F.3d at 1287 ("`If there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court.'"). Thus, "[t]he plaintiff need not have a winning case against the allegedly fraudulent defendant[s]; he need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate." Id. (citation omitted); see also Pacheco de Perez v. AT & T Co., 139 F.3d 1368, 1380 (11th Cir. 1998) ("Where a plaintiff states even a colorable claim against the resident defendant, joinder is proper and the case should be remanded to state court.").
"The determination of whether a resident defendant has been fraudulently joined must be based upon the plaintiff's pleadings at the time of removal, supplemented by any affidavits and deposition transcripts submitted by the parties. . . . In making its determination, the district court must evaluate factual allegations in the light most favorable to the plaintiff and resolve any uncertainties about the applicable law in the plaintiff's favor." Pacheco de Perez, 139 F.3d at 1380 (citations omitted); see also Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997) ("To determine whether the case should be remanded, the district court must evaluate the factual allegations in the light most favorable to the plaintiff and must resolve any uncertainties about state substantive law in favor of the plaintiff. . . . The federal court makes these determinations based on the plaintiff's pleadings at the time of removal; but the court may consider affidavits and deposition transcripts submitted by the parties."); Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1561 (11th Cir. 1989) ("In addressing the issue of fraudulent joinder, the district court should resolve all questions of fact and controlling law in favor of the plaintiff and can consider any submitted affidavits and/or deposition transcripts.").
Crowe, supra, 113 F.3d at 1538 (internal citations omitted).
"In a fraudulent joinder inquiry, `federal courts are not to weigh the merits of a plaintiff's claim beyond determining whether it is an arguable one under state law.'" Pacheco de Perez, 139 F.3d at 1380-1381 (quoting Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997)).
Crowe, 113 F.3d at 1541-1542 (internal citations omitted).
Because the removing defendants must show by clear and convincing evidence that there is no possibility plaintiff can establish a cause of action against the resident defendants, Henderson, 454 F.3d at 1281, it is no surprise that courts describe the burden on the removing parties to prove fraudulent joinder as a "heavy one." Crowe, 113 F.3d at 1538 (citation omitted).
Since St. John's, along with defendants Frontier, Macon, SACS, and Coggin, are Alabama citizens for diversity purposes, the removing defendants, led by Hermitage, predicate removal jurisdiction under § 1332 on their argument that the citizenships of Frontier, Macon, SACS, and Coggin do not count in the diversity analysis since they were fraudulently joined. The analysis in this case has been distilled down to whether a possibility exists that plaintiff can establish a negligence
The Alabama Supreme Court has "consistently refused to recognize a cause of action for the negligent handling of insurance claims, and . . . [does] not recognize a cause of action for alleged wanton handling of insurance claims." Kervin v. Southern Guaranty Ins. Co., 667 So.2d 704, 706 (Ala. 1995) (citations omitted); see also State Farm Fire & Cas. Co. v. Agee, 2009 WL 1441537, *6 (S.D. Ala. May 21, 2009) ("Alabama does not recognize a cause of action for negligent and wanton claim handling[.]").
Just as claim handling/adjusting is specifically contemplated in insurance contracts, so too is appraisal, as reflected in the instant insurance contract (see Doc. 7, Exhibit A). Therefore, it is logical to recognize that claims handling/adjusting and appraisal of the value of property/loss fall on the same continuum, appraisal coming after the parties have agreed on coverage, that is, agreed there is a covered loss, but have a dispute regarding the amount of the covered loss. See Southern United Fire Ins. Co. v. Knight, 736 So.2d 582, 585 n.2 (Ala. 1999) ("[T]he more dispute-specific appraisal provision should be read as applying when there is no dispute over coverage but there is a dispute as to the amount of a covered loss."). Accordingly, there is no question but that the Supreme Court of Alabama would, consistent with Kervin and Akpan, supra, find that there is no cause of action in Alabama for negligent and/or wanton appraisal of a loss under a contract of insurance since the insured, in such a situation, is not without remedy but may sue its insurer for breach of contract and the tort of bad faith.
That there can be no remedy beyond assertion of breach of contract and bad faith against the insurer for actions that arise as a result of application of specific provisions of the contract of insurance is clear even in light of the Alabama Supreme Court's holding in Rogers v. State Farm Fire & Cas. Co., 984 So.2d 382 (Ala. 2007). As noted by this Court, the Rogers court, "[a]fter canvassing the mixed case law from other jurisdictions on the subject . . . [concluded] that `an appraiser's duty is limited to determining the "amount of loss"-the monetary value of the property damage-and that appraisers are not vested with the authority to decide questions of coverage and liability . . . . Questions of coverage and liability should be decided only by the courts, not appraisers.'" Caribbean I Owners' Ass'n, Inc. v. Great American Ins. Co. of New York, 619 F.Supp.2d 1178, 1183 (S.D. Ala. Mar. 10, 2008), quoting Rogers, supra, 984 So.2d at 392. Nowhere in the Rogers decision did the Alabama Supreme Court indicate, much less hold, that an appraiser's "duty" is owed to an insured under a policy of insurance because this was not the context in which Rogers was written. Rather, the focus of the Supreme Court's decision in Rogers, see id. at 389 ("What are the duties and powers of an appraiser when he or she `set[s] the amount of the loss' under an appraisal clause contained in a homeowner's insurance policy? . . . `We have considered the holdings of other jurisdictions interpreting appraisal provisions containing substantially similar language to that contained in the policy at issue in this case in concluding that appraisers have no power to determine the cause of the damage[]. Their power is limited to the function of determining the money value of the property damage.'"), simply was "to delineate the boundaries of insurance appraisers' role[,]" Caribbean I Owners' Ass'n, Inc., supra, 619 F.Supp.2d at 1182, that is, their responsibility under appraisal provisions of a contract of insurance. Insurance appraisers were not sued in Rogers and the Supreme Court, no doubt in light of Kervin, gave no indication that appraisers could be sued;
In light of the foregoing, the undersigned finds that the plaintiff's negligence and wantonness claims asserted against the non-diverse defendants in its state court complaint are obviously "frivolous or fraudulent[.]" Crowe, 113 F.3d at 1542.
Mere diversity, in and of itself, is not sufficient to create jurisdiction under § 1332 since "the court is obligated to assure itself that the case involves the requisite amount in controversy." Morrison v. Allstate Indemnity Co., 228 F.3d 1255, 1261 (11th Cir. 2000) (citations omitted). In Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744 (2010), a panel of the Eleventh Circuit reminded district courts that the first paragraph of § 1446(b) provides a much wider entry into federal court than does the second paragraph of that section. See id. at 760. This is not only because the first paragraph of § 1446(b) does not "restrict the type of evidence that a defendant may use to satisfy the jurisdictional requirements for removal." Id. at 771; see also id. at 759 (a removing defendant can offer its "own affidavits or other evidence to establish federal removal jurisdiction[,]"); id. at 755 & 756 ("The substantive jurisdictional requirements of removal do not limit the types of evidence that may be used to satisfy the preponderance of the evidence standard. Defendants may introduce their own affidavits, declarations, or other documentation-provided of course that removal is procedurally proper. . . . The other circuit courts of appeal that have addressed the issue agree with our circuit law that defendants may submit a wide range of evidence in order to satisfy the jurisdictional requirements of removal. . . . No court of appeals decision we could find holds that a defendant may not submit its own evidence in order to satisfy the jurisdictional requirements of removal, and we conclude that the defendant can."); id. at 761 ("Lowery's `receipt from the plaintiff' rule has no application to cases, like this one, which are removed under the first paragraph of § 1446(b)."), but, as well, because "the use of deduction, inference, or other extrapolation of the amount in controversy is []permissible," id. at 753; see also id. ("A different question is presented [] when a removing defendant makes specific factual allegations establishing jurisdiction and can support them (if challenged by the plaintiff or the court) with evidence combined with reasonable deductions, reasonable inferences, or other reasonable extrapolations. That kind of reasoning is not akin to conjecture, speculation, or star gazing."); id. at 770 ("It is true that `[n]othing in Lowery says a district court must suspend reality or shelve common sense in determining whether the face of a complaint, or other document, establishes the jurisdictional amount.' . . . And viewing facts through the lens of common sense is not star gazing."), and "a removing defendant is not required to prove the amount in controversy beyond all doubt or to banish all uncertainty about it." Id. at 754; see also id. ("The law does not demand perfect knowledge or depend any less on reasonable inferences and deductions then we all do in everyday life.").
Inasmuch as the instant removal petition was filed within thirty (30) days of service of the complaint (compare Doc. 1 (filing date of November 4, 2011) with Doc. 1, Exhibit A, COMPLAINT (electronically filed on October 5, 2011 in the Circuit Court of Mobile County, Alabama)), this is a first paragraph removal under § 1446(b).
For the reasons set forth above, it is
The instructions which follow the undersigned's signature contain important information regarding objections to the report and recommendation of the Magistrate Judge.
1. Objection. Any party who objects to this recommendation or anything in it must, within fourteen (14) days of the date of service of this document, file specific written objections with the Clerk of this court. Failure to do so will bar a de novo determination by the district judge of anything in the recommendation and will bar an attack, on appeal, of the factual findings of the Magistrate Judge. See 28 U.S.C. § 636(b)(1)(C); Lewis v. Smith, 855 F.2d 736, 738 (11th Cir. 1988); Nettles v. Wainwright, 677 F.2d 404 (5th Cir. Unit B, 1982)(en banc). The procedure for challenging the findings and recommendations of the Magistrate Judge is set out in more detail in SD ALA LR 72.4 (June 1, 1997), which provides that:
A magistrate judge's recommendation cannot be appealed to a Court of Appeals; only the district judge's order or judgment can be appealed.
2. Transcript (applicable Where Proceedings Tape Recorded). Pursuant to 28 U.S.C. § 1915 and FED.R.CIV.P. 72(b), the Magistrate Judge finds that the tapes and original records in this case are adequate for purposes of review. Any party planning to object to this recommendation, but unable to pay the fee for a transcript, is advised that a judicial determination that transcription is necessary is required before the United States will pay the cost of the transcript.
Finally, because this Court need consider whether a possibility exists that plaintiff can establish a negligence or wantonness claim against the resident defendants under Alabama law, the undersigned finds no occasion to consider the numerous cases plaintiff relies upon from outside Alabama. (See Doc. 5, at 3-5; Doc. 7, at 4-6.)
