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Grosshart v. State Farm Mutual Automobile Insurance Co.

United States District Court, W.D. Missouri, Western Division

September 29, 2016

QUENTIN GROSSHART, individually, and as class representative, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., LEANA MASSEY, JOHN DOES 1-25, and JANE DOES 1-25, Defendants.

          ORDER

          Dean Whipple United States District Judge.

         Pending before the Court is the Plaintiff Quentin Grosshart's (“Grosshart”) Motion for Remand Based on the Local Controversy Exception and Comity (the “Motion”). See Doc. 10. Defendant State Farm Mutual Automobile Insurance Company (“State Farm”) filed suggestions in opposition (Doc. 13), and Grosshart filed a reply brief (Doc. 20). For the reasons set forth below, the Motion is DENIED because the Court finds it has jurisdiction over this case.

         I.[1]

         In January 2008, Grosshart was injured in an automobile accident and received medical treatment. He then made a claim upon an insurance policy issued by State Farm to non-party William Hall.[2] After negotiations, Grosshart agreed to settle his claim for $11, 600. In a letter dated December 8, 2009, Defendant Leana Massey (“Massey”)-who is a State Farm Claim Representative-provided Grosshart a “full and final release reflecting our settlement agreement.” Doc. 12-2. The letter informed Grosshart that if he executed the release, State Farm would “forward payment to you in the amount of $4, 395.00. We will also forward payment in the amount of $7, 205.00 to the applicable lien holder. Thus, the total settlement is $11, 600.00[.]” Id. Grosshart executed the release on December 16, 2009. Doc. 12-3.

         On May 18, 2016, Grosshart filed this case in the Circuit Court of Cass County, Missouri. Grosshart seeks relief for himself and on behalf of a proposed class of similarly situated individuals. The Petition names as defendants State Farm, Massey, John Does 1-25, and Jane Does 1-25. Plaintiff Grosshart and all proposed members of the class are citizens of Missouri. Defendant State Farm is an Illinois Corporation with its principal place of business in Illinois. Defendant Massey is a Claim Representative for State Farm, and she is a citizen of Missouri. The John/Jane Doe Defendants are also Claim Representatives for State Farm, and are also allegedly citizens of Missouri.

         Grosshart alleges that State Farm and the individual defendants engaged in a “scheme in which they undertook to pay class members' liens and then paid more to medical providers than they were legally required.” Doc. 11, p. 9. Specifically, Grosshart alleges that Defendants violated Missouri Revised Statute § 430.225 by: (1) directly paying his medical lien holders without first obtaining his permission, and by (2) improperly paying those lien holders in excess of fifty percent of his settlement proceeds.[3]

         Grosshart asserts claims for negligence (Count I), for breach of fiduciary duty (Count II), and for intentional, negligent, and fraudulent misrepresentations (Counts III-V). Counts I and II are primarily based on Defendants' alleged failure to obtain Grosshart's permission to pay the liens, and for overpaying the lien holders, under § 430.225. Counts III, IV, and V are primarily based on Defendants' alleged misleading statements about § 430.225, and/or for failing to advise Grosshart of the statutory requirements. Grosshart seeks compensatory and punitive damages, and also class certification.

         On July 8, 2016, Defendants removed the case to this Court under the Class Action Fairness Act of 2005 (“CAFA”). See 28 U.S.C. § 1332(d). Grosshart now moves to remand, and argues that CAFA's “local controversy exception” divests this Court of jurisdiction. The local controversy exception, and its applicability to this case, is discussed below.

         II.

         CAFA creates diversity jurisdiction “over a class action if [1] the amount in controversy exceeds $5 million, [2] any member of the plaintiff class is a citizen of a different state from any defendant, and [3] the class consists of at least 100 persons.” Johnson v. MFA Petroleum Co., 701 F.3d 243, 253 (8th Cir. 2012) (citing 28 U.S.C. § 1332(d)(2), (5)). A party removing a case under CAFA must establish these elements by a preponderance of the evidence. See Hurst v. Nissan N. Am., Inc., 511 Fed. App'x 584, 585 (8th Cir. 2013); Scott v. Cerner Corp., 2015 WL 5227431, at * 1 (W.D. Mo. Sept. 8, 2015). If the removing party carries its burden, “the burden shifts to the party seeking remand to establish that one of CAFA's express jurisdictional exceptions applies.” Westerfeld v. Indep. Processing, LLC, 621 F.3d 819, 822 (8th Cir. 2010).

         One exception is the local controversy exception. Id. at 823; 28 U.S.C. § 1332(d)(4). Under this exception, a district court “shall decline to exercise jurisdiction . . .

(A)(i) over a class action in which-
(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which ...

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