United States District Court, W.D. Missouri, Central Division
NANETTE K. LAUGHREY United States District Judge.
before the Court are Plaintiff Derek Hart's Motion to
Remand, Doc. 3, and Defendant Knockerball MidMo, LLC's
Motion to Remand, Doc. 7. For the following reasons, the
Motions to Remand are granted. Because the Court grants the
Motions to Remand, Defendant Knockerball MidMo, LLC's
Motion for Leave to File First Amended Cross-Claim, Doc. 40,
is denied for lack of subject matter jurisdiction.
December 23, 2016, Derek Hart visited Knockerball MidMo, LLC
(“Knockerball”), where he sustained severe and
permanent injuries, including paralysis. One month later,
Hart served Knockerball with a state court lawsuit, claiming
that Knockerball was liable for his damages. At the time,
Knockerball was insured under a policy issued by Atlantic
Specialty Insurance Company (“Atlantic”), with a
coverage period of July 1, 2016 through July 1, 2017. Despite
notice of the lawsuit, Atlantic did not defend Knockerball in
state court. Soon thereafter, Knockerball was held to be in
default, and on July 11, 2017 a bench trial determined
Hart's damages. On July 13, 2017, the state court entered
a final judgment against Knockerball in the amount of $44,
August 17, 2017, Hart filed an equitable garnishment
proceeding in the Circuit Court of Cole County, Missouri,
under Mo. Rev. Stat. § 379.200, seeking to recover the
judgment from Knockerball's insurer, Atlantic. Pursuant
to Section 379.200, both Knockerball and Atlantic were named
as defendants. On August 23, 2017, Knockerball filed a
cross-claim against Atlantic, alleging breach of its duties
under the insurance policy. On September 21, 2017, Atlantic
removed the case on the basis of diversity citizenship. Both
Hart and Knockerball move to remand.
removing an action to federal court, the defendant bears the
burden of proving by a preponderance of the evidence that the
court has subject matter jurisdiction over the case. In
re Prempro Prods. Liab. Litig., 591 F.3d 613, 620 (8th
Cir. 2010); Hatridge v. Aetna Cas. & Sur. Co.,
415 F.2d 809, 814 (8th Cir. 1969). “Removal statutes
are strictly construed, and any doubts about the propriety of
removal are resolved in favor of state court jurisdiction and
remand.” Baumgartner v. Ford Motor Credit Co.,
No. 07-4084-CV-C-NKL, 2007 WL 2026135, at *1 (W.D. Mo. July
9, 2007) (citing In re Business Men's Assurance Co.
of America, 992 F.2d 181, 183 (8th Cir. 1993)).
undisputed that Plaintiff Hart and Defendant Knockerball are
both Missouri citizens. Nevertheless, Atlantic argues that
removal is proper based on two co-dependent theories. First,
Atlantic argues that although Section 379.200 requires both
the insured and the insurer to be joined as defendants,
Knockerball, the insured, must be realigned with Plaintiff
for purposes of determining jurisdiction. Second, Atlantic
argues that the direct action provision of 28 U.S.C.
1332(c)(1) does not apply to this case, because petitions
brought under Section 379.200 do not constitute direct
actions against the insurer. Atlantic must prevail on both of
these theories to avoid remand-a difficult task considering
that a significant number of courts within this circuit have
regard to realignment, Atlantic argues that the parties'
alignment under Section 379.200 is immaterial, and
Knockerball must be realigned with Hart for federal
jurisdiction purposes. In determining jurisdiction,
“the designation of parties as plaintiff or defendant
in the pleadings is not controlling . . . .” Dryden
v. Dryden, 265 F.2d 870, 873 (8th Cir. 1959). “It
is the duty of the federal courts to look beyond the pleading
and to arrange the parties according to their sides in the
dispute.” Universal Underwriters Ins. Co. v.
Wagner, 367 F.2d 866, 870 (8th Cir. 1966). Furthermore,
“[t]he question whether a civil action is removable and
has been properly removed is one for the consideration of the
federal courts and is not controlled by State law.”
Elite Nurse Staffing, inc. v. Am. Cas. Co. of Reading,
Pa., No. 2:10-CV-04210-NKL, 2010 WL 5300926, at *4 (W.D.
Mo. Dec. 20, 2010) (quoting Stoll v. Hawkeye Cas. Co. of
Des Moines Iowa, 185 F.2d 96, 99 (8th Cir. 1950));
see also Minot Builders Supply Ass'n v. Teamsters
Local 123, 703 F.2d 324, 327 (8th Cir. 1983) (“The
question whether a particular party is a
‘defendant' for purposes of removal is a matter of
urges the Court to follow the Eleventh Circuit's holding
in City of Vestavia Hills v. General Fidelity Insurance
Company, 676 F.3d 1310 (11th Cir. 2012), a case brought
pursuant to an Alabama statute that is nearly
indistinguishable from Section 379.200. There, the
Eleventh Circuit held that the interests of the
defendant-insured and the plaintiff were aligned once the
judgment was entered against the defendant-insured in the
underlying case. Id. at 1314 (“[T]he only
thing that [the defendant-insured] could want out of this
case is for Vestavia Hills to win.”). Thus, for
purposes of diversity jurisdiction, the Eleventh Circuit
realigned the defendant-insured with the plaintiff.
Id. Here, Atlantic argues that just as in
Vestavia Hills, both Hart and Knockerball would like
nothing more than for Atlantic to fulfill the judgment, and
therefore Knockerball should be realigned with Hart. Atlantic
also argues that Randolph v. Employers Mut. Liability
Ins. Co., 260 F.2d 461 (8th Cir. 1958), supports such
realignment. Randolph noted, in dicta, that it would
be proper in a garnishment action to align the underlying
defendant with the plaintiff for jurisdictional purposes.
Id. at 464.
as Atlantic acknowledges, a number of Missouri federal
district courts have also taken up the issue, and each
declined to realign the parties as Atlantic suggests.
See, e.g., Goree v. PV Holding Corp., No.
4:15-CV-202 CEJ, 2015 WL 2238960, at *3 (E.D. Mo. May 12,
2015) (“Courts have repeatedly rejected the argument
that judgment debtors sued under § 379.200 can be
realigned as plaintiffs for the purposes of creating federal
jurisdiction); Webster v. Mair, No. 4:15 CV
430 RWS, 2015 WL 1886640, at *2 (E.D. Mo. Apr. 24, 2015)
(“[Defendant-insured] cannot be realigned as a
party-plaintiff.”); Kendall v. N. Assur. Co. of
Am., No. 09-0539-CV-W-GAF, 2009 WL 2632757, at *2 (W.D.
Mo. Aug. 25, 2009) (“This Court has rejected this
realignment argument on at least four separate
occasions.”); Haines v. Sentinel Ins. Co., No.
08-00981-CV-W-FJG, 2009 WL 648894, at *3 (W.D. Mo. Mar. 11,
2009) (“[T]he Court finds that the realignment of [the
defendant-insured] is improper in this action because he is a
necessary party defendant to the action under Mo.Rev.Stat.
§ 379.200.”). Indeed, this Court is one of the
many that has declined to realign a defendant-insured with
the plaintiff under Section 379.200. See Cincinnati Ins.
Co. v. R & L Siding, Inc., No. 01-04091-CV-C-NKL,
2002 U.S. Dist. LEXIS 29357, (W.D. Mo. June 21, 2002).
Atlantic asks the Court to ignore this long line of cases
because the previous decisions each “proceeded on a
variety of erroneous premises or distinguishable
facts.” Notice of Removal, Doc. 1, p. 4. Some
decisions, Atlantic argues, confuse the necessary party
concept with realignment. Doc. 16, p. 12. Others are
allegedly inapplicable because the decisions to remand were
based upon whether or not the defendant-insured is a nominal
party. Doc. 16, p. 11.
the Court is not bound by the parties' statutory
alignment under Section 379.200, it is bound by Glover v.
State Farm Fire and Casualty Company, 984 F.2d 259, 260
(8th Cir. 1993). There, the Eighth Circuit affirmed the
district court's decision that Section 379.200
“require[d] joinder of [the defendant-insured] as an
additional party defendant, and that joinder of [the
defendant-insured] in the federal action would destroy
diversity jurisdiction.” Id. at 260.
Glover also affirmed the district court's
holding that “[the plaintiff] could not bring such an
action [under Section 379.200] in federal court, ”
id. at 260-261, a critical requirement of removal
under 28 U.S.C. 1441(a).
courts have an obligation to exercise the jurisdiction
bestowed upon them. See Colorado River Water Conservation
Dist. v. U.S., 424 U.S. 800, 817 (1976) (noting the
“virtually unflagging obligation of the federal courts
to exercise the jurisdiction given them”). Therefore,
in affirming the district court's jurisdictional
determinations, Glover implicitly rejected the use
of realignment to create federal jurisdiction. The Eighth
Circuit's earlier decision, Randolph, does not
affect the outcome of this case because it did not consider
equitable garnishment under Section 379.200. Under Section
379.200, Knockerball is a necessary ...