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Simon v. Liberty Mutual Fire Insurance Co.

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

December 8, 2017

GLEN SIMON and SOLARIS POWER SERVICES, LLC, Plaintiffs,
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY, ASSOCIATE ELECTRIC & GAS INSURANCE SERVICES, LTD., CAPITAL ELECTRIC, INC., and KEVIN and ANITA JOHNSON, Defendants.

          ORDER DENYING MOTIONS TO REMAND

          GREG KAYS, CHIEF JUDGE UNITED STATES DISTRICT COURT

         This case is an insurance coverage dispute concerning an uncontested $44 million judgment entered against Solaris Power Services, LLC (“Solaris”) in the Circuit Court of Jackson County, Missouri, in favor of Kevin and Anita Johnson (“the Johnsons”) pursuant to Mo. Rev. Stat. § 537.065.[1] The judgment arises from an accident at the General Motors Fairfax plant in Kansas City, Kansas, in which Kevin Johnson, an electrician employed by Capital Electric Construction Company, Inc., [2] (“Capital”) was severely injured because of Solaris's negligence in failing to de-energize equipment on which he was working. Capital was insured by Liberty Mutual Fire Insurance Company (“Liberty Mutual”), and Associate Electric & Gas Insurance Services, LTD. (“AEGIS”), provided excess liability insurance to Capital. Plaintiffs Glen Simons (“Simons”) and Solaris (collectively “Plaintiffs”) allege they were, or should have been, additional insureds under both policies, but both insurance companies wrongly denied them coverage, damaging them.

         Plaintiffs subsequently filed suit in Jackson County Circuit Court to try to recover on the policies. Liberty Mutual removed to this court.

         Now before this Court are the Johnsons' motion to remand (Doc. 11) and Plaintiffs' separate motion to remand (Doc. 14). The Court holds that the Johnsons and the named defendant, Capital Electric, Inc., have been fraudulently joined, and so the motions are DENIED.

         Background

         Solaris Power is the judgment debtor on the judgment obtained by Kevin and Anita Johnson who have been named as defendants in this case.[3]

         On January 17, 2017, Liberty Mutual filed a declaratory judgment action in the United States District Court for the District of Kansas seeking a declaration that it owes Solaris no coverage as an additional insured under the insurance policy issued to Capital. See Liberty Mut. Fire Ins. Co. v. Solaris Power Servs., LLC, No. 2:17-cv-02046-CM-GLR.[4]

         On January 30, 2017, Plaintiffs filed suit in Jackson County Circuit Court against Liberty Mutual, AEGIS, and Kevin and Anita Johnson. Plaintiffs brought four claims for breach of contract and bad faith refusal to defend and settle, alleging they were additional insureds under the Liberty Mutual and AEGIS insurance policies, and that they were damaged by the insurance companies denial of coverage for Solaris. Liberty Mutual removed this lawsuit to federal court, and then Plaintiffs voluntarily dismissed it. See Simon v. Liberty Mut. Fire Ins. Co., No. 4:17-cv-089-DGK (Feb. 9, 2017 W.D. Mo.).

         On February 17, 2017, Plaintiffs filed the present lawsuit, which is nearly identical to the previous lawsuit except it adds two claims. Count V is a breach of contract claim brought by Solaris against Capital, who is allegedly a Missouri citizen, alleging that Capital contracted with Solaris to include Solaris as an additional insured under any liability policy issued to Capital, and Capital breached the contract by failing to include Solaris as an additional insured on the Fairfax job. Count VI seeks a declaratory judgment that Solaris is an additional insured under the Liberty Mutual policy issued to Capital.

         None of the six counts in the Petition names either Johnson as a defendant. Further, paragraph five of the Petition states, “Defendants Kevin Johnson and Anita Johnson are necessary parties pursuant to § 379.200 R.S.Mo [Missouri's equitable garnishment statute], and can be served at their residence, ” but the Petition contains no equitable garnishment count.

         Standard

         An action may be removed by the defendant where the case falls within the original jurisdiction of the district courts. 28 U.S.C. § 1441(a). The burden of establishing federal jurisdiction is on the party seeking removal. In re Bus. Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993). In considering a motion to remand, removal statutes are strictly construed, and the court resolves all doubts in favor of remand. Transit Cas. Co. v. Certain Underwriters at Lloyd's of London, 119 F.3d 619, 625 (8th Cir. 1997).

         To invoke the court's diversity jurisdiction, the parties must be citizens of different states and the amount in controversy must exceed $75, 000. Id. § 1332(a). The parties agree that the amount in dispute is more than $75, 000, they disagree whether the diversity requirement is satisfied. Complete diversity between the parties is required; the presence of a single plaintiff from the same state as a single defendant extinguishes federal jurisdiction. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005). Also, the “forum-defendant rule” prohibits an action from being removed to federal court “if any of the parties in interest properly joined and served” as a defendant is a citizen of the state in which the action is brought. 28 U.S.C. § 1441(b)(2).

         Fraudulent joinder is an exception to the complete diversity rule. In re Prempro Prods. Liab. Litig., 591 F.3d 613, 620 (8th Cir. 2010). Fraudulent joinder occurs when a litigant files “a frivolous or illegitimate claim” against a non-diverse party to prevent removal. Id. Although the doctrine is called “fraudulent joinder, ” the term is “somewhat of a misnomer” because the plaintiff's intent is not an element in the analysis. Kongelf v. Sears Holding Corp., No. 4:09-cv-038, 2010 WL 1977833, at *3 (D.N.D Apr. 7, 2010). In determining whether there is fraudulent joinder, the court ...


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