United States District Court, W.D. Missouri, Western Division
ROSEANN A. KETCHMARK, JUDGE.
the Court is Plaintiff's motion to remand for lack of
jurisdiction. (Doc. 31.) The issue is fully briefed and a
jurisdictional hearing was held on October 15, 2019. (Docs.
24, 27, 31, 38.) Previously, on July 13, 2019, a related
case, case number 4:19- cv- 00171- RK, was consolidated with
the present action. After careful consideration, the order of
consolidation, consolidating case number 4:19-cv-00171-RK and
4:19-cv-00464-RK, is VACATED. Further, the
present case, case number 4:19-cv-00464- RK, is
begin, this case presents distinct facts from any case cited
by the parties or that the Court has found through its
independent research. Specifically, in the underlying state
action, judgment has been entered against one defendant,
Floyd R. Brown, JR & Company, with a garnishment action
already commenced, while issues of liability remain as to two
other defendants, Jamie Gaffney and L-MASH, LLLP.
Ralph King (“King”), initially filed his
complaint in 2016, in the Circuit Court of Jackson County,
case number 1616-cv18075, against Defendants Floyd R. Brown,
JR. & Company (“FRB”), Jamie Gaffney
(“Gaffney”), L-MASH, LLLP (“L-MASH”),
and Matthew Peterson for claims surrounding accounting
malpractice. The parties do not contest that King, FRB,
Gaffney, and L-MASH are all Missouri citizens for purposes of
diversity jurisdiction. FRB had an Accountants Professional
Liability Insurance Policy with Hanover Insurance Company
(“Hanover”), a citizen of New Hampshire and
Massachusetts. On October 20, 2016, FRB and Hanover entered
into an alleged settlement agreement regarding
Hanover's duty to defend and indemnify FRB for accounting
malpractice. FRB then entered into an agreement with King
under Mo. Rev. Stat. § 537.065, which allows an insured
to protect itself by limiting recovery to insurance proceeds.
See Allen v. Bryers, 512 S.W.3d 17, 32 (Mo. 2016).
Eventually, King's 2016 claims against FRB, Gaffney, and
L-MASH were voluntarily dismissed on March 7, 2018.
King's claims against FRB, Gaffney, and L-MASH were
refiled on April 26, 2018, case number 1816- cv11048. In
March 2019, the state court bifurcated King's claims
against FRB from those against Gaffney and L-MASH for
purposes of trial. Pursuant to the § 537.065 agreement,
a bench trial was held as to claims against FRB on April 25,
2019. The state court made findings of fact, and conclusions
of law, and entered judgment in favor of King and against
FRB. King was awarded (a) compensatory damages in the sum of
$549, 487.55; (b) punitive damages in the sum of $1, 000,
000; (c) post-judgment interest on all sums awarded, accruing
at the statutory rate; and (d) the costs of the action. On
May 13, 2019, King filed a garnishment application and an
application for a garnishment order against Hanover pursuant
to Mo. R. Civ. P. 90.02 and Mo. Rev. Stat. § 525.010
et seq. King's claims against Gaffney and L-MASH
are pending and therefore, issues of liability remain as to
Gaffney and L-MASH. On June 13, 2019, Hanover removed the
case to this Court. However, issues of liability as to
Gaffney and L-MASH have not been adjudicated.
on March 6, 2019, Hanover filed a complaint for declaratory
judgment against FRB, Jamie Gaffney, and King, and for breach
of contract against FRB, in case number 4:19- cv- 00171-RK.
On July 13, 2019, the declaratory judgment case was
consolidated with the present case, 4:19-cv-00464-RK. This
Court then ordered Hanover to show cause twice why this case,
4:19-cv-00464-RK, should not be remanded for lack of subject
matter jurisdiction. Hanover filed responses to both orders.
After the second order to show cause, King requested an
opportunity to respond, which was granted. In that response,
King has requested this Court to remand the garnishment
action. On October 15, 2019, a jurisdictional hearing was
held, where oral arguments concerning the issue of
jurisdiction and remand were heard.
courts are courts of limited jurisdiction.” Ark.
Blue Cross & Blue Shield v. Little Rock Cardiology
Clinic, P.A., 551 F.3d 812, 816 (8th Cir. 2009).
“[F]ederal courts have an independent obligation to
ensure that they do not exceed the scope of their
jurisdiction, and therefore they must raise and decide
jurisdictional questions that the parties either overlook or
elect not to press.” Henderson ex rel. Henderson v.
Shinseki, 562 U.S. 428, 434 (2011). A party may remove
an action to federal court if there is complete diversity of
the parties and the amount in controversy exceeds $75, 000.
28 U.S.C. §§ 1332(a) and 1441(a). Even if all
parties are diverse, the “forum defendant rule”
provides that the action cannot be removed to federal court
if any of the properly joined and served defendants are
citizens of the state in which the action is brought.
See 28 U.S.C. § 1441(b); Horton v.
Conklin, 431 F.3d 602, 605 (8th Cir. 2005). In the
Eighth Circuit, violation of the forum defendant rule is a
jurisdictional defect and cannot be waived. Id.
Therefore if the forum defendant rule is violated, the court
must remand the case to the state court from which is was
removed. 28 U.S.C. § 1447(c). A party seeking removal
and opposing remand carries the burden of establishing
federal subject-matter jurisdiction by a preponderance of the
evidence. In re Prempro Prods. Liab. Litig., 591
F.3d 613, 620 (8th Cir. 2010). Furthermore, any doubts about
the propriety of removal should be resolved in favor of
remand. In re Bus. Men's Assurance Co. of Am.,
992 F.2d 181, 183 (8th Cir. 1993) (per curiam). “If at
any time before final judgment it appears that the district
court lacks subject matter jurisdiction, the case shall be
remanded.” 28 U.S.C. § 1447(c).
are two issues the Court must now resolve in the present
order: (1) whether the Court has Jurisdiction over the
removed action, 4:19-cv-00464-RK and (2) whether the order of
consolidation, in 4:19-cv-00171-RK, must now be vacated. The
Court finds it lacks jurisdiction over the removed action.
The Court, therefore, must vacate the order consolidating the
two cases and remand the removed case, 4:19-cv-00464-RK, back
to state court.
The Court Lacks Jurisdiction Over the Garnishment Action
Hanover was the removing party, they bore the burden of
establishing federal subject-matter jurisdiction. In Re
Prempro Pods. Liab. Litig., 591 F.3d. at 620. While any
civil action can be removed, a removing party must remove the
entire action, “not piecemeal claims for the parties to
choose.” Arnold Crossroads, L.L.C. v. Gander
Mountain Co., No. 4:12-CV0506 HEA, 2013 WL 1789441 at *1
(E.D. Mo. Apr. 26, 2013) (citing 28 U.S.C. §§
1441(a), 1441(c)); see also De Espina v. Jackson,
No. DKC 15-2059, 2015 WL 6122329 at *2 (D. Md. Oct. 15, 2015)
(citing Arango v. Guzman Travel Advisors Corp., 621
F.2d 1371, 1376 (5th Cir. 1980)). Further, a court must
consider the claims in state court as they existed at
removal. Momin v. Maggiemoo's Intern., L.L.C.,
205 F.Supp.2d. 506, 508 (D. Md. 2002) (citing Manguno v.
Prudential Property and Casualty Ins. Co., 276 F.3d 720,
723 (5th Cir. 2002)).
Hanover has attempted to remove only the garnishment
proceeding while remaining issues of liability remain between
non-diverse parties: King, Gaffney and L-MASH. Hanover cites
to several cases to support its position. In particular,
Hanover has cited to Randolph v. Employers Mutual
Liability Insurance Co. of Wisc., 260 F.2d 461 (8th Cir.
1958); Gregg v. Walker, 4:19-cv-00053-NKL, 2019 WL
1569350 (W.D. Mo. Apr. 11, 2019); Monroe v. Roedder,
583 F.Supp.2d 1031, 1034 (E.D. Mo. 2008); Grissom v.
Welker, No. 1:10 CV 144 RWS, 2011 WL 845285 (W.D. Mo.
Mar. 9, 2011); and Shilo Inn, Seaside Ocean Front, LLC v.
Grant, No. 08-CV-618-BR, 2009 WL 2611217 (D. Or. Aug.
24, 2009). However, each case is distinguishable from the
case now before the Court. In each of those cases, there was
only one underlying defendant and liability as to that
defendant had been fully resolved. Here, the liability issues
as to Gaffney and L-MASH have not been fully resolved.
Further, despite Hanover's contention that the only
parties removed were Hanover and King, the cases cited by
Hanover indicate that any remaining defendants are parties to
the action. See Monroe, 583 F.Supp.2d at 1034
(“Roedder is a nominal party”); Grissom,
2011 WL 845285 at *1 (“Welker is a nominal party at
best.”); Shilo, 2009 WL 2611217 at *5
(discussing how the insured is a nominal party and the
insured's interests are aligned with the Plaintiff)
(citing Monroe, 583 F.Supp.2d at 1034;
Randolph, 260 F.2d at 464); see also Arnold
Crossroads, L.L.C., 2013 WL 1789441 at *1 (when removing
a case, the entire case is removed). While those cases found
the insured to be a nominal party, the fact remains the
insureds were still parties to the suit and included in
removal. Thus, the Court finds that all parties, including
FRB, Gaffney, and L-MASH, were included in the removal.
Therefore, the presence of Gaffney and L- MASH, non-diverse
defendants, destroys diversity of citizenship. The question
then becomes whether those diversity destroying defendants
are nominal parties or should be realigned with the Plaintiff
for diversity purposes.
next argues that Defendants FRB, Gaffney, and L-MASH are
nominal parties. FRB may be a nominal party.See
Monroe, 583 F.Supp.2d at 1034. Regarding Gaffney and L-
MASH, Hanover repeatedly argues Gaffney and L-MASH were
nominal parties because they have nothing to do with the
issue of whether or not Hanover provides coverage for the
judgment against FRB. Hanover misunderstands the Court's
concerns and Kings' arguments. Even if Gaffney and L-
MASH were nominal for purposes of determining the issue of
garnishment, they are not nominal parties as to the case.
See Mundle v. Linde, LLC, No. 4:10 CV 2116 DDN, 2011
WL 1526965 at *2 (E.D. Mo. Apr. 20, 2011) (citing
Pecherski v. Gen. Motors Corp., 636 F.2d 1156, 1161
(8th Cir. 1981) (citizenship of defendant can be ignored
where they are “merely nominal parties against whom no
relief is sought.”) The entire case was removed, not
merely the issue of garnishment. See Arnold Crossroads,
L.L.C., 2013 WL 1789441 at *1. As in Mundle,
Gaffney and L-MASH are not nominal parties in the present
case because their ...