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Beeks v. American Family Insurance Co.

United States District Court, C.D. Illinois

May 21, 2018

JASON E. BEEKS, and J.B., a minor, Plaintiffs,
v.
AMERICAN FAMILY INSURANCE COMPANY, and MICHAEL ORTH, Defendants.

          ORDER AND OPINION

          JAMES E. SHADID, CHIEF UNITED STATES DISTRICT JUDGE

         Now before the Court is a Motion to Remand (Doc. 16) by Plaintiffs Beeks and J.B. For the reasons set forth below, Plaintiff's Motion to Remand (Doc. 16) is GRANTED and this action is remanded to the Circuit Court of the Fourteenth Judicial Circuit in Rock Island County for further proceedings.

         Background

         Plaintiffs originally filed this action pro se in the Circuit Court of the Fourteenth Judicial Circuit in Rock Island County on August 1, 2017, naming as Defendants American Family Insurance Company (“AFIC”) and Michael Orth. Shortly thereafter, Plaintiffs obtained counsel. The essence of Plaintiffs' complaint is that AFIC wrongfully denied their claim under a homeowner's insurance policy issued by AFIC to Plaintiffs. On November 14, 2017, AFIC removed this action to the United States District Court for the Northern District of Illinois on the basis of diversity jurisdiction.[1] Defendant Orth is an Illinois citizen, but Defendants asserted in their Notice of Removal that Orth was fraudulently joined to destroy diversity jurisdiction. Doc. 1.

         Following the transfer to this District, Defendants filed a Motion to Dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Doc. 13. Thereafter, Plaintiffs filed a Motion to Remand, wherein they argue that removal was improper because diversity of citizenship is not present. Doc. 16. Specifically, Plaintiffs assert that Orth, an Illinois citizen, issued the declaration page of the insurance policy central to this dispute. According to Plaintiffs, Orth may be liable to them because he actually issued two declaration pages-one for the real estate closing, and the second, with a more limited amount of coverage, that was actually delivered.

         Plaintiffs then filed an amended complaint. Doc. 20. As it relates to Defendant Orth, Plaintiffs' amended complaint states as follows:

The closing on the purchase of the home … took place in Moline, Illinois. To close on the loan Beeks obtained to purchase the property, Beeks was required to produce evidence of insurance on the property. To that end, Orth issued a declaration page which listed several Options/Endorsements. The Fungi or Bacteria Exclusion (END 595 ED 6/02) was not listed on the declaration page as issued. Subsequently and unknown to Beeks, Orth changed the policy and did add the Fungi or Bacteria Exclusion (END 595 ED 6/02). The effect of this was to try [to] eliminate coverage for personal injury/ medical expense coverage for the members of the household who were injured as a result of the occurrence in question. This was a failure to exercise ordinary skill and reasonable care towards Beeks and was an affirmative role in American Family's wrongful denial of coverage. When Beeks realized that the damage to the home was a result of the wind/hail storm of August 2, 2015, he contacted Orth and requested that he reopen that claim. Orth refused stating that the American Family's adjusters were correct and that American Family's denial of that claim will stand Orth and thereby [sic] played an affirmative role in American Family's wrongful denial of the claim. Additionally, Beeks communicated with American Family through Orth and Orth played an affirmative role in American Family's decision to deny coverage.

Doc. 20, at 5-6 (so in original).

         Defendants filed a Response to Plaintiffs' Motion to Remand, arguing that (1) Plaintiffs' Motion to Remand should be limited to the facts asserted in the original complaint, and (2) Defendant Orth was fraudulently joined because Plaintiffs fail to allege a cause of action against him. Doc. 21.

         Legal Standard

         Federal courts are courts of limited jurisdiction. Section 1332(a)(1) confers upon district courts jurisdiction to hear state law claims when complete diversity of citizenship exists between the parties: “The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different States.” 28 U.S.C. § 1332(a)(1). Thus, “§ 1332 allows plaintiffs to invoke the federal courts' diversity jurisdiction.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005). When a plaintiff files a civil action in state court, “§ 1441 gives defendants a corresponding opportunity.” Id. Section 1441(a) provides:

Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

28 U.S.C. § 1441.

         While both § 1332 and § 1441 allow parties to invoke a federal court's diversity jurisdiction, “[t]he scales are not evenly balanced.” Id. at 89-90. This is so because an in-state plaintiff may use § 1332 to establish diversity jurisdiction, but § 1441(b) bars defendants from removing an action to federal court on the basis of diversity if they are citizens of the state in which the action is ...


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