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Heath v. Jackson National Life Insurance Co.

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

October 26, 2017

GREGORY A. HEATH, Plaintiff,
v.
JACKSON NATIONAL LIFE INSURANCE COMPANY AND JOHN FINLEY, Defendants.

          ORDER

          SAMUEL H. MAYS, JR., UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff Gregory A. Heath's Motion to Remand for lack of subject matter jurisdiction, dated August 14, 2017. (ECF No. 12; cf. ECF No. 14.) Defendant Jackson National Life Insurance Company responded on August 28, 2017. (ECF No. 17.)

         For the following reasons, the Motion to Remand is GRANTED.

         I. Background

         Defendant Jackson National Life Insurance Company (“Defendant Jackson”) issued a life insurance policy to Kathryn Finley (“Ms. Finley”). (ECF No. 14 at 117.)[1] The policy insured Ms. Finley's life in the amount of $150, 000. (Id.) Plaintiff and Defendant John Finley (“Defendant Finley”) were the designated beneficiaries of the policy. (Id.) The policy provided that policyholders could submit Change of Beneficiary forms by fax. (Id. at 118.)

         On May 19, 2015, Ms. Finley submitted a Change of Beneficiary form by fax to Defendant Jackson. (Id.) Ms. Finley requested that, after her death, Plaintiff should receive 67% of the proceeds and Defendant Finley should receive 33% of the pro-ceeds.[2] (Id.) Based on Ms. Finley's $150, 000 policy, Plaintiff would receive $100, 500 and Defendant Finley would receive $49, 500. (Id.)

         Ms. Finley died on June 14, 2015. (Id.) Defendant Jackson issued a check to Plaintiff for $49, 535.10 and a check to Defendant Finley for $100, 500. (Id. at 118-19.) After receiving his check, Plaintiff contacted Defendant Jackson to protest the amount he had received. (Id. at 119.) In a letter dated September 18, 2015, Defendant Jackson informed Plaintiff that the May 19, 2015 Change of Beneficiary form submitted by Ms. Finley had been declined. (Id.) Thus, Plaintiff's portion of the policy proceeds had not been changed to 67%. (Id.)

         Plaintiff's counsel, acting on Plaintiff's behalf, asked Defendant Jackson to provide Plaintiff with a copy of the insur- ance policy and all correspondence between Defendant Jackson and Ms. Finley. (Id.) Plaintiff represents that Defendant Jackson refused. (Id.)

         On May 23, 2017, Plaintiff filed a Complaint for Declaratory Judgment in the Chancery Court for Shelby County, Tennessee, against Defendant Jackson and Defendant Finley. (Id.; ECF No. 1-3 at 19-26.) The Complaint alleges that Defendant Jackson has breached its contract with Plaintiff by: (1) refusing to provide Plaintiff with a copy of the policy and correspondence between Defendant Jackson and Ms. Finley; (2) refusing to honor Ms. Fin-ley's May 19, 2015 Change of Beneficiary form; and (3) paying Plaintiff 33% instead of 67% of the policy proceeds. (ECF No. 1-3 at 23-25.) On July 24, 2017, Defendant Jackson filed a Notice of Removal to this Court on the basis of diversity. (ECF No. 1.)

         On August 14, 2017, Plaintiff filed a Motion to Remand. (ECF No. 12; cf. ECF No. 14.) Plaintiff argues that the Court does not have subject matter jurisdiction because there is not complete diversity between the parties and the amount in controversy does not exceed $75, 000. (ECF No. 14 at 120-22.) Defendant Jackson responded on August 28, 2017. (ECF No. 17.)

         II. Standard of Review

         28 U.S.C. § 1441 grants defendants in civil suits the right to remove cases from state courts to federal district courts when the latter would have had original jurisdiction. Jerome-Duncan, Inc. v. Auto-By-Tel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999). To permit removal, “there must be complete diversity of citizenship both at the time the case is commenced and at the time that the notice of removal is filed.” Id.

         “‘When a non-diverse party has been joined as a defendant, then in the absence of a substantial federal question[, ] the removing defendant may avoid remand only by demonstrating that the non-diverse party was fraudulently joined.'” Id. (internal quotations omitted). The burden of proving fraudulent joinder of a non-diverse defendant is “a heavy one” and lies on the removing party. Walker v. Philip Morris USA, Inc., 443 Fed.Appx. 946, 953 (6th Cir. 2011) (internal quotations omitted); Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 948-949 (6th Cir. 1994).

         “To prove fraudulent joinder, the removing party must present sufficient evidence that plaintiff could not have established a cause of action against non-diverse defendants under state law.” Coyne v. American Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999). One basis for remand is failure to state a colorable claim for recovery against a non-diverse defendant. Id. “[A] claim is colorable ‘if the state law might impose liability on the resident defendant under the facts alleged.'” Kent State Univ. Bd. of Trs. v. Lexington Ins. Co., 512 Fed.Appx. 485, 489 (6th Cir. 2013) (internal quotations omitted). In deciding whether a defendant has been fraudulently joined, the district court must ...


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