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Tampa Electric Co. v. The Travelers Indemnity Company of America

United States District Court, M.D. Florida, Tampa Division

September 7, 2017

TAMPA ELECTRIC COMPANY, Plaintiff,
v.
THE TRAVELERS INDEMNITY COMPANY OF AMERICA, and PIPELINE DISTRIBUTION, INC., Defendants.

          ORDER

          VIRGINIA M. HERNANDEZ COVINGTON UNITED STATES DISTRICT JUDGE

         This matter comes before the Court upon consideration of Plaintiff Tampa Electric Company's (“TECO”) Motion to Remand, filed on July 28, 2017 (Doc. # 10), Defendant Pipeline Distribution, Inc.'s (“PDI”) response in opposition, filed on August 11, 2017 (Doc. # 24), and Defendant The Travelers Indemnity Company of America, Inc.'s (“Travelers”) response in opposition, also filed on August 11, 2017 (Doc. # 25). For the reasons that follow, the Motion to Remand is GRANTED.

         I. Background

         TECO originally filed this action in state court, seeking declaratory relief and damages based on PDI's and Travelers' refusal to defend and indemnify TECO in an underlying action. (Doc. # 2). Invoking diversity jurisdiction, Travelers removed the case to this Court. (Doc. # 1). Although TECO and PDI are both citizens of Florida, and complete diversity is therefore lacking, Travelers maintains that PDI is fraudulently joined and that its citizenship can be disregarded for diversity purposes. A brief review of the facts follows.

         TECO's claims against Travelers and PDI arise from a personal-injury action filed by Mario Santos against TECO, PDI, and two other defendants, Posen Construction Co. (“Posen”) and Johnson Engineering, Inc. (Doc. # 2 at ¶¶ 2, 10). Mr. Santos was employed by Posen, which was the prime contractor on a road expansion project. (Id. at ¶ 11). While Mr. Santos was operating a mixer, he struck an underground gas line, which exploded and caused him to suffer severe burns and permanent injuries. (Id. at ¶¶ 12, 13, 17). Mr. Santos alleged that TECO and PDI were negligent for failing to properly install, reposition, maintain, and mark the gas line. (Id. at ¶¶ 15-16).

         Before the accident, TECO hired PDI to reposition the gas line in order to allow Posen to perform necessary construction. (Id. at ¶ 14). TECO and PDI entered into a General Agreement for Contracted Work (“General Agreement”). (Id. at ¶ 18). Among other provisions, the General Agreement required PDI to obtain a commercial general liability policy and to name TECO as an additional insured on the policy. (Id. at ¶¶ 18, 20, 69). In addition, the General Agreement included a hold-harmless provision, which required PDI to defend and indemnify TECO for certain claims, including personal-injury claims arising from TECO's sole, contributory, or concurrent negligence. (Id. at ¶¶ 18-19; Doc. # 2 at 129-129).

         PDI obtained a Commercial Insurance Policy from Travelers that named TECO as an additional insured (“the Policy”). (Doc. # 2 at ¶ 1). In the Santos action, Travelers initially defended TECO under the Policy pursuant to a reservation of rights. (Id. at ¶¶ 22, 25). Travelers also defended PDI. (Id. at ¶ 23).

         Ultimately, Travelers settled Mr. Santos's claims against PDI. (Id. at ¶ 24). After the settlement, Mr. Santos filed a Fifth Amended Complaint, which asserted two negligence claims against TECO. (Id. at ¶ 31; Doc. # 1-1 at 173-179). In contrast to his prior complaint, Mr. Santos did not allege that PDI was TECO's agent. (Id. at ¶ 32).

         Based on that change, Travelers withdrew its defense of TECO. (Id. at ¶¶ 33, 40). In particular, Travelers maintained that TECO was no longer an “additional insured” because the Policy specified that a “person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.” (Id. at ¶¶ 33, 35; Doc. # 1-1 at 181-82). Travelers characterized the Fifth Amended Complaint as alleging claims based on TECO's independent negligence. (Doc. # 1-1 at 181).

         In this action, TECO asserts six claims. (Doc. # at ¶¶ 43-74). With respect to Travelers, TECO alleges that Travelers breached the Policy by failing to defend and indemnify TECO in the Santos action (Count I), TECO seeks a declaratory judgment with respect to Travelers' duty to defend and indemnify TECO in the Santos action (Count II), and TECO alleges that Travelers tortiously interfered with the General Agreement between TECO and PDI by settling PDI's claims in the Santos action. (Id. at ¶¶ 49-60).

         With respect to PDI, TECO alleges that PDI breached the General Agreement by failing to defend and indemnify TECO in the Santos action (Count IV), TECO alleges that PDI breached the General Agreement by failing to procure insurance for TECO (Count V), and TECO seeks contribution in the Santos action, pursuant to Fla. Stat. § 768.31 (Count VI). (Doc. # 2 at ¶¶ 61-74).

         While the case was still pending in state court, PDI filed a Motion to Dismiss TECO's Complaint on July 17, 2017. (Doc. # 3). That same day, Travelers removed the case to this Court, with PDI's consent. (Doc. # 1). On July 28, 2017, TECO filed the instant Motion to Remand. (Doc. # 10). On July 31, 2017, PDI filed a memorandum of law in support of its Motion to Dismiss. (Doc. # 14). On August 7, 2017, the Court granted TECO's motion to stay consideration of PDI's Motion to Dismiss pending a decision on TECO's Motion to Remand. (Doc. ## 12, 23).

         On August 11, 2017, PDI and Travelers filed separate responses in opposition to the Motion to Remand. (Doc. ## 24, 25). Accordingly, the Motion to Remand is ripe for review.

         II. Discussion

         As a general rule, a civil action filed in state court may be removed by a defendant to federal district court if the federal court possesses original jurisdiction. 28 U.S.C. § 1441(a). Travelers removed this action pursuant to 28 U.S.C. § 1332(a), which confers diversity jurisdiction when an action is between citizens of different states and the amount in controversy exceeds $75, 000. “Diversity jurisdiction requires complete diversity; every plaintiff must be diverse from every defendant.” Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998).

         The parties agree that TECO is a Florida corporation with its principal place of business in Florida, that Travelers is a Connecticut corporation with its principal place of business in Connecticut, and that PDI is a Florida corporation with its principal place of business in Florida. (Doc. # 2 at ¶¶ 4-6; Doc. # 1 at ¶¶ 1-3). Therefore, for diversity purposes, TECO is a Florida citizen, Travelers is a Connecticut citizen, and PDI is a Florida citizen. 28 U.S.C. § 1332(c)(1) (“a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business”).

         Travelers concedes in the Notice of Removal that complete diversity is lacking because TECO and PDI are both Florida citizens. (Doc. # 1 at ¶ 1). In addition, 28 U.S.C. § 1441(b)(2) prohibits removal when a properly-served defendant is a citizen of the state in which the action is filed, as PDI is here. Nonetheless, Travelers maintains that removal was proper because PDI was fraudulently joined as a party-defendant. (Doc. # 1 at ¶¶ 1, 6-7).

         The judicially-created doctrine of fraudulent joinder provides an exception to the requirement of complete diversity and to the forum-defendant rule in 28 U.S.C. § 1441(b)(2). Triggs, 154 F.3d at 1287; Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1561 (11th Cir. 1989). Fraudulent joinder may be found in three situations: (1) “when there is no possibility that plaintiff can prove the claims against the resident [or non-diverse] defendant, ” (2) “when there is outright fraud in the pleading of jurisdictional facts, ” and (3) when “a diverse defendant is joined with a nondiverse defendant as to whom there is no joint, several or alternative liability and where the claim against the diverse defendant has no real connection to the claim against the nondiverse defendant.” Triggs, 154 F.3d at 1287.

         In this case, Travelers asserts that the first and third theories apply, which are addressed in turn below. (Doc. # 25 at 2-3). As the removing party, Travelers bears the “heavy” burden of establishing fraudulent joinder. Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). The Court “evaluate[s] the factual allegations in the light most favorable to the ...


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