Hsi-Sheng Lee, et al. v. Harris McKay Company, Inc., et al.

Summary

The United States District Court for the Northern District of Alabama grants the plaintiffs’ motion to remand an insurance dispute removed on diversity grounds. The court holds that the resident insurance agency defendant was not fraudulently joined because the complaint and supporting materials showed a possibility of a viable Alabama breach-of-contract claim based on an agreement to procure insurance. The court declines to award remand-related costs and attorney’s fees and directs the Clerk to remand and close the case.

Holdings

1. Under binding Eleventh Circuit precedent, fraudulent joinder exists only if the removing party proves either that there is no possibility the plaintiff can establish a cause of action against the resident defendant or that the plaintiff fraudulently pleaded jurisdictional facts. If there is even a possibility that a state court would find that the complaint states a cause of action against a resident defendant, joinder is proper and remand is required.
2. The Lees showed at least a possibility that an Alabama court would find a viable breach-of-contract claim against HMC for failing to procure insurance as agreed. The alleged procurement agreement, HMC's insurance proposal, and Hsi-Sheng Lee's affidavit were sufficient at the remand stage.
3. The asserted two-year statute of limitations and contributory-negligence or duty-to-read defenses did not establish that the Lees' breach-of-contract claim was nonviable as a matter of law.

Questions Presented

1. Whether HMC and Findley were fraudulently joined so that their Alabama citizenship could be disregarded for diversity jurisdiction.
2. Whether the Lees' allegations and supporting affidavit established at least a possibility of a viable Alabama breach-of-contract claim against HMC based on an agreement to procure insurance.
3. Whether the asserted statute-of-limitations and contributory-negligence or duty-to-read defenses defeated the claim at the remand stage.

Disposition

remanded