E-Alert Case Updates

Diversity of Citizenship Jurisdiction Exists Where Plaintiff Failed to Show Ability to Prevail against Maryland Attorneys

Sean Cook v. Nationwide Insurance Company, et al.
Case No.: PWG-13-882, (U.S. District Court for the District of Maryland, August 23, 2013)
by Eric M. Leppo, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In this recently issued opinion by Judge Paul W. Grimm of the U.S. District Court for the District of Maryland, the Court ruled that Plaintiff could not prevail against two (2) Maryland attorneys named as Defendants. As such, those individuals were deemed to have been fraudulently joined, and removal to Federal Court was proper.

This action was filed by Plaintiff Sean Cook after the conclusion of an auto tort suit that went to trial in 2010 in Maryland state court. Mr. Cook was the Plaintiff in that personal injury action as well in which a car accident was allegedly caused by Antonio Alvarez who was driving while intoxicated and on a suspended license at the time. Mr. Alvarez was insured by Nationwide at the time of the accident with liability limits of $50,000. The Plaintiff sustained significant injuries, and filed a civil lawsuit against Alvarez after he was unable to resolve his claim with Nationwide.

Nationwide engaged attorneys Eric Hitzel and Andrew Greenspan to defend Mr. Alvarez in the auto tort action. On the day trial was to begin in the underlying matter, the Plaintiff conveyed a settlement demand of $71,000 to a Nationwide representative (an attorney not representing Mr. Alvarez in the case) to account for the policy limits and Plaintiff’s estimate of Nationwide’s trial costs. Nationwide countered, through attorneys Hitzel and Greenspan, with an offer of $54,000 which was rejected by the Plaintiff. Trial proceeded and a verdict was entered against Alvarez totaling $892,050.52 (well in excess of his insurance). Mr. Alavarez was apparently not in any position to pay the judgment, but instead assigned to the Plaintiff, any and all rights and claims he had against Nationwide and his attorneys as a result of the auto tort suit and the excess verdict entered against him.

Plaintiff Cook filed suit in the Circuit Court for Prince George’s County against Nationwide, the two (2) attorneys, and their law office (a subdivision of Nationwide), alleging a single count of “Bad Faith/Negligence” against all Defendants. The Defendants removed the case to federal court pursuant to 28 U.S.C. § 1332(a), contending that the only Maryland Defendants (the attorneys) were fraudulently joined, and that there was diversity of citizenship amongst the Plaintiff and the other Defendants. Defendants also filed a Motion to Dismiss as to all Defendants. The Plaintiff filed a Motion to Remand the matter to state court and an Amended Complaint.

Judge Grimm first noted the general rule that fraudulent joinder permits removal when a non-diverse party is (or has been) a defendant in the case, but that it is a high bar for Defendants, and a plaintiff need only show a“glimmer of hope” or “a slight possibility of a right to relief.” Hartley v. CSX Transp., Inc., 187 F.3d 422, 426 (4th Cir. 1999). The Court noted further that under Fourth Circuit precedent (Pinney v. Nokia, Inc., 402 F.3d 430, 443 (4th Cir. 2005)), a court must look at the original complaint as opposed to amended complaints when determining if removal is proper.

The Court held that Plaintiff could not possibly prevail against the attorney Defendants. After noting that no Maryland case has even addressed whether a bad faith claim may be asserted against anyone other than the actual insurer, the Court noted that issue need not be decided here since the specific allegations of the Complaint were insufficient regarding any acts of those Defendants. Further, even if the action were seen as one of legal malpractice, the court held that any malpractice claim Alaverz had, was not assignable under Maryland law.