A Mississippi Federal Court recently refused to remand a case after concluding that the plaintiff improperly joined two insurance agents to a lawsuit to destroy diversity jurisdiction. Wildmon v. EMC National Life Co., No. 1:08-CV-173 (SA)(JAD) (N.D.Miss. Mar. 11, 2009).
Plaintiff’s daughter had a life insurance policy naming plaintiff as the sole beneficiary. Following the death of her daughter, the insurer twice denied plaintiff’s claim for insurance proceeds. Thereafter, plaintiff commenced suit against the insurer and two insurance agents alleging breach of contract and bad faith based on the defendants’ failure to timely and properly investigate the claim and the application of insurance. Plaintiff alleged that one of the agents committed fraud by intentionally and knowingly completing the application with incorrect information concerning the decedent’s health and that the other agent acted in bad faith in issuing and administering the policy.
The insurer successfully removed the case to federal court alleging that the plaintiff fraudulently joined the two agents to destroy the court’s diversity jurisdiction. The plaintiff moved to remand the case claiming that the court lacked jurisdiction.
In order to determine whether plaintiff fraudulently joined the non-diverse agents, the court had to determine whether plaintiff could successfully maintain a cause of action against them in state court. The court held that plaintiff failed to put forth admissible evidence that the first agent fraudulently completed the application, or that either agent was independently liable for their work on the claim. Finding that the agents were acting within the scope of their agency, the court held that they could not, as a matter of law, be independently liable in connection with their work on the claim. Under Mississippi law, insurance agents can not be held independently liable for their work on a claim unless their conduct amounts to gross negligence, malice, or reckless disregard for the rights of the insured. The court found that the complaint lacked any allegations of gross negligence and the allegations supporting the plaintiff’s bad faith claim were vague and conclusory.
Concluding that plaintiff could not sustain any claims against the agents, the court dismissed the agents from the action, denied the plaintiff’s motion to remand and retained jurisdiction over the remaining claims.