Murriel-Don Coal Co., Inc. v. Aspen Ins. UK Ltd.
790 F. Supp. 2d 590
E.D. Ky.2011Background
- Murriel-Don Coal Company sued in Kentucky state court for damages arising from a fatal fatigue-related accident connected to an employee of Murriel-Don; the plaintiffs (Hudson and Jent) added Murriel-Don as a defendant.
- Aspen Insurance UK Limited insured Murriel-Don and agreed to defend under a CGL policy with an automobile-exclusion; Aspen later determined the Jent/Hudson action fell under the automobile exclusion and withdrew coverage.
- Dunaway of Tooms & Dunaway, PLLC, initially defended Murriel-Don under Aspen’s instruction; Dunaway argued defective service and filed a motion to dismiss.
- Aspen terminated Dunaway’s defense after conclusions about coverage; Murriel-Don proceeded without an attorney due to Aspen’s withdrawal of coverage.
- Default judgment (award of damages to Hudson and Jent) entered in state court after Murriel-Don failed to respond to discovery; Murriel-Don subsequently sued Aspen, Dunaway, and Tooms & Dunaway in Kentucky Knott Circuit Court alleging breach of contract, duty to defend, unfair claims practices, legal malpractice, and breach of fiduciary duty.
- Aspen removed the case to federal court seeking fraudulent-joinder/misjoinder relief to preserve diversity; Murriel-Don moved to remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraudulent joinder/removal is proper given lack of complete diversity | Murriel-Don argues Dunaway is not fraudulently joined; state-law claims colorable. | Aspen contends Dunaway is fraudulently joined to defeat diversity. | Court remands; fraudulent-joinder not established; diversity lacking unless state court dismisses non-diverse defendant. |
| Whether fraudulent misjoinder applies to defeat diversity | Murriel-Don renotes the lack of improper joinder arguments; claims arise from same transaction. | Aspen argues misjoinder could sever unrelated non-diverse defendant. | Court declines to apply fraudulent misjoinder; leaves state court to evaluate joinder. |
| Whether attorney’s fees should be awarded under 28 U.S.C. § 1447(c) | Murriel-Don seeks fees due to improper removal. | Aspen’s theories were arguable; not objectively unreasonable. | No fees awarded; arguments were reasonable despite ultimately failing. |
Key Cases Cited
- Coyne v. American Tobacco Co., 183 F.3d 488 (6th Cir.1999) (fraudulent joinder doctrine hinges on lack of colorable claim against non-diverse defendant)
- Saginaw Hous. Comm'n v. Bannum, Inc., 576 F.3d 620 (6th Cir.2009) (colorable claim required to avoid remand under fraudulent joinder)
- McLeod v. Cities Serv. Gas Co., 233 F.2d 242 (10th Cir.1956) (jurisdictional threshold for fraudulent-joinder analysis)
- May v. Walmart Stores, Inc., 751 F. Supp. 2d 946 (E.D. Ky.2010) (remand and jurisdictional-amount issues; procedurally relevant to removal and discovery rights)
- Gold-Washing & Water Co. v. Keyes, 96 U.S. 199 (1877) (removal jurisdiction based on state-court record at time of removal)