R. Michael Stillwell v. Allstate Insurance Company
663 F.3d 1329
| 11th Cir. | 2011Background
- Stillwell owned a multi-unit East Point, Georgia property with nine bedrooms, each with separate locks, rented to unrelated tenants; Stillwell sometimes used a room as an office.
- In 2007 the property sustained fire damage; Stillwell later claimed water damage; Allstate denied coverage, determining the property was not a dwelling under the policy.
- Stillwell filed two state-court lawsuits against Allstate (water damage) and against Allstate and Edwards Insurance Agency (fire damage and Edwards’ fiduciary duties).
- Allstate removed both actions to federal court based on diversity; Edwards was later dismissed as a fraudulent non-diverse defendant, and the actions were consolidated.
- The district court granted summary judgment for Allstate in the water-damage case, and remanded the fire-damage case for lack of dwelling coverage; the fire case was remanded to state court.
- On appeal, the Eleventh Circuit vacated the fire-damage remand, affirmed the water-damage summary judgment, and remanded with instructions to remand the fire-damage case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Edwards was fraudulently joined to defeat diversity | Stillwell asserts Edwards is plausibly liable under Georgia law. | Allstate contends no possibility of a claim against Edwards; fraudulent joinder applies. | Remand improper; Edwards not fraudulently joined; remand granted. |
| Proper standard for fraudulent-joinder analysis | District court used 12(b)(6) standard; should use a lax fraudulent-joinder standard. | District court appropriately applied fraud-joinder analysis. | Court adopts lax fraudulent-joinder standard; remand required. |
| Whether the Fire Damage Property qualifies as a dwelling under the policy | Language ambiguous; should be interpreted in Stillwell's favor to provide coverage. | Property not a one-to-four-family building; not principally a private residence. | Property not a one-to-four-family structure; not a dwelling; Allstate wins on coverage. |
| Effect of remand on the water-damage case | Remand of fire case should affect all consolidated actions. | Water-damage case remains properly in federal court; remains distinct from fire case. | Water-damage summary judgment affirmed; fire-damage remanded to state court. |
Key Cases Cited
- Crowe v. Coleman, 113 F.3d 1536 (11th Cir. 1997) (fraudulent-joinder standard; burden to show no possibility of recovery)
- Coker v. Amoco Oil Co., 709 F.2d 1433 (11th Cir.1983) (joinder proper if state-law claim could be stated)
- Triggs v. John Crump Toyota, Inc., 154 F.3d 1284 (11th Cir.1998) (possibility of stating a valid cause of action suffices for joinder)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim)
- Guthrie v. Monumental Props., Inc., 232 S.E.2d 369 (Ga. Ct. App. 1977) (Georgia notice-pleading — fair notice suffices)
- Henderson v. Washington Nat. Ins. Co., 454 F.3d 1278 (11th Cir. 2006) (fraudulent-joinder standard noted)
- Pacheco de Perez v. AT&T Co., 139 F.3d 1368 (11th Cir. 1998) (heavy burden to prove lack of possible claim)