EAST ST. LOUIS – Edward Unsell of East Alton added an insurance agent to a suit for the sole purpose of defeating federal jurisdiction, U.S. Magistrate Judge Gilbert Sison ruled on July 23.
Sison dismissed a fraud claim that Unsell’s client Michael Schuster brought against agent Diane Wilson, an Illinois citizen, in a suit against Owners Insurance.
Sison wrote that the balance of equities strongly favored finding that Schuster fraudulently joined Wilson.
“Plaintiff’s sole count against defendant Wilson is utterly groundless, even under the lenient standard for evaluating the likelihood of a claim’s success for the purposes of fraudulent joinder,” Sison wrote.
“This strongly suggests that plaintiff’s motive in adding her was to defeat diversity jurisdiction.”
Schuster sued Owners Insurance in Madison County chancery court on March 10, to recover $588,803.96 in medical expenses from a vehicle accident.
Owners counsel Daniel Price of Centralia removed the complaint to district court on March 29, asserting diverse citizenship as an Ohio citizen.
He moved to dismiss it on April 6, claiming Schuster failed to allege conduct that violated state law or the insurance contract.
Unsell moved for leave to amend the complaint on April 7.
Sison granted it on April 9, and Unsell added Wilson on April 12.
Owners and Wilson moved to dismiss the complaint on April 26, and Price separately objected to the addition of Wilson.
On May 28, Unsell responded that Owners waived its objection by failing to object to the motion to amend.
“Wilson made false statements to further delay and prolong the process to which plaintiff would and should receive hundreds of thousands of dollars,” Unsell wrote.
Sison found Wilson didn’t belong in his court.
He found Schuster’s argument distorted basic agency law of Illinois.
“While the acts of an agent may be considered the acts of the principal, acts of the principal are never imputed to the agent,” Sison wrote.
He found that an agent who breaches a duty owed only to her principal can’t be independently liable to a third party.
He found an agent has no duty of care toward a customer as long as there is no agency relationship between them.
He found the timing of the amendment supported a finding of fraudulent joinder.
“When a plaintiff moves to join a nondiverse defendant immediately after removal, but without additional discovery providing a legitimate reason for doing so, the motion suggests that the joinder’s only purpose is to destroy diversity jurisdiction,” Sison wrote.
He wrote that he’d take up the motion to dismiss Owners Insurance in a separate order at a later date.