UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

 

LABARBARA ALFORD,

KEVIN JOHNSON, and

DESOTA JOHNSON,

Plaintiffs,

v.

LIBERTY MUTUAL FIRE INSURANCE

COMPANY and

MICHIGAN AUTOMOBILE INSURANCE

PLACEMENT FACILITY,

Defendants.

 /

Case No. 15-11464

OPINION AND ORDER DENYING PLAINTIFFS’ MOTION FOR REMAND

Plaintiffs Labarbara Alford, Kevin Johnson, and Desota Johnson initiated the

instant action in state court against Defendants Liberty Mutual Fire Insurance Company

(“Liberty Mutual”) and the Michigan Automobile Insurance Placement Facility (the

“MAIPF”) alleging that both Defendants violated Mich. Comp. Laws § 500.3101 et seq.

by refusing or neglecting to pay Plaintiffs’ No-Fault Automobile Insurance Benefits. 

(Dkt. # 1-1, Pg. ID 16, 19.) Liberty Mutual removed the case to federal court on April

22, 2015, averring that Plaintiffs had fraudulently joined the MAIPF and that, absent the

MAIPF, the court has diversity jurisdiction over this case pursuant to 28 U.S.C. § 1332. 

(Dkt. # 1, Pg. ID 1).

Now before the court is Plaintiffs’ Motion for Remand, which contends that the

MAIPF was not fraudulently joined and, therefore, the court does not have diversity

jurisdiction because the MAIPF and Plaintiffs are all citizens of Michigan, defeating the

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complete diversity requirement of § 1332(a). (Dkt. # 6, Pg. ID 59); see Caterpillar Inc. v.

Lewis, 519 U.S. 61, 68 (1996). The matter is fully briefed, and no hearing is needed. 

See E.D. Mich. LR 7.1(f)(2). For the reasons stated below, the court will deny Plaintiffs’

Motion for Remand to State Court.

I. BACKGROUND

According to the complaint, on April 2, 2014, Plaintiffs were “involved in an

automobile accident causing numerous severe and permanent injuries and damages to

Plaintiff[s].” (Dkt. # 1-1, Pg. ID 15.) Plaintiffs allege that “Defendant Liberty Mutual is

liable to them for all [No-Fault Personal Injury Protection] benefits” resulting from the

accident. (Id.) Plaintiffs claim that “[a]lthough demand for payment . . . has been made,

Defendants unreasonably . . . refuse or neglect to pay Plaintiffs all Personal Protection

Benefits in accordance with [Mich. Comp. Laws §] 500.3101 et seq.” (Id. at 16.)

II. STANDARD

Pursuant to 28 U.S.C. § 1332(a), “district courts . . . have original jurisdiction of

all civil actions where the matter in controversy exceeds the sum or value of $75,000 

. . . and is between (1) citizens of different states.” A corporation is deemed to be a

citizen of “of every State . . . by which it has been incorporated and of the State 

. . . where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). “[A]ny civil

action brought in a State court of which the district courts of the United States have

original jurisdiction, may be removed by the defendant . . . to the district court of the

United States for the district and division embracing the place where such action is

pending.” 28 U.S.C. § 1441(a).

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“The current general-diversity statute . . . , 28 U.S.C. § 1332(a), . . . applies only

to cases in which the citizenship of each plaintiff is diverse from the citizenship of each

defendant.” Caterpillar, 519 U.S. at 68. “When a non-diverse party has been joined as

a defendant, then in the absence of a substantial federal question the removing

defendant may avoid remand only by demonstrating that the non-diverse party was

fraudulently joined.” Jerome-Duncan, Inc. v. Auto-By-Tel, LLC, 176 F.3d 904, 907 (6th

Cir. 1999); see 28 U.S.C. § 1441(b). “To prove fraudulent joinder, the removing party

must present sufficient evidence that a plaintiff could not have established a cause of

action against non-diverse defendants under state law.” Coyne v. Am. Tobacco Co.,

183 F.3d 488, 493 (6th Cir. 1999). “[I]f there is a colorable basis for predicting that a

plaintiff may recover against non-diverse defendants, this Court must remand the action

to state court.” Id. The Sixth Circuit recently clarified, “When deciding a motion to

remand, including fraudulent joinder allegations, we apply a test similar to, but more

lenient than, the analysis applicable to a Rule 12(b)(6) motion to dismiss.” Casias v.

Wal-Mart Stores, Inc., 695 F.3d 428, 433 (6th Cir. 2012).

“The district court must resolve all disputed questions of fact and ambiguities in

the controlling . . . state law in favor of the non removing party[, and a]ll doubts as to the

propriety of removal are resolved in favor of remand.” Coyne, 183 F.3d at 493 (internal

quotation marks and citations omitted). “As a general rule, removability is determined

by the pleadings filed by the plaintiff.” Union Planters Nat’l Bank of Memphis v. CBS,

Inc., 557 F.2d 84, 89 (6th Cir. 1977). However, “[a]s appropriate, . . . [t]he court may 

look to material outside the pleadings for the limited purpose of determining whether

there are undisputed facts that negate the claim.” Casias, 695 F.3d at 433 (internal

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quotation marks omitted).

III. DISCUSSION

According to the complaint and motion papers, Labarbara Alford and Kevin

Johnson are citizens of Michigan (Dkt. # 1, Pg. ID 2; Dkt. # 1-1, Pg. ID 14-15), Desota

Johnson is a citizen of California (Dkt. # 1, Pg. ID 2; Dkt. # 1-1, Pg. ID 15), Liberty

Mutual is a citizen of Wisconsin and Massachusetts (Dkt. # 1, Pg. ID 2; Dkt. # 6), and

the MAIPF is a citizen of Michigan (Id. at 3; see Dkt. # 6, Pg. ID 57). See 28 U.S.C. §

1332(c)(1). Furthermore, it is uncontested that Plaintiffs’ complaint satisfies 28 U.S.C. §

1332(a)’s $75,000 amount in controversy requirement. (Dkt. # 1, Pg. ID 5; Dkt. # 6.) 

Absent the MAIPF, the court would have diversity jurisdiction over this matter because

the amount in controversy exceeds $75,000 and all Plaintiffs have diverse citizenship

from Liberty Mutual. See Caterpillar, 519 U.S. at 68. Unless the court finds that the

MAIPF was fraudulently joined, the court would be compelled to remand the case for

lack of subject matter jurisdiction.

Liberty Mutual alleges that “[t]he only relief sought by Plaintiffs is [Personal Injury

Protection (“PIP”)] benefits allegedly owed pursuant [to] the Liberty Mutual Policy . . . . 

MAIPF is not responsible for the payment of PIP benefits. Rather, the MAIPF is only

responsible for assigning PIP claims to participating insurers.” (Dkt. # 1, Pg. ID 4.) 

Therefore, “Plaintiffs’ Complaint fails to state a claim against MAIPF upon which relief

can be granted,” creating a case of fraudulent joinder. (Id.)

Meanwhile, Plaintiffs contest that “Plaintiffs submitted applications to the MAIPF

requesting benefits from an assigned insurer, but it has not yet assigned an insurer.” 

(Dkt. # 6, Pg. ID 59.) Plaintiffs seek “to have MAIPF either assign an insurer or pay the

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benefits,” and therefore, “[t]he cause of action instituted against MAIPF is colorable” and

the MAIPF is not fraudulently joined. (Id.)

Liberty Mutual responds that “[i]n their Complaint, Plaintiffs do not request that

the Court declare anything, much less that MAIPF is ‘compelled to assign an insurer or

pay benefits themselves.’” (Dkt. # 7, Pg. ID 66.) Liberty Mutual also observes that,

pursuant to Michigan law, “MAIPF is simply not responsible for the payment of PIP

benefits.” (Id. at 67.) Therefore, since Plaintiffs’ claim only seeks those benefits, (Dkt. #

1-1, Pg. ID 17, 20), Liberty Mutual argues that “Plaintiffs’ Complaint fails to state a claim

against MAIPF upon which relief can be granted,” resulting in fraudulent joinder and

proper removal pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. (Dkt. # 7, Pg. ID 67.)

Under Michigan law, “[t]he [MAIPF] shall make an initial determination of a

claimant’s eligibility for [No-Fault or PIP] benefits . . . and shall deny an obviously

ineligible claim. The claimant shall be notified promptly in writing of the denial and the

reasons for the denial.” Mich. Comp. Laws § 500.3173a(1). If an applicant is eligible for

benefits, “[t]he [MAIPF] shall promptly assign the claim . . . and notify the claimant of the

identity and address of the [assigned] insurer.” Mich. Comp. Laws § 500.3174. The

MAIPF, therefore, is an intermediary between claimants and insurers that evaluates

claimants’ eligibility before assigning them an insurer to pay their benefits. The 

MAIPF’s enumerated duties do not extend to paying claimants’ benefits directly. See

Mich. Admin. Code R. 11.102 (stating that the MAIPF was created for the following

purposes: “(a) Receiving claims for personal protection insurance benefits[;] (b)

Assigning claims to servicing insurers[;] (c) Assessing fees from member insurers[;] (d)

Monitoring the proper payment of claims[; and] (e) Performing other duties under the

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act.”). Accordingly, Plaintiffs’ two counts seeking No-Fault PIP benefits from

Defendants are inapplicable to the MAIPF because the MAIPF does not pay such

benefits.

Likewise, despite Plaintiffs’ statement in its Motion to Remand that their

complaint seeks to have MAIPF assign their claim (Dkt. # 6, Pg. ID 59), the complaint

does not contain any claim that the MAIPF has failed to fulfill its statutory duties to, inter

alia, “make an initial determination of a claimant’s eligibility for [No-Fault insurance]

benefits” and “promptly assign the claim.” Mich. Comp. Laws § 500.3174. The

complaint only notes that Plaintiffs’ claims have not been assigned to an insurer in order

to explain why no claim number exists. (Dkt. # 1-1, Pg. ID 20 (“That the insurance

policy above referred to under which Plaintiff[s] bring this action is: Claim Number:

ASSIGNED CLAIMS [sic] has failed to assign the claim to a particular servicing insurer,

so no claim number exists”).) 

Plaintiffs take umbrage at Liberty Mutual’s use of the term “fraudulent joinder,”

arguing that “nothing about the addition of MAIPF can be said to be fraudulent in any

manner; and certainly not a fraudulent attempt to avoid diversity jurisdiction. Liberty

Mutual is simply making unfounded accusations about Plaintiffs’ intent.” (Dkt. # 6, Pg.

ID 59.) The term, however, does not imply that Plaintiffs face a claim of actual fraud. 

Rather, “‘Fraudulent joinder’ is a term of art in federal jurisdictional analysis and does

not require any sort of intentional wrongdoing or deceitful intentions. It is simply legal

shorthand for deciding whether a particular party's citizenship should be disregarded in

assessing subject matter jurisdiction.” Casias v. Wal-Mart Stores, Inc., 764 F. Supp. 2d

914, 917 (W.D. Mich. 2011). In finding that the MAIPF was fraudulently joined, neither

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the court nor Liberty Mutual charges Plaintiffs with committing fraud. It does, however,

mean that the court will disregard MAIPF’s Michigan citizenship in determining whether

or not there is complete diversity in this case.

Plaintiffs’ only counts are for the payment of No-Fault PIP benefits, and the

MAIPF cannot be held liable under either count; therefore, the court finds that there is

no colorable basis for predicting that Plaintiffs could recover from the MAIPF and that

MAIPF was fraudulently joined.

IV. CONCLUSION

IT IS ORDERED that Plaintiffs Labarbara Alford, Kevin Johnson, and Desota

Johnson’s Motion for Remand to State Court (Dkt. # 6) is DENIED.

IT IS FURTHER ORDERED that Defendant Michigan Automobile Insurance

Placement Facility is DISMISSED AS A PARTY from this case.

 s/Robert H. Cleland 

ROBERT H. CLELAND

UNITED STATES DISTRICT JUDGE

Dated: July 24, 2015

I hereby certify that a copy of the foregoing document was mailed to counsel of record

on this date, July 24, 2015, by electronic and/or ordinary mail.

 s/Lisa Wagner 

Case Manager and Deputy Clerk

(313) 234-5522

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