Court Opinion

ID: 1022749
Source: CourtListenerOpinion
Date Created: 2013-07-04 23:27:17.99404+00
Date Added: 2024-06-11T09:28:35.421033
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 06-1877

BALTIMORE COUNTY, MARYLAND, a body Corporate
and Politic,

                                              Plaintiff - Appellant,

           versus

CIGNA HEALTHCARE; CIGNA CORPORATION; ART
JOHNSON;   CIGNA HEALTHCARE MID-ATLANTIC,
INCORPORATED,

                                                          Defendants,

                and

CONNECTICUT GENERAL LIFE INSURANCE COMPANY,

                                               Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.    Catherine C. Blake, District Judge.
(1:05-cv-00511-CCB)

Argued:   March 12, 2007                      Decided:   June 5, 2007

Before WILKINSON, MICHAEL, and KING, Circuit Judges.

Vacated in part, reversed in part, and remanded by unpublished
opinion. Judge King wrote the majority opinion, in which Judge
Michael joined. Judge Wilkinson wrote a dissenting opinion.
ARGUED: Jeffrey Grant Cook, Assistant County Attorney, BALTIMORE
COUNTY OFFICE OF LAW, Towson, Maryland, for Appellant. Michael
Patrick Cunningham, FUNK & BOLTON, P.A., Baltimore, Maryland, for
Appellee.    ON BRIEF:    John E. Beverungen, County Attorney,
BALTIMORE COUNTY OFFICE OF LAW, Towson, Maryland, for Appellant.
Bryan D. Bolton, Hisham M. Amin, FUNK & BOLTON, P.A., Baltimore,
Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
KING, Circuit Judge:

        Plaintiff Baltimore County, Maryland, (“Baltimore County” or

the “County”) appeals from the district court’s Memorandum and

Order denying its motion to remand this lawsuit to state court and

denying its motion to file a Second Amended Complaint.                         See

Baltimore County v. Cigna Corp., CCB-O5-511 (D. Md. Aug. 3, 2005)

(the “Opinion”). Baltimore County initially filed suit in Maryland

state    court,     but   Connecticut    General      Life   Insurance    Company

(“Connecticut       General”),   one    of    the    defendants,   removed     the

proceeding to the District of Maryland.                The district court then

dismissed    the     non-diverse   defendants,        Art    Johnson   and   Cigna

Healthcare Mid-Atlantic, Inc. (“Cigna HMA”), from the action,

relying on the doctrine of fraudulent joinder, and concluded that

it possessed diversity jurisdiction.                After discovery, the court

awarded summary judgment to Connecticut General, the only remaining

defendant.    See Baltimore County v. Conn. Gen. Life Ins. Co., CCB-

05-511 (D. Md. July 14, 2006).

        Baltimore    County   contends       that   the   court   erred   in   its

conclusion that it possessed jurisdiction, in its denial of the

County’s motion to file a Second Amended Complaint, and in its

award of summary judgment to Connecticut General.                  As explained

below, we agree with the County that Connecticut General failed to

establish that Johnson was fraudulently joined in this lawsuit. We

therefore vacate the court’s summary judgment award, reverse its

                                         3
holding that it possessed jurisdiction, and remand to permit a

further remand to the appropriate state court.

                                    I.

                                    A.

     This civil action stems from a group life insurance policy

(the “Policy”) issued by Connecticut General, a subsidiary of Cigna

Corporation, covering Baltimore County’s employees.1           The Policy

had been in effect since 1966 and was written by a predecessor of

Connecticut General.      Connecticut General acquired the Policy in

1991 and reissued it under its own name in 1993.               The Policy

requires Baltimore County to make monthly premium payments to

Connecticut General in return for life insurance coverage for

Baltimore County’s employees.      A portion of these monthly payments

was allocated by Connecticut General into two reserve funds:          the

Incurred But Not Reported Reserve (the “IBNR”), and the Premium

Stabilization   Reserve    (the   “PSR”).   The   IBNR   was   originally

established by Connecticut General to pay claims incurred during a

policy year but not reported until after the policy year ended.        It

was not subject to or created under the Policy, and there was no

     1
      The facts underlying this appeal are drawn from the record
created in the district court and are presented in the light most
favorable to Baltimore County. See Mayes v. Rapoport, 198 F.3d
457, 464 (4th Cir. 1999) (concluding that, when evaluating a motion
for remand, all legal and factual disputes must be resolved in
favor of the plaintiff).

                                    4
written     agreement   between    the    County    and   Connecticut    General

concerning how the balance in the IBNR would be distributed if the

Policy was terminated.

      The PSR was created pursuant to an amendment to the Policy in

1970.     The PSR permitted the County to be credited with dividends

if the premiums paid by the County during the Policy year exceeded

the charges for benefit claims and other expenses.                Although the

PSR was held by Connecticut General, the County could use the PSR

to   make   up   for   any   shortfalls      that   occurred   between   premium

payments and benefit claims.          Pursuant to the Policy, any funds

remaining in the PSR after termination of the Policy and a final

settlement of the County’s account would be returned to the County.

The Policy also provided that “[c]hanges may be made in the policy

only by amendment signed by the Policyholder and by the Insurance

Company acting through its President, Vice President, Secretary or

Assistant Secretary.         No agent may change or waive any terms of the

policy.”     J.A. 118.2

      In July 1995, Robert Behler, a Baltimore County employee,

became the administrator for several of the County’s insurance

plans, including its group life insurance plan with Connecticut

General. Behler testified that, sometime between 1995 and 1997, he

agreed that Connecticut General could move a substantial sum of

      2
      Citations to “J.A.   ” refer to the Joint Appendix filed by
the parties in this appeal.

                                         5
money from the PSR into the IBNR.    Behler explained that Joe Mock,

an employee of Connecticut General who served as Baltimore County’s

account manager, asked him to approve the movement of these funds

for tax purposes.   Behler testified that Mock advised him that the

transferred money would be treated as if it were still in the PSR.

Thus, Behler believed that the money moved from the PSR to the

IBNR, like any funds remaining in the PSR, would be returned to

Baltimore County at the termination of the Policy.   Unfortunately,

this agreement on Connecticut General’s movement of money from the

PSR into the IBNR was never reduced to writing.

     Mock testified in his deposition that he does not remember

making any such representations to Behler.     Mock later explained

that, for the Policy year ending August 31, 1995, Connecticut

General began applying its own underwriting standards to calculate

the amount of premiums paid that would go into the IBNR, instead of

using those standards previously applied by Connecticut General’s

predecessor.   The financial statements indicate that during the

1993-1994 and the 1994-1995 Policy years, the IBNR increased from

$150,000 to $409,000.   After this increase in the IBNR, the funds

in the IBNR continued to accumulate interest.     Mock explained by

deposition that the interest was used by Connecticut General to

help offset the administrative expenses of managing Baltimore

County’s account.

                                 6
     After Mock was transferred to another position within Cigna

Corporation, Art Johnson, another employee of Connecticut General,

became Baltimore County’s account manager.                  Behler testified that

he explained and reiterated to Johnson his understanding with Mock

concerning the money transferred by Connecticut General from the

PSR to the IBNR.       He stated that Johnson did not object to or

correct this understanding in any way and thus acknowledged the

arrangement.     Johnson testified, however, that he did not recall

any such conversation with Behler.               While working with the County

on the Policy, Johnson would also send financial reports to the

County, indicating the sum of money in the IBNR and showing that

those funds were accumulating interest.                   Behler explained that

these documents reaffirmed his understanding that the funds in the

IBNR would be returned to the County upon termination of the Policy

because the IBNR was earning interest.

     Baltimore County decided to terminate the Policy at the end of

the 2001-2002 Policy year, with the Policy’s final date being

August   31,   2002.       As    part    of   its   final    account   settlement,

Connecticut General concluded that the total benefit claims were

$2,999,539 for the final Policy year, with administrative costs and

profits of $171,635.            Thus, Baltimore County owed $3,171,174 to

Connecticut     General.         The    County    had    paid   premiums   of   only

$2,065,987     for   the   final       Policy    year,   leaving   a   deficit   of

$1,105,187.

                                          7
     Connecticut General applied this deficit against the sum of

$723,385 then in the PSR, which resulted in a final deficit of

$381,802.    Baltimore County never paid Connecticut General this

deficit balance.     Connecticut General’s records also show that it

paid $328,844 in unreported claims for the final Policy year,

reducing the balance in the IBNR from $540,087 to $211,243.              This

$211,243 balance in the IBNR serves as the basis for Baltimore

County’s Complaint in this case, as the County contends that it is

entitled to reimbursement of the IBNR funds from Connecticut

General.    To the contrary, Connecticut General asserts that it is

entitled to keep the IBNR funds because it remains liable for any

future unreported claims from the final Policy year.3                 Although

this contingency exists, no claims have been reported since the

filing of the Complaint in this case in January of 2005.

                                    B.

     On January 11, 2005, Baltimore County filed its Complaint in

state    court   against   defendants       Cigna   Corporation,   Connecticut

General, Art Johnson, and “Cigna Healthcare.”                Pursuant to the

allegations of the Complaint, Baltimore County is a citizen of

Maryland, Connecticut General is a citizen of Connecticut, Art

     3
      Although Behler testified that his agreement with Mock and
Johnson required the balance of the IBNR to be returned to
Baltimore County after the final account settlement, the County
offered to assume liability for any remaining unreported claims, if
Connecticut General tendered to the County the balance of the IBNR.

                                        8
Johnson is a citizen of Maryland, and Cigna Corporation is a

citizen of Delaware and Pennsylvania.              As Baltimore County later

learned, Cigna Healthcare is a nonexistent entity.               The Complaint,

alleging that the County was entitled to the balance of the IBNR,

contained    three     counts:     fraud     in   the   inducement,      negligent

misrepresentation,       and   breach   of    contract.     It    did    not   make

specific allegations against any particular defendant, but instead

made its allegations against the four Defendants collectively.

     As relevant to this appeal, Baltimore County alleged, in the

negligent misrepresentation count, that the “Defendants had a duty

to Baltimore County that required the transmittal of accurate

information to it.       Defendants . . . consistently represented that

the IBNR was Baltimore County’s money.”            J.A. 26.      The County also

alleged that the Defendants were negligent in making such false

statements and that the statements “were made with the intention of

having Baltimore County act and rely” on them.                  Id.     The County

then alleged that the Defendants knew Baltimore County would rely

on these false statements and that the County was justified in such

reliance.    Id. at 26-27.

     On February 22, 2005, Connecticut General removed this matter

to   the    District    of     Maryland,     asserting    the    Complaint      had

fraudulently joined Johnson as a defendant and alleging that

diversity jurisdiction was appropriate. Baltimore County filed its

First Amended Complaint on February 28, 2005, before any responsive

                                        9
pleading was filed. The First Amended Complaint contained the same

allegations as the original Complaint but added Cigna HMA as a

defendant and removed Cigna Healthcare.                    Cigna HMA is a registered

health maintenance organization and a citizen of Maryland.                            On

March 7, 2005, Baltimore County moved to remand to state court,

maintaining        that     complete       diversity       did    not   exist   because

defendants Johnson and Cigna HMA are both citizens of Maryland.

       On August 3, 2005, the district court issued its Memorandum

and Order on the jurisdictional issue, denying Baltimore County’s

motion to remand and dismissing Johnson and Cigna HMA on the basis

of    fraudulent         joinder.      Opinion      5.4      In   evaluating    whether

fraudulent joinder had occurred, the court determined that the

allegations        against       Johnson   for     fraud    in    the   inducement   and

negligent misrepresentation “arguably do not satisfy Fed. R. Civ.

P. 8(a), and clearly do not satisfy Fed. R. Civ. P. 9(b).”                       Id. at

3.5        The   court    then    concluded       that    Cigna   HMA   had   also   been

fraudulently joined because Baltimore County had not presented

       4
      The district court’s Opinion of August 3, 2005, is found in
the Joint Appendix at J.A. 222-26. In its Opinion, the court also
denied the County’s motion to file a Second Amended Complaint,
which had been submitted to the court on May 3, 2005. The Second
Amended Complaint contained more specific factual allegations
against Johnson.
       5
      With regard to the breach of contract claim of the First
Amended Complaint, the court determined that “Johnson is not a
party to the policy and therefore is not a proper defendant to the
breach of contract claim.” Opinion 3. Baltimore County does not
address on appeal whether it had the possibility of maintaining a
breach of contract claim against Johnson.

                                             10
sufficient evidence to establish that Johnson was an employee of

Cigna HMA.      Id. at 3-4.     Thus, the court determined that “[t]he

County has shown no possibility of a claim against Johnson or Cigna

Healthcare Mid-Atlantic, Inc.”          Id. at 4.

        On July 14, 2006, the court made its award of summary judgment

to Connecticut General, the sole remaining defendant.6             The court

concluded that Connecticut General’s counterclaim, alleging that

Baltimore County had failed to pay $381,802 in premiums for the

final Policy year, constituted a valid recoupment defense.                J.A.

1068.       Because Connecticut General’s damages claim exceeded the

damages      claimed   by   Baltimore    County,    the   recoupment   defense

extinguished any monetary claim by Baltimore County.             Id. at 1080-

81. Connecticut General was thus awarded summary judgment. Id. at

1081.

                                        II.

        We review “de novo questions of subject matter jurisdiction,

including those relating to the propriety of removal and fraudulent

joinder.”      Mayes v. Rapoport, 198 F.3d 457, 460 (4th Cir. 1999)

(internal quotation marks omitted).

        6
      After the district court denied Baltimore County’s motion to
remand and dismissed Johnson and Cigna HMA, the remaining
defendants were Cigna Corporation and Connecticut General.     The
court dismissed Cigna Corporation on October 18, 2005.

                                        11
                                        III.

        On appeal, Baltimore County contends that the district court

erred in its conclusion that it possessed diversity jurisdiction in

this proceeding.         In so concluding, the court determined that the

non-diverse      defendants       —   Johnson   and    Cigna   HMA   —    had    been

fraudulently joined and dismissed both from the civil action.                     The

County also contends that the court erred in denying its motion to

file a Second Amended Complaint and in awarding summary judgment to

the sole remaining defendant, Connecticut General.                   As explained

below,    the    court    erred   in    concluding     that    Johnson   had     been

fraudulently joined. Thus, because there was no complete diversity

among the parties, the district court did not possess jurisdiction

in the matter.        As a result, we need not reach the merits of the

County’s other contentions, but vacate those rulings for lack of

jurisdiction.      See Mayes v. Rapoport, 198 F.3d 457, 466 (4th Cir.

1999) (vacating, without addressing merits, district court’s order

dismissing complaint against diverse parties after concluding that

court    erred   in   its   determination       that    non-diverse      party    was

fraudulently joined).

                                         A.

        Before a case can be properly removed to federal court, a

defendant must comply with the statutory requirements governing a

defendant’s ability to consummate removal. Mayes, 198 F.3d at 461.

One such statutory mandate is that the party seeking removal must

                                         12
show that there is “complete diversity” among all parties in order

to establish diversity jurisdiction.             See 28 U.S.C. § 1332(a).

Complete diversity occurs “when no party shares common citizenship

with any party on the other side.”                Mayes, 198 F.3d at 461.

Because there must be complete diversity, it is “difficult for a

defendant to remove a case if a non-diverse defendant has been

party to the suit.”        Id.     The doctrine of fraudulent joinder,

however, “permits removal when a non-diverse party is (or has been)

a defendant in the case.”        Id.     In essence, the fraudulent joinder

doctrine allows a court “to disregard, for jurisdictional purposes,

the    citizenship    of   certain        non-diverse   defendants,   assume

jurisdiction over a case, dismiss the non-diverse defendants, and

thereby retain jurisdiction.”          Id.

       A defendant seeking removal of a state court action to federal

court bears the heavy burden of establishing that a non-diverse

defendant has been fraudulently joined.             See Mayes, 198 F.3d at

464.    In order to establish the existence of fraudulent joinder,

       the removing party must establish either: that there is
       no possibility that the plaintiff would be able to
       establish a cause of action against the in-state
       defendant in state court; or that there has been outright
       fraud in the plaintiff’s pleading of jurisdictional
       facts.

Id.    (internal   quotation     marks    and   alterations   omitted).   In

applying this strict standard, we have recognized that “[a] claim

need not ultimately succeed to defeat removal; only a possibility

of a right to relief need be asserted.”          Marshall v. Manville Sales

                                         13
Corp., 6 F.3d 229, 233 (4th Cir. 1993).                     In evaluating a claim of

fraudulent joinder, all legal and factual issues must be resolved

in favor of the plaintiff.            Mayes, 198 F.3d at 464.              A court making

such   an   assessment        “is    not    bound      by   the   allegations       of    the

pleadings,        but   may    instead      consider        the   entire    record,       and

determine the basis of joinder by any means available.”                                   Id.

(internal     quotation         marks      omitted).          Furthermore,        we     have

emphasized that the standard for evaluating a fraudulent joinder

issue “is even more favorable to the plaintiff than the standard

for ruling on a motion to dismiss under Fed. R. Civ. P. 12(b)(6).”

Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999).

       In this appeal, Baltimore County contends that the court erred

in dismissing the two non-diverse defendants — Johnson and Cigna

HMA.    The County asserts that Connecticut General did not satisfy

its burden of establishing that the County had no possibility of

maintaining either a negligent misrepresentation claim or a fraud

in the inducement claim against the non-diverse defendants.                               We

need only address, however, whether the County’s claim of negligent

misrepresentation has a chance of being maintained against Johnson.

In order to survive an assertion of fraudulent joinder and show

that complete diversity does not exist, the County needs only to

show the possibility of maintaining one cause of action against one

non-diverse defendant.              See Mayes, 198 F.3d at 464.                 Because the

County      had     the       possibility         of    maintaining         a     negligent

                                             14
misrepresentation       claim    against         Johnson,    we    need    not   address

whether it could have possibly established its other causes of

action against Johnson or Cigna HMA.

                                            B.

     Baltimore County maintains on appeal that the district court

erred in its conclusion that Johnson was fraudulently joined.                        The

County asserts that Connecticut General did not meet its burden of

establishing that the County had no possibility of maintaining a

negligent misrepresentation claim against Johnson.                            Connecticut

General     contends,     on     the        other    hand,        that    a    negligent

misrepresentation claim could not be maintained because (1) the

County did not meet the pleading requirements of Federal Rule of

Civil Procedure 9(b), and (2) there is no factual basis on which to

conclude     that       Johnson        is        liable     for      any       negligent

misrepresentation.       We assess these contentions in turn.

                                            1.

     Connecticut General first contends that the district court

correctly    applied    Fed     R.   Civ.     P.    9(b)    to    Baltimore      County’s

negligent misrepresentation claim against Johnson.                        Specifically,

the court concluded in its Opinion that the allegations against

Johnson, including the negligent misrepresentation claim, “arguably

do not satisfy Fed. R. Civ. P. 8(a), and clearly do not satisfy

Fed. R. Civ. P. 9(b).”          Opinion 3.         Rule 9(b) provides that “[i]n

all averments of fraud or mistake, the circumstances constituting

                                            15
fraud or mistake shall be stated with particularity.”                  Connecticut

General maintains that the First Amended Complaint was not pled

with particularity because it does not contain any factual or legal

allegations specifically directed at Johnson.               Instead, the First

Amended    Complaint     makes     all    allegations      against       the    named

defendants collectively.           It also fails to allege when these

statements    were   made,    to   whom    they   were    made,    and    what       was

specifically represented.

     The County, however, contends that the pleading requirements

of Rule 9(b) do not apply to a negligent misrepresentation claim.

To maintain such a claim under Maryland law, a plaintiff must show:

     (1)     the defendant, owing a duty of care to the
             plaintiff, negligently asserts a false statement;

     (2)     the defendant intends that his statement will be
             acted upon by the plaintiff;

     (3)     the defendant has knowledge that the plaintiff will
             probably   rely on    the  statement,   which,   if
             erroneous, will cause loss or injury;

     (4)     the plaintiff, justifiably,                takes    action        in
             reliance on the statement; and

     (5)     the plaintiff suffers damage proximately caused by
             the defendant’s negligence.

Griesi v. Atl. Gen. Hosp. Corp., 756 A.2d 548, 553 (Md. 2000).                        In

evaluating     whether    a   cause       of   action     must    be     pled       with

particularity, a court should examine whether the claim requires an

essential showing of fraud.         See Vess v. Ciba-Geigy Corp. USA, 317

F.3d 1097, 1104-05 (9th Cir. 2003) (“Allegations of non-fraudulent

                                         16
conduct need satisfy only the ordinary notice pleading standards of

Rule 8(a).”); In re NationsSmart Corp. Sec. Litig., 130 F.3d 309,

315 (8th Cir. 1997) (“[A] pleading standard which requires a party

to plead particular facts to support a cause of action that does

not include fraud or mistake as an element comports neither with

Supreme Court precedent nor with the liberal system of ‘notice

pleading’ embodied in the Federal Rules of Civil Procedure.”).

Importantly, a claim of negligent misrepresentation under Maryland

law does not contain an essential showing of fraud and thus the

heightened pleading requirements of Rule 9(b) do not apply.     See

Tricontinental Indus., Ltd. v. PricewaterhouseCoopers, LLP, 475

F.3d 824, 833 (7th Cir. 2007) (recognizing that heightened pleading

standards of Rule 9(b) do not apply to negligent misrepresentation

claim); Gen. Elec. Capital Corp. v. Posey, 415 F.3d 391, 395-96

(5th Cir. 2005) (concluding that negligent representation claim

needs only to satisfy notice pleading standard of Rule 8(a)).

     Connecticut General next contends that, even if the negligent

misrepresentation claim does not require an essential showing of

fraud, Rule 9(b) standards should nevertheless apply because the

County made allegations of both fraudulent and non-fraudulent

conduct in its First Amended Complaint.      We also reject this

contention and conclude, as have our sister circuits, that in such

circumstances only the fraud allegations of a complaint must

satisfy the heightened pleading standards of Rule 9(b).   See Vess,

                                17
317 F.3d at 1104-05; In re NationsSmart Corp., 130 F.3d at 315.          As

explained by the Ninth Circuit,

     [t]o require that non-fraud allegations be stated with
     particularity merely because they appear in a complaint
     alongside fraud averments, however, serves no similar
     reputation-preserving function, and would impose a burden
     on plaintiffs not contemplated by the notice pleading
     requirements of Rule 8(a).

Vess, 317 F.3d at 1104.          Thus, because the heightened pleading

standards of Rule 9(b) do not apply to the County’s negligent

misrepresentation claim against Johnson, the district court erred

in determining that there was a fraudulent joinder of Johnson on

this ground.

                                      2.

     Connecticut General contends, in the alternative, that even if

Baltimore County’s First Amended Complaint was properly pled, the

County still has no possibility, as a matter of law, of maintaining

a negligent misrepresentation claim against Johnson.            It asserts

that, under Maryland law, it would be impossible for the County to

establish at least two of the essential elements needed to prove a

negligent misrepresentation claim.           First, Connecticut General

asserts that the County has no possibility of demonstrating that

Johnson   owes    the   County    a   duty   of   care   in   communicating

information.     Second, Connecticut General asserts that the County

has no possibility of showing that it was reasonable for it to rely

on Johnson’s silent acknowledgment of, or acquiescence in, Behler’s

earlier arrangement with Mock concerning the IBNR.

                                      18
     Connecticut         General      first    asserts,    in       its    alternative

contention, that it would be impossible for Baltimore County to

establish that Johnson owed it a tort duty because the County

cannot, as a matter of law, show that any special relationship

existed between the County and Johnson.              In order to initiate and

pursue    a    negligent    misrepresentation       claim,      a    plaintiff      must

establish that the defendant owes it a duty of care to communicate

correct information.        See Griesi, 756 A.2d at 553.              Although there

is no precise formula for determining whether a duty of care exists

between       two    parties,   the    Maryland   courts     have,        at   minimum,

evaluated “the nature of the legal relationship between the parties

and the likely harm that results from a party’s failure to exercise

reasonable care within that relationship.”                   Id. at 554.            When

dealing       with     claims   of     economic     loss     due      to       negligent

misrepresentation, a plaintiff is entitled to demonstrate that a

duty of care exists by establishing an intimate nexus or special

relationship between the parties.              Id.; see also Giant Food, Inc.

v. Ice King, Inc., 536 A.2d 1182, 1185 (Md. Ct. Spec. App. 1988)

(“[T]he most common example of the duty to speak with reasonable

care is based on a business or professional relationship, or one in

which there is a pecuniary interest.”).              The Maryland courts have

found special relationships to exist between parties in a variety

of business relationships.             See, e.g., Griesi, 756 A.2d at 556

(concluding that special relationship existed in pre-contractual

                                          19
employment negotiations); Weisman v. Connors, 540 A.2d 783, 793-94

(Md. 1998) (concluding that there was sufficient evidence for jury

to find special relationship between two executives engaged in pre-

contractual employment negotiations); Giant Food, 536 A.2d at 1185

(concluding that special relationship existed between buyer and

seller because of extensive communications that occurred over

period of time).

     Viewed in the proper light, it is clear that the County has

the possibility of establishing that it had a special relationship

with Johnson.    First, the Maryland courts have not ruled out, or

even addressed, whether a special relationship could exist under

the circumstances of this case.        See Hartley, 187 F.3d at 424-25

(reasoning that fraudulent joinder did not exist when state court

had not squarely foreclosed plaintiff’s claim).         Second, going

beyond the allegations of the pleadings, Baltimore County has

presented evidence that Johnson had a close business relationship

with the County, during which he engaged in detailed and extensive

communications with the County concerning the Policy and the two

reserve funds.     This evidence, given Maryland’s legal precedent,

provides the County with the possibility of establishing that a

special relationship existed between it and Johnson.

     Second, Connecticut General contends that Baltimore County

cannot establish that it was reasonable for it to rely on any

representations that may have been made or acknowledged by Johnson.

                                  20
See   Griesi,   756    A.2d    at    553    (recognizing     that,     in   order   to

establish     negligent       misrepresentation         claim,   plaintiff      must

demonstrate     that   it     was   justified     in   relying    on    defendant’s

representations).       Connecticut General first asserts that it was

unreasonable, as a matter of law, for the County to rely on any

representations       made    by    Johnson     when   the   Policy    specifically

provides that its terms cannot be modified by an agent.                      Because

the Policy does not apply to the IBNR, however, this contention

must fail.      That the Policy could not have been modified by a

Connecticut General agent does not necessarily mean that the IBNR,

which was neither created by nor subject to any written agreement,

could not have been so modified.

      Connecticut General also asserts that it was unreasonable for

the County to rely on Johnson’s silent acknowledgment of, or

acquiescence in, Behler’s arrangement with Mock.                 It contends that

Johnson was required under law to have made a more definitive

statement in order for the County to have reasonably relied on any

information Johnson provided.              The Maryland courts, however, have

recognized that a successful negligent misrepresentation claim may

be based upon a defendant failing “to make statements needed to

clarify the plaintiff’s understanding.”                Griesi, 756 A.2d at 555.

This legal principle is controlling here, and the County has

presented evidence that Johnson should have corrected Behler after

Behler explained his understanding of the IBNR.                       Thus, because

                                           21
Baltimore County has a possibility of maintaining a cause of action

for   negligent     misrepresentation      against   Johnson,    the    County’s

motion to remand this proceeding to state court should have been

granted.

                                     IV.

      Pursuant to the foregoing, we vacate the district court’s

judgment order, reverse its holding that it possessed jurisdiction,

and   remand   to   permit   a   further    remand   of   this   case    to   the

appropriate state court.

                                                 VACATED IN PART, REVERSED
                                                     IN PART, AND REMANDED

                                     22
WILKINSON, Circuit Judge, dissenting:

     The only fault the majority finds with the district court is

its holding that Art Johnson was fraudulently joined in this

action.    In the majority’s view, the district court should have

remanded    the   case    to   state    court    because    Baltimore   County’s

negligent misrepresentation claim “has a chance of being maintained

against Johnson.”        See ante at 14.       Because I believe the district

court correct in finding Johnson improperly joined, I respectfully

dissent.

                                        I.

     The gravamen of the County’s complaint is its allegation that

Joe Mock, a Connecticut General Sales Agent and citizen of Texas,

promised that the County would be entitled to the IBNR funds upon

policy termination.        But Baltimore County did not sue Joe Mock.

Instead, it chose to hale a citizen of Maryland, Art Johnson, into

state court alleging negligent misrepresentation.               The problem is

that nowhere in its complaint or subsequent submissions does

Baltimore County identify a single false statement made by Art

Johnson.    Indeed, Johnson did not even take over the Baltimore

County     account   until       1999     --     well   after     the   alleged

misrepresentations were made by Joe Mock.                  Nor does the County

explain why Johnson owed it -- an equally sophisticated business

entity -- a duty to explain contract terms, or why the County’s

                                        23
purported reliance upon an agent’s representation was reasonable in

light of Policy terms expressly foreclosing agent-modifications.

For all of these reasons, the district court was correct to

conclude that nondiverse defendant Johnson had been fraudulently

joined.    The district court’s decision is also correct in that the

County’s Second Amended Complaint plainly fails to allege negligent

misrepresentation as to Johnson with the requisite Rule 9(b)

particularity.

                                    II.

        To arrive at the conclusion that Johnson was not fraudulently

joined, the majority first holds that negligent misrepresentation

claims need not comport with the particularity requirements of

Federal Rule of Civil Procedure 9(b).         Rule 9(b) is an exception to

the general requirements of notice pleading, which provides that

“[i]n    all   averments   of   fraud    or   mistake,   the   circumstances

constituting fraud or mistake shall be stated with particularity.”

Fed. R. Civ. P. 9(b).      Thus, in a case governed by Rule 9(b), the

plaintiff must allege the speaker, time, place, and contents of the

allegedly false statement.       United States v. ex rel. Harrison v.

Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999).

Where, as here, there are multiple defendants, a plaintiff must

state “all claims with particularity as to each of the defendants”

and “identif[y] each individual defendant’s participation.”            Adams

                                        24
v. NVR Homes, Inc., 193 F.R.D. 243, 250, 251 (D. Md. 2000)

(emphasis added).

     Neither the majority nor Baltimore County argues that the

County’s claim of negligent misrepresentation against Art Johnson

in its First Amended Complaint meets Rule 9(b)’s requirements. And

for good reason.      The complaint attributes no misrepresentation to

Johnson at all, much less specify when these statements were made,

to whom they were made, or what was misrepresented.                     Indeed,

Johnson’s name appears only twice in the First Amended Complaint:

once in the caption and once in paragraph five where it is alleged

that he is a Maryland citizen.           In light of these deficiencies, I

would   affirm   the    district    court’s    ruling    that   the    County’s

negligent misrepresentation allegations against Johnson “clearly do

not satisfy Fed. R. Civ. P. 9(b).”

     The majority, however, sidesteps this analysis: It summarily

concludes that the County’s claim against Johnson is not governed

by Rule 9(b) and is thus properly pled.            The majority reasons that

“a claim of negligent misrepresentation under Maryland law does not

contain an essential showing of fraud.”             See ante at 17.      But a

cause of action need not prohibit “fraud” in so many words for the

requirements     of   Rule   9(b)   to    apply.     Rather,    Rule   9(b)   is

applicable to “all cases where the gravamen of the claim is fraud

even though the theory supporting the claim is not technically

                                         25
termed fraud.”        Toner v. Allstate Ins. Co., 821 F. Supp. 276, 283

(D. Del. 1993).

      Here,     fraud         and    negligent      misrepresentation            share    two

essential     elements:         both    require     that    defendant          supply    false

information to plaintiff and that plaintiff detrimentally rely on

the false statement.                See Breeden v. Richmond Cmty. Coll., 171

F.R.D.   189,      202    (M.D.N.C.        1997).         The    fact     that    negligent

misrepresentation may be premised on a “negligent” false statement

is not dispositive: Rule 9(b) is not delimited by an intentionality

requirement.        Rather, the plain text extends beyond intentional

misrepresentations: Rule 9(b) covers “fraud and mistake.”                           Fed. R.

Civ. P. 9(b).        As such, “the rule was designed to govern claims

premised upon a party’s misrepresentation, misapprehension, or

misunderstanding          .    .    .   whether     intentionally         or     carelessly

generated.”        Breeden, 171 F.R.D. at 199.

      Indeed,       the       rationale    behind     Rule       9(b)’s    particularity

requirements applies with equal force to claims of negligent

misrepresentation.            Madison River Mgmt. Co. v. Bus. Mgmt. Software

Corp., 351 F. Supp. 2d 436, 447 (M.D.N.C. 2005).                        As this court has

explained, Rule 9(b) protects defendants “from harm to their

goodwill and reputation,” and from “frivolous suits.”                             Harrison,

352   F.3d    at   921    (quotation       omitted).            Like    fraud,    negligent

misrepresentation         claims        bear   on   the    morality       of    defendant’s

conduct and his reputation going forward. A defendant is therefore

                                               26
“entitled to know fully the grounds on which the allegations are

made, so that he may have every opportunity to prepare his case to

clear himself at the trial.” Breeden, 171 F.R.D. at 200 (quotation

omitted).

       In light of the similarities between fraud and its close

cousin negligent misrepresentation, it is hardly surprising that a

number of our sister circuits espouse the view that Rule 9(b) does

indeed    apply      to   claims     of   negligent          misrepresentation.            For

example, in Aetna Cas. & Sur. Co. v. Aniero Concrete Co., the

Second Circuit held that negligent misrepresentation “must be pled

in accordance with the specificity criteria of Rule 9(b).”                                 404

F.3d    566,   583    (2d    Cir.    2005)      (per        curiam).       In    that    case,

plaintiff’s complaint was dismissed because it “failed to allege

with    specificity        any     representation           made     to   [plaintiff]       by

[defendant].”        Id. at 583-84; see also Atlantic Richfield Co. v.

Ramirez, 176 F.3d 481, 1999 WL 273241 (9th Cir. 1999) (unpublished)

(“The district court . . . properly dismissed [plaintiff’s] first

and      second       counterclaims,                for      fraud        and     negligent

misrepresentation, because they did not comply with Federal Rule of

Civil    Procedure        9(b)’s    particularity           requirement.”);        see    also

Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th

Cir. 2003) (holding that Rule 9(b) applies to claims of negligent

misrepresentations           where,       as        here,     “fraud       and    negligent

                                               27
misrepresentation claims are based on the same set of alleged

facts”).

     A number of district courts -- some applying the very Maryland

tort at issue in this case -- have also concluded that Rule 9(b)

applies to negligent misrepresentation claims.    See, e.g., Madison

River,     351   F.   Supp.   2d   at   447   (requiring   negligent

misrepresentation claim to meet heightened pleading requirements of

Rule 9(b)); Dealers Supply Co. v. Chiel Indus., 348 F. Supp. 2d

579, 590 (M.D.N.C. 2004); Giannaris v. Cheng, 219 F. Supp. 2d 687,

694-95 (D. Md. 2002)(requiring negligent misrepresentation claim

under Maryland law to meet heightened pleading requirements of Rule

9(b)); Swedish Civil Aviation Admin. v. Project Mgmt. Enter., Inc.,

190 F. Supp. 2d 785, 798-99 (D. Md. 2002) (same); Adams, 193 F.R.D.

at 252 (same); Breeden, 171 F.R.D. at 199-202 (requiring negligent

misrepresentation claim to meet heightened pleading requirements of

Rule 9(b)); In re Leslie Fay Cos., Inc. Securities Litig., 918 F.

Supp. 749, 767 (S.D.N.Y. 1996) (same); Pitten v. Jacobs, 903 F.

Supp. 937, 951 (D.S.C. 1995) (same); Lubin v. Sybedon Corp., 688 F.

Supp. 1425, 1453-54 (S.D. Cal. 1988) (same).

     In view of all this, the two references to Mr. Johnson in the

First Amended Complaint -- and the absence of anything remotely

resembling particularized pleading -- establish that Mr. Johnson

has no business being in this case.

                                   28
                                         III.

     Even      if    Baltimore    County’s        First     Amended     Complaint      was

properly pled, the district court correctly held that Johnson was

fraudulently joined, because the County cannot maintain a claim for

negligent misrepresentation against nondiverse defendant Johnson.

                                             A.

     To   begin      with,   Baltimore        County      failed   to    identify      any

qualifying misrepresentation made by Johnson.                   Under Maryland law,

negligent    misrepresentation          is    concerned      primarily     with      false

statements.     Indeed, the word “statement” occurs no less than four

times in the definition of the operative tort employed by my

friends in the majority.          See ante at 16.            To recover, the County

must prove that Art Johnson (1) negligently “assert[ed] a false

statement”; (2) intended “that his statement” would be acted upon;

(3) knew that the County would “probably rely on the statement”;

and (4) that the County did in fact “rel[y] on the statement.”                        Id.

(emphasis added).

     It   is    undisputed       that   Art       Johnson    never    made     a    “false

statement”      to    Baltimore    County:         nowhere    within     its       Amended

Complaint or its subsequent submissions does the County identify

any statement made by Johnson.                Indeed, the only statements that

Baltimore County has ever identified are ones it attributes to Joe

Mock, a citizen of Texas. And even these statements were allegedly

                                             29
made in the mid-1990s -- years before Johnson began working for

Connecticut General.

     The majority contends that the County’s failure to identify a

statement made by Johnson is not dispositive: Silence is enough.

See ante at 21 (concluding that Johnson may be held liable for his

“fail[ure]   to    make   statements    needed   to   clarify   [Baltimore

County’s] understanding”).*     But to impose in tort an obligation to

refrain from negligent silence goes further than anything the

Maryland courts have sanctioned. Such an approach expands tort law

beyond even deliberate silence -- it punishes those who remain

carelessly mute.

                                   B.

     The district court’s conclusion that Johnson was fraudulently

joined is correct for the additional reason that Johnson owed no

duty to Baltimore County.     To be actionable, a plaintiff alleging

negligent misrepresentation must “establish that the defendant owes

it a duty of care to communicate correct information.”          See ante at

19 (quoting Griesi v. Atl. Gen. Hosp. Corp., 756 A.2d 548, 553 (Md.

     *
      I realize that a claim for fraudulent (as opposed to
negligent) disclosure may be perpetrated by omission when a
“special duty to disclose exists.”     Hogan v. Md. State Dental
Ass’n, 843 A.2d 902, 908 (Ct. Spec. App. Md. 2004). But Johnson
owed no duty to Baltimore County. See infra Part III.B. Further,
the case law quoted by the majority for its assertion that
liability can be predicated on negligent silence is extracted from
a discussion of duty, not a discussion of what constitutes a
“statement.” See Griesi v. Atl. Gen. Hosp. Corp., 756 A.2d 548,
555 (Md. 2000).

                                   30
2000).   Under Maryland law, the relationship between “an insurance

carrier and its insured . . . does not warrant the imposition of

tort duties.”   Stephens v. Liberty Mut. Fire Ins. Co., 821 F. Supp.

1119, 1121 (D. Md. 1993).    “The purpose of this rule is to confine

actions between an insured and his or her insurer to the realm of

contract law, rather than letting such actions expand to tort

proportions.” McCauley v. Suls, 716 A.2d 1129, 1134 (Md. Ct. Spec.

App. 1998) (quotation omitted); see also Johnson v. Fed. Kemper

Ins. Co., 536 A.2d 1211, 1213 (Md. Ct. Spec. App. 1988).

     The majority nonetheless maintains that a tort duty may exist

here because Baltimore County and Johnson “had a close business

relationship with the County.”    See ante at 20.   But the existence

of a “close business relationship” has never been enough: “the

ordinary commercial adversary bargainer ordinarily has no duty to

use care in supplying information to those with whom he bargains.”

Dan B. Dobbs, The Law of Torts § 472, at 1350 (2001).          It is

instead the “nature of [the] legal relationship” which determines

whether the requisite special relationship exists.       Griesi, 756

A.2d at 554 (emphasis added).

     The cases the majority relies upon to support a duty here are

not on point: each involves employment or consumer negotiations

where “vital and material information” was within the “exclusive

control” of the defendant.   Id. at 556 (pre-contractual employment

negotiations); Weisman v. Connors, 540 A.2d 783, 793-94 (Md. 1988)

                                  31
(same); Giant Food, Inc. v. Ice King, Inc., 536 A.2d 1182, 1185-86

(Md.   Ct.   Spec.    App.    1988)       (extensive     and     detailed     consumer

negotiations).       Baltimore County is not a vulnerable consumer or

prospective employee.         It has a wealth of prior experience with

insurance    matters;    has   been       a     party   to   this    Policy    or   its

predecessor for more than 35 years; and is itself an insurer.

Unlike the prospective employees or would-be purchasers in the

cases cited by the majority, all the County had to do to understand

its rights was read the contract.               Holzman v. Fiola Blum, Inc., 726

A.2d 818, 831 (Md. Ct. Spec. App. 1999) (A party “is under a duty

to   learn   the   contents    of     a   contract      before      signing   it”   and

“presumed to know the contents”).

                                           C.

       The district court’s conclusion that Johnson was fraudulently

joined should also be upheld because Baltimore County cannot

establish reasonable reliance. See ante at 16 (quoting Griesi, 756

A.2d at 553).      Where, as here, a policy provides that no agent has

the authority to amend the agreement or bind the company by a

promise or representation, reliance upon an agent representation

which purports to modify the policy is unreasonable as a matter of

law.    See, e.g., Cannon v. Southland Life Ins. Co., 283 A.2d 404,

407-08 (Md. 1971); Simpson v. Prudential Ins. Co., 177 A.2d 417,

421 (Md. 1962).

                                           32
     In the case at hand, the Baltimore County/Connecticut General

Policy prohibits agent-modification.     It provides:

     POLICY CHANGES. Changes may be made in the policy only
     by amendment signed by the Policyholder and by the
     Insurance Company acting through its President, Vice
     President, Secretary or Assistant Secretary. No agent
     may change or waive any terms of the policy.

J.A. 118 (emphasis added).      The policy plainly put Baltimore

County on notice that (1) any policy change must be in writing and

signed by a Connecticut General officer; and (2) neither Joe Mock,

Art Johnson, nor any other agent had any authority whatsoever to

amend the Baltimore County/Connecticut General Policy.

     Nevertheless, the majority brushes aside as irrelevant the no-

modification clause: according to my colleagues, the provision is

inapposite “[b]ecause the policy does not apply to the IBNR.”   See

ante at 21.   The majority apparently views the IBNR agreement as a

different contract.    Yet, since almost any modification can be

construed as a new contract, the majority’s conclusion that the

IBNR account is a brand-new agreement reads the no-modification

clause right out of the Policy.       And, even if the IBNR account

could be considered a separate pact, the majority’s suggestion only

underscores the unreasonableness of the County’s alleged reliance.

Neither Joe Mock nor Art Johnson had any authority whatsoever to

amend the Baltimore County/Connecticut General Policy, much less

enter into a new contract.   In short, Baltimore County had no more

reason to believe Joe Mock could orally bind Connecticut General to

                                 33
a new insurance agreement than it had reason to believe he could

orally amend the existing one.

                                  IV.

     Whatever one’s view of the scope of fraudulent joinder, the

doctrine exists for a purpose: to afford fair treatment to out-of-

state defendants sued by in-state residents.           It is obvious to me,

as it was to the district court, that Baltimore County is seeking

to have its claim heard in a forum which it believes will favor its

position vis-a-vis an out-of-state insurance company. While I have

total confidence in the ability of state courts to administer

justice impartially, a defendant’s right to remove a case that

could be heard in federal court should not be so easily overcome by

litigation tactics.    See McKinney v. Bd. of Trs. of Mayland Cmty.

Coll., 955 F.2d 924, 927-28 (4th Cir. 1992).

     The   cost   of   permitting        this   sort    of    jurisdictional

gamesmanship extends beyond the mere defeat of what Congress deems

the legitimate purposes of diversity jurisdiction.                Fraudulent

joinders exact a high toll on individuals who do not rightly belong

in a lawsuit: as a result, lives are disrupted by expensive and

unnecessary   litigation.    In     my    view,   human      beings   are   not

sacrificial pawns on the board of a party’s litigation strategy.

I would affirm the judgment of the district courts in all respects.

                                    34