Clendenin v. Kennedy

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

CHARLES F. CLENDENIN,

Plaintiff,

v. Case No. 8:23-cv-2155-VMC-JSS

CHRISTOPHER W. KENNEDY

and GEICO GENERAL INSURANCE

COMPANY,

Defendants.

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ORDER

This matter is before the Court on consideration of

Plaintiff Charles F. Clendenin’s Motion to Remand (Doc. #

31), filed on October 25, 2023. Defendant GEICO General

Insurance Company responded on November 8, 2023. (Doc. # 34).

For the reasons that follow, the Motion is granted and the

case is remanded to state court.

I. Background

Clendenin initiated this action in state court against

Defendants GEICO and Christopher W. Kennedy in March 2023.

(Doc. # 1-10). The amended complaint outlines the history of

Clendenin’s underlying state court action against Kennedy,

who was insured by GEICO. (Id.).

According to the amended complaint, Kennedy and

Clendenin were in a car accident in 2013, in which Clendenin

suffered severe injuries and other damages. (Id. at 2-3).

GEICO refused to accept Clendenin’s settlement offer for the

policy limits. (Id. at 3). Clendenin then filed a negligence

action against Kennedy in state court in February 2014. (Id.).

That case “was litigated for over five years.” (Id.).

“To avoid unnecessary costs associated with trial,

[Clendenin and Kennedy] drafted a proposed Stipulation for

Final Judgment against [] Kennedy and agreed on an amount of

$1,000,000.00.” (Id.). The amended complaint alleges that

“[t]he Parties’ ability to enter into the Consent Judgment

was contingent upon GEICO’s consent to [] Kennedy accepting

the Consent Judgment and that it would not raise any policy

defense or coverage defense based upon the acceptance of the

Consent Judgment.” (Id.). “On May 28, 2019, relying on []

Kennedy’s and GEICO’s express agreement to the proposed terms

and the effect of the Final Judgment, the Parties executed a

Stipulation for Final Judgment against [] Kennedy.” (Id.).

“Pursuant to the Consent Judgment, the court entered a Final

Judgment against [] Kennedy on August 20, 2019.” (Id. at 3-

4).

“In an effort to clarify the agreement reached in the

Stipulation for Final Judgment, [] Clendenin moved to amend

the Final Judgment.” (Id. at 4). GEICO, “appearing in the

underlying case [as] a non-party, filed papers in opposition,

expressly stating that ‘GEICO did not approve or join in the

Settlement and Assignment Agreement.’” (Id.). “GEICO

contradicted the position represented by GEICO’s insured, []

Kennedy, and GEICO challenges that it provided its assent to

the Consent Judgment.” (Id.). “GEICO’s assent and []

Kennedy’s acquisition thereof was a key inducement in []

Clendenin’s acceptance of the Consent Judgment.” (Id.).

“GEICO and [] Kennedy’s actions have called into doubt GEICO’s

necessary assent to the Consent Judgment.” (Id.).

The amended complaint asserts (1) a claim for a

declaratory judgment against both GEICO and Kennedy (Count

I), and (2) a claim for bad faith against GEICO (Count II).

(Id. at 4-6). As for Count I, Clendenin seeks a declaration

“that Mr. Kennedy and GEICO provided the assent necessary for

the Agreement and the Consent Judgement, [and] that GEICO is

now estopped from claiming otherwise.” (Id. at 6); see also

(Id. at 5) (asserting Clendenin is entitled to “a declaration

that GEICO is estopped from denying its assent to the Consent

Judgment in any derivative claims from its handling of Mr.

Clendenin’s claim against GEICO’s insured, Mr. Kennedy”).

Count I explains that “Clendenin relied to his detriment

on [] Kennedy and GEICO’s representations of assent, as he

could have taken the issue to trial by jury and would have

done so if [] Kennedy did not sufficiently receive the consent

of his insurer or if GEICO could and would later collaterally

attack its own assent to and the purpose of the Consent

Judgment, i.e., to liquidate [] Clendenin’s damages so as to

be able to pursue GEICO to collect them in a common law bad

faith action.” (Id. at 5); see also (Id.) (“Mr. Clendenin

reasonably relied on Mr. Kennedy and GEICO’s representations

that GEICO provided the necessary assent to form the basis

for the Consent Judgement and should be estopped from any

deviations from that agreement.”). Now, “Kennedy and GEICO

have both taken the contrary position, asserting that GEICO

was not required to be, and was not actually, bound by the

Agreement and the Consent Judgement. This contrary position

calls into doubt the viability of the Consent Judgment.”

(Id.). Thus, Clendenin reasons, “[a]n actual, bona fide, and

present need exists for an adjudication of the controversy

between the parties as to the legal question of whether []

Kennedy and GEICO provided the assent necessary for the basis

of the Consent Judgement, such that the Consent Judgment

serves as a binding ‘excess judgment’ necessary to effectuate

the purpose of the Agreement.” (Id. at 5-6).

GEICO removed the case to federal court on the basis of

diversity jurisdiction. (Doc. # 1). The notice of removal

asserts that Clendenin is a Florida citizen, and GEICO is a

Maryland and Nebraska citizen. (Id. at 2-3). Kennedy’s

citizenship is unknown, although he was a resident of Florida

at “all times material to the underlying action” and possesses

a Florida driver’s license. (Id. at 3 & n. 1). But, according

to GEICO, Kennedy’s “citizenship does not destroy diversity

jurisdiction in this action because Kennedy was fraudulently

joined as a defendant to the present lawsuit.” (Id. at 4).

Now, Clendenin moves to remand, insisting that Kennedy

has not been fraudulently joined and thus complete diversity

does not exist. (Doc. # 31). GEICO has responded (Doc. # 34),

and the Motion is ripe for review.

II. Legal Standard

“Federal courts have limited subject matter

jurisdiction.” Morrison v. Allstate Indem. Co., 228 F.3d

1255, 1260-61 (11th Cir. 2000). As such, “[a] federal court

not only has the power but also the obligation at any time to

inquire into jurisdiction whenever the possibility that

jurisdiction does not exist arises.” Fitzgerald v. Seaboard

Sys. R.R., Inc., 760 F.2d 1249, 1251 (11th Cir. 1985).

“An action filed in state court may be removed to federal

court based upon diversity or federal question jurisdiction.”

Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th

Cir. 2011) (citing 28 U.S.C. § 1441(a)). “When a case is

removed based on diversity jurisdiction, as this case was,

the case must be remanded to state court if there is not

complete diversity between the parties, or one of the

defendants is a citizen of the state in which the suit is

filed.” Id. (citations omitted). “However, ‘[w]hen a

plaintiff names a non-diverse defendant solely in order to

defeat federal diversity jurisdiction, the district court

must ignore the presence of the non-diverse defendant and

deny any motion to remand the matter back to state court.’”

Id. (quoting Henderson v. Washington Nat. Ins. Co., 454 F.3d

1278, 1281 (11th Cir. 2006)). “In such a case, the plaintiff

is said to have ‘fraudulently joined’ the non-diverse

defendant.” Id.

“The determination of whether a resident defendant has

been fraudulently joined must be based upon the plaintiff’s

pleadings at the time of removal, supplemented by any

affidavits and deposition transcripts submitted by the

parties.” Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1380

(11th Cir. 1998).

III. Analysis

Here, Clendenin moves to remand the case to state court

because complete diversity does not exist. (Doc. # 31).

Clendenin is a citizen of Florida and, though not perfectly

established, it appears that Kennedy is also a citizen of

Florida. (Doc. # 1-1 at 2); see also (Doc. # 1 at 2-4)

(acknowledging that Clendenin is a citizen of Florida, and

that Kennedy was a citizen of Florida throughout the original

state court action against Kennedy); (Doc. # 16 at 2)

(Clendenin’s status report on service on Kennedy, reporting

that Kennedy’s brother informed Clendenin’s counsel that

Kennedy “currently resides in Florida”). If this information

is insufficient to establish Kennedy as a citizen of Florida,

then Kennedy’s citizenship is unknown such that GEICO has

still failed to establish that complete diversity exists.

For its part, GEICO maintains that this Court does have

jurisdiction because Kennedy was fraudulently joined as a

defendant to this action. GEICO reasons that Clendenin cannot

state a claim for declaratory relief against Kennedy because,

“as a matter of Florida law, the Consent Judgment entered in

the underlying action serves as a binding excess judgment,

which serves as the ‘condition precedent’ for [Clendenin] to

bring his common law bad faith action against GEICO.” (Doc.

# 34 at 8); see also (Doc. # 1 at 4-5) (arguing that, “under

Florida law, the Consent Judgment serves as a binding ‘excess

judgment’ necessary to support Clendenin’s common law bad

faith claim against GEICO as asserted in Count II of the

Amended Complaint”). Thus, according to GEICO, “there is no

actual and practical need for the declaration sought in Count

I of [Clendenin]’s Amended Complaint.” (Doc. # 34 at 8).

“To establish fraudulent joinder, ‘the removing party

has the burden of proving [by clear and convincing evidence]

that either: (1) there is no possibility the plaintiff can

establish a cause of action against the resident defendant;

or (2) the plaintiff has fraudulently pled jurisdictional

facts to bring the resident defendant into state court.’”

Stillwell, 663 F.3d at 1332 (quoting Crowe v. Coleman, 113

F.3d 1536, 1538 (11th Cir. 1997)). A third type of fraudulent

joinder also exists “where a diverse defendant is joined with

a nondiverse defendant as to whom there is no joint, several

or alternative liability and where the claim against the

diverse defendant has no real connection to the claim against

the nondiverse defendant.” Triggs v. John Crump Toyota, Inc.,

154 F.3d 1284, 1287 (11th Cir. 1998); see also Tapscott v. MS

Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996) (“We

do not hold that mere misjoinder is fraudulent joinder, but

we do agree with the district court that Appellants’ attempt

to join these parties is so egregious as to constitute

fraudulent joinder.”), abrogated on other grounds by Cohen v.

Off. Depot, Inc., 204 F.3d 1069 (11th Cir. 2000). The burden

of proving fraudulent joinder “is a ‘heavy one.’” Stillwell,

663 F.3d at 1332 (citation omitted).

“To determine whether the case should be remanded, the

district court must evaluate the factual allegations in the

light most favorable to the plaintiff and must resolve any

uncertainties about state substantive law in favor of the

plaintiff.” Id. at 1333 (quoting Crowe, 113 F.3d at 1538).

The analysis “must be limited to determining whether

[plaintiff has] even an arguable claim. So, any ambiguity or

doubt about the substantive state law favors remand to state

court.” Crowe, 113 F.3d at 1539. “[F]ederal courts are not to

weigh the merits of a plaintiff’s claim beyond determining

whether it is an arguable one under state law.” Id. at 1538.

Upon review, the Court is not convinced that there is no

possibility Clendenin can establish a cause of action against

Kennedy. As the parties are aware, “[t]he purpose of a

declaratory judgment is to afford parties relief from

insecurity and uncertainty with respect to rights, status,

and other equitable or legal relations.” Santa Rosa Cnty. v.

Admin. Comm’n, Div. of Admin. Hearings, 661 So. 2d 1190, 1192

(Fla. 1995). “A declaratory judgment may not be invoked if it

appears that there is no bona fide dispute with reference to

a present justiciable question.” Real Est. Sols. Home

Sellers, LLC v. Viera E. Golf Course Dist. Ass’n, Inc., 288

So. 3d 1228, 1230 (Fla. 5th DCA 2020) (citation and internal

quotation marks omitted). Florida Statute § 86.011 provides

that Florida courts “may render declaratory judgments on the

existence, or nonexistence”:

(1) Of any immunity, power, privilege, or right; or

(2) Of any fact upon which the existence or

nonexistence of such immunity, power, privilege, or

right does or may depend, whether such immunity,

power, privilege, or right now exists or will arise

in the future. Any person seeking a declaratory

judgment may also demand additional, alternative,

coercive, subsequent, or supplemental relief in the

same action.

Fla. Stat § 86.011.

GEICO’s insistence that Clendenin does not need a

declaratory judgment against Kennedy or GEICO to maintain his

separate bad faith claim against GEICO is misplaced. True,

the existence of the Consent Judgment and Final Judgment in

the underlying state action is the predicate necessary for

Clendenin to assert his bad faith claim against GEICO, as

recently made clear by the Eleventh Circuit. See McNamara v.

Gov’t Emps. Ins. Co., 30 F.4th 1055, 1063 (11th Cir. 2022)

(“A final judgment that exceeds all available insurance

coverage — regardless of whether it results from a consensual

settlement or a jury verdict — constitutes an ‘excess

judgment’ that can satisfy the causation element of an

insurer-bad-faith claim under Florida law.”).

But the declaratory judgment Clendenin seeks is not

primarily about whether the Consent Judgment is an “excess

judgment.” Rather, Clendenin is unsure and requires a

declaration regarding whether Kennedy had obtained GEICO’s

assent to the Consent Judgment before it was entered in the

underlying state court action, as Kennedy allegedly assured

Clendenin he had. (Doc. # 1-10 at 3-4). Clendenin explains:

[T]he Consent Judgment being treated as an excess

verdict is only one necessary aspect of GEICO’s

assent to the Final Judgment because basic contract

principles still apply. For the settlement

agreement to be valid it required [] Kennedy to

gain GEICO’s assent to the consent judgment,

including its acceptance as a jury verdict, GEICO’s

agreement that it would not challenge the

reasonableness of the amount or allege that it was

the product of collusion, and that it will not bring

forth any derivative claims from its handling of []

Clendenin’s claim against [] Kennedy.

(Doc. # 31 at 12) (emphasis added).

Essentially, if GEICO neither agreed to the Consent

Judgment entered in state court nor agreed not to “raise any

policy defense or coverage defense based upon the acceptance

of the Consent Judgment” (Doc. # 1-10 at 3), GEICO will be

able to collaterally attack the Consent Judgment on various

grounds in response to Clendenin’s bad faith claim in this

action. Indeed, although the Eleventh Circuit in McNamara

held that consent judgments qualify as excess judgments, the

McNamara court still explained that “a consent judgment will

be enforced against an insurer only to the extent that the

judgment itself is reasonable in amount and untainted by bad

faith on the part of the insured.” McNamara, 30 F.4th at 1062.

It is just such an anticipated collateral attack of the

Consent Judgment and Final Judgment that Clendenin seeks to

head off with his declaratory judgment claim against both

Kennedy and GEICO.

With good reason. Prior to the removal of this action,

GEICO had suggested in the underlying state court action that

it might raise a collateral attack on the Consent Judgment in

response to a bad faith claim. In opposing Clendenin’s motion

to amend the Final Judgment in the underlying state court

action, GEICO wrote that it “did not approve or join in the

Settlement and Assignment Agreement or the resulting

stipulated Final Judgment.” (Doc. # 1-10 at 4; Doc. # 28-1 at

4). GEICO further wrote: “With the foregoing in mind, it is

clear that GEICO is not bound, did not approve, and did not

agree that the amount of the stipulated Final Judgment was

reasonable.” (Doc. # 28-1 at 5) (emphasis added).

Importantly, after the Consent Judgment was entered, Kennedy

allegedly also denied that GEICO had agreed to the Consent

Judgment and subsequent Final Judgment. See (Doc. # 1-10 at

5) (“Kennedy and GEICO have both taken the contrary position,

asserting that GEICO was not required to be, and was not

actually, bound by the Agreement and the Consent Judgment.”).

Thus, Clendenin insists, he requires a declaration against

both Kennedy and GEICO on the issue of whether Kennedy

obtained GEICO’s assent.

GEICO’s reliance on Colello v. GEICO General Insurance

Co. is unavailing because the facts of that case are

distinguishable. No. 6:22-cv-1262-RBD-RMN at (Doc. # 43)

(M.D. Fla. Jan. 12, 2023). True, the court there held that

“[a]s the Consent Judgment is undisputedly an enforceable

‘excess judgment,’ there is no definite or concrete

controversy that touches the legal relations of parties.” Id.

at 4. But, in Colello, “neither GEICO [n]or [individual

defendant] Erroudani [sought] to avoid enforcement of the

Consent Judgment, nor [was] it likely that they [could], as

Erroudani is a party to the Consent Judgment and GEICO agreed

in writing not to collaterally attack it.” Id. (emphasis

added). Here, at the time of removal, GEICO had not agreed —

in writing or otherwise — that it would not collaterally

attack the Consent Judgment.1 Rather, based on GEICO’s

opposition to the motion to amend the Final Judgment in the

state court action, there was good reason to believe GEICO

would collaterally attack the Consent Judgment and Final

Judgment in this action. See (Doc. # 28-1 at 5) (“With the

foregoing in mind, it is clear that GEICO is not bound, did

not approve, and did not agree that the amount of the

stipulated Final Judgment was reasonable.”).

1 In its response to the Motion to Remand, GEICO suggests that

it is not raising as a defense to the bad faith claim the

reasonableness of the amount of the consent judgment or

whether it was entered into in bad faith. See (Doc. # 34 at

6 n.2 & 16-17) (stating that GEICO had “not raised” a defense

to the bad faith claim about the reasonableness of the amount

of the consent judgment and whether it was entered into in

bad faith and stating that GEICO “has not and is not

collaterally attacking the Final Judgment, [and] has not

raised any affirmative defense in that regard”). However,

these statements made in GEICO’s various filings post-removal

do not alter the analysis of whether Kennedy was fraudulently

joined by Clendenin. Again, “[t]he determination of whether

a resident defendant has been fraudulently joined must be

based upon the plaintiff’s pleadings at the time of removal.”

Pacheco de Perez, 139 F.3d at 1380.

For this reason, it appears that Clendenin has an

arguable declaratory judgment claim against Kennedy. See

Crowe, 113 F.3d at 1542 (“[T]he district court’s authority to

look into the ultimate merit of the plaintiff’s claims must

be limited to checking for obviously fraudulent or frivolous

claims.”). Clendenin is unsure whether Kennedy obtained

GEICO’s assent to and agreement not to collaterally attack

the Consent Judgment before its entry, which was allegedly a

condition of Clendenin’s agreement to the Consent Judgment

with Kennedy. In short, GEICO has not convinced the Court by

clear and convincing evidence that there is no possibility

that Clendenin can establish a declaratory judgment claim

against Kennedy. See Stillwell, 663 F.3d at 1332 (“To

establish fraudulent joinder, ‘the removing party has the

burden of proving [by clear and convincing evidence] that

either: (1) there is no possibility the plaintiff can

establish a cause of action against the resident defendant;

or (2) the plaintiff has fraudulently pled jurisdictional

facts to bring the resident defendant into state court.’”

(citation and internal quotation marks omitted)).

Nor is the Court convinced that the claim against GEICO

has no real connection to the claim against Kennedy. See

Triggs, 154 F.3d at 1287 (stating that fraudulent joinder

exists “where a diverse defendant is joined with a nondiverse

defendant as to whom there is no joint, several or alternative

liability and where the claim against the diverse defendant

has no real connection to the claim against the nondiverse

defendant”). Again, Clendenin seeks the same declaration in

Count I against both Kennedy and GEICO regarding those

parties’ actions in assenting to the Consent Judgment. As

Clendenin persuasively explains, the uncertainty he seeks to

resolve with the declaratory judgment claim “is rooted in

whether [] Kennedy, GEICO’s insured and party to the

settlement agreement, secured all parts of the necessary

assent from GEICO to execute the parties’ stipulation to

resolve the underlying case and forego a jury trial.” (Doc.

# 31 at 16). Resolving such uncertainty necessarily involves

both Kennedy and GEICO and any declaration the Court might

enter on Count I would have an impact on the defenses

available to GEICO for Count II, the bad faith claim.

GEICO having failed to meet its heavy burden to prove

fraudulent joinder, the Court will not dismiss Kennedy as

fraudulently joined. This case must be remanded to state court

for lack of jurisdiction.

Finally, the Court declines to award Clendenin

attorney’s fees and costs related to the Motion to Remand.

“An order remanding a removed case back to state court ‘may

require payment of just costs and any actual expenses,

including attorney fees, incurred as a result of the

removal.’” Taylor Newman Cabinetry, Inc. v. Classic Soft

Trim, Inc., 436 F. App’x 888, 890 (11th Cir. 2011) (quoting

28 U.S.C. § 1447(c)). “[A]bsent unusual circumstances,

attorney’s fees should not be awarded when the removing party

has an objectively reasonable basis for removal.” Martin v.

Franklin Cap. Corp., 546 U.S. 132, 136 (2005). “[S]imply

because a court later determines that removal was

inappropriate does not mean that the court is required to

award attorney’s fees.” Fernandez v. Pilot Travel Ctrs., LLC,

No. 5:07-cv-359-WTH-GRJ, 2007 WL 3379848, at *2 (M.D. Fla.

Nov. 14, 2007). Here, although the Court disagrees with GEICO

that Kennedy was fraudulently joined, GEICO’s removal of the

case on that basis was not objectively unreasonable. No fees

or costs are warranted here.

Accordingly, it is hereby

ORDERED, ADJUDGED, and DECREED:

(1) Plaintiff Charles F. Clendenin’s Motion to Remand (Doc.

# 31) is GRANTED.

(2) The Clerk is directed to REMAND this case to the Circuit

Court of the Tenth Judicial Circuit, in and for Polk

County, Florida.

DONE and ORDERED in Chambers in Tampa, Florida, this

17th day of November, 2023.

tin In. Mecmeply (neh

VIR IA M. HERNANDEZ’COVINGTON

UNITED STATES DISTRICT JUDGE

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