A federal judge from the Eastern District of Missouri has denied a boxer’s bid to pursue an insurance claim in state court, finding that he “fraudulently joined” the promoters to the suit in a bid to keep the case in Missouri. Specifically, the plaintiff, Fernando Maldonado, had already joined into a consent judgment with the promoters, eliminating their role as a part to the suit.
In providing a backdrop to the case, the court noted that defendants Doug Hartmann and Doug Hartmann Productions, LLC (Hartmann) worked to promote boxing events, and that Maldonado entered into a contract with the defendants to box in a match. Hartmann obtained an insurance policy from co-defendants Legion Indemnity Company and Lexington Insurance Company (Lexington) to cover the boxing event. But the policies excluded liability for injuries, which occurred during the athletic event.
After the boxing match, Maldonado collapsed in his dressing room, went into convulsions and “began suffering a hypoxic brain injury.” The court wrote the plaintiff alleged that his injuries were “caused by Hartmann’s failure to monitor his medical condition, to have an ambulance on the premises, and to provide adequate medical treatment.”
Maldonado initially sued Hartmann and several others in state court. Hartmann notified the insurance companies, but they declined coverage and refused to defend the case. Hartmann and Maldonado settled the original suit by entering into “a consent judgment in the amount of $ 5 million executable only against insurance proceeds.”
Maldonado then filed this declaratory judgment suit in state court, naming Hartmann and Lexington as defendants. He specifically sought a declaration that there is coverage, that no exclusions apply and that judgment be entered against all defendants in the amount of $5 million. Lexington had the case removed to federal court, asserting diversity jurisdiction. Maldonado sought remand, arguing that the presence of the Missouri defendants defeats removal, according to the court.
“Complete diversity exists: plaintiff Maldonado is a citizen of the country of Mexico; both Hartmann and Hartmann defendants are Missouri citizens; Lexington is a Delaware corporation with its principal place of business in Massachusetts; and Legion is an Illinois corporation with its principal place of business in Illinois,” wrote the court. “The issue presented here is whether removal is proper when there are Missouri defendants.”
In its analysis, the court recounted Lexington’s argument “‘that the Hartmann defendants were fraudulently joined to defeat federal jurisdiction, and that I should therefore disregard their citizenship.’ Joinder is fraudulent and removal is proper when there exists no reasonable basis in fact and law supporting a claim against the resident defendants.” Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871 (8th Cir. 2002) (citation omitted).
“Under the doctrine of ‘fraudulent joinder,’ a court may disregard the citizenship of a nondiverse defendant who was frivolously joined in an effort to defeat removal. Commercial Sav. Bank v. Commercial Fed. Bank, 939 F.Supp. 674, 680 (N.D. Iowa 1996). The fraudulent joinder cases cited by the parties, and all those I have found, have dealt with fraudulent joinder to defeat diversity jurisdiction, not fraudulent joinder to trigger the forum-defendant bar to removal. I can think of no reason why the same analysis should not apply here, however, and the removal statute specifically refers to local defendants ‘properly joined and served.’”
Maldonado and the Hartmann defendants entered into a consent decree in the amount of the policy limits; that consent judgment can be executed only against the insurance proceeds. Maldonado’s petition alleges no cause of action against Doug Hartmann or Doug Hartmann Productions, LLC. Even if all the claims of Maldonado’s petition were found in his favor, there would be no resulting liability against the Hartmanns in this case. The disputes between those parties were fully settled by the consent judgment.
“Maldonado argues that Hartmann is properly joined under Mo. Rev. Stat. § 527.110 which requires that a declaratory judgment suit include ‘all persons … who have or claim any interest which would be affected by the declaration.’ According to the Missouri courts, an ‘interest’ under this statute is ‘not one which is merely consequential, remote or a conjectural possibility of being somehow affected by the result of an action.’ Moschenross v. St. Louis County, 188 S.W.3d 13, 25 (Mo. Ct. App. 2006) (citation omitted). ‘The interest at issue must be a direct claim upon the subject of the action such that the joined party will either gain or lose by direct operation of the judgment rendered.’ Id. The Hartmann defendants have no interest or claim in the outcome of this suit; their liability will not change at all depending on the outcome here.
“Because there is no factual or legal basis for a claim by plaintiff Maldonado against (Hartmann), these defendants were fraudulently joined. I will dismiss the claims against them under Rule 21, Fed. R. Civ. P., for misjoinder.”
Fernando Iberra Maldonado v. Doug Hartmann et al.; E.D. Mo.; Case No. 4:07CV853 CDP, 2007 U.S. Dist. LEXIS 47104; 6/28/07
Attorneys of Record: (for plaintiff) Jeffrey J. Lowe, LEAD ATTORNEY, JEFFREY J. LOWE, P.C., St. Louis, MO; John G. Simon, LEAD ATTORNEY, SIMON AND PASSANANTE, PC, St. Louis, MO. (for defendants) Joseph P. Lang, Matthew J. Fink, LEAD ATTORNEYS, BATES AND CAREY, LLP, Chicago, IL; R. Prescott Sifton, LEAD ATTORNEY, BLACKWELL SANDERS PEPER MARTIN LLP, St. Louis, MO.
