Southall v. Allstate Vehicle and Property Insurance Company et al

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
NORTHERN DIVISION
REGINALD SOUTHALL, 	)
)
Plaintiff, 	)
)
v. 	) 	CASE NO.: 2:24-cv-00082-KD-C
)
ALLSTATE VEHICLE AND 	) 	Removed from the Circuit Court
PROPERTY INSURANCE 	) 	of Wilcox County, Alabama
COMPANY, et al., 	) 	Civil Action No. 2024-900008
)
Defendants. 	)
ORDER
This case arises from a dispute over the terms of an insurance contract
following a fire at Plaintiff Reginald Southall's ("Southall") home. Specifically, this
case centers around the amount of the replacement cost benefit under the policy for
re-construction of the home.
Allstate removed the case based on diversity jurisdiction. Southall moved to
remand for incomplete diversity (Doc. 9), arguing that the joinder of the resident
defendants destroys complete diversity. The resident defendants are the insurance
agents or agencies that sold the Allstate policy: 	James Chad Solomon, Gulf
Protection Group, Inc., Jonathan Waters, Jonathan Waters Agency, LLC, and

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Russell Johnson (the "Agents"). Allstate contends they were fraudulently joined and,
therefore, do not disturb this Court's jurisdiction.1
A hearing on the motion to remand was held on May 14, 2024. 	During that
hearing Southall agreed there is no fictious party practice in federal court, and he is
not basing his motion for remand upon the citizenship of any “fictitious party,” nor
shall the Court consider same. See 28 U.S.C. § 1441(b)(1) ("In determining whether
a civil action is removable on the basis of the jurisdiction under section 1332(a) of
this title, the citizenship of defendants sued under fictitious names shall be
disregarded."); see also GMFS, L.L.C. v. Bounds, 275 F. Supp. 2d 1350, 1354 (S.D.
Ala. 2003).
After review of the Motion to Remand (Doc. 9), the Response in Opposition
(Doc. 11), and the statements and arguments of the parties presented during the
hearing, it is determined that the Agents were fraudulently joined and jurisdiction in
this Court is proper.2
FINDINGS OF FACT
1 The motion to remand was referred for appropriate action pursuant to the Clerk’s referral dated
April 15, 2024. (See CM/ECF Docket Sheet).
2 A motion to remand does not address the merits of the case but the appropriate forum. Thus, an
order is deemed the appropriate procedural response to a motion to remand as opposed to a
report and recommendation. See Alum Fund, LLC v. Greater Nevada Credit Union, 2024 WL
2954125, *7, fn. 3 (M.D. Fla. June 12, 2024) (citing Franklin v. City of Homewood, 2007 WL
1804411, *3 (N.D. Ala. June 21, 2007). Should Judge DuBose disagree with this assessment,
she will have the option of choosing to review this opinion de novo.

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The following findings of fact are based upon the parties’ submissions and
statements at oral argument.
1. Plaintiff Reginald Southall (“Southall”) purchased an Allstate Vehicle and
Property Insurance Company (“Allstate”) homeowners policy in 2017 covering his
house located at 155 Roger Road, Pine Hill, AL 36769. 	The policy was renewed
annually, and was last renewed on February 10, 2023, shortly before the fire.
Complaint, Doc. 1-2, PageID.23; Doc. 1-5, PageID.91-94.
2. On March 25-26, 2023, the insured home completely burned, and Southall
subsequently filed a claim under his Allstate policy. Doc. 1-2, PageID.24.
3. 	Allstate adjusted the loss and paid Southall $247,844, an amount it has
determined to be the actual cash value of the house. Doc. 1, PageID.1. Southall was
then entitled to apply for an additional replacement cost benefit to be paid in
accordance with the policy terms and conditions. Allstate estimated the replacement
cost was $358,037. Id., PageID.2. Deducting the actual cash value already paid of
$247,844 from the replacement cost leaves a net replacement cost benefit of
$110,193. 	Southall, however, contends he should be paid the full policy limit for
the dwelling of $640,722 (or more) to rebuild the house that was there. 	See
Complaint, Doc. 1-2, PageID.24.
4. The policy contains the following replacement cost benefit:
Building Structure Reimbursement will not exceed the smallest
of the following amounts:

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1) 	the 	replacement 	costs 	of 	the 	part(s) 	of 	the 	building
structure(s) for equivalent construction for similar use on
the same residence premises;
2) 	the amount actually and necessarily spent to repair or
replace the damaged building structure(s) with equivalent
construction 	for 	similar 	use 	on 	the 	same 	residence
premises; or
3) 	the 	Limit 	of 	Liability 	applicable 	to 	the 	building
structure(s) as shown on the Policy Declarations for
Dwelling 	Protection-Coverage 	A 	or 	Other 	Structures
Protection-Coverage 	B, 	regardless 	of 	the 	number 	of
building structures and structures other than building
structures involved in the loss.
See Doc. 1-3, PageID.80.
The replacement cost benefit is arguably the amount required to rebuild for
“equivalent construction” the residence that was destroyed.
5. 	The policy also advised that the actual replacement cost upon loss of the
property could be more or less than the policy limits.
6. 	While the Important Notices (the “Notices”) included with the policy
estimated that the cost to replace Southall’s home was $640,722 (which is also the
policy limit), the Notices explained that any loss settlement for the house would be
based on the actual replacement cost up to the limits. See Doc. 1-5, PageID.92, 95-
96. The Notices expressly warned "there is a possibility that your new limits may
provide coverage in excess of the actual replacement cost of your home. . . ." Id. at
PageID.95. 	The Notices further explained that the policy limits are only an

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“estimate” of the actual replacement cost following damage or destruction to the
insured home:
[i]t is important to keep in mind that your Coverage A limits
reflect a replacement cost that is only an estimate based on data
that was available to us when we made this estimate . . . . The
actual amount it will cost to replace your home cannot be known
until after a covered total loss has occurred. Please keep in mind
that we do not guarantee the adequacy of the estimate to cover
any future loss(es).
Id.
7. 	The Policy advised Southall that automatic increases in the policy limits
were based on increased construction costs in this area, that it was his duty to assess
necessary coverage amounts, and that he should contact 	his 	agent with any
questions:

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Id.
8. 	Southall did not contact Allstate or any of the Agents upon renewal to
indicate the policy did not meet his needs.
9. 	In his Complaint, Southall asserts claims for Civil Conspiracy (Count I),
Bad Faith (Count II), Fraud (Count III), Breach of Contract (Count IV), Combined
and 	Concurring 	Conduct 	(Count 	V), 	Negligent 	and 	Wanton 	Procurement 	of

7
Insurance Policy (Count VI), Declaratory Judgment (Count VII), and Fictitious
Defendants (Count VIII). See Complaint, Doc. 1-2.
CONCLUSIONS OF LAW
I. 	Applicable Legal Standards
“Any civil case filed in state court may be removed by the defendant to federal
court if the case could have been brought originally in federal court.” Tapscott v.
MS Dealer Serv. Corp., 77 F.3d 1353, 1356 (11th Cir.1996), citing 28 U.S.C. §
1441(a), abrogated on other grounds Cohen v. Office Depot, Inc., 204 F.3d 1069
(11th Cir.2000). Federal courts may exercise diversity jurisdiction over all civil
actions where the amount in controversy exceeds $75,000, exclusive of interest and
costs, and the action is between citizens of different states. 28 U.S.C. § 1332(a)(1).
However, “[b]ecause removal jurisdiction raises significant federalism concerns,
federal courts are directed to construe removal statutes strictly.... Indeed, all doubts
about jurisdiction should be resolved in favor of remand to state court.” University
of South Alabama v. American Tobacco Co., 168 F.3d 405, 411 (11th Cir.1999).
"Fraudulent joinder is a judicially created doctrine that provides an exception to
the requirement of complete diversity." Triggs v. John Crump Toyota, Inc., 154 F.3d
1284, 	1287 	(11th 	Cir. 	1998). 	“[T]he 	removing 	party 	bears 	the 	burden 	of
demonstrating federal jurisdiction.” Triggs at 1287 n. 4 (citation omitted); Tapscott,
supra (“A removing defendant has the burden of proving the existence of federal

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jurisdiction.”). Therefore, in this case, the burden is on the removing defendant to
establish complete diversity, that is, the plaintiff is diverse from every defendant,
Triggs, supra, 154 F.3d at 1287 (citation omitted), and, in addition, to establish by a
preponderance of the evidence that the amount in controversy more likely than not
exceeds the $75,000 jurisdictional requirement,3 Tapscott, supra, 77 F.3d at 1357.
"[W]hen a plaintiff names a non-diverse defendant solely to defeat federal
diversity jurisdiction, the district court must ignore the presence of the non-diverse
defendant and deny any motion to remand the case to state court." Kimball v. Better
Business Bureau of West Florida, 613 F. App'x 821, 823 (11th Cir. 2015) (citing
Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th Cir. 2011)). In other words,
"[a] defendant's 'right of removal cannot be defeated by a fraudulent joinder of a
resident defendant having no real connection with the controversy.'" Tapscott at
1360 (quoting Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S. Ct. 35,
37, 66 L. Ed. 144 (1921)).
Courts determine whether they have jurisdiction over a case "'based upon the
plaintiff's pleadings at the time of the removal,' . . . supplemented by any affidavits
or deposition transcripts filed by the parties." Fowler v. Provident Life & Accident
Ins. Co., 256 F. Supp. 2d 1243, 1246 (N.D. Ala. 2003) (citation omitted).
3 Plaintiff does not dispute that the jurisdictional amount requirement is present in this action.
Doc. 9, PageID.65.

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II. 	Analysis.
Southall alleges eight counts in his Complaint.4
A. Civil Conspiracy (Count I)
To establish a claim for civil conspiracy, a plaintiff must first establish a valid
underlying claim. Goolesby v. Koch Farms, LLC, 955 So. 2d 422, 430 (Ala. 2006)
("A civil conspiracy cannot exist in the absence of an underlying tort."). "'[L]iability
for civil conspiracy rests upon the existence of an underlying wrong and . . . if the
underlying wrong provides no cause of action, then neither does the conspiracy.'" Ex
parte Ala. Dep't of Transp., 764 So. 2d 1263, 1271 (Ala. 2000) (quoting Jones v. BP
Oil Co., 632 So. 2d 435, 439 (Ala. 1993)). In other words, the gist of a conspiracy
claim is the wrong committed. Anderson v. Allstate Life Ins. Co., No. CA 00-958-C,
2001 WL 228057, at *8 (S.D. Ala. Feb. 1, 2001).
The Court is unable to identify an underlying wrong pled against the Agents
that would support the existence of a civil conspiracy.
B. Tort of Bad Faith (Count II)
Bad faith claims can only be brought against parties to an insurance contract.
See Pyun v. Paul Revere Life Ins. Co., 768 F. Supp. 2d 1157, 1178 (N.D. Ala. 2011).
None of the Agents are parties to the Allstate insurance contract, so the bad faith
4 Southall's Fictitious Defendants claim is addressed above; thus, the individual count does not
need to be addressed.

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count fails as a matter of law against the Agents. See Aspinwall v. Gowens, 405 So.
2d 134, 136 (Ala. 1983) (reversed for failure to grant claims adjuster a directed
verdict); Ligon Furniture Co. v. O.M. Hughes, 551 So. 2d 283, 285 (Ala. 1989)
(affirming summary judgment); Badners v. Prudential Life Ins. Co. of America, 567
So. 2d 1242, 1244 (Ala. 1990) (affirming summary judgment for insurance agent on
breach of contract and bad faith claims because "the record shows no insurance
contract between plaintiff and . . . Grant [the agent]." ); Henson v. Celtic Life Ins.
Co., 621 So. 2d 1268, 1270 n.2 (Ala. 1993) ("the defendant Jones cannot be held
liable for the breach of a contract to which he was not a party; . . . and Jones cannot
be held liable on the bad faith count.").
Accordingly, Southall has no possible bad faith claim against the Agents.
C. Fraud (Count III)
Southall has not asserted a fraud claim against the Agents, only Allstate. See
Complaint, Doc. 1-2, ¶¶ 34–38, PageID.26-27.
Moreover, the elements of a fraud claim are: (1) a false representation made
to the plaintiff, (2) concerning a material, existing fact, (3) upon which the plaintiff
reasonably relied, and (4) suffered damage as a proximate consequence of the
misrepresentation. 	Brickhouse Capital, LLC v. Coastal Cryo, LLC, --- So. 3d ---,
2023 WL 8658521, *4 (Ala. Dec. 15, 2023) (citation omitted).

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The Complaint does not identify any misrepresentation or other fraudulent
acts by the Agents or when such was committed. Certainly, the complaint does not
meet the requirements of Ala. R. Civ. P. 9(b) that “In alleging fraud . . . , a party
must state with particularity the circumstances constituting fraud . . . .” Ala. R. Civ.
P. 9(b).
To the contrary, Southall only complains of representations a purported
Allstate employee, Nicholas Cook, allegedly made after the fire during the claims
adjustment process. Complaint, Doc. 1-2, ¶ 35, PageID.26. However, an alleged
misrepresentation in the claim adjustment process is not actionable because of the
lack of the element of reasonable reliance. As a matter of law, there can be no
reasonable reliance after the covered peril has occurred; because “[t]o sustain a fraud
action, 	‘the 	representee 	must 	have 	been 	deceived 	by 	and 	relied 	upon 	the
representation as an inducement of his action or non-action.’” See Jones v. Ala. Farm
Bureau Mut. Cas. Co., 507 So. 2d 396, 401–02 (Ala. 1986). There could be no
detrimental deception after the fire that caused Southall to purchase the policy seven
years before.
D. Breach of Contract (Count IV)
To prove a breach of contract claim, Southall must first establish the existence
of a valid contract that is binding on the parties. Dupree v. PeoplesSouth Bank, 308
So. 3d 484, 490 (Ala. 2020). The insurance contract was between Allstate and

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Southall. The Agents were not parties to that contract. An insured cannot maintain
a breach of contract action against an agent because the agent is not a party to that
contract, and thus, cannot be liable for breach. See cases cited in section II.B., supra.
E. Combined and Concurring Conduct (Count V)
This count does not state a plausible claim for relief that is cognizable under
Alabama law. 	See Steel v. Viscofan USA, Inc., 2017 WL 253960, at *1, n.2 (M.D.
Ala. Jan. 19, 2017) ("The court is not aware of an independent cause of action under
Alabama law for combined injury. As a result, the court does not treat this allegation
as an independent cause of action . . . ."). Accordingly, this claim does not disturb
the jurisdiction of this Court.
F. Negligent or wanton procurement (Count VI)
Southall combined two separate causes of action, negligence and wantonness,
into one count. To establish a claim for wantonness, a plaintiff must demonstrate
that 	the 	defendant 	acted 	"'with 	reckless 	indifference 	to 	the 	consequences,
consciously and intentionally do some wrongful act or omit some known duty.'"
Thompson v. United Companies Lending Corp., 699 So. 2d 169, 175 (Ala. Ct. App.
1997) (quoting Carter v. Treadway Trucking, Inc., 611 So. 2d 1034, 1035 (Ala.
1992) (emphasis added)). During oral argument, Southall's counsel admitted the
facts of this case likely could not support a wanton procurement cause of action. The
Court concurs in that assessment. The Agents would have to be charged with acting

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with reckless indifference to the consequences while consciously and intentionally
committing wrongful acts or omitting some known duty. Southall’s allegations do
not charge wanton conduct. Accordingly, Southall has failed to assert a claim for
wanton procurement of the insurance policy against the Agents for which they could
possibly be liable.
Negligent procurement may arise where "[o]nce the parties have come to an
agreement on the procurement of insurance, the agent or broker must exercise
reasonable skill, care, and diligence in effecting coverage." Highlands Underwriters
Ins. Co. v. Elegante Inns, Inc., 361 So. 2d 1060, 1065 (Ala. 1978).
To recover for negligent procurement, a plaintiff must demonstrate the classic
elements of negligence: (1) duty, (2) breach of duty, (3) proximate cause, and (4)
injury. Crook v. Allstate Indem. Co., 314 So. 3d 1188, 1198 (Ala. 2020).
The existence of a duty is a question of law for the Court. Albert v. Hsu, 602
So. 2d 895, 897 (Ala. 1992) (“The existence of a legal duty is a question of law for
the court; ‘where there is no duty, there can be no negligence.’”). 	The terms of the
insurance contract negate any duty owed by the Agents to Southall concerning the
replacement cost benefit. Rather, the contract terms governed those benefits. 	The
contract, as renewed, established:
• 	Replacement cost is for “equivalent construction” of the home that was
actually destroyed;

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• 	The Important Notices explained that the replacement cost benefit
would be based on the actual cost to replace the house up to the policy
limits;
• 	The Important Notices advised “there is a possibility that your new
limits 	may 	provide 	coverage” 	lower 	or 	higher 	than 	the 	actual
replacement cost of your home;
• 	The Important Notices 	advised the replacement limits had been
increased, which obviously increased the coverage the Agents had
originally sold six years earlier on policy inception: “We would like
you to know that your policy’s PIA recently indicated that construction
costs in your area have increased. Based on this information, we have
automatically increased your Dwelling Protection-Coverage A limits;”
• 	The Important Notices in the policy renewal continued: “It is important
for you to understand that these are only estimates and the new limits
of your policy may not provide sufficient coverage in the event of a
loss.”
Therefore, the replacement cost benefit existed as a matter of contract in the
renewal between Allstate and Southall in February 2023. Moreover, the limits at the
time of the fire were higher than when the policy was sold.

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The lack of duty is further shown by the rule that once an agent obtains
insurance coverage, he does not have a continuing duty to advise, guide, or direct
the insured on coverage unless they had a specific agreement to do so. Somnus
Mattress Corp. d/b/a Posturecraft Mattress Co. v. Hilson, 280 So. 3d 373, 380 (Ala.
2018) (explaining that an agent "does not have a continuing duty to advise, guide, or
direct the insured's coverage after the agent has complied with his or her obligation
to obtain coverage on behalf of the insured" unless the insured and the agent have a
specific agreement to the contrary).
No such agreement has been pled or referred to in the Complaint, the filings,
or argument. The Agents were out of the picture when the policy was automatically
renewed a few weeks before the fire.
The primary case Southall relies upon is distinguishable. Specifically, in
Pickett v. Am. Bankers Ins. Co., No. 2:23-cv-00201-JB-B (S.D. Ala. Oct. 16, 2023),
there was a 45-day lapse between the date the plaintiff requested insurance and the
insurance agent placed the policy. Id. During the 45-day lapse, the plaintiff's prior
insurance policy was cancelled, which resulted in her application for insurance
(which stated that she had never had an insurance policy be cancelled and the
property had never been uninsured) appear to include misinformation. Id. The
plaintiff's claim was then denied because her new insurance company claimed she
committed fraud. Id. There, the issue was whether the insurance agent "exercised

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reasonable skill, care, and diligence in obtaining insurance for [the plaintiff] when
more than 45 days lapsed between [the plaintiff's] request for a policy and the
placement of the policy and when there is evidence that the previous policy lapsed
in between." Id. Thus Pickett, a case concerning delay in submission of a policy
application, is distinguishable.
The Court agrees with Allstate that a case on all fours with the facts of this
action has not been found. The logical application of Alabama law to the facts in this
case, however, has convinced the undersigned that there is no possibility that
Southall can prove a claim of negligent procurement.
G. Declaratory Judgment (Count VII)
This claim concerns the policy only, and thus, is against Allstate only.
Moreover, the equitable remedy of declaratory judgment is moot because Southall
has alleged at law claims that will decide the issue of the replacement cost benefit.
CONCLUSION
Here, the Agents have no real connection with the controversy between
Allstate and Southall over the amount of the replacement cost benefit. The fire
occurred six years after the policy was sold and was annually renewed by Allstate.
The dispute did not arise from the initial policy selection but from post-loss claim
adjustment over valuation differences at the time of the fire. Accordingly, the Agents
were “fraudulently joined” as that term applies, and their citizenship should be

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disregarded under diversity jurisdiction. See Triggs, 154 F.3d at 1287 (citing Coker
v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th Cir. 1983), superceded by statute on
other grounds as stated in Georgetown Manor, Inc. v. Ethan Allen, Inc., 991 F.2d
1533 (11th Cir. 1993)). The motion to remand is due to be, and is hereby DENIED.
NOTICE OF RIGHT TO FILE OBJECTIONS
A copy of this Order shall be served on all parties in the manner provided by law. Any
party who objects to this Order or anything in it must, within fourteen (14) days of the date of
service of this document, file specific written objections with the Clerk of this Court. See 28 U.S.C.
§ 636(b)(1); Fed. R. Civ. P. 72(a); S.D. ALA. GenL.R. 72(c).
DONE and ORDERED this 26th day of June, 2024.
/s/WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE