Engel v. UMB Bank NA et al

UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
MARK ENGEL, an individual residing )
in the State of Oklahoma, )
)
Plaintiff, )
)
v. ) Case No. CIV-23-311-G
)
)
UMB BANK, n.a., a foreign for-profit )
National Association, et al., )
)
Defendants. )
ORDER
Now before the Court is Plaintiff Mark Engel’s Motion to Remand (Doc. No. 11).
Defendants UMB Bank, n.a. (“UMB”) and Tejal Bhatt have responded in opposition (Doc.
No. 12). Plaintiff has replied in further support of his Motion (Doc. No. 13).
I. Background
Plaintiff brings this case against UMB and its employee Defendant Bhatt alleging
certain wrongful conduct relating to a time deposit account. On January 6, 2011, Plaintiff
entered into an agreement known as a “Time Deposit Agreement” or “Certificate of
Deposit Agreement” with UMB (the “Agreement”). See Pet. (Doc. No. 1-2, at 1-14) at 2;
id. Ex. 1, at 15-17; Notice of Removal (Doc. No. 1) at 2 n.2. The Agreement provided that
for a term of six years, Plaintiff’s $1,000,000 deposit would carry a guaranteed interest rate
of 2.65% and would then “automatically renew at maturity for a like term at a rate to be
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determined by [UMB] and subject to the same terms and conditions.” Pet. Ex. 1, at 16.1
The first page of the Agreement (the “Letter Page”) contained additional bargained-for
terms, including one penalty-free withdrawal per month and one interest rate increase per
year at the time of Plaintiff’s choosing. See Pet. at 2-4; id. Ex. 1, at 15. Plaintiff contends
that, regardless of the Agreement’s written terms, the “intent” of the Agreement was for
his account to forever enjoy an interest rate of at least 2.65% and that, as long as his deposits
were held by UMB, the interest rate on his account could never go down and could only
go up. See Pet. ¶ 25.
The Agreement automatically renewed at maturity on January 6, 2017, for another
six-year term. Id. ¶ 12. In January 2018, Plaintiff “became aware that the payment of
interest on the first year in January of 2018 was at a rate of 1.10%.” Id. ¶ 13. Plaintiff
requested that UMB increase the interest rate back to 2.65%, but UMB declined. See id.
Plaintiff alleges that UMB ultimately agreed that it would retroactively adjust interest rate
payments for 2017 and 2018 from 1.10% to 2.25% and to continue to honor the terms on
the Letter Page in exchange for Plaintiff depositing an additional $1,000,000 at a 2.87%
rate (the “Second Agreement”). See id.
Plaintiff alleges that UMB breached the Second Agreement by not adjusting the
2017 and 2018 interest rate payments and not honoring the terms of the Letter Page. See
1 The Agreement further provides that, “[a]fter the current term or at the end of any
subsequent term of deposit, [UMB] reserves the right to change the rate of interest specified
above.” Pet. Ex. 1, at 16.
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id. ¶ 14. In December 2019, UMB informed Plaintiff that it would not honor the terms of
the Letter Page, contending that those terms were no longer applicable. See id. ¶ 15.
Plaintiff recounts at length his various interactions with Defendant Bhatt, the
downtown Oklahoma City UMB branch manager. When Plaintiff first noticed the
decreased interest rate on his account in 2018, Plaintiff went to Defendant Bhatt to
complain. See id. ¶ 25. Plaintiff complains that Defendant Bhatt asked Plaintiff for written
proof of the Letter Page terms. See id. When Plaintiff pressed Defendant Bhatt on whether
the Bank would honor the Letter Page if he was unable to produce a copy of it, Defendant
Bhatt responded that “her instructions were to call [Plaintiff] and ask him for a copy of the
written confirmation.” Id. While Plaintiff continued to seek a copy of the Letter Page from
UMB, “Bhatt would only continue to state that she was just supposed to keep asking him
to provide his proof of the CD terms.” Id. Plaintiff alleges that Defendant Bhatt would not
reveal who “was telling her what to do” and Plaintiff “asked why he could not just go
upstairs to the second floor and talk directly to whoever was handling the matter.” Id.
Eventually, after Plaintiff “explained to Ms. Bhatt very frankly how improper it appeared
to him that his own bank was attempting to cheat him,” Defendant Bhatt confirmed that
she had a copy of the Letter Page. Id. “[Plaintiff] responded that he already had his copy
of the letter and was just checking to see if [UMB] was going to be honest with him.” Id.
Plaintiff then attempted to negotiate more favorable terms for his time deposits with
UMB, through Defendant Bhatt. See id. Defendant Bhatt “refused to reveal” “the person
or persons at [UMB] who w[ere] handling the matter so that [Plaintiff] could address the
same directly with [Defendant Bhatt’s] supervisors or persons responsible.” Id. Defendant
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Bhatt “promised she would tell her supervisors that their position was unacceptable to
[Plaintiff] and would lead to litigation.” Id. Eventually, Defendant Bhatt told Plaintiff that
“the Bank had decided to pay the current interest rate of 2.25% for the years 2017 and 2018
and going forward on the CD, together with honoring the two remaining terms of penalty-
free withdrawals and one rate increase per year at the time choice of [Plaintiff’s] choosing.”
Id. “[Plaintiff] arranged with [Defendant Bhatt] for the deposit of an additional $1,000,000
CD on January 9, 2019.” Id. Plaintiff alleges that Defendant Bhatt “failed to disclose or
mention in any respect” that UMB would not honor the terms of the Letter Page with
respect to this deposit. Id.
Plaintiff, an Oklahoma resident, originally filed his claims of breach of contract
against UMB, and of negligence, false representation, concealment, and deceit against both
Defendants, in Oklahoma County District Court. See id. ¶¶ 9-16, 23. UMB removed the
case to this Court on the basis of diversity jurisdiction, citing its own non-Oklahoma
citizenship and Defendant Bhatt’s allegedly fraudulent joinder. See Notice of Removal at
3-5 (citing 28 U.S.C. §§ 1332, 1441, 1446(b)(1)). Plaintiff then filed his Motion to
Remand.
II. Standards of Review
A defendant may remove a case pending in state court to federal court if the case is
one over “which the district courts of the United States have original jurisdiction.” 28
U.S.C. § 1441(a). “Since federal courts are courts of limited jurisdiction, there is a
presumption against our jurisdiction, and the party invoking federal jurisdiction bears the
burden of proof.” Penteco Corp. Ltd. P’ship—1985A v. Union Gas Sys., Inc., 929 F.2d
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1519, 1521 (10th Cir. 1991). “Removal statutes are to be strictly construed, and all doubts
are to be resolved against removal.” Fajen v. Found. Res. Ins. Co., 683 F.2d 331, 333 (10th
Cir. 1982) (citation omitted).
A. Citizenship of the Parties
The relevant statute prescribes that “district courts shall have original jurisdiction
of all civil actions where the matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs, and is between . . . citizens of different States.” 28 U.S.C.
§ 1332(a). Jurisdiction under § 1332(a) requires complete diversity among the parties—
i.e., the citizenship of all defendants must be different from the citizenship of all plaintiffs.
McPhail v. Deere & Co., 529 F.3d 947, 951 (10th Cir. 2008). The party or parties invoking
diversity jurisdiction—here, Defendants—have the “burden of proving [diversity
jurisdiction] by a preponderance of the evidence.” Middleton v. Stephenson, 749 F.3d
1197, 1200 (10th Cir. 2014).
B. Fraudulent Joinder
The doctrine of fraudulent joinder permits a federal court evaluating diversity
jurisdiction to disregard the citizenship of a nondiverse defendant against whom the
plaintiff has not asserted or cannot assert a colorable claim for relief. See Dutcher v.
Matheson, 733 F.3d 980, 988 (10th Cir. 2013). “To establish fraudulent joinder, the
removing party must demonstrate either: 1) actual fraud in the pleading of jurisdictional
facts, or 2) inability of the plaintiff to establish a cause of action against the non-diverse
party in state court.” Id. (alteration and internal quotation marks omitted); see also
Hernandez v. Liberty Ins. Corp., 73 F. Supp. 3d 1332, 1336 (W.D. Okla. 2014). Where,
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as here, removal is premised on the second basis, the removing party must establish “[t]he
non-liability of the defendant[] alleged to be fraudulently joined . . . with ‘complete
certainty.’” Hernandez, 73 F. Supp. 3d at 1336 (quoting Smoot v. Chi., Rock Island & Pac.
R.R., 378 F.2d 879, 882 (10th Cir. 1967)).
“This does not mean that the federal court will pre-try, as a matter of course,
doubtful issues of fact to determine removability[.]” Smoot, 378 F.2d at 882 (internal
quotation marks omitted). “But upon specific allegations of fraudulent joinder the court
may pierce the pleadings, consider the entire record, and determine the basis of joinder by
any means available.” Id. (citation and internal quotation marks omitted). “In so doing,
the court must decide whether there is a reasonable basis to believe the plaintiff might
succeed in at least one claim against the non-diverse defendant.” Nerad v. AstraZeneca
Pharms., Inc., 203 F. App’x 911, 913 (10th Cir. 2006). “A ‘reasonable basis’ means just
that: the claim need not be a sure-thing, but it must have a basis in the alleged facts and the
applicable law.” Id. Any uncertainty regarding the viability of the claims asserted against
the nondiverse party—including “disputed questions of fact” and “ambiguities in the
controlling law”—must be resolved in favor of remand. Montano v. Allstate Indem., No.
99-2225, 2000 WL 525592, at *1 (10th Cir. Apr. 14, 2000) (internal quotation marks
omitted); accord Dutcher, 733 F.3d at 988.
III. Discussion
In this case, the citizenship of the named parties is undisputed and does not reflect
complete diversity. Both Plaintiff and Defendant Bhatt are citizens of Oklahoma for
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purposes of § 1332(a). See Pet. ¶¶ 1, 4; Notice of Removal at 5. UMB is a citizen of
Missouri. See Pet. ¶ 2; Notice of Removal at 5.
UMB contends that because Plaintiff has no possibility of recovery against
Defendant Bhatt, the citizenship of that nondiverse defendant should be ignored and
diversity jurisdiction found to lie in this case. See Notice of Removal at 6-14. Plaintiff
disputes the existence of federal jurisdiction, arguing that Defendant Bhatt is not
fraudulently joined because Plaintiff has stated viable claims against Defendant Bhatt and
that remand is therefore required. See Pl.’s Mot. at 16-20.
Generally, under Oklahoma law, “an employer is liable for the torts of its employee
occurring in the course and scope of employment, although the employee is personally
immune from suit.” Hooper ex rel. Hooper v. Clements Food Co., 694 P.2d 943, 944
(Okla. 1985). Certain exceptions to this rule exist, and the rule’s application depends on
the type of claim that is raised. Employees who commit intentional torts are generally not
considered to be acting in the scope of their employment except where the act committed
“is one which is fairly and naturally incident to the business, and is done while the servant
was engaged upon the master’s business and [was] done, although mistakenly or ill
advisedly, with a view to further the master’s interest.” Schovanec v. Archdiocese of Okla.
City, 188 P.3d 158, 176 (Okla. 2008) (internal quotation marks omitted). Further, an
employee is generally not liable for negligence committed in the scope of employment
unless “physical harm results” or the employee “has taken control of land or other tangible
thing”—circumstances typically arising in premises liability cases. Tyree v. Cornman, 453
P.3d 497, 506 (Okla. Civ. App. 2019) (internal quotation marks omitted); see Milner v.
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Eagle Materials Inc., No. CIV-23-423-PRW, 2024 WL 584453, at *2 (W.D. Okla. Feb.
13, 2024).
Here, the record most reasonably reflects that Defendant Bhatt’s role in the dispute
was that of a UMB customer service representative acting within the scope of her
employment.2 There is no evidence that Defendant Bhatt was herself a party to the
Agreement, Second Agreement, or any other agreement between Plaintiff and UMB. Nor
is there any evidence that Defendant Bhatt acted without authority or exceeded her
authority when performing her job as branch manager.3 Plaintiff has not alleged that
Defendant Bhatt’s negligence caused physical harm, and this case does not concern
2 For purposes of this Order, the Court assumes without deciding that the correspondence
between attorney Justin Hiersche and UMB attached to Defendants’ Response (Doc. Nos.
12-2, 12-3) reflects settlement communications subject to Federal Rule of Evidence 408
and has not considered them in connection with this Order. The Court notes that Rule 408
communications may appropriately be considered in determining the Court’s jurisdiction
in some circumstances. See McPhail, 529 F.3d at 956 (holding that Rule 408 does not
prohibit the use of settlement offers in determining the amount in controversy for purposes
of establishing diversity jurisdiction).
3 Plaintiff argues that Defendant Bhatt acted outside of her authority by approving a rate
increase and thereby exposed herself to personal liability for fraud. See Pl.’s Mot. at 10-
11. Merits aside, Plaintiff’s argument is undermined by his own allegations in the Petition,
which establish that Defendant Bhatt served as a powerless liaison between Plaintiff and
her superiors during the negotiations:
[Plaintiff] explained to Ms. Bhatt his frustration with not being able to talk directly
to the decision makers involved . . . . [Plaintiff] stated that there had to be an
agreement with regard to the appropriate interest payments and that Ms. Bhatt could
tell her supervisors that if they resolved this issue for him in accord with the letter
that he would deposit another $1,000,000 in the Bank at the newly advertised rate
for CDs. Ms. Bhatt finally responded advising that the Bank had decided to pay the
current rate of 2.25% for the years 2017 and 2018 and going forward . . . .
Pet. ¶ 25.
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Defendant Bhatt’s control of land or other tangible things. The record reflects that
Defendant Bhatt was, at most, an intermediary between Plaintiff and the decisionmakers at
UMB. Indeed, the Petition recounts in detail Plaintiff’s frustration at Defendant Bhatt’s
lack of authority and at Plaintiff’s inability to deal directly with the actual decisionmakers
within UMB. See Pet. ¶ 25. Accordingly, the Court finds no reasonable basis to conclude
that Plaintiff can establish a cognizable negligence or intentional tort claim against
Defendant Bhatt under Oklahoma law. See Dutcher, 733 F.3d at 988.
CONCLUSION
For the reasons set forth herein, the Court finds that Defendant UMB Bank, n.a.’s
allegation of fraudulent joinder has been established, and the citizenship of Defendant
Bhatt should be disregarded. There is complete diversity between the relevant parties,
Plaintiff and UMB, and therefore subject-matter jurisdiction exists.
Plaintiff’s Motion to Remand (Doc. No. 11) is DENIED.
Plaintiff’s claims against Defendant Bhatt are dismissed without prejudice.
Defendant Bhatt shall be terminated as a party to this action.
IT IS SO ORDERED this 20th day of September, 2024.
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