United States District Court, W.D. Virginia, Danville Division
JACKSON L. KISER, SENIOR UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiff Bobby Harris,
Sr.'s Motion to Remand [ECF No. 17] and Defendant Gary
Edem's Motion to Dismiss [ECF No. 22]. Both motions were
fully briefed by the parties, and I heard oral arguments on
the motions on January 10, 2019. I have reviewed the relevant
records, arguments of the parties, and applicable law. For
the reasons stated herein, I will grant the motion to remand.
Because that ruling divests the court of jurisdiction,
Edem's Motion to Dismiss will be denied as moot.
STATEMENT OF FACTS AND PROCEDURAL BACKGROUND
parties, for the purposes of the Motion to Remand, do not
contest the factual allegations in the Complaint. On October
30, 2016, Plaintiff Bobby Harris, Sr.
(“Plaintiff”) was attending a
NASCAR Cup Series auto-racing event at the
Martinsville Speedway in Martinsville, Virginia. (Compl.
¶ 6 [ECF No. 1-1].) While leaving that event, Plaintiff
was struck by a car allegedly driven by Defendant Gary Edem
(“Edem”), resulting is serious bodily injury.
(Id. ¶ 10.)
the accident, Edem has filed for and received a bankruptcy
discharge in the United States Bankruptcy Court for the
Eastern District of Virginia. See In re: Gary Thomas
Edem, No. 18-11670-KHK (Bankr. E.D. Va. Aug. 15, 2018)
[ECF No. 1-6]. His insurance company has also apparently
interpled all relevant insurance policy proceeds with the
Henry County Circuit Court in Virginia. Because of this,
Defendants maintain, Edem faces no direct financial liability
as a result of this suit.
originally brought suit in the Richmond City Circuit Court on
February 15, 2018, and the case was transferred, on
Edem's motion, to the Henry County Circuit Court on June
29. [ECF No. 1-5.] Thereafter, Defendants International
Speedway Corporation (“ISC”), Martinsville
International, Inc. (“MI”), and NASCAR filed a
Notice of Removal, contending that diversity of citizenship
granted this Court jurisdiction pursuant to 28 U.S.C. §
1332. Although both Plaintiff and Edem are residents of
Virginia, ISC, MI, and NASCAR contend that he is a nominal
party by virtue of his bankruptcy discharge, and thus his
citizenship can be ignored for purposes of establishing
jurisdiction. (See Not. Of Removal ¶ 15, Sept.
6, 2018 [ECF No. 1].) Plaintiff filed a Motion to Remand [ECF
No. 17], arguing that he is not a nominal party for the
jurisdictional analysis. Edem also filed a Motion to Dismiss
[ECF No. 22], contending that the bankruptcy discharge
required his dismissal from this action. Both motions were
fully briefed by the parties, and I heard oral arguments on
both motions on January 10. I have reviewed the pleadings,
relevant evidence, and applicable law, making the matter ripe
STANDARD OF REVIEW
28 U.S.C. § 1441(a), an action may be removed to federal
district court if the action is one over which the district
court would have had original jurisdiction. “Because
removal jurisdiction raises significant federalism concerns,
[federal courts] must strictly construe removal jurisdiction.
If federal jurisdiction is doubtful, a remand is
necessary.” Mulcahey v. Columbia Organic Chems.
Co., 29 F.3d 148, 151 (4th Cir. 1994) (internal
citations omitted). This presumption against removal places
the “burden of establishing federal jurisdiction . . .
upon the party seeking removal.” Id.
case presents a discrete issue: Does a defendant, who has
received a discharge in bankruptcy, become a nominal party
for purposes of the jurisdictional requirement found in 28
U.S.C. §§ 1332(a) and 1441(b)(1)? The answer is no.
may remove an action from state court to federal court if
there is diversity between the parties, and if the amount in
controversy exceeds $75, 000.00. See 28 U.S.C.
§§ 1332(a)(1), 1441(a) (2018). When examining the
citizenship of the parties, courts are obligated to
“disregard” parties with no interest in the
litigation, and “rest jurisdiction only upon the
citizenship of real parties to the controversy.”
Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 461
present case, both Plaintiff and Defendant Edem are citizens
of Virginia. Defendants maintain that, by virtue of his
bankruptcy discharge and the fact that his insurance carrier
has interpled Edem's policy limits in state court, Gary
Edem is a “nominal” party whose citizenship may
be ignored for purposes of determining jurisdiction. See,
e.g., Jackson v. E-Z-GO Division of Textron,
Inc., No. 3:12-cv-154-H, 2012 WL 2562830, at *1-2 (W.D.
Ky. June 29, 2012). Essentially Defendants argue that,
because Edem's insurance proceeds have been interpled and
his personal funds are under the control of the bankruptcy
trustee, he faces no direct financial liability and is
therefore a nominal party. Plaintiff disagrees, arguing that,
because he is required by law to sue Edem personally to
recover any insurance proceeds, Edem is not
“nominal” and his citizenship cannot be ignored.
Plaintiff also argues that obtaining a judgment against Edem
is helpful, if not necessary, to proving his claim against
Edem's bankruptcy estate.
have the better argument. First, of those courts that have
addressed this issue, they are virtually unanimous that a
bankrupt defendant is not “nominal” for purposes
of diversity jurisdiction. See Tyree v. Kanawha Energy
Co., LLC, No. 2:18-cv-01200, 2018 WL 4781253, at *2
(S.D. W.Va. Oct. 3, 2018); City of Carlsbad v. I&W,
Inc., No. 12-080 BB-CG, 2012 WL 12931286, at *6 (D.N.M.
May 15, 2012); Monroe v. Continental Tire The Americas,
LLC, 807 F.Supp.2d 1129, 1132-34 (M.D. Fl. 2011);
Stewart v. Jennings, No. 1:10-cv-158, 2010 WL
3009536, at *3 (E.D. Tenn. July 28, 2010); Schuchmann v.
Miraglia, No. 3:04-cv-1057-B, 2004 WL 2626532, at *2
(N.D. Tx. Nov. 16, 2004). But see Jackson, 2012 WL
2562830, at *1-2. Like those cases, Virginia law requires
Plaintiff to sue Edem personally in order to recover
insurance proceeds. See Va. Code Ann. §
8.01-5(B) (2018). Because the law of Virginia, which governs
this action, see Traveler's Ins. Co. v. Riggs,
671 F.2d 810, 814 (4th Cir. 1982), requires that Edem be
sued, he is not a nominal party.
maintain that a judgment is not required to make a claim to
the insurance proceeds in the interpleader action or to prove
a claim before the bankruptcy court. While this may be an
appealing argument where liability is not contested, the
unworkability of this argument is easily illustrated. Imagine
that, in this action, a jury determines that Edem is not
liable for Plaintiff's damages. Such an outcome is not
beyond the realm of possibility; Virginia is a contributory
negligence state. See, e.g., Ponirakis v.
Choi, 546 S.E.2d 707, 710 (Va. 2001). Without knowing
the facts of this specific case, if a jury determines that
Plaintiff was somehow negligent, and if they determine
Plaintiff's negligence contributed in any way to the
accident, the law of Virginia requires judgment for Edem.
Defendants contended at the hearings on these motions that
such a verdict would not matter in either the bankruptcy or
interpleader proceedings, but I am not persuaded that is
correct. No reasonable bankruptcy trustee would permit a
claim to go forward, unquestioned, in the face of a jury
verdict declaring that no such claim exists under the law. By
the same token, regardless of what the judge in the
interpleader action may determine, it would likely be
malpractice for the attorneys for other claimants not to at
least protest against a recovery of the interpled funds by
Plaintiff if a jury finds that Edem is not liable under the
applicable law. Regardless of what argument they raise in
this action, I have no trouble concluding that a verdict
against Edem is vital to protecting Plaintiff's
interests, Edem is a “real party to [this] ...