United States District Court, D. Minnesota
Jason Tomporowski, as trustee for the next of kin of Michelle Lee Young, deceased, Plaintiffs,
Christina Marie Knutson, Neil Owen Knutson, and Government Employees Insurance Company, Defendants.
Matthew James Barber and Peter W. Riley, Schwebel, Goetz
& Sieben, for Plaintiffs.
R. Crawford, Lauren Elizabeth Nuffort, and Michelle Kristine
Kuhl, Lommen Abdo, P.A., for Defendants.
RICHARD NELSON, UNITED STATES DISTRICT JUDGE
Jason Tomporowski, as trustee for the next of kin of Michelle
Lee Young, deceased, originally filed this action in Hennepin
County District Court in February 2019. (See Compl.
[Doc. No. 1-1].) Plaintiffs allege that on July 7, 2018,
Defendant Christina Marie Knutson was negligent in the
operation of a motor vehicle allegedly owned by her father,
Neil Owen Knutson, that collided with a motorcycle operated
by Young, who died as a result of her injuries. (Id.
¶¶ 2-3.) In addition, Plaintiffs allege that
Defendant Government Employees Insurance Company
(“GEICO”) insured Christina Knutson through a
policy issued to her mother, Amy Knutson. (Id.
¶ 8.) Plaintiffs assert state law claims of wrongful
death and negligence against the Knutsons, and seek a
declaratory judgment against GEICO for insurance coverage.
(Id. ¶ 9-10.)
removed this case to federal court on the basis of diversity
of citizenship. (Notice of Removal ¶¶ 4-5 [Doc. No.
1].) Plaintiffs are Minnesota residents. (Id. ¶
2.) Defendants Christina and Neil Knutson are also Minnesota
residents, while Defendant GEICO is a Maryland corporation,
with its principal place of business in Chevy Chase,
Maryland. (Id.) GEICO contends that the Knutsons are
not adverse to Plaintiffs, id. (citing Order of
St. Benedict v. St. Paul Mercury Ins. Co., No. 17-cv-781
(DSD/KMM), 2017 WL 1476121, at *3 (D. Minn. Apr. 25, 2017;
Interlachen Properties, LLC v. State Auto Ins. Co.,
136 F.Supp.3d 1061, 1069 (D. Minn. 2015)), as it plans to
file a motion to “realign” the Knutsons as
plaintiffs. (Id. ¶ 3.) Once “properly
aligned, ” GEICO contends, complete diversity will
exist. (Id. ¶ 4.)
another case arising from the same accident and involving the
same defendants, but a different plaintiff, Mayo v.
Knutson, 19-cv-788 (PJS/LIB) (D. Minn. 2019), GEICO also
invoked diversity of citizenship to remove the matter from
state court to federal court. There too, GEICO argued that
the Knutsons' interests could be realigned with the
plaintiffs' interests. Mayo, Notice of Removal
[Doc. No. 1] ¶¶ 3-4. After directing GEICO to
demonstrate the existence of subject-matter jurisdiction,
Judge Patrick J. Schiltz, to whom the case was assigned,
ultimately found jurisdiction lacking. Mayo, Apr. 9,
2019 Order [Doc. No. 14] at 3. Judge Schiltz therefore
remanded the case to state court. Id.
Mayo, Plaintiffs here assert that complete diversity
of citizenship is lacking and the Court therefore lacks
subject-matter jurisdiction. (Pl.'s Mar. 26, 2019 Letter
[Doc. No. 5] at 1.) On March 26, 2019, this Court issued a
show-cause order [Doc. No. 7] similar to the order in
response to this Court's show-cause order, GEICO
acknowledges the lack of diversity, but argues that: (1) even
if the parties' initial alignment is not completely
diverse, a defendant may still remove a case to federal court
and request realignment of the parties in order to meet the
diversity requirement; (2) the Knutsons should be realigned
because they have the same interests as the Trustee; (3)
Christina Knutson should be realigned as a plaintiff because
if she is not, this becomes a direct action, which is not
allowed under Minnesota law; and (4) judicial economy is best
served by retaining jurisdiction. (Def.'s Resp. [Doc. No.
10] at 3-8.) The Court considers these arguments in turn.
noted, GEICO contends that although there is not complete
diversity, courts permit removal of state actions to federal
court, where, shortly after removal, a party requests
realignment of the parties in order to satisfy diversity.
(Id. at 3) (citing Lott v. Scottsdale Ins.
Co., 811 F.Supp.2d 1220, 1223 (E.D. Va. 2011); Reko
v. Creative Promotions, Inc., 70 F.Supp.2d 998, 1002 (D.
Minn. 1999)). For instance, GEICO notes that this Court has
considered realignment motions prior to deciding an issue of
fraudulent joinder and before considering a motion to remand.
(Id.) (citing Interlachen Props., LLC
v. State Auto Ins. Co., 136 F.Supp.3d 1061, 1067-71
(D. Minn. 2015); Kuepers Constr., Inc. v. State Auto Ins.
Co., No. 15-cv-449 (ADM/LIB), 2015 WL 4247153, at *5 (D.
Minn. July 13, 2015)).
case is distinguishable from the authority on which GEICO
relies, however. Unlike Reko, Interlachen,
and Kuepers, Plaintiffs here have not yet entered
into a Miller-Shugart settlement agreement with the
Knutsons. Under Minnesota law, a plaintiff may enter into a
settlement agreement with a defendant-insured, which is only
collectible from the insurer. See Miller v. Shugart,
316 N.W.2d 729 (Minn. 1982). In Reko, the
Miller-Shugart settlement had been entered into by
the time of removal, making the defendant-insured a nominal
party, which “has no controlling significance for
removal purposes.” 70 F.Supp.2d at 1002 (citing
Bradley v. Md. Cas. Co., 382 F.2d 415, 419 (8th Cir.
1967); see also Interlachen, 136 F.Supp.3d at 1062
(noting that the parties had entered into
Miller-Shugart agreements, seeking to obtain
judgment only from the insurer); Kuepers, 2015 WL
4247153, at *2 (discussing the parties'
Miller-Shugart agreements). In this case, at this
time, the Knutsons are not “nominal parties.” The
Court also disagrees with GEICO regarding whether the
interests of Plaintiffs and the Knutsons are the same.
Notably, Plaintiffs have asserted negligence and wrongful
death claims against the Knutsons. While it is possible that
Plaintiffs and the Knutsons may enter into a
Miller-Shugart agreement in the future, their
interests are now adverse. See Allegiance Energy Servs.,
LLC v. Kinder Morgan Cochin LLC, 80 F.Supp.3d 963, 972
(D. Minn. 2015) (holding that where any actual and
substantial conflict is present between aligned parties, they
should not be realigned).
Court is also unpersuaded that the Knutsons and Plaintiffs
should be realigned because Minnesota law does not allow an
injured party to proceed directly against a liability
insurer. As Judge Schiltz stated in Mayo, this
argument goes to the merits of the claims, and the Court
cannot reach the merits, absent jurisdiction. Mayo,
April 9, 2019 Order at 2.
the Court does not find that judicial efficiency warrants
retention of this case in federal court because Plaintiffs
and the Knutsons are likely to enter into a
Miller-Shugart settlement agreement. Again, as Judge
Schiltz noted in Mayo, removal jurisdiction is
dependent on the facts at the time of removal. Id.
at 3 (citing Schubert v. Auto Owners Ins. Co., 649
F.3d 817, 822 (8th Cir. 2011) (“It is axiomatic the
court's jurisdiction is measured either at the time the
action is commenced or, more pertinent to this case, at the
time of removal”); Universal Underwriters Ins.
Co., 367 F.2d at 871 (“The question of
realignment, involving jurisdiction, must be tested at the
time of filing of the complaint.”)).
because the parties have not entered into a
Miller-Shugart settlement agreement and are
non-diverse, the Court remands this case under 28 U.S.C.
§ 1447(c) for lack of subject-matter jurisdiction.
IT IS ...