George Wiles v. Capitol Indemnity ( 2002 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 01-2107
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George Wiles, doing business as *
Arcadia Valley Office Supply, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Capitol Indemnity Corporation; *
Brown & James, P.C.; Nixon and *
Company, *
*
Appellees. *
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Submitted: December 14, 2001
Filed: February 14, 2002
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Before MORRIS SHEPPARD ARNOLD, BEAM, and RILEY, Circuit Judges.
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RILEY, Circuit Judge.
George Wiles (Wiles) appeals from a final judgment in favor of Capitol
Indemnity Corporation (Capitol) in an action on a fire insurance policy. Wiles
contends on appeal that the district court1 improperly dismissed parties from the suit,
lacked subject matter and removal jurisdiction, and improperly denied leave to amend
the complaint. We affirm the judgment of the district court.
Wiles filed his original complaint seeking a declaratory judgment in the Circuit
Court of the City of St. Louis on July 2, 1999, alleging civil conspiracy, fraud, breach
of contract and vexatious refusal to pay his fire insurance claim on his Capitol policy.
On August 11, 1999, the case was removed to the United States District Court in St.
Louis based upon diversity jurisdiction under 28 U.S.C. § 1332. Diversity of
citizenship existed between Wiles, a citizen of Missouri, and Capitol, a Wisconsin
corporation, where the amount in controversy exceeded $6 million. Based upon
fraudulent joinder, the district court on October 21, 1999, dismissed Wiles's
conspiracy claim against the two non-diverse defendants, Brown & James, P.C. and
Nixon and Company, Capitol's attorneys and its claims handling agency, respectively.
The court concluded Wiles's conspiracy count against these two defendants failed to
state a claim under Missouri law. The district court on December 13, 1999, denied
Wiles's motion filed on November 12, 1999, requesting leave to amend his conspiracy
claim as to the non-diverse defendants.
On January 11, 2001, the district court granted Capitol a summary judgment
on Wiles's claims arising out of an alleged material breach of the insurance policy's
cooperation clause. On February 23, 2001, a jury returned a verdict for Capitol on
its counterclaim that Wiles had intentionally concealed material facts and
circumstances concerning the fire in both his insurance claim and Capitol's
subsequent investigation of the claim.
1
The Honorable Jean C. Hamilton, United States District Court for the Eastern
District of Missouri.
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Wiles specifically argues on appeal (1) the dismissal of the two non-diverse
defendants was prejudicial error and the court therefore lacked subject matter
jurisdiction; (2) Capitol's notice of removal was faulty and thus negated removal
jurisdiction; and (3) the denial of leave to amend the complaint constituted prejudicial
error.
We first address Wiles's argument regarding the dismissal of the non-diverse
defendants. We review the district court's conclusions of law de novo. Lewis v.
Wilson, 253 F.3d 1077, 1079 (8th Cir. 2001). While the court must accept allegations
of fact as true when considering a motion to dismiss, the court is free to ignore legal
conclusions, unsupported conclusions, unwarranted inferences and sweeping legal
conclusions cast in the form of factual allegations. See Westcott v. City of Omaha,
901 F.2d 1486, 1488 (8th Cir. 1990).
The only count relating to the non-diverse defendants was the civil conspiracy
count. Missouri recognizes the general rule that there is no tort of civil conspiracy.
Xavier v. Bumbarner & Hubbell Anesthesiologists, 923 S.W.2d 428, 432 (Mo. App.
1996). A claim of conspiracy alone is not actionable absent an underlying tort or
wrongful act. Id.; see Williams v. Mercantile Bank of St. Louis, 845 S.W.2d 78, 85
(Mo. App. 1993).
We note that the Missouri Supreme Court has held "an insurance company's
denial of coverage itself is actionable only as a breach of contract and, where
appropriate, a claim for vexatious refusal to pay." Overcast v. Billings Mutual Ins.
Co., 11 S.W.3d 62, 69 (Mo. 2000) (en banc). An insured cannot recast a contract
claim as a conspiracy tort under Missouri law. See Meeker v. Shelter Mutual Ins.
Co., 766 S.W.2d 733, 742-43 (Mo. App. 1989). Thus, Wiles's allegations do not
present an underlying tort or a wrongful act to support a conspiracy count under
Missouri law.
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In addition, under Missouri agency law generally, a principal cannot conspire
with its own agents. Macke Laundry Serv., Ltd. P'ship v. Jetz Serv. Co., 931 S.W.2d
166, 176 (Mo. App. 1996). Two exceptions exist to the rule when "the agent acts out
of a self-interest which goes beyond the agency relationship" or when an "attorney
is acting within the scope of the attorney-client relationship, under the general
principles of law governing attorney liability" such that "the attorney is guilty of
fraud, collusion, or a malicious or tortious act." Id. at 176-77 (internal quotations and
citations omitted). In Missouri, "an attorney is usually not liable for an injury to a
nonclient arising out of the representation of a client." Id. at 176-77.
Wiles alleged in his petition specifically that Capitol "acted and failed to act
by and through its agents and employees acting within the scope and course of their
respective employment/agency . . . and on behalf of" Capitol. Wiles failed to allege
any acts outside the scope of the normal relationship between attorney and client or
between claims representative and client. Nor did he allege any facts supporting a
claim for fraud, collusion, or any malicious or tortious act within the scope of the
agency relationship. Thus, the exceptions to the rule that a principal cannot conspire
with its own agents were not triggered.
Joinder is fraudulent and removal is proper when there exists no reasonable
basis in fact and law supporting a claim against the resident defendants. Anderson
v. Home Ins. Co., 724 F.2d 82, 84 (8th Cir. 1983). Here, no reasonable basis in fact
and law is alleged which will support a claim against the non-diverse defendants.
Wiles's argument that the district court lacked subject matter jurisdiction is
based upon the premise that the non-diverse parties were wrongfully dismissed from
the suit. As we find the dismissal of the non-diverse parties based upon fraudulent
joinder was correct, we find no error in the determination that the district court had
subject matter jurisdiction.
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Wiles argues the Notice of Removal did not properly invoke removal
jurisdiction because it cited 28 U.S.C. § 1446 and not 28 U.S.C. § 1441. While
§ 1441 sets forth grounds for removal, § 1446 prescribes the procedure for removal.
Although Capitol should have cited § 1441 as part of its grounds for removal, its
failure to do so did not deprive the court of removal jurisdiction because the § 1441
jurisdictional requirements were nonetheless met.
The district court, after reviewing Wiles's motion and proposed amended
complaint, denied Wiles's motion for leave to amend. We review the denial of leave
to amend a complaint for an abuse of discretion. Grandson v. Univ. of Minn., 272
F.3d 568, 575 (8th Cir. 2001). Leave to amend should be denied if the proposed
amended pleading would be futile. Id. The district court did not abuse its discretion
in denying Wiles leave to amend his complaint because the proposed amendment
merely restated Wiles's prior conspiracy claim and would fail as a matter of law for
the same reasons as the original complaint.
Accordingly, we affirm the judgment of the district court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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