St. Louis Record

Thursday, September 19, 2019

Federal judge remands a St. Louis bar's suit against insurer and attorney back to state court

Lawsuits

By Tomas Kassahun | May 3, 2019


ST. LOUIS – The U.S. District Court Eastern District of Missouri Eastern Division has remanded a St. Louis bar’s lawsuit against its insurer and the attorney it hired.

In the ruling on March 21, U.S. Judge Stephen N. Limbaugh Jr. said the claims are valid and could be heard in the Circuit Court for the city of St. Louis.

According to the ruling, 11 plaintiffs joined in this case to seek remand. The plaintiffs include eight individuals who had originally filed a lawsuit against Kilroy Was Here LLC, saying the St. Louis bar caused the plaintiffs’ injuries when its tent collapsed. The court said the other plaintiffs are Kilroy Was Here along with its owners, Arthur and Brenda Randall.

According to the opinion, the case also includes the bar’s insurer, Starr Indemnity, and Brian McBrearty, the attorney hired by Starr to represent Kilroy. 

“At some point, the eight plaintiffs offered to settle the case with Kilroy for $720,100, which was under the policy limits of $1 million,” the opinion stated. 

The ruling states Kilroy then "demanded" that Starr settle the case for that amount, but Starr declined and the case went to trial, where the eight plaintiffs were awarded a net verdict of $3.4 million, which is in excess of the policy limits.

According to the opinion, Kilroy and the Randalls are now targeting McBrearty’s purported malpractice and breach of fiduciary obligations, while the eight plaintiffs continue to pursue the insurance-related claims against Starr. 

“Specifically, Kilroy and Randalls’ claims against McBrearty involve allegations that McBrearty failed to appropriately respond to a conflict of interest that arose between himself, Starr, and Kilroy,” the opinion stated.

According to the opinion, the eight plaintiffs assert that “Starr had a duty to put Kilroy’s interests above its own and that, by refusing to settle, Starr was both negligent in handling claims against Kilroy and acted in bad faith.”

According to the opinion, "Starr notes that the two groupings of plaintiffs are 'strange bedfellows,' having at one point opposed each other and now electing to join together in an apparent effort to defeat federal jurisdiction."

“Starr goes on to argue that Kilroy and Randalls’ claims against McBrearty have been fraudulently joined,” the opinion stated.

The court said fraudulent joinder is defined as “the filing of a frivolous or otherwise illegitimate claim against a non-diverse defendant solely to prevent removal.”

“Joinder is fraudulent when there exists no reasonable basis in fact and law supporting a claim against the resident defendants,” the opinion stated. “A plaintiff ‘cannot defeat a defendant’s right of removal by joining a defendant who has ‘no real connection to the controversy.’”

However, if the state law might impose liability on the resident defendant under the facts alleged, then there is no fraudulent joinder, the opinion stated.

Having found the claims valid in this case, Limbaugh ruled there is no fraudulent joinder and the case is remanded to the Circuit Court for the City of St. Louis.

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