Harris v. Edem

A defendant who has received a discharge in bankruptcy does not become a nominal party for purposes of diversity and removal jurisdiction.

In this personal injury suit, both parties are citizens of Virginia. The defendants maintain that, by virtue of the tortfeasor’s bankruptcy discharge and the fact that his insurance carrier has interpled his policy limits in state court, he is a “nominal” party whose citizenship may be ignored for purposes of determining jurisdiction. But the plaintiff is required by law to sue the insured personally to recover any proceeds. The courts that have addressed this issue are virtually unanimous that a bankrupt defendant is not “nominal” for purposes of diversity jurisdiction.

The defendants effectively argue that a judgment-proof defendant’s citizenship may be ignored for jurisdictional purposes. That is not the law. Edem is not a nominal party, and his inclusion as a defendant divests this court of jurisdiction.

Motion to remand granted.

Harris v. Edem, No. 4:18cv53, Feb. 7, 2019. WDVA at Danville (Kiser).

Categories: Opinions, U.S. District Court - Western District of Virginia

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