Casillas et al v. American Family Mutual Insurance Company et al

Filing 14

ORDER granting 9 Plaintiffs' Motion to Remand to State Court. The Clerk shall remand this action to the Superior Court of Arizona in Maricopa County. Signed by Judge Frederick J Martone on 9/14/12. (Attachments: # 1 Remand Letter)(DMT)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiffs,
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vs.
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American Family Mutual Insurance Co., )
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Defendant.
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Ezequiel Casillas; Sonia Casillas,

CV 12-01474-PHX-FJM
ORDER

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The court has before it plaintiffs' motion to remand (doc. 9) and defendant's response
(doc. 11). Plaintiffs did not reply, and the time for replying has expired.

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This action arises from a 2008 car accident that injured Ezequiel Casillas, an Arizona

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resident. On October 12, 2011, plaintiffs brought an action in the Superior Court of Arizona

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in Maricopa County against American Family Mutual Insurance ("American Family"),

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Ezequiel's insurance company, as well as insurance adjuster Maureen Roberts, an Arizona

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resident. The complaint asserts a breach of contract claim against American Family, and a

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bad faith claim against both American Family and Roberts. Mot., ex. 1. American Family

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was served on October 13, 2011. On June 21, 2012, the Superior Court, over plaintiffs'

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objection, granted Roberts's motion to dismiss for failure to state a claim. American Family

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removed to this court on July 9, 2012 (doc. 1).

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An action is removable from state court if it could have been originally filed in federal

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court. See 28 U.S.C. § 1441(a). A notice of removal must be filed within 30 days after

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defendant's receipt of the initial pleading. Id. § 1446(b)(1). However, if the action is not

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removable based on the initial pleading, the defendant may file a notice of removal within

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30 days after receiving "a copy of an amended pleading, motion, order or other paper from

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which it may first be ascertained that the case is one which is or has become removable." Id.

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§ 1446(b)(3) (emphasis added).

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American Family concedes that there was not complete diversity between the parties

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when the complaint was filed. It argues, however, that the action is nevertheless removable

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because Roberts, the non-diverse defendant, was fraudulently joined. When a defendant is

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fraudulently joined, her presence in the lawsuit is ignored for diversity purposes. Morris v.

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Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). A defendant is fraudulently

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joined if the plaintiff fails to state a claim against her and that failure is obvious pursuant to

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settled state law. Id. However, if after accepting the facts in the complaint as true, the court

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concludes that plaintiff "can possibly state a claim" against the non-diverse defendant, the

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defendant has not been fraudulently joined and the action must be remanded. Ballesteros v.

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Am. Standard Ins. Co. of Wis., 436 F. Supp. 2d 1070, 1073 (D. Ariz. 2006).

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Here, American Family argues that removal was timely because the notice of removal

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was filed within 30 days of the Superior Court's ruling granting Roberts's motion to dismiss.

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But according to American Family's argument, Roberts was fraudulently joined because it

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was clearly settled under Arizona law that a bad faith claim cannot be asserted against an

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insurance adjuster. The Arizona appellate cases cited by American Family to support this

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argument were decided in 1991 and 1999. Indeed, American Family argues that "plaintiffs

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never had a viable claim against Defendant Roberts." Resp. at 9. Thus, under American

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Family's theory of fraudulent joinder, all it needed to look at to determine that Roberts was

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fraudulently joined was the complaint. The Superior Court's granting of Roberts's motion

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to dismiss in June 2012, in other words, was not the document from which American Family

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could have "first [] ascertained that the case is one which is or has become removable." 28

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U.S.C. § 1446(b)(3). That was the complaint, which it was served with on October 13, 2011.

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Thus, American Family's notice of removal, which was filed almost 9 months after it was
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served with the initial pleading, is untimely. See id. § 1446(b)(1).

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Moreover, even if the notice of removal was timely, this court has previously rejected

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American Family's argument that an insurance adjuster was fraudulently joined, after

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concluding that Arizona law concerning a bad faith claim brought against an insurance

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adjuster is ambiguous. Allo v. Am. Family Mut. Ins. Co., No. CV-08-0961-PHX-FJM, 2008

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WL 4217675, at *2-*3 (D. Ariz. Sept. 12, 2008); see also Ballesteros, 436 F. Supp. 2d at

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1077; Wapniarski v. Allstate Ins. Co., No. CV-10-0823-PHX-LOA, 2010 WL 2534167, at

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*5 (D. Ariz. June 18, 2010). No cases cited by American Family here warrant a different

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conclusion. Thus, even if the notice of removal was timely, we would still conclude that

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Roberts was not fraudulently joined and would remand on that basis.

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Plaintiffs request an award of costs and attorneys' fees pursuant to 28 U.S.C. §

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1447(c). That statute gives the court discretion to award fees and costs where removal was

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incorrect as a matter of law. Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102,

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1106 n.6 (9th Cir. 2000). Both the untimely removal of this action and the ambiguity in

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Arizona law demonstrate that American Family's removal was incorrect as a matter of law.

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An award of fees and costs to plaintiffs is therefore warranted. If the parties are unable to

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agree on a reasonable sum, they may file supporting documentation and memoranda pursuant

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to LRCiv 54.2.

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IT IS ORDERED GRANTING plaintiffs' motion to remand (doc. 9). The Clerk
shall remand this action to the Superior Court of Arizona in Maricopa County.
DATED this 14th day of September, 2012.

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