Gambrell et al v. IDS Property Casualty Insurance Company et al

Filing 22

ORDER denying 18 Motion for Attorneys' Fees. Signed by Judge John W Sedwick on 5/10/13.(JWS)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF ARIZONA 8 9 FRANK and BETTINA GAMBRELL, 10 Plaintiffs, 11 12 vs. 13 IDS PROPERTY CASUALTY INSURANCE CO., et al., 14 15 Defendants. ) ) ) ) ) ) ) ) ) ) ) 4:12-cv-00661 JWS ORDER AND OPINION [Re: Motion at docket 18] 16 I. MOTION PRESENTED 17 18 At docket 18, plaintiffs Frank and Bettina Gambrell (“Gambrells”) seek an award 19 of attorneys’ fees “pursuant to A.R.S. 12-341.01 and /or 28 U.S.C. 1447(c).” Defendant 20 IDS Property Casualty Insurance Co. (“IDS”) responds at docket 20. Gambrells’ reply is 21 at docket 21. Oral argument was not requested, and oral argument would not be of 22 assistance to the court. 23 24 II. DISCUSSION 25 The parties are familiar with the factual and procedural background. Readers 26 who are unfamiliar with the relevant background should read the order at docket 14, 27 which remanded the case to state court. 28 1 2 3 In support of their motion, Gambrells rely primarily on A.R.S. 12-341.01 which authorizes a court to award reasonable attorneys’ fees to a prevailing party in a contract dispute governed by Arizona law. This court has already explained in an order at 4 5 docket 30, Case No. 2:12-cv-1227, why it declines to exercise its discretion to award 6 fees to the Gambrells pursuant to that statute. The reasoning in that order is 7 incorporated here. Based thereon, to the extent it relies on A.R.S. 12-341.01, the 8 Gambrells’ request for fees at docket 18 will be denied. 9 The court now turns to Gambrells’ assertion that fees may be awarded pursuant 10 to 28 U.S.C. § 1447(c). That statute provides that a district court may award “just costs 11 12 and any actual expenses, including attorney fees, incurred as a result of the removal.” 13 Like A.R.S. 12-341.01, the federal statute authorizes, but does not require, an award of 14 fees. In their opening memorandum at docket 19, Gambrells did not cite any authority 15 for the proposition that an award would be proper under section 1447(c); rather, they 16 merely asserted it would. In response, IDS asserts that an award may not be made 17 18 19 because they had an objectively reasonable basis for initiating the removal citing Gardner v. UICI.1 It is IDS’ position that because they could legitimately contend that in 20 Walter v. Simmons2 an Arizona Appellate court had indicated that an employee adjuster 21 owed no duty to an insured, the decision to remove was objectively reasonable. In their 22 reply, Gambrells not only argue the removal was unreasonable, but advance a different 23 legal standard. Gambrells contend that the removal was “wrong as a matter of law” with 24 25 26 1 27 2 28 508 F.3d 559, 561 (9th Cir. 2007). 818 P.2d 214 (Ariz. Ct. App. 1991). 2 1 respect to the fraudulent joinder issue. Gambrells rely on Balcorta v. Twentieth 2 Century-Fox Film Corp3. 3 Under the “wrong as a matter of law” standard, Gambrells’ argument is not 4 5 persuasive, because as this court explained in an earlier order, it is not settled as a 6 matter of Arizona law that an employee adjuster owes a duty of good faith and fair 7 dealing to an insured. It follows that IDS could not have been wrong as a matter of law 8 to base the removal on the proposition that there is no such duty. 9 The matter thus turns on whether there was an objectively reasonable basis to 10 assert that Harrish was fraudulently joined because she owed no duty to the Gambrells. 11 12 Gambrells contend that it could not have been objectively reasonable to remove on that 13 basis, because IDS was aware that earlier district court decisions had remanded cases 14 because Arizona law is not clear on this point. This argument has some merit, but does 15 not carry the day, as explained below. 16 In earlier motion practice IDS argued that the decision by the Arizona Court of 17 Appeals in the Walter case had established that an employee adjuster owed no good 18 19 faith duty to the insured. In reviewing the motion papers and the relevant case law, this 20 court concluded that whether Walter was properly cited as establishing that proposition 21 was a close question, but ultimately determined that what the Walter court had said was 22 dicta, which did not establish Arizona law. In answering what is again a close question, 23 this court now holds that it was objectively reasonable for IDS to rely on Walter, even 24 25 26 27 28 3 208 F.3d 1102, 1106 n.6 (9th Cir. 2000). 3 1 though in this court’s final analysis that reliance was incorrect. It follows that there is no 2 basis for an award of fees under section 1447(c). 3 III. CONCLUSION 4 5 6 7 For the reasons above, this court declines to exercise its discretion to award fees to Gambrells. The motion at docket 18 is DENIED. DATED this 10th day of May 2013. 8 9 10 /s/ JOHN W. SEDWICK UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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