Anthony Gonzalez, Sr. v. Metropolitan Life Insurance Company et al

Filing 26

ORDER GRANTING PLAINTIFFS MOTION TO REMAND by Judge Manuel L. Real: IT IS HEREBY ORDERED that Plaintiffs Motion to Remand is GRANTED. (Dkt. No.13). Los Angeles County Superior Court BC574757. MD JS-6. Case Terminated. (pj)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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ANTHONY GONZALEZ, SR., an individual,

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Plaintiff,
v.
METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation;
RAGHBIR S. GAMBHIR, an individual, and
DOES 1 - 50, inclusive,

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Defendants.

) CASE NO. CV 15-2870-R
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) ORDER GRANTING PLAINTIFF’S
) MOTION TO REMAND
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Before the Court is Plaintiff’s Motion to Remand, which was filed on May 15, 2015.

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Having been thoroughly briefed by both parties, this Court took the matter under submission on

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July 1, 2015.

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A defendant may remove a civil action from state court to federal court if original

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jurisdiction would have existed in the federal court at the time the complaint was filed. 28 U.S.C.

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§ 1441(a). The Ninth Circuit “strictly construe[s] the removal statute against removal jurisdiction.

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Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The strong presumption against removal

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jurisdiction means that the defendant always has the burden of establishing that removal is proper.

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Id. Accordingly, federal jurisdiction must be rejected if there is any doubt as to the right of

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removal in the first instance. Id.

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There are two grounds for federal subject matter jurisdiction: (1) federal question

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jurisdiction under Title 28 U.S.C. § 1331; and (2) diversity jurisdiction under Title 28 U.S.C. §

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1332. A district court has federal question jurisdiction in "all civil actions arising under the

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Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. A district court has

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diversity jurisdiction "where the matter in controversy exceeds the sum or value of $75,000, . . .

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and is between citizens of different states, or citizens of a State and citizens or subjects of a

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foreign state . . . ." 28 U.S.C. § 1332 (a)(1)-(2).

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Here, Plaintiff, a California resident, brought suit in state court against defendant

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Metropolitan Life Insurance Company (“MetLife”), a New York corporation, and defendant

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Raghbir Gambhir, a California resident, for failure to pay benefits allegedly due under a life

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insurance policy. On April 17, 2015, Defendants removed the action to this Court on the grounds

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of diversity. Defendants argue that Gambhir is a sham defendant who was joined in the action

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solely for the purpose of defeating diversity.

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“[O]ne exception to the requirement of complete diversity is where a non-diverse

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defendant has been `fraudulently joined.'" Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067

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(9th Cir. 2001). Fraudulent joinder is a "term of art" courts use to describe a non-diverse

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defendant who has been joined to an action for the sole purpose of defeating diversity. McCabe v.

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Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). In the Ninth Circuit, a non-diverse

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defendant is deemed a sham defendant if, after all disputed questions of fact and all ambiguities in

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the controlling state law are resolved in the plaintiff's favor, the plaintiff could not possibly

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recover against the party whose joinder is questioned. Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d

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1416, 1426 (9th Cir.1989). The failure to state a claim against the non-diverse defendant must be

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"obvious according to the well-settled rules of the state." United Computer Sys. v. AT&T Corp.,

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298 F.3d 756, 761 (9th Cir. 2002).

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There is a "general presumption" that a plaintiff's sole purpose for including a defendant
residing in the same state as the plaintiff in the lawsuit is not to defeat diversity jurisdiction.
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Hamilton Materials, Inc. v. Dow Chemical Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). This

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presumption requires defendants to "do more than show that the complaint at the time of removal

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fails to state a claim against the non-diverse defendant." Padilla v. AT&T Corp., 697 F. Supp. 2d

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1156, 1159 (C.D. Cal. 2009). "[T]he defendant must demonstrate that there is no possibility that

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the plaintiff will be able to establish a cause of action in State court against the alleged sham

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defendant." Good v. Prudential Ins. Co. of Am., 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998)

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(emphasis added). If there is a "non-fanciful possibility" that the plaintiff can state a claim against

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the non-diverse defendant, then the court must remand the case. Macey v. Allstate Prop. & Cas.

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Ins. Co., 220 F. Supp. 2d 1116, 1118 (N.D. Cal. 2002).

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It is undisputed that both Plaintiff and Gambhir are residents of California for purposes of

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diversity. As such, diversity is not present, and remand must occur, unless Defendants can show

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that Gambhir was fraudulently joined.

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Plaintiff’s claims against Gambhir for negligence allege that Gambhir breached his duties

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as an insurance agent by failing to procure the proper coverage for Plaintiff’s loss, and by failing

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to advise Plaintiff of any lapse in coverage. Defendants, on the other hand, argue that Plaintiff

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cannot state a viable claim for negligence against Gambhir because Plaintiff cannot establish

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Gambhir owed Plaintiff a duty, or that Gambhir breached any duty. Defendants contend that

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because Plaintiff’s claims against Gambhir fail as a matter of law, Gambhir has been fraudulently

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joined, and Plaintiff’s motion to remand should be denied.

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Generally, “where the agent contracts in the name of the insurer and does not exceed that

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authority, the insurer is liable and not the agent." Briano v. Conseco Life Ins. Co., 126 F. Supp. 2d

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1293, 1298 (C. D. Cal. 2000)(citations omitted). However, it is well-settled that an insurance

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agent may be directly liable for misrepresenting the extent or nature of coverage, or if the agent

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holds himself out as having expertise in the area of insurance sought by the insured. Levine v.

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Allmerica Fin. Life Ins. & Annuity Co., 41 F. Supp. 2d 1077, 1079 (C.D. Cal. 1999) (citing

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Fitzpatrick v. Hayes, 67 Cal.Rptr.2d 445, 452 (1997)). In addition, an insurance agent has an

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"obligation to use reasonable care, diligence, and judgment in procuring the insurance requested

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by an insured." Butcher v. Truck Ins. Exch., 77 Cal. App. 4th 1442, 1461 (2000) (citing Jones v.
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Grewe, 189 Cal.App.3d 950, 954 (1987)). An agent's failure to deliver the agreed-upon coverage

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may constitute actionable negligence and the proximate cause of an injury. See id. (citing Desai v.

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Farmers Ins. Exchange, 47 Cal.App.4th 1110, 1120 (1996)).
Moreover, it is an "established rule that if a dual agency exists, the law does not foreclose

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recovery by the insured." Icasiano v. Allstate Ins. Cos., 103 F. Supp. 2d 1187, 1189 (N.D. Cal.

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2000). (citation and quotation marks omitted). "Under California law, a dual-agent theory requires

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that the insurance agent act on behalf of the insured in some way beyond his or her capacity as an

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agent for the insurer." Good v. The Prudential Insurance Company of America, 5 F. Supp. 2d 804,

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808 (N.D. Cal.1998). If an insurance agent is a dual agent, that agent owes a duty to both the

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insurer and the insured. Consequently, the agent may be liable to the insured for negligence or

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other tortious behavior even if committed within the scope of his role as an agent of the fully

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disclosed insurer. Levine, 41 F. Supp. 2d at 1079.
Here, Defendants’ argument that Gambhir cannot be liable because the alleged actions

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occurred while Gambhir was performing his duties as an agent of MetLife simply begs the

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question of whether Gambhir was acting within the scope of his duties during his interactions with

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Plaintiff. The determination of whether Gambhir was acting within the scope of his duty and

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whether dual agency exists is a question of fact. Construing all facts in Plaintiff’s favor, it is not

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obvious according to settled law that Plaintiff cannot state a cause of action against Gambhir for

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negligence. Although this is a close case, the Court finds that there is a "non-fanciful possibility"

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that Plaintiff can state a claim against Gambhir under California law. Accordingly, Defendants

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have failed to meet their heavy burden of showing there is no possibility Plaintiff can establish a

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cause of action for negligence against Gambhir.
IT IS HEREBY ORDERED that Plaintiffs’ Motion to Remand is GRANTED. (Dkt. No.

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Dated: July 7, 2015.

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___________________________________
MANUEL L. REAL
UNITED STATES DISTRICT JUDGE
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