Emil Gasumyan v. Travelers Casualty Insurance Company of America, et al

Filing 29

MINUTES (IN CHAMBERS) ORDER DENYING MOTION FOR REMAND by Judge Andre Birotte Jr.: Because the Plaintiff is diverse from Defendant Travelers, and the amount in controversy exceeds $75,000, diversity jurisdiction exists. Plaintiff's motion for remand 23 is therefore DENIED. Court Reporter: N/A. (gk)

motion to strike portions of the Complaint. Plaintiff then filed a First Amended
Complaint (“FAC,” Dkt. No. 11) that purported to add Pavel Arestov as a defendant and
adds a fourth cause of action, for negligent misrepresentation. Plaintiff now moves to
remand on the ground that the addition of Arestov destroyed diversity jurisdiction.
First, the motion lacks a statement of compliance with Local Rule 7-3 and on that
basis alone should be denied.
Second, the motion also fails on its merits. Plaintiff’s argument that adding
non-diverse defendant Pavel Arestov destroyed diversity fails for several reasons. The
FAC did not effectively add Arestov as a defendant: he is not named on the face page of the
FAC, nor is he identified on the docket. Thus, for all intents and purposes, Arestov has
not been “added” as a defendant. Furthermore, Plaintiff did not seek the issuance of a
summons from the Court, as required to serve Arestov with process. Also, under Fed. R.
Civ. Proc. 4(m), Plaintiff should have served Arestov with the FAC within 90 days of filing
it; Plaintiff filed the FAC on November 27, 2016, so the 90 day deadline to serve passed on
February 27, 2017 and no proof of service for Arestov is on the docket. Thus, even
assuming Plaintiff had properly “added” Arestov as a defendant, their failure to serve
Arestov would have prompted the Court to issue an order to show cause why Arestov
should not be dismissed for Plaintiff’s failure to prosecute. Even after Defendant pointed
out these defects in its April 21, 2017 opposition, Plaintiff has not remedied them.
Finally, Plaintiff has not shown why joinder is appropriate under 28 U.S.C. 1447(e).
Indeed, all of the factors relevant to the analysis of whether to permit joinder of a
non-diverse party who would defeat federal jurisdiction weight against joinder. See
McGrath v. Home Depot USA, Inc., 298 F.R.D. 601, 607 (S.D. Cal. 2014) (discussing
factors). The Court therefore rejects Plaintiff’s attempt to join Arestov.
All of the foregoing also reinforces what is clear from the FAC itself: that Arestov is
a sham defendant whom Plaintiff sought to add as a tactic to defeat diversity jurisdiction.
A non-diverse party may be disregarded for purposes of determining whether jurisdiction
exists if the court determines that the party’s joinder was “fraudulent” or a “sham.”
Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001); Ritchey v. Upjohn
Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998); McCabe v. General Foods Corp., 811 F.2d
1336, 1339 (9th Cir. 1987). The term “fraudulent joinder” is a term of art and does not
imply any intent to deceive on the part of a plaintiff or his counsel. Lewis v. Time Inc., 83
F.R.D. 455, 460 (E.D. Cal. 1979) aff’d 710 F.2d 549 (9th Cir. 1983) impliedly overruled on
other grounds in Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990). The relevant
inquiry is whether the plaintiff has failed to state a cause of action against the non-diverse
defendant, and the failure is “obvious according to the settled rules of the state.” McCabe,
811 F.2d at 1339 (emphasis added); see also Morris, 236 F.3d at 1067.

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Here, Arestov’s joinder was fraudulent because the FAC does not and cannot state a
cause of action against Arestov. The FAC alleges that “Arestov was the ‘claims
professional’ assigned and employed by Travelers Insurance to this case.” FAC ¶ 4. The
FAC’s only other allegation as to Arestov appears in the fourth cause of action, for
negligent misrepresentation: “Defendants, including Travelers Insurance and Defendant
Arestov, represented to Plaintiff that an important fact was true.” FAC ¶ 42. The FAC
does not allege any specific conduct by Arestov – no other factual allegations are
connected to him. The FAC makes clear that insofar as Arestov was involved in the
misconduct alleged, it was as an employee of Travelers for which Travelers, and not
Arestov personally, may be held liable.
Because Arestov was fraudulently joined (if at all), his citizenship is disregarded for
purposes of diversity jurisdiction. Because the Plaintiff is diverse from Defendant
Travelers, and the amount in controversy exceeds $75,000, diversity jurisdiction exists.
CONCLUSION
Plaintiff’s motion for remand is therefore DENIED.
IT IS SO ORDERED.

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