Alicia Peak v. Progressive Select Insurance Company et al
Filing
22
MINUTES (IN CHAMBERS)ORDER GRANTING PLAINTIFFS' MOTION TO REMAND 14 AND DENYING AS MOOT DEFENDANTS' MOTION TO DISMISS 8 by Judge Virginia A. Phillips. Pending before the Court are (1) the Motion to Remand filed by PlaintiffsAlicia Peak, as an individual and as guardian ad litem for Dustan Carlos Lugo and Imogen Eloise Lugo, (Plaintiffs), (See Dkt. No. 14 (Motion or Mot.)); and (2) the Motion to Dismiss filed by Defendants Progressive Select InsuranceCompany (Progressive) and Michae l Apatov (collectively, Defendants), (Dkt.No. 8 (Motion to Dismiss)). After considering the papers filed in support of and in opposition to the Motion, as well as the arguments advanced at the hearing on November 6, 2017, the Court GRANTS Plaintiffs Motion and DENIES as moot Defendants Motion to Dismiss. For the foregoing reasons, Plaintiffs Motion to Remand is GRANTED, and Defendants' Motion to Dismiss is DENIED as moot. This action is remanded back to the Los Angeles County Superior Court, Case No. BC665202. IT IS SO ORDERED. MD JS-6. Case Terminated. (SEE DOCUMENT FOR FURTHER DETAILS) (ab) Modified on 11/14/2017 (ab).
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.
CV 17-06376-VAP (PLAx)
JS-6
Date
November 14, 2017
Title Alicia Peak v. Progressive Select Insurance Company, et al.
Present: The Honorable
VIRGINIA A. PHILLIPS, CHIEF UNITED STATES DISTRICT JUDGE
Beatrice Herrera
Not Reported
Deputy Clerk
Court Reporter
Attorney(s) Present for Plaintiff(s):
Attorney(s) Present for Defendant(s):
None Present
None Present
(IN CHAMBERS)
Proceedings:
ORDER GRANTING PLAINTIFFS’ MOTION TO REMAND [14] AND
DENYING AS MOOT DEFENDANTS’ MOTION TO DISMISS [8]
Pending before the Court are (1) the Motion to Remand filed by Plaintiffs
Alicia Peak, as an individual and as guardian ad litem for Dustan Carlos Lugo and
Imogen Eloise Lugo, (“Plaintiffs”), (See Dkt. No. 14 (“Motion” or “Mot.”)); and
(2) the Motion to Dismiss filed by Defendants Progressive Select Insurance
Company (“Progressive”) and Michael Apatov (collectively, “Defendants”), (Dkt.
No. 8 (“Motion to Dismiss”)). After considering the papers filed in support of and
in opposition to the Motion, as well as the arguments advanced at the hearing on
November 6, 2017, the Court GRANTS Plaintiffs’ Motion and DENIES as moot
Defendants’ Motion to Dismiss.
I. BACKGROUND
Plaintiff Alicia Peak (“Plaintiff”) brings this action on behalf of herself and
as the mother and guardian ad litem of Plaintiffs Dustan Carlos Lugo and Imogen
Eloise Lugo, her young twins. Plaintiffs are residents of the County of Ventura in
California. (Dkt. No. 1-1 (“Complaint” or “Compl.”) ¶ 1.) Defendant Progressive
is incorporated and has its principal place of business in Ohio. (Dkt. No. 1
(“Removal”) ¶ 4.) Defendant Apatov is a resident of California. (Compl. ¶ 4.)
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On or about September 6, 2016, Plaintiff purchased a policy of automobile
liability insurance from Progressive. (Compl. ¶ 11.) The effective policy dates of
coverage spanned from October 1, 2016 through April 1, 2017. (Compl. ¶ 11.)
Under the policy, Plaintiffs were insured against losses caused by uninsured and/or
underinsured motorists, with limits of coverage of $100,000 per person, and
$300,000 per occurrence. (Compl. ¶ 14.)
Plaintiff alleges that on October 14, 2016, her vehicle was struck by a loose
car tire traveling across the roadway.1 (Compl. ¶ 15.) At the time of the accident,
Plaintiff was pregnant with her twins. (Compl. ¶ 15.) The force of the impact with
the tire caused Plaintiff to sustain placental abruption, requiring the emergency
delivery of her twins several months prematurely. (Compl. ¶ 15.)
On April 6, 2017, Plaintiff avers she timely notified Progressive of the loss,
and the claim was assigned to Defendant Apatov. (Compl. ¶ 16.) Plaintiff alleges
that Defendants failed to conduct a prompt, full, and complete investigation of the
facts and circumstances giving rise to the claim, chose to ignore facts necessitating
coverage, and reached coverage conclusions not supported by the facts. (Compl. ¶
17.) On May 19, 2017, Defendant Apatov sent Plaintiff’s attorney a letter denying
coverage on the basis of their determination that Plaintiff’s vehicle had collided
with a stationary tire in the road. (Removal ¶ 5.)
As a result, on June 15, 2017, Plaintiff filed a Complaint in Los Angeles
County Superior Court, alleging three claims for relief: (1) breach of contract,
(2) bad faith, and (3) intentional infliction of emotional distress (“IIED”). (See
Compl. at 1–7.) The first two causes of action are alleged only against
Progressive, and the third IIED cause of action is alleged both Defendants.
Plaintiff also requested attorneys’ fees pursuant to Insurance Code section 1619.
(See Compl. at 8.) Defendants filed a Notice of Removal on August 8, 2017,
invoking this Court’s diversity jurisdiction and contending that Defendant Apatov
is a sham defendant. (See Removal). On September 4, 2017, Defendants filed a
Motion to Dismiss Plaintiff’s third cause of action for IIED and Plaintiff’s attorney
1
Defendants contest Plaintiff’s account of the collision and asserts that Plaintiff collided with a
stationary tire in the road. (Removal ¶ 5.) This factual disagreement will likely be central to the
parties’ dispute and is not appropriate for resolution at this stage of the proceedings. At this
stage, the Court is confined to the factual allegations contained within the complaint, its attached
exhibits, documents incorporated by reference, and matters properly subject to judicial notice,
and must accept these factual allegations as true. Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
551 U.S. 308, 322-24 (2007); Lee v. City of Los Angeles, 250 F.3d 668, 668 (9th Cir. 2001).
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fee claim. (See Motion to Dismiss.) On September 29, 2017, Plaintiffs filed both
the instant Motion to Remand, (Mot.), and an opposition to Defendants’ Motion to
Dismiss, (Dkt. No. 13).2 On October 5, 2017, Defendants timely opposed
Plaintiffs’ Motion, (Dkt. No. 17 (“Opp’n)), and Plaintiffs timely replied on October
23, 2017, (Dkt. No. 20). A hearing on this Motion was held on November 6, 2017.
(Dkt. No. 21.)
II. LEGAL STANDARD
A. Motion to Remand
Under 28 U.S.C. § 1441(a), a defendant may remove a state court action to
federal court if the federal court has "original jurisdiction" over the matter. "The
burden of establishing federal jurisdiction is upon the party seeking removal, and
the removal statute is strictly construed against removal jurisdiction." Emrich v.
Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). "A motion to remand
the case on the basis of any defect other than lack of subject matter jurisdiction
must be made within 30 days after the filing of the notice of removal . . . ." 28
U.S.C. § 1447(c). "If at any time before final judgment it appears that the district
court lacks subject matter jurisdiction, the case shall be remanded." Id.
Federal courts have original "diversity" jurisdiction of all civil actions where
the matter in controversy exceeds $75,000, exclusive of interest and costs, and is
between citizens of different states. 28 U.S.C. § 1332(a). Proper jurisdiction
under Section 1332 requires complete diversity of citizenship, so each plaintiff
must be diverse from each defendant. Exxon Mobil Corp. v. Allapattah Servs.,
Inc., 545 U.S. 546, 553 (2005) (internal citation omitted). "[A] corporation shall
be deemed to be a citizen of every State and foreign state by which it has been
incorporated . . . ." 28 U.S.C. § 1332(c)(1).
III. DISCUSSION
A. Plaintiffs’ Motion to Remand
Plaintiffs argue the removal of this action was improper because the Court
lacks diversity jurisdiction under 28 U.S.C. § 1332(a). Specifically, Plaintiffs
argue the parties are not completely diverse because Plaintiffs are California
2
The parties filed a joint stipulation for an extension of time for Plaintiffs to file an opposition to
Defendants’ Motion to Dismiss on September 27, 2017, which the Court approved on October 3,
2017. (See Dkt. Nos. 12, 16.)
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residents, and at least one defendant, Apatov, is also a California resident. (See
Mot. at 1.)
Defendants do not dispute that Defendant Apatov is a resident of California.
Rather, Defendants assert that Defendant Apatov has been fraudulently joined to
this action in an effort by Plaintiffs to divest this Court of jurisdiction. (Removal ¶
5.) Consequently, Defendants argue, the Court possesses diversity jurisdiction
because the remaining parties to this action – Plaintiffs and Progressive – are
citizens of different states. (Removal ¶¶ 1, 5.)
Removal based on a court's diversity jurisdiction is proper despite the
presence of a non-diverse defendant where that defendant is a fraudulently joined
or sham defendant. See Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996). In the
Ninth Circuit, a non-diverse defendant is deemed a sham defendant if, after all
disputed questions of fact and all ambiguities in the controlling state law are
resolved in the plaintiff's favor, the plaintiff could not possibly recover against the
party whose joinder is questioned. Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416,
1426 (9th Cir. 1989). The joinder of a non-diverse defendant is considered
fraudulent, and the party's citizenship is disregarded for purposes of diversity
jurisdiction, "[i]f the plaintiff fails to state a cause of action against the [nondiverse] defendant, and the failure is obvious according to the settled rules of the
state . . . ." Hamilton Materials, Inc. v. Dow Chemical Co., 494 F.3d 1203, 1206
(9th Cir. 2007) (quoting McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th
Cir. 1987)). "It is a commonplace that fraudulently joined defendants will not
defeat removal on diversity grounds." Ritchey v. Upjohn Drug Co., 139 F.3d 1313,
1318 (9th Cir. 1998) (internal citation omitted).
Defendants alleging fraudulent joinder must "prove that individuals joined in
the action cannot be liable on any theory." Ritchey, 139 F.3d at 1318. Defendants
must prove fraudulent joinder by "clear and convincing evidence." Hamilton
Materials, 494 F.3d at 1206 (internal citation omitted). Thus, "fraudulent joinder
claims may be resolved by 'piercing the pleadings' and considering summary
judgment-type evidence such as affidavits and deposition testimony." Morris v.
Princess Cruises, Inc., 236 F.3d 1061, 1068 (9th Cir. 2001) (quoting favorably the
Fifth Circuit's decision in Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256,
263 (5th Cir. 1995) (citations omitted)). Since courts must resolve all doubts
against removal, a court determining whether joinder is fraudulent "must resolve
all material ambiguities in state law in plaintiff's favor." Macey v. Allstate Prop. &
Cas. Ins. Co., 220 F. Supp. 2d 1116, 1117 (N.D. Cal. 2002) (citing Good v.
Prudential, 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998)).
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"If there is a non-fanciful possibility that plaintiff can state a claim under
[state] law against the non-diverse defendant[,] the court must remand." Id.; see
also Good, 5 F. Supp. 2d at 807 ("The defendant must demonstrate that there is no
possibility that the plaintiff will be able to establish a cause of action in State court
against the alleged sham defendant."). Given this standard, "[t]here is a
presumption against finding fraudulent joinder, and defendants who assert that
plaintiff has fraudulently joined a party carry a heavy burden of persuasion." Plute
v. Roadway Package Sys., Inc., 141 F. Supp. 2d 1005, 1008 (N.D. Cal. 2001).
1. Applicable State Law
Under California state law, a cause of action for IIED “exists when there is:
(1) extreme and outrageous conduct by the defendant with the intention of causing,
or reckless disregard of the probability of causing, emotional distress; (2) the
plaintiff’s suffering severe or extreme emotional distress; and (3) actual and
proximate causation of the emotional distress by the defendant’s outrageous
conduct.” Bock v. Hansen, 225 Cal. App. 4th 215, 232-33 (2014) (quoting Hughes
v. Pair, 46 Cal. 4th 1035, 1050-51 (2009)). “A defendant’s conduct is
‘outrageous’ when it is so extreme as to exceed all bounds of that usually tolerated
in a civilized community. And the defendant’s conduct must be intended to inflict
injury or engaged in with the realization that injury will result.” Id. at 233 (internal
quotation marks omitted).
Liability for IIED “does not extend to mere insults, indignities, threats,
annoyances, petty oppressions, or other trivialities.” Id. “With respect to the
requirement that a plaintiff show severe emotional distress, [the California Court of
Appeal] has set a high bar.” Id. Severe emotional distress is “of such substantial
quality or enduring quality that no reasonable [person] in civilized society should
be expect to endure it.” Id. “Moreover, the extreme and outrageous character of
the conduct may arise from an abuse by the actor of a position, or a relation with
the other, which gives him actual or apparent authority over the other, or power to
affect [her] interests. . . The extreme and outrageous conduct may arise from the
actor’s knowledge that the other is peculiarly susceptible to emotional distress, by
reason of some physical or mental condition or peculiarity.” Hailey v. Cal.
Physicans’ Serv., 158 Cal. App. 4th 452, 474 (2007) (quoting McDaniel v. Gile,
230 Cal. App. 3d 363, 372 (1991)) (emphasis omitted).
IIED claims may be asserted against both the insurer as well as persons other
than the insurer, such as a claims supervisor or independent adjuster. In
determining whether particular conduct is outrageous within the context of an IIED
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claim, courts often took to holdings in earlier cases dealing with particular types of
conduct. Bock, 225 Cal. App. 4th at 233.
2. Analysis
Defendants insist that Plaintiffs “cannot state facts sufficient to establish the
‘extreme and outrageous conduct’ element of the intentional infliction tort.”
(Opp’n at 5.) As discussed above, Defendants “must demonstrate that there is no
possibility the plaintiff will be able to establish a cause of action in [s]tate court.”
Good, 5 F. Supp. 2d at 807 (emphasis added). Plaintiffs contend that “there is at
least a possibility that a state court would find that [her] Complaint states a cause
of action against [Defendant] Apatov” for IIED. (Mot. at 6.) The Court agrees
with Plaintiffs.
Plaintiffs allege that “[i]n denying [her] claim, Apatov purposefully ignored
the great bulk of the information with which he had been provided, and he sought
only to justify his own predetermined course of denying payments due [sic]
Plaintiff under the [p]olicy.” (See Compl. ¶ 35.) Moreover, Plaintiff asserts that
Defendant Apatov denied the claim with knowledge “that Plaintiff had suffered a
major life trauma, that Plaintiff was in a frail emotional state, and that denying
benefits due to Plaintiff would cause Plaintiff to suffer financial hardship, and
further exacerbate the pain, suffering, and emotional distress Plaintiff was already
suffering as a result of having to care and pay for medical treatments for her
prematurely born children.” Id. California courts have previously found that
similar allegations were sufficient to withstand a motion to dismiss an IIED claim
against an insurer’s employees. See, e.g., Hailey, 158 Cal. App. 4th at 474; see
also Hernandez v. Gen. Adjustment Bureau, 199 Cal. App. 3d 999, 1007 (1988)
(finding the plaintiff sufficiently alleged an IIED claim where the defendant,
“knowing her susceptibility to profound mental distress, and of her repeated
attempts at suicide, . . . intentionally delayed payments of approved benefits vital
to the support of [plaintiff] and her three children.”).
In their Opposition, Defendants argue that because Plaintiffs do not
specifically allege how Defendant Apatov had knowledge of Plaintiff’s
susceptibility to emotional distress (i.e., medical records), she is unable to state an
IIED claim against him. (Opp’n at 5-7.) Plaintiffs do not need to allege
specifically how Defendant Apatov had this knowledge; Plaintiffs’ allegation that
Defendant Apaptov was aware that Plaintiff had suffered a major life trauma and
was in an emotionally fragile state is sufficient. Additionally, Plaintiff’s fragile
emotional state could be reasonably inferred following her placental abruption that
led to the twins’ significantly premature delivery.
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Defendants also argue that Plaintiffs’ allegations fail because they do not
allege specific financial hardship. (Opp’n at 5-7.) Evidence of financial harm,
general or specific, is not an essential element of an IIED claim, nor is it required
to establish that a defendant’s behavior is outrageous. See Bock, 225 Cal. App. 4th
at 232-33; Hailey, 158 Cal. App. 4th at 473-74; Cal. Jury Instr. BAJI No. 12.70
(2017). The court’s discussion of the defendant’s outrageous conduct in Hailey, a
case which Defendants rely upon, indicates that specific financial hardship is
treated as a contributing factor to establishing the plaintiff’s emotional distress; it
is not, however, necessarily a prerequisite to an IIED claim. Hailey, 158 Cal. App.
4th at 474-76. The other cases cited by Defendants similarly treat the plaintiff’s
financial hardship as a factor in establishing the plaintiff’s susceptibility to
emotional distress, or the defendant’s knowledge of plaintiff’s financial hardship as
a factor in establishing why the defendant’s conduct was outrageous. See Little v.
Stuyvesant Life Ins. Co., 67 Cal. App. 3d 451, 462-63 (1977); Younan v. Equifax,
Inc., 111 Cal. App. 3d 498, 515 (1980); Hernandez, 199 Cal. App. 3d at 1007.
Plaintiffs’ claim therefore does not fail for not alleging specific financial hardship.
While this Court finds Plaintiffs’ Complaint adequately alleges an IIED
claim against Defendant Apatov as it stands, in the event a state court deemed the
factual allegations insufficient, Plaintiffs could likely amend her Complaint to cure
factual deficiencies. See Bock, 225 Cal. App. 4th at 235-36 (“we must also
consider whether the complaint might state a cause of action if a defect could
reasonably be cured by amendment[]”). The Court also notes that the operative
Complaint is Plaintiffs’ originally filed Complaint.
For the reasons above, the Court finds that Defendants failed to show by
clear and convincing evidence that Platiniffs cannot possibly state a claim under
state law against Defendant Apatov. The Court therefore cannot deem Defendant
Apatov a sham defendant, and there is not complete diversity between the parties.
Accordingly, the Court GRANTS Plaintiff's Motion to Remand this action for lack
of subject matter jurisdiction.
IV. CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion to Remand is GRANTED, and
Defendants' Motion to Dismiss is DENIED as moot. This action is remanded
back to the Los Angeles County Superior Court.
IT IS SO ORDERED.
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