Greenberg v. RiverSource Life Insurance Company et al

Filing 32

ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND VACATING HEARING by Judge William Alsup [denying 14 Motion to Remand]. (whasec, COURT STAFF) (Filed on 4/5/2012)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 RICK M. GREENBERG, Plaintiff, 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 No. C 12-00552 WHA v. RIVERSOURCE LIFE INSURANCE COMPANY, and HOWARD BELFER, M.D., Defendants. ORDER DENYING PLAINTIFF’S MOTION TO REMAND AND VACATING HEARING / INTRODUCTION In this fraud and breach-of-contract action, plaintiff moves to remand for lack of complete diversity. For the reasons stated below, the motion is DENIED. 19 STATEMENT 20 Pro se plaintiff Rick M. Greenberg filed the instant action in Santa Clara County 21 Superior Court. Plaintiff, a California resident, is a policy holder of insurance coverage provided 22 by defendant RiverSource Life Insurance Company, a Minnesota corporation and citizen. 23 Defendant Dr. Howard Belfer is a medical doctor and a resident of California. The complaint 24 alleges that in December 2007, defendant RiverSource fraudulently denied plaintiff his health 25 insurance benefits, and in doing so, breached its contract to provide disability coverage. 26 In regard to plaintiff’s fraud claim, plaintiff asserts that RiverSource informed him that 27 an independent medical examination was to be performed before benefit payments would be 28 made, and that no such examination was performed. Plaintiff further alleges that RiverSource 1 then fraudulently represented that defendant Dr. Belfer performed the medical examination. 2 It is unclear whether plaintiff contends that no medical examination took place, or that the 3 examination was not in fact “independent” because Dr. Belfer was employed by or engaged in 4 some sort of scheme with RiverSource to deny benefits. Plaintiff’s breach-of-contract claim is 5 premised on the allegation that RiverSource’s denial of coverage is a breach of a 1996 contract 6 to provide long-term disability coverage. Plaintiff is seeking damages in the amount of 7 $2,106,200. of removal, defendant asserted: (1) jurisdiction here was proper as the amount in controversy 10 exceeds $75,000; (2) defendant RiverSource is incorporated and is a citizen of Minnesota; and 11 For the Northern District of California Defendant RiverSource removed this action pursuant to 28 U.S.C. 1441(b). In support 9 United States District Court 8 (3) defendant Dr. Belfer’s California citizenship should be ignored because he is a fraudulently 12 joined defendant (Dkt. No. 1 ¶¶ 9–11). There is no dispute that the amount in controversy has 13 been met, and therefore, this order need only consider the issue of complete diversity as raised 14 by the parties. This order follows full briefing. 15 16 ANALYSIS “[A]ny civil action brought in a State court of which the district courts of the United 17 States have original jurisdiction, may be removed.” 28 U.S.C. 1441. A case may be remanded 18 to state court for lack of subject-matter jurisdiction or defects in removal procedure. 28 U.S.C. 19 1447(c). Diversity jurisdiction requires complete diversity of citizenship and an amount in 20 controversy greater than $75,000. 28 U.S.C. 1332(a). The party who sought removal in the first 21 instance bears the burden of proof in regard to the propriety of the removal. Wilson v. Republic 22 Iron & Steel Co., 257 U.S. 92, 97 (1921). “Federal jurisdiction must be rejected if there is any 23 doubt as to the right of removal in the first instance,” such that courts must resolve all doubts 24 as to removability in favor of remand. Gaus v. Miles Inc., 980 F.2d 564, 566 (9th Cir. 1992). 25 In support of his motion to remand, plaintiff asserts that his complaint qualifies as a 26 “direct action” against an insurer pursuant to 28 U.S.C. 1332(c) and therefore, defendant 27 RiverSource is deemed to be a citizen of California. Defendant contends that Section 1332(c) 28 2 1 is inapplicable to plaintiff’s complaint, and also, that defendant Dr. Belfer is a fraudulently 2 joined defendant and should be ignored for diversity purposes. 3 1. PLAINTIFF’S CLAIM DOES NOT QUALIFY AS A DIRECT ACTION AGAINST AN INSURER UNDER 28 U.S.C. 1332(c). 4 In support of his motion, plaintiff relies exclusively on 28 U.S.C. 1332(c)(1), which 5 states in relevant part: 6 7 8 9 For the purposes of [diversity jurisdiction] . . . [I]n any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of . . . every State and foreign state of which the insured is a citizen[.] Plaintiff contends that this action is a “direct action” against insurer RiverSource and, 11 For the Northern District of California United States District Court 10 therefore, defendant is deemed to be a citizen of California, plaintiff’s state of residence. 12 Plaintiff’s argument is misguided. “Courts have uniformly defined the term ‘direct action’ as 13 used in [Section 1332(c)] as those cases in which a party suffering injuries or damage for which 14 another is legally responsible is entitled to bring suit against the other’s liability insurer without 15 joining the insured or first obtaining a judgment against him.” Beckham v. Safeco Ins. Co. of 16 Am., 691 F.2d 898, 901–02 (9th Cir. 1982). Plaintiff is not seeking recovery from an insurance 17 company for liability incurred by a third-party insured. Instead, plaintiff is seeking recovery 18 from his own insurer for wrongs suffered by plaintiff directly. Therefore, plaintiff is not entitled 19 to rely on 28 U.S.C. 1332(c)(1). Plaintiff attempts to distinguish his claims from those at issue 20 in the direct-action cases cited by defendant. He asserts that those cases all involve liability 21 insurance, whereas the issue here is the recovery of disability insurance (Reply Br. 2). 22 Unfortunately, plaintiff’s assertion is an admission that his claim is not a “case[] in which a party 23 suffering injuries or damage for which another is legally responsible is entitled to bring suit 24 against the other’s liability insurer”, and therefore, does not qualify as a “direct action” as 25 defined by our court of appeals. Ibid. 26 27 28 3 1 2. DR. BELFER IS A FRAUDULENTLY JOINED DEFENDANT. 2 Defendant RiverSource asserts that Dr. Belfer is a fraudulently joined defendant, and 3 should be ignored for the purposes of determining whether complete diversity exists between 4 the parties. 5 Citizenship of fraudulently joined parties must be ignored in analyzing diversity. If a 6 plaintiff fails to state claims against a resident defendant, and the failure is obvious according 7 to the settled rules of the state, then joinder of the resident defendant is fraudulent. Morris v. 8 Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). 9 Plaintiff’s motion and reply both rest on the theory that RiverSource standing on its own destroys diversity. Plaintiff has not argued the fraudulent joinder issue as raised by defendant. 11 For the Northern District of California United States District Court 10 In light of plaintiff’s pro se status, this order will read plaintiff’s reply brief as if it addressed 12 defendant’s fraudulent joinder argument. 13 A. Plaintiff Has Not Asserted a Breach-of-Contract Claim Against Dr. Belfer. 14 Under California law, a breach-of-contract claim requires “the existence of the contract, 15 performance by the plaintiff or excuse for nonperformance, breach by the defendant and 16 damages.” First Commercial Mortgage Co. v. Reece, 89 Cal. App. 4th 731, 745 (2001). 17 Fatal to plaintiff’s complaint is the lack of an assertion that a contract existed between 18 plaintiff and Dr. Belfer. The only contract referred to is one for “long term disability coverage” 19 which can only exist between RiverSource and plaintiff (Dkt. No. 2, Exh. A, Section 3 at 5) 20 B. Plaintiff Has Not Asserted a Fraud Claim Against Dr. Belfer. 21 “It is essential that the facts and circumstances which constitute the fraud should be set 22 out clearly, concisely, and with sufficient particularity to apprise the opposite party of what he is 23 called on to answer, and to enable the court to determine whether, on the facts pleaded, there is 24 any foundation, prima facie at least, for the charge of fraud.” Scafidi v. W. Loan & Bldg. Co., 25 72 Cal. App. 2d 550, 553 (1946) (internal citation omitted). 26 The only reference to Dr. Belfer in plaintiff’s complaint is an allegation that RiverSource 27 denied disability coverage following an independent medical examination performed by 28 Dr. Belfer (Dkt. No. 2, Exh. A, Section 3 at 3–4). The complaint does not allege that Dr. Belfer 4 1 committed fraud, or aided RiverSource in its alleged fraud. It is unclear what role, if any, 2 Dr. Belfer is accused of playing in the fraud. 3 Read in a light most favorable to plaintiff, this order finds that the complaint is devoid 4 of any factual allegations to support a claim against Dr. Belfer. Therefore, Dr. Belfer is a 5 fraudulently joined defendant and must be ignored for purposes of determining diversity. 6 Thus, this order finds that complete diversity exists between Minnesota defendant RiverSource 7 and plaintiff, a California resident. 8 9 For the foregoing reasons, plaintiff’s motion to remand is DENIED. The hearing scheduled for April 12, 2012, is VACATED. 11 For the Northern District of California United States District Court 10 CONCLUSION 12 IT IS SO ORDERED. 13 14 Dated: April 5, 2012. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5

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