Zhang v. Safeco Insurance Company of America et al

Filing 15

ORDER DENYING PLAINTIFF'S 5 MOTION TO REMAND. Case Management Statement due by 6/20/2012. Case Management Conference set for 6/27/2012 02:00 PM. Signed by Judge Claudia Wilken on 5/23/2012. (ndr, COURT STAFF) (Filed on 5/23/2012)

1
2
3
4

IN THE UNITED STATES DISTRICT COURT

5

FOR THE NORTHERN DISTRICT OF CALIFORNIA

6
7
8

YANTING ZHANG,

9

United States District Court
For the Northern District of California

10
11

No. C 12-1430 CW

Plaintiff,

ORDER DENYING
PLAINTIFF'S MOTION
TO REMAND

v.

12

SAFECO INSURANCE COMPANY OF
AMERICA, LEONARD BAINES and DOES
1-10,

13

Defendants.

14

________________________________/

15
16

Defendant Safeco Insurance Company of America removed this

17

breach of insurance contract action to federal court on the basis

18

of diversity jurisdiction.

19

remand this case to the Contra Costa County superior court,

20

pointing to the absence of complete diversity created by Leonard

21

Baines as a named defendant.

22

that Baines was fraudulently joined to defeat diversity.

23

matter was taken under submission and decided on the papers.

24

Having considered all of the paper filed by the parties, the Court

25

denies Plaintiff's motion to remand.

Plaintiff Yanting Zhang moves to

Safeco opposes the motion, arguing
The

26

BACKGROUND

27

The following facts are taken from Plaintiff's complaint.

28

or about June 15, 2009, Plaintiff's home was vandalized.

At the

On

1

time of the vandalism, Safeco insured Plaintiff's interest in the

2

property.

3

$155,791 to recover the cost to repair the damage caused by the

4

vandalism.

5

and withheld the money needed to repair Plaintiff's home which

6

remains unrepaired and uninhabitable.

7

Defendant Leonard Baines, who determined the loss to be no more

8

than $31,852.

9

Safeco is incorporated in the State of New Hampshire with its

Plaintiff submitted a claim to Safeco in the amount of

Safeco agreed to pay only a small portion of the loss

The loss was adjusted by

Baines and Plaintiff are citizens of California.

United States District Court
For the Northern District of California

10

principal place of business in the State of Massachusetts.

11

amount in controversy is more than $75,000.

12

The

Baines knew the minimum cost to return Plaintiff's property

13

to its condition prior to the vandalism was not less than $155,791

14

and knew that to deprive Plaintiff of the money needed to repair

15

her home would potentially cause her to lose her home and, as a

16

result, she would suffer severe and extreme emotional distress.

17

Baines nevertheless steadfastly and falsely claimed that the home

18

could be repaired for $31,852.

19

to be this false amount, Baines showed a reckless disregard for

20

the probability of causing severe and extreme emotional distress

21

to Plaintiff arising from the loss of her home.

22

proximate result of Baines' conduct, Safeco withheld policy

23

benefits due under the insurance policy, the insured home was not

24

repaired, Plaintiff is in danger of losing her home and has

25

suffered severe and extreme emotional distress.

26

Plaintiff alleges against Baines is intentional infliction of

27

emotional distress (IIED).

In estimating the cost of repairs

28
2

As a direct and

The one claim

LEGAL STANDARD

1

A defendant may remove a civil action filed in state court to

2
3

federal district court so long as the district court could have

4

exercised original jurisdiction over the matter.

5

§ 1441(a).

6

28 U.S.C.

Title 28 U.S.C. § 1447(c) provides that, if at any

time before judgment it appears that the district court lacks

7
subject matter jurisdiction over a case previously removed from
8
9

state court, the case must be remanded.

On a motion to remand,

United States District Court
For the Northern District of California

10

the scope of the removal statute must be strictly construed.

Gaus

11

v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

12

presumption' against removal jurisdiction means that the defendant

13

always has the burden of establishing that removal is proper."

14

Id.

"The 'strong

Courts should resolve doubts as to removability in favor of

15
remanding the case to state court.

Id.

16
District courts have original jurisdiction over all civil
17
18

actions "where the matter in controversy exceeds the sum or value

19

of $75,000, exclusive of interest and costs, and is between . . .

20

citizens of different States."

21

subject matter jurisdiction is predicated on diversity of

22

citizenship, complete diversity must exist between the opposing

23

parties.

28 U.S.C. § 1332(a).

When federal

Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-

24
74 (1978).
25
26

A defendant may remove a case with a non-diverse defendant on

27

the basis of diversity jurisdiction and seek to persuade the

28

district court that this defendant was fraudulently joined.
3

1

McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).

2

"If the plaintiff fails to state a cause of action against a

3

resident defendant, and the failure is obvious according to the

4

settled rules of the state, the joinder of the resident defendant

5

is fraudulent."

6

Id.

The defendant opposing remand is entitled to

present facts showing the joinder to be fraudulent.

Id.; Ritchey

7
v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998) (where the
8
9

issue is fraudulent joinder, a court may look beyond the

United States District Court
For the Northern District of California

10

plaintiff's complaint).

The burden of the defendant is not to

11

show that the joinder of the non-diverse party was for the purpose

12

of preventing removal because "it is universally thought that the

13

motive for joining such a defendant is immaterial."

14

Street & Smith Publ'ns, 140 F.2d 310, 312 (9th Cir. 1944).

Albi v.

15
Instead, the defendant must demonstrate that there is no
16
possibility that the plaintiff would be able to establish a cause
17
18

of action in state court against the alleged sham defendant.
DISCUSSION

19
20
21

Id.

I. Scope of Employment
Safeco first argues that Baines cannot be held liable

22

individually because, when he was adjusting Plaintiff's claim, he

23

was acting as Safeco's employee.

24

declaration in which he states that, "at all times while I was

25

handling Zhang's claim arising out of the June 15, 2009 incident,

26

I was acting in my role as a Senior Claims Examiner for Safeco."

Safeco submits Baines'

27

In California, an employee of an insurance company, acting

28

within the course and scope of his or her employment, cannot be
4

1

held individually liable as a defendant unless he or she acts for

2

his or her own personal advantage.

3

340 F.3d 824, 826 (9th Cir. 2003).

4

Mercado v. Allstate Ins. Co.,

Plaintiff does not dispute that an employee or agent of an

5

insurance company, working within the scope of his or her

6

employment, cannot be held liable for a claim of IIED.

7

she argues that the allegations in her complaint control, and

8

there are no allegations that Baines worked as Safeco's employee.

9

Plaintiff further contends that the Court should not rely on

Instead,

United States District Court
For the Northern District of California

10

Baines' declaration because "there is no rule that a declaration

11

by an adverse party on an issue of fact resolves that issue of

12

fact."

13

Plaintiff is correct that a declaration, by itself, does not

14

resolve an issue of fact.

15

uncontested.

16

dispute of fact regarding Baines' employment for Safeco and

17

whether he was working within the scope of that employment when he

18

investigated and adjusted her claim.

19

declaration is taken as true, at least for the purposes of this

20

motion to remand.

21

Furniture Co., Inc., 765 F.2d 932, 936 (9th Cir. 1985) (taking as

22

true defendants' uncontested declaration about identity of Doe

23

defendants showing them to be fraudulently joined to establish

24

diversity).

25

Baines' relationship to Safeco in her complaint, the Court finds

26

that, during the time at issue, he was Safeco's employee working

27

within the scope of that employment.

However, Baines' declaration is

Plaintiff has not submitted evidence raising a

Baines' uncontested

See West America Corp. v. Vaughan-Bassett

Therefore, even though Plaintiff has not alleged

28
5

1

Therefore, Safeco has met its burden to show that there is no

2

possibility that Plaintiff will be able to state a cause of action

3

against Baines in state court.

4

must not be considered for purposes of establishing diversity

5

jurisdiction.

6

Plaintiff, the two remaining parties, are citizens of different

7

states and the amount in controversy is more than $75,000.

8

Plaintiff's motion for remand is denied.

9

discussed below, Plaintiff has failed to allege a claim against

Baines is fraudulently joined and

Diversity jurisdiction exists because Safeco and

Furthermore, as

United States District Court
For the Northern District of California

10

Baines upon which relief may be granted.

11

II. Failure to State a Claim Against Baines

12

The elements of a cause of action for IIED are (1) extreme

13

and outrageous conduct (2) intended to cause or done in reckless

14

disregard for causing (3) severe emotional distress and (4) actual

15

and proximate causation.

16

Cal. 3d 579, 593 (1979), superseded by statute on other grounds as

17

stated in Melendez v. City of Los Angeles, 63 Cal. App. 4th 1, 7

18

(1998).

19

of that usually tolerated in a civilized community," id., and the

20

distress so severe "that no reasonable man in a civilized society

21

should be expected to endure it."

22

Ins. Co., 10 Cal. App. 3d 376, 397 (1970).

23

outrageous if a defendant (1) abuses a relation or position which

24

gives him power to damage the plaintiff’s interest; (2) knows the

25

plaintiff is susceptible to injury through mental distress; or

26

(3) acts intentionally or unreasonably with the recognition that

27

the acts are likely to result in illness through mental distress."

28

Pulver v. Avco Fin. Servs., 182 Cal. App. 3d 622, 637 (1986).

Cervantez v. J.C. Penney Co., Inc., 24

The conduct must be so extreme as to "exceed all bounds

Fletcher v. Western Nat'l Life

6

"Behavior may be

1

California courts have held that delay or denial of insurance

2

claims is not sufficiently outrageous to state a cause of action

3

for IIED.

4

Cal App. 4th 403, 416-17 (2005).

5

Coleman v. Republic Indem. Ins. Co. of California, 132

Plaintiff argues that she has stated a claim for IIED because

6

her allegations meet the requirement of Judicial Council of

7

California Jury Instruction (CACI) 1603, which states that "the

8

defendant acted with reckless disregard in causing the plaintiff's

9

emotional distress if (1) the defendant knew that emotional

United States District Court
For the Northern District of California

10

distress would probably result from his or her conduct, or (2) the

11

defendant gave little or no thought to the probable effects of his

12

or her conduct."

13

394 and Younan v. Equifax, 111 Cal. App. 3d 498 (1980), to show

14

that a claim for IIED can be stated in connection with an

15

insurance claim.

16

distinguishable.

17

Plaintiff points to Fletcher, 10 Cal. App. 3d at

However, Fletcher and Younan are

In Fletcher, the court found that an insurer and its claims

18

supervisor induced the plaintiff to surrender his disability

19

insurance policy and to settle a non-existent dispute by sending

20

the plaintiff a series of false and threatening letters and

21

applying economic pressure.

22

The defendants conceded that their conduct was deplorable and

23

outrageous.

24

handling agency worked with the insurer deliberately to falsify

25

medical records so as to provide a basis upon which to deny an

26

insured's claim.

Id.

Fletcher, 10 Cal. App. 3d at 392.

In Younan, the court found that a claims

Younan, 111 Cal. App. 3d at 515-16.

27

Here, there are no allegations of a plan to induce Plaintiff

28

to surrender her policy, to settle a dispute by sending her false
7

1

and threatening letters or of the falsification of medical records

2

to deny a valid claim.

3

Baines' opinion of the cost of repairing Plaintiff's house was

4

much lower than her estimate.

5

The allegations merely indicate that

The facts of this case are not as egregious as those in

6

Coleman, 132 Cal. App. 4th at 407, 417, where the insurance

7

adjuster misled the claimants as to the applicable statute of

8

limitations and advised them not to obtain the services of an

9

attorney.

The court held that even these acts, based on statutory

United States District Court
For the Northern District of California

10

unfair settlement practices, did not constitute the type of

11

outrageous conduct that would support a cause of action for IIED.

12

Id. at 417; see also, Hailey v. California Physicians' Serv., 158

13

Cal. App. 4th 452, 474-76 (2007) (citing cases in which claims of

14

IIED against an insurer were rejected where the insurance company

15

refused to accept a settlement demand within policy limits, failed

16

to investigate a claim, accused the insured of "trying to put

17

something over on" it, or delayed or denied insurance benefits).

18

Here, too, Plaintiff's allegations against Baines do not rise to

19

the level of outrageous conduct that is necessary to state a claim

20

for IIED.

21

Plaintiff's argument that her pleading is sufficient because

22

she states the elements of CACI 603 is unpersuasive.

23

allege outrageous conduct on the part of Baines, not merely repeat

24

the elements of the cause of action.

25

her pleading is "properly drafted" because it alleges

26

"outrageousness" is unpersuasive.

27

the label of outrageousness, that is determinative.

She must

Similarly, her argument that

It is the alleged conduct, not

28
8

1
2

Based on the foregoing, Plaintiff's complaint has failed to
state a claim for IIED against Baines.

3
4

CONCLUSION
For the foregoing reasons, diversity jurisdiction exists and

5

Plaintiff's motion to remand is denied.

6

on Wednesday, June 27, 2012 at 2:00 pm for a case management

7

conference.

The parties shall appear

8
9

IT IS SO ORDERED.

United States District Court
For the Northern District of California

10
11
12

Dated: 5/23/2012
CLAUDIA WILKEN
United States District Judge

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9