Walker et al v. American National Insurance Company et al

Filing 47

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING DEFENDANTS 19 MOTION TO DISMISS WITH PREJUDICE; DENYING PLAINTIFFS 13 MOTION TO REMAND. Case Management Statement due by 9/6/2017; Case Management Conference set for 9/12/2017 02:00 PM.. (ndrS, COURT STAFF) (Filed on 8/22/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ANTHONY WALKER, ET AL.,

Case No. 16-cv-06255-HSG

Plaintiffs,
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v.
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AMERICAN NATIONAL INSURANCE
COMPANY, et al.,

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United States District Court
Northern District of California

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ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS WITH
PREJUDICE; DENYING PLAINTIFFS’
MOTION TO REMAND

Defendants.

Re: Dkt. Nos. 13, 19

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Pending before the Court is Plaintiffs Anthony Walker and Pamela Walker’s (“Plaintiffs”)

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motion to remand, which Defendant American National Insurance Company (“ANICO”) opposes.

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See Dkt. Nos. 13, 20. Also before the Court is Defendant Rajeshvar Singh’s (“Mr. Singh,”

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together, “Defendants”) motion to dismiss. Dkt. No. 19. The Court finds that these matters are

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appropriate for disposition without oral argument and they are deemed submitted. See N.D. Civ.

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L.R. 7–1(b). For the reasons described below, the Court DENIES the motion to remand and

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GRANTS the motion to dismiss with prejudice.

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I.

LEGAL STANDARD

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A defendant may remove a state court action to federal court on the basis of diversity of

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citizenship. 28 U.S.C. § 1441(b); see also 28 U.S.C. § 1332. Diversity jurisdiction exists only

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where there is: (1) complete diversity between the residency of the plaintiffs and the defendants;

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and (2) a sufficient amount in controversy. 28 U.S.C. 1332(a). Where either of those elements of

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diversity are lacking, federal courts must remand the action to the state court. See id. § 1447(c).

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However, a district court may disregard a non-diverse party and retain federal jurisdiction if the

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party resisting removal can show that the non-diverse party was fraudulently joined. Hunter v.

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Phillip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009). Joinder is fraudulent “if the plaintiff

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fails to state a cause of action against a resident defendant, and the failure is obvious according to

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the settled rules of the state.” Id. However, there is a “general presumption against fraudulent

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joinder,” and defendants who assert that a party is fraudulently joined carry a “heavy burden.” Id.

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at 1046. Defendants must “show that the individuals joined in the action cannot be liable on any

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theory.” Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998).

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Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint

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if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to

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dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its

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face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). On a motion to dismiss, the Court

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accepts as true a plaintiff’s well-pleaded factual allegations and construes all factual inferences in
the light most favorable to the plaintiff. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d

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United States District Court
Northern District of California

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1025, 1031 (9th Cir. 2008). But the plaintiff must allege facts sufficient to “raise a right to relief

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above the speculative level.” Twombly, 550 U.S. at 555.

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II.

DISCUSSION
Defendants do not dispute that Plaintiffs and Mr. Singh are residents of the same state. See

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Dkt. No. 20 at 1. Plaintiffs thus argue “that this action [must] be remanded to state court because

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diversity jurisdiction indisputably does not exist, and therefore this Court lacks jurisdiction to hear

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this case.” Dkt. No. 13-1 at 2. However, ANICO contends that Mr. Singh is a sham defendant

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who was fraudulently joined to this action in order to defeat federal diversity jurisdiction. Dkt.

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No. 20 at 1. Specifically, Defendants contend that Plaintiffs’ motion to remand should be denied

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and the claims against Mr. Singh should be dismissed because the complaint alleges that at all

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relevant times, Mr. Singh was “a District Manager of [ANICO] and acting in the course and scope

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of such agency and or employment with [ANICO].” Dkt. Nos. 1-1 ¶ 4, 19 at 4, 20 at 6. The Court

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agrees with Defendants.

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In general, under California law, “a negligence claim cannot be stated by an insured

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against agents and employees of an insurer” because “[a]n agent of an insurance company is

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generally immune from suits brought by claimants for actions taken while the agent was acting

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within the scope of its agency.” Feizbakhsh v. Travelers Commer. Ins. Co., No. LA CV16-02165

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JAK (Ex), 2016 U.S. Dist. LEXIS 123471, at *12 (C.D. Cal. Sept. 9, 2016). Because the
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complaint alleges that Mr. Singh was at all relevant times an employee of ANICO, Mr. Singh is

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immune from liability unless he was acting as a “dual agent,” or for his own advantage. See

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Mercado v. Allstate Ins. Co., 340 F.3d 824, 826 (9th Cir. 2003) (holding that “[i]t is well

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established that, unless an agent or employee acts as a dual agent . . . she cannot be held

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individually liable as a defendant unless she acts for her own personal advantage.”).

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“Under California law, a ‘dual agent’ theory requires that the insurance agent act on behalf

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of the insured in some way beyond his or her capacity as an agent for the insurer. An insurance

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agent cannot be a ‘dual agent’ unless he or she is either an independent broker or has a long-term,

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special relationship with the insured.” Good v. Prudential Ins. Co. of America, 5 F. Supp. 804,
808 (N.D. Cal. 1998). Nothing in the complaint indicates that Mr. Singh was an independent

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United States District Court
Northern District of California

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broker, or in a special relationship with Plaintiffs. To the contrary, it alleges that Mr. Singh was a

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“District Manager of ANICO and acting in the course and scope of such agency and or

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employment.” Dkt. No. 1-1 ¶ 4. Nor do Plaintiffs offer any facts to support a theory that Mr.

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Singh, acting within the scope of his employment at ANICO, owed a special duty to Plaintiffs or

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held himself out as having any particular expertise. See Mercado, 340 F.3d at 826 n.1 (stating that

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“[a]n employee acts as a ‘dual agent” by assuming special duties for the benefit of the insured

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beyond those required by her principal”). Instead, Plaintiffs only allege that Mr. Singh failed to

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investigate Plaintiffs’ disputes, failed to provide Plaintiffs with adequate information pertaining to

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their claims or policies, and refused to reinstate their policies. Id. Without more, these facts

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cannot demonstrate that Mr. Singh was either acting as a dual agent or for his personal advantage

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such that he may be personally liable in this action. Mr. Singh is thus immune from suit as

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ANICO’s agent, and the Court GRANTS his motion to dismiss. While leave to amend a

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complaint that has been dismissed should generally be freely granted, Fed. R. Civ. Proc. 15(a),

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since Mr. Singh is immune from suit, “the pleading could not possibly be cured by the allegation

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of other facts,” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000), and the Court grants Mr.

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Singh’s motion with prejudice.

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Accordingly, and for the same reasons, the Court finds that Mr. Singh was improperly
joined in this action such that diversity jurisdiction is proper, and DENIES Plaintiffs’ motion to
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remand. The Court SETS a case management conference for September 12, 2017 at 2:00 p.m. A

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joint case management conference statement is due by September 6, 2017.

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IT IS SO ORDERED.
Dated: 8/22/2017
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge

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United States District Court
Northern District of California

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