Delgado v. Primerica Life Insurance Company et al

Filing 54

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING IN PART AND DENYING IN PART PLAINTIFFS 17 MOTION TO REMAND AND DENYING AS MOOT DEFENDANTS ( 11 , 13 , 22 , 27 MOTIONS TO DISMISS. (ndrS, COURT STAFF) (Filed on 2/13/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MARIA ISABEL DELGADO,
Plaintiff,

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v.

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PRIMERICA LIFE INSURANCE
COMPANY, et al.,

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United States District Court
Northern District of California

Defendants.

Case No. 17-cv-03744-HSG
ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’S
MOTION TO REMAND AND DENYING
AS MOOT DEFENDANTS’ MOTIONS
TO DISMISS
Re: Dkt. Nos. 11, 13, 17, 22, 27

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Pending before the Court is Plaintiff Maria Isabel Delgado’s motion to remand and four

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motions to dismiss filed by each of the Defendants: Primerica Life Insurance Company and

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Primerica Financial Services Insurance Marketing, Inc. (collectively, “Primerica”); National

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Union Fire Insurance Company of Pittsburgh, PA (“National Union”); Wells Fargo & Co. and

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Wells Fargo Bank, N.A. (collectively, “Wells Fargo”); and American International Group, Inc.

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(“AIG”). See Dkt. Nos. 11, 13, 17, 22, 27.1 For the reasons set forth below, Plaintiff’s motion is

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GRANTED IN PART and DENIED IN PART and Defendants’ motions are DENIED AS

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MOOT.

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I.

BACKGROUND

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A.

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In 2007, Plaintiff and her husband, Ramiro Alvarez Conejo (“Alvarez”) opened a bank

Factual Allegations

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account at a Wells Fargo branch in San Francisco. Dkt. No. 1-1 (“Complaint” or “Compl.”) ¶ 28.

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During that transaction, without Alvarez’s consent, Wells Fargo2 also signed him up for a life

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The Court finds this matter appropriate for disposition without oral argument and the matter is
deemed submitted. See Civil L.R. 7-1(b).
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It is unclear from the Complaint whether it was Wells Fargo & Co., Wells Fargo Bank, N.A., or
another, non-party Wells Fargo entity that set up Alvarez’s life insurance policy.

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insurance policy, administered by AIG and operated by National Union. See id. ¶¶ 28-29, 33.

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After becoming aware later that year that they were paying for the AIG/National Union policy,

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Plaintiff and Alvarez ultimately decided to keep it. See id. ¶ 31. Approximately eight years later,

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in or around July 2015,3 they met with a Primerica insurance agent,4 who issued Alvarez a life

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insurance policy shortly thereafter. See id. ¶¶ 15, 19.
On June 2, 2016, Alvarez died from injuries he sustained while riding a horse. See id. ¶¶

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11-14. Upon his death, Plaintiff filed a claim with Primerica as the beneficiary of his life

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insurance policy. Id. ¶ 20. Primerica denied her claim on August 31, 2016. Id. ¶ 22. Plaintiff

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also filed a claim under the AIG/National Union policy, which AIG denied. Id. ¶ 36.
B.

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United States District Court
Northern District of California

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On May 26, 2017, Plaintiff filed a complaint in San Francisco Superior Court, naming

Procedural Posture

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Primerica, AIG, National Union, and Wells Fargo. See id. ¶¶ 2-8. She alleged causes of action for

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(1) breach of contractual duty to pay a covered insurance claim, see id. ¶¶ 37-46; (2) insurance bad

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faith, see id. ¶¶ 47-61; (3) intentional misrepresentation and fraud, see id. ¶¶ 62-78; (4) negligent

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misrepresentation, see id. ¶¶ 79-92; (5) breach of fiduciary duty, see id. ¶¶ 93-102; and (6) unfair

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business practices under California’s Unfair Competition Law, see id. ¶¶ 103-08.
On June 29, 2017, Primerica removed the matter to this Court. Dkt. No. 1 (“Notice”). On

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July 20, 2017, Plaintiff filed this motion to remand. Dkt. No. 17 (“Mot.”). Primerica filed its

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opposition on August 3, 2017, Dkt. No. 21 (“Opp.”), and Plaintiff replied on August 10, 2017,

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Dkt. No. 31 (“Reply”). Defendants also filed four motions to dismiss between July 6, 2017 and

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August 4, 2017. See Dkt. Nos. 11, 13, 22, 27.

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II.

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 citizenship of the plaintiffs and the defendants;

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Plaintiff later claims the events in this paragraph took place in June 2015. See Compl. ¶ 22.
It is unclear throughout the Complaint whether Plaintiff’s allegations concern Primerica Life
Insurance or Primerica Financial Services Marketing.
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and (2) an amount in controversy greater than $75,000. 28 U.S.C. § 1332(a). Where either

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element is lacking, federal courts lack subject matter jurisdiction and must remand the action to

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state court. See id. § 1447(c); see also ARCO Envtl. Remediation, L.L.C. v. Dep’t of Health &

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Envtl. Quality of Mont., 213 F.3d 1108, 1113 (9th Cir. 2000).
On a motion to remand, a federal court must presume that a cause of action lies beyond its

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subject matter jurisdiction, Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009), and
must grant remand “if there is any doubt as to the right of removal in the first instance,ˮ Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Courts must resolve all ambiguity in favor of
remand. Hunter, 582 F.3d at 1042.
III.

There is no diversity of citizenship between Plaintiff and Wells Fargo in this case, a point

United States District Court
Northern District of California

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ANALYSIS

which Primerica does not refute. Instead, Primerica urges the Court to apply the Eleventh
Circuit’s “fraudulent misjoinder” exception to the requirement of complete diversity. See Notice
¶¶ 10, 22-28. Primerica invokes this exception to argue that Wells Fargo should be severed from
the case, the end result of which would be the complete diversity necessary for this Court to
exercise subject matter jurisdiction.5 See Notice ¶¶ 9-10. For the reasons stated below, the Court
declines to apply the doctrine of fraudulent misjoinder and finds that remand is proper.
A.

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There Is Not Complete Diversity of Citizenship Between Plaintiff and
Defendants.

The Court lacks subject matter jurisdiction over this case because there is not complete

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diversity of citizenship between Plaintiff and Defendants. See 28 U.S.C. § 1332(a)(1). Plaintiff is

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a citizen of California. See Compl. ¶ 2; Notice ¶ 4.6 And because Wells Fargo Bank & Co. (like

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its subsidiary, Wells Fargo Bank, N.A.) is headquartered in California, see Compl. ¶ 8, it is a

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Primerica also argues that each of the other Defendants should be severed from the case because
they were also fraudulently misjoined. See Notice ¶¶ 7-10. For purposes of this Motion, however,
the Court need only address the application of this theory to Wells Fargo.
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Although Plaintiff styles herself as a “resident” of California in the Complaint, Compl. ¶ 2, there
appears to be no dispute among the parties that she is a citizen of California. See Notice ¶ 4.
Citizenship, not residency, is the controlling factor in determining diversity of parties. See Seven
Resorts, Inc. v. Cantlen, 57 F.3d 771, 774 (9th Cir. 1995) (“It is black letter law that, for purposes
of diversity, residence and citizenship are not the same thing.”) (citation, internal quotation marks,
and brackets omitted). In any event, any ambiguity must be resolved in favor of remand. Hunter,
582 F.3d at 1042.
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California citizen as well, see 28 U.S.C. § 1332(c)(1) (stating that a corporation is a citizen of the

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state where it has its “principal place of business”); Hertz Corp. v. Friend, 559 U.S. 77, 93 (2010)

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(explaining that the principal place of business “should normally be the place where the

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corporation maintains its headquarters—provided that the headquarters is the actual center of

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direction, control, and coordination, i.e., the ‘nerve center[]’”). This Court accordingly lacks

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subject matter jurisdiction, unless Primerica can establish that some exception to the rules of

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diversity jurisdiction applies.

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B.

The Court Declines to Apply the Doctrine of Fraudulent Misjoinder, Which the
Ninth Circuit Has Not Adopted.

The exception Primerica attempts to invoke is fraudulent misjoinder, which was first

United States District Court
Northern District of California

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articulated by the Eleventh Circuit. See Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360

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(11th Cir. 1996), overruled on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069, 1072

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(11th Cir. 2000). A fraudulent misjoinder occurs “where a diverse defendant is joined with a

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nondiverse defendant as to whom there is no joint, several or alternative liability and where the

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claim against the diverse defendant has no real connection to the claim against the nondiverse
defendant.” Thakor v. Burlington Ins. Co., No. C 09-1465 SBA, 2009 WL 1974511, at *3-4 (N.D.
Cal. July 8, 2009) (quoting Tapscott, 77 F.3d at 1360). Tapscott “does not stand for the broad rule
that all procedural misjoinder is fraudulent,” however; rather, there must be evidence that the
misjoinder is “egregrious” and “borders on a sham.” See id.
Courts have been slow to adopt the rule of Tapscott. “Three circuits, including the Ninth,
have declined to adopt the doctrine when presented with the opportunity.” In re: Bard Ivc Filters

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Prods. Liab. Litig., No. CV-16-00344-PHX-DGC, 2016 WL 2347430, at *4 (D. Ariz. May 4,
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2016) (citing Cal. Dump Truck Owners Ass’n v. Cummins Engine Co., Inc., 24 F. App’x 727, 729
(9th Cir. 2001)). Moreover, a “decided majority” of district courts within the Ninth Circuit have
declined to apply it. See Garcia v. Allstate Ins. Co., No. 2:14-CV-06478-CAS(AGRx), 2014 WL
12611285, at *2 (C.D. Cal. Oct. 3, 2014); see also Alaniz v. Merck & Co, Inc., No. CV 05-2487-

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JFW (MANx), 2005 WL 6124308, at *3 (C.D. Cal. June 3, 2005) (declining to apply the

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doctrine); Osborn v. Metro. Life Ins. Co., 341 F. Supp. 2d 1123, 1127-28 (E.D. Cal. 2004) (same);

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Brazina v. Paul Revere Life Ins. Co., 271 F. Supp. 2d 1163, 1172 (N.D. Cal. 2003) (“Even if this
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court were to extend Tapscott to [the action at bar], there is no evidence that the claims are so

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unrelated as to constitute ‘egregious’ misjoinder.”).

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In short, the Court agrees with Garcia’s characterization of the issue: “in the absence of

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any direction from the Ninth Circuit to apply the fraudulent misjoinder exception, the better course

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is not to do so.” See 2014 WL 12611285, at *3.

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C.

The Ninth Circuit Recognizes the Fraudulent Joinder Doctrine, Under Which
Primerica Fails to Meet Its Heavy Burden.

The Ninth Circuit does, however, recognize fraudulent joinder. Under this doctrine, a

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court may exercise diversity jurisdiction over a case without complete diversity if the removing

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party can show that the non-diverse party was fraudulently joined. See Hunter, 582 F.3d at 1043.
A defendant qualifies for the fraudulent joinder exception only if it can show that “the plaintiff

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United States District Court
Northern District of California

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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.” See Tucker v. Travelers Indem. Co. of Conn., No. 17-cv-04613-

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HSG, 2017 U.S. Dist. LEXIS 164845, at *2 (N.D. Cal. Feb. 7, 2017) (citing Hunter, 582 F.3d at

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1043); see also Garcia, 2014 WL 12611285, at *1 (“It is well established in this circuit that an

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exception to the requirement of complete diversity exists where it appears that a plaintiff has

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fraudulently joined a ‘sham’ non-diverse defendant.”) (citing treatise). There is a “general

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presumption against fraudulent joinder,” and defendants who assert the doctrine carry a “heavy

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burden.” Tucker, 2017 U.S. Dist. LEXIS 164845, at *2. Defendants must effectively “show that

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the individuals joined in the action cannot be liable on any theory.” Id. (citing Ritchey v. Upjohn

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Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998)).

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Nowhere in the papers does Primerica even attempt to apply the fraudulent joinder

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standard. In choosing to focus its argument on fraudulent misjoinder, it has failed to meet the

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“heavy burden” required to show that the Court can exercise diversity jurisdiction over the parties

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in this case notwithstanding the lack of complete diversity. Even if Primerica did contend that

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Wells Fargo was fraudulently joined, however, its argument would fail because Plaintiff has not

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obviously failed to state a claim against those defendants under settled California law. Plaintiff

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alleges a number of facts that could conceivably allow it to prevail under California law on its

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claims of fraud, negligent misrepresentation, and breach of fiduciary duty against Wells Fargo.
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See, e.g., Compl. ¶¶ 71-72 (alleging that Wells Fargo knowingly and intentionally misrepresented

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the nature of Alvarez’s life insurance policy with AIG because, despite a Wells Fargo banker’s

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representation that the policy would pay approximately $1 million upon death, AIG has refused to

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pay); id. ¶¶ 88-89 (alleging negligent misrepresentation on the same facts); id. ¶ 96 (alleging

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breach of fiduciary duty on the same facts).
Primerica fails to apply the correct standard, and thus fails to show that Plaintiff

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fraudulently joined Wells Fargo. Accordingly, remand is proper because this Court lacks subject

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matter jurisdiction.

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D.

Attorney’s Fees Are Not Warranted.

Plaintiff seeks to recover attorney’s fees for this motion to remand. See Reply at 11.

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United States District Court
Northern District of California

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Under 28 U.S.C. § 1447(c), “[a]n order remanding the case may require payment of just costs and

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any actual expenses, including attorney’s fees, incurred as a result of the removal.” The decision

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to award such fees “should turn on the reasonableness of the removal,” and an award is proper

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“only where the removing party lacked an objectively reasonable basis for seeking removal.”

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Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).

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The Court cannot conclude that Primerica lacked an objectively reasonable basis for

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removal. Although the Ninth Circuit has not adopted the doctrine of fraudulent misjoinder,

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neither has it affirmatively rejected it. Although it did not prevail, Primerica made a reasonable,

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good-faith argument in support of removal. See Dent v. Lopez, No. CV14-00442-LJO-SMS, 2014

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WL 3838837, at *3 (E.D. Cal. July 30, 2014). Plaintiff’s fee request is therefore denied.

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IV.

CONCLUSION

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For the foregoing reasons, Plaintiff’s motion is GRANTED insofar as the case is

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remanded and DENIED as to her request for attorney’s fees. Defendants’ motions to dismiss are

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DENIED AS MOOT. The Clerk is directed to remand the case forthwith to the San Francisco

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County Superior Court and close the case.

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IT IS SO ORDERED.

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Dated: 2/13/2018
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge

United States District Court
Northern District of California

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