Tucker et al v. The Travelers Indemnity Company of Connecticut et al

Filing 27

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING 18 MOTION TO REMAND( 14 Motion to Dismiss-moot). (ndrS, COURT STAFF) (Filed on 10/4/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DON TUCKER, et al.,
Plaintiffs,

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v.

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Case No. 17-cv-04613-HSG
ORDER GRANTING MOTION TO
REMAND
Re: Dkt. Nos. 14, 18

THE TRAVELERS INDEMNITY
COMPANY OF CONNECTICUT, et al.,

United States District Court
Northern District of California

Defendants.
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Pending before the Court is Defendant Diane Frazier’s motion to dismiss the negligent

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misrepresentation claim against her, Dkt. No. 14, and Plaintiffs Don Tucker and Martin Aguilar’s

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motion to remand for lack of diversity jurisdiction, Dkt. No. 18. Because subject-matter

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jurisdiction is a threshold issue, the Court addresses Plaintiffs’ motion to remand first.

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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 element of

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diversity is 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

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

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v. 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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II.

ANALYSIS
Here, Plaintiffs are residents of California and so is Defendant Frazier. See Dkt. No. 1, Ex.

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A (“Compl.”) ¶¶ 7–10. The Court finds that Defendants have failed to meet their “heavy burden”

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of establishing fraudulent joinder. Id. at 1046. The California Court of Appeal has opened the

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door to claims against insurance adjusters, holding that “a cause of action for negligent

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misrepresentation can lie against an insurance adjuster.” See Bock v. Hansen, 255 Cal. App. 4th

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215, 231 (Cal. Ct. App. 2014). In Bock, homeowners sued their insurer and the claims adjuster for

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damages caused when a tree limb crashed onto the plaintiffs’ home. See id. at 219. The plaintiffs

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United States District Court
Northern District of California

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brought, inter alia, a negligent misrepresentation claim against the adjuster based on his allegedly

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false statement that the plaintiffs’ policy did not cover the cost of cleanup. See id.at 223. The

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Court of Appeal concluded that the insurance adjuster owed a duty of care to the homeowners and

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that he could be held liable for his characterization of the insurance policy. See id. 229–30.

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Here too, Plaintiffs allege that Defendant Frazier, an insurance adjuster for Defendant

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Travelers Indemnity Company of Connecticut, stated that Travelers would deny all coverage

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because Tucker’s insurance excluded injuries arising from work done on residential property.

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Compl. ¶¶ 4, 11–12. Plaintiffs’ negligent misrepresentation claim is premised on this allegedly

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“false and untrue” statement because, according to Plaintiffs, “the [p]olicy does not contain an

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exclusion for injuries arising from work at a family residence” and Defendant Frazier should have

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known this. Id. ¶¶ 12, 43–44. Regardless of whether Bock may represent a minority view among

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California courts, the decision demonstrates that it is not obvious under California law that

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Plaintiffs cannot state a negligent misrepresentation claim of the type they have alleged here

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against Defendant Frazier.

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III.

CONCLUSION

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Because the Court lacks subject matter jurisdiction, it REMANDS the case to San
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Francisco Superior Court. The motion to dismiss is MOOT and the Clerk is directed to remand
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the case to the state court and to close the federal case.
IT IS SO ORDERED.
Dated: 10/4/2017
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge

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United States District Court
Northern District of California

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