United States District Court, W.D. Washington, Seattle
C. COUGHENOUR, UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendant American Family
Mutual Insurance Company's motion to dismiss a party
(Dkt. No. 12) and Plaintiffs' motion to remand and for
attorney fees (Dkt. No. 13). Having thoroughly considered the
parties' briefing and the relevant record, the Court
finds oral argument unnecessary and hereby GRANTS
Plaintiffs' motion to remand and DENIES Plaintiffs'
motion for attorney fees (Dkt. No. 13) and STRIKES as moot
American Family's motion to dismiss a party (Dkt. No. 12)
for the reasons explained herein.
September 23, 2017, a Schwartz Brothers commercial truck,
driven by an employee of Defendant SBR Holdings, LLC, crashed
into Plaintiffs' home. (Dkt. No. 1-3 at 1-2.) After
American Family, Plaintiffs' insurer, failed to pay to
repair their home, Plaintiffs sued American Family in King
County Superior Court. (Id.) Plaintiffs allege that
American Family failed to promptly respond to and investigate
Plaintiffs' claim for loss and that American Family has
constructively denied them coverage. (Id. at 3-5.)
Plaintiffs bring claims against American Family for breach of
contract, insurance bad faith, negligent claims handling,
violation of Washington's Consumer Protection Act, Wash.
Rev. Code § 19.86, and violation of the Insurance Fair
Conduct Act, Wash. Rev. Code § 48.30.015. (Id.
at 5-6.) Plaintiffs also bring a claim for negligence against
SBR. (Id. at 6.)
Family removed the matter to the Court based on diversity
jurisdiction. (Dkt. No. 1 at 3-7.) American Family is a
citizen of Wisconsin, and Plaintiffs and SBR are citizens of
Washington (Id. at 4, Dkt. No. 13 at 2.) In its
removal notice, American Family alleges that SBR should be
ignored for the purposes of jurisdiction because SBR is a
dispensable party subject to severance by the Court. (Dkt No.
1 at 4-5.) American Family now moves to dismiss SBR based on
fraudulent joinder and as a dispensable party pursuant to
Rules 19 and 21. (See Dkt. No. 12.) Plaintiffs move
to remand on the ground that the Court lacks subject matter
jurisdiction. (See Dkt. No. 13.)
Motion to Remand
plaintiff is the master of the complaint and can plead a
cause of action to avoid federal jurisdiction. Lowdermilk
v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 999 (9th
Cir. 2007). For this reason, courts strictly construe a
defendant's ability to remove a case from state court to
federal court. Romo v. Teva Pharm. USA, Inc., 731
F.3d 918, 921 (9th Cir. 2013). The burden is on the defendant
to demonstrate that a claim “arises under” or
“necessarily turns upon” federal law.
Ultramar America Ltd. v. Dwelle, 900 F.2d 1412, 1414
(9th Cir. 1990).
to a civil action brought in state court may remove that
action to federal court if the district court would have had
original jurisdiction at the time of both commencement of the
action and removal. See 28 U.S.C. § 1441(a);
14B Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 3723 (4th ed. 2013). Once
removed, the case can be remanded to state court for either
lack of subject matter jurisdiction or defects in the removal
procedure. See 28 U.S.C. § 1447(c). But
“fraudulently joined defendants will not defeat removal
on diversity grounds.” Ritchey v. Upjohn Drug
Co., 139 F.3d 1313, 1318 (9th Cir. 1998). “Joinder
of a non-diverse defendant is deemed fraudulent, and the
defendant's presence in the lawsuit is ignored for
purposes of determining diversity, ‘[i]f the plaintiff
fails to state a cause of action against a resident
defendant, and the failure is obvious according to the
settled rules of the state.'” Morris v.
Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.
2001) (quoting McCabe v. Gen. Foods Corp., 811 F.2d
1336, 1339 (9th Cir. 1987)).
to the notice of removal, Plaintiffs are citizens of
Washington. (See Dkt. No. 1 at 4.) It is uncontested
that SBR is a citizen of Washington. (See Dkt. Nos.
13 at 2, 16 at 1-2.) Thus, there is no question that if SBR
were a party to this case, the parties would not be diverse.
See 28 U.S.C. § 1332(a)(1). Therefore, to
decide whether remand is proper based on lack of subject
matter jurisdiction, the Court considers American
Family's arguments for dismissing SBR.
fewer than all the defendants have joined in a removal
action, the removing party has the burden under section
1446(a) to explain affirmatively the absence of any
co-defendants in the notice for removal.” Prize
Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1266
(9th Cir. 1999). Plaintiffs argue that the removal was
defective because American Family did not obtain SBR's
consent. (Dkt. No. 14 at 3-4.) But in its removal notice,
American Family made clear that it would contest whether SBR
should be part of the case. (See Dkt. No. 1 at 4-5)
(alleging that SBR is a dispensable party subject to
severance). And in its motion to dismiss, American Family
specifically alleged that SBR was fraudulently joined. (Dkt.
No. 12 at 7-9.) Thus, the procedural requirement of consent
by all parties to removal does not prevent the Court from
evaluating whether SBR should be a party to this case.
See Ritchey, 139 F.3d at 1318; see also
S. Bayview Apartments, Assocs. v. Cont'l W. Ins.
Co., No. C07-5287-RBL, Dkt. No. 24 at 11 (W.D. Wash.
2007) (finding that the consent requirement was eclipsed by
the necessity for remand).
Family moves to dismiss SBR as fraudulently joined. (Dkt. No.
12 at 7-9.) Plaintiffs' claim against SBR is for
negligence, based on the conduct of SBR's employee who
crashed the commercial truck into Plaintiffs' home. (Dkt.
No. 1-3 at 6.) American Family does not argue that Plaintiffs
fail to state a claim against SBR. (See Dkt. No. 12
at 7-9.) Instead, American Family cites a district court case
for the proposition that joinder could also be fraudulent if
Plaintiffs have “no real intention” of
prosecuting their claim against SBR. (Dkt. No. 12 at 7)
(citing S. Bayview, No. C07-5287-RBL, Dkt. No. 24 at
5 (W.D. Wash. 2007)). But the dictum in S. Bayview
did not establish a different type of fraudulent joinder.
See Id. The court in that case concluded that the
plaintiff obviously failed to state an actionable case
against certain defendants. Id. Thus, American
Family offers no authority for the proposition that
Plaintiffs' subjective intentions regarding joinder of
SBR are relevant to a fraudulent joinder
analysis.Moreover, American Family offers little
more than a conclusory allegation that “the plain
language of the ...