Diaz v. Allstate Northbrook Indemnity Company

District Court, S.D. California·Decided September 2, 2022·No. 3:22-cv-00705·Unknown

Opinion

ESAI DIAZ, Case No.: 22-cv-705-MMA (WVG)

Plaintiff, ORDER DENYING PLAINTIFF’S v. MOTION TO REMAND TO STATE COURT INDEMNITY COMPANY, [Doc. No. 5] Defendant. On November 17, 2021, Plaintiff Esai Diaz (“Plaintiff”) initiated a breach of implied covenant and breach of contract action against Defendant Allstate Northbrook Indemnity Company (“Defendant”) in the Superior Court of California, County of San Diego. Doc. No. 1-2 (“State Ct. Compl.”). On May 17, 2022, Defendant filed a notice of removal to this Court. Doc. No. 1 (“Notice of Removal”). Plaintiff now moves to remand the action back to state court. Doc. No. 5. Defendant filed an opposition. See Doc. No. 7. The Court found the matter suitable for determination on the papers and without oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7.1.d.1. See Doc. No. 8. For the reasons set forth below, the Court DENIES Plaintiff’s motion to remand. This action arises from a written automobile insurance policy Defendant issued to Plaintiff. State Ct. Compl. ¶ 8. The policy included $1,000,000.00 in underinsured motorist coverage. Id. ¶ 9. In January 2016, Plaintiff was involved in an automobile accident, and Gabriel Flores was the other driver involved in the accident. Id. ¶ 11. Mr. Flores maintained automobile liability insurance coverage of $15,000.00 per person and $30,000.00 per occurrence. Id. In January 2018, “Plaintiff settled his claim with Mr. Flores for payment of his policy limits.” Id. Then, Plaintiff “pursued his claim for underinsured motor benefits under [his policy] with [his] automobile insurance carrier, ALLSTATE.” Id. Plaintiff sent a few arbitration demands to Defendant, and he subsequently contacted Defendant multiple times before the claim was transferred to Defendant’s arbitration department. Id. ¶ 15. Then, Plaintiff and Defendant corresponded and met multiple times concerning the claim and discovery. Id. Plaintiff alleges Defendant “unreasonably and wrongfully refused to pay Plaintiff’s request for the underinsured motorist benefits that he was entitled to receive.” Id. ¶ 12. Further, Plaintiff alleges his policy with Defendant contained an implied covenant of good faith and fair dealing. Id. ¶ 13. On November 17, 2021, Plaintiff filed his Complaint in the Superior Court of California, County of San Diego. See generally id. Plaintiff brings two causes of action against Defendant: (1) breach of implied covenant of good faith and fair dealing; and (2) breach of contract. See generally id. On December 21, 2021, Defendant served on Plaintiff a request for Statement of Damages. Doc. No. 1-5 at 2–3. On April 19, 2022, Plaintiff served on Defendant a Statement of Damages where he sought general damages of pain, suffering, inconvenience, and emotional distress to be later determined; punitive damages to be later determined; and at least $46,695.00 in attorney’s fees and costs and at least $5,794.52 in prejudgment interest. Doc. No. 1-6 (“Statement of Damages”) at 2. On May 17, 2022, Defendant removed the action to this Court. See generally Notice of Removal. Now, Plaintiff moves to remand the action to state court. See Doc. No. 5. “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “They possess only that power authorized by Constitution and statute.” Id. “A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock W., Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989) (citing California ex rel. Younger v. Andrus, 608 F.2d 1247, 1249 (9th Cir. 1979)). The party seeking federal jurisdiction bears the burden to establish jurisdiction. Kokkonen, 511 U.S. at 377 (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S 178, 182–83 (1936)). Generally, subject matter jurisdiction is based on the presence of a federal question, see 28 U.S.C. § 1331, or on complete diversity between the parties, see 28 U.S.C. § 1332. 28 U.S.C. § 1441(a) provides for removal of a civil action from state to federal court if the case could have originated in federal court. The removal statute is construed strictly against removal, and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)). Defendant removed the action to this Court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, alleging diversity jurisdiction. Notice of Removal at 3. Plaintiff alleges that Defendant’s removal was improper because the Court lacks diversity jurisdiction and removal was untimely. Doc. No. 5 at 3.1 The Court addresses each issue in turn. A. Diversity Jurisdiction Plaintiff contends in his motion that the case must be remanded because the Court lacks subject matter jurisdiction. Id. at 7. Plaintiff asserts that he is a citizen of California, and Defendant is also considered a citizen of California for diversity purposes because “the insured is a California citizen” and the matter concerns a dispute under an insurance policy the insured has with Defendant. Id. Plaintiff’s argument relies heavily on 28 U.S.C. § 1332(c)(1)’s plain language. Id. at 8–9. It is based on his analysis of the statute’s plain language that Plaintiff argues in conclusion “the main cause of action in the subject case is a ‘direct action.’” Id. at 7. Thus, Plaintiff asserts that “the Court should apply the statute’s plain language and remand the case.” Id. at 9. Defendant contends in opposition that the Section 1332(c)(1) exception does not apply here and complete diversity exists between the parties. Doc. No. 7 at 14. Defendant relies on the Ninth Circuit’s interpretation of Section 1332(c)(1) direct action claims, where the court narrowed the application of Section 1332(c)(1) to direct actions. Id. Defendant contends that “[b]ecause plaintiff is ‘seeking to impose liability against Allstate for its own tortious conduct’ (i.e., mishandling his [underinsured motorist claim], not against the other driver, it is not a ‘direct action’ within the meaning of section 1332(c).” Id. at 15. Importantly, Defendant points to a Southern District of California case that addressed the same issue presented in this case, under identical facts, where the court found that the plaintiff’s bad faith claim against their insurer was not a direct action. Id. (quoting Heredia v. Allstate Indem. Co., No. 15cv1642 WQH (RBB), 2015 WL 6828682, at *3 (S.D. Cal. Nov. 6, 2015)). Thus, Defendant argues that the direct action exception does not apply, and it is a citizen of Illinois so complete diversity exists. Id. at 16. Pursuant to 28 U.S.C. § 1332, a federal district court h

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