5 GREGORY YATES, Case No. 2:25-cv-00935-ART-DJA 6 Plaintiff, ORDER 7 v.
ASSOCIATION et. al., 9 Defendants. 10 11 Plaintiff Gregory Yates sued Defendants United Services Automobile 12 Association Casualty Insurance Company (“USAA CIC”) and United Services 13 Automobile Association (“USAA”) for 1) breach of contract, 2) tortious breach of 14 the implied covenants of good faith and fair dealing, 3) contractual breach of the 15 implied covenant of good faith and fair dealing, 4) unfair claims practices, and 5) 16 declaratory relief, following a motor vehicle collision. (ECF No. 3.) Before the Court 17 is Mr. Yates’s Motion to Remand (ECF No. 11) and USAA’s Motion to Dismiss. 18 (ECF No. 6.) For the reasons stated below, the Court grants the motion to remand 19 and denies USAA’s motion to dismiss as moot. 20 I. Background 21 On December 15, 2023, Mr. Yates was driving and got into a car accident, 22 resulting in his injuries. (ECF No. 3 at ¶¶ 26–30.) Mr. Yates submitted his claim 23 to USAA CIC, who insured him at the time. (Id. at ¶¶ 25–33.) The other driver did 24 not have sufficient insurance to cover damages from the accident. (Id. at ¶ 31.) 25 As a result, Mr. Yates alleges that he is entitled to the full uninsured motorist 26 policy limit of $100,000, which he has not been paid. (ECF No. 11 at 14.) 27 Mr. Yates filed this action in state court against Defendants USAA CIC and 28 USAA (ECF No. 1-2), and Defendants removed the case to this Court based on 1 diversity jurisdiction, arguing that non-diverse defendant USAA was fraudulently 2 joined. (ECF No. 1-1.) Defendant USAA filed a motion to dismiss Mr. Yates’s 3 claims against it, asserting that Mr. Yates fails to state a valid claim for relief 4 against USAA. (ECF No. 6.) Mr. Yates subsequently filed a motion to remand 5 based on USAA’s lack of diversity as a Nevada corporation, and Defendants’ 6 failure to establish the amount in controversy. (ECF No. 11.) Defendants 7 responded that USAA was fraudulently joined, and Mr. Yates could not state a 8 possible claim against USAA. (ECF No. 19.) Mr. Yates replied. (ECF No. 20.) 9 II. Legal Standard 10 A defendant may only remove a case brought in state court if the federal 11 district court would have original jurisdiction over the case. 28 U.S.C. § 1441(a). 12 Federal courts have jurisdiction over lawsuits where the amount in controversy 13 is over $75,000 and the parties are diverse. 28 U.S.C. § 1332(a). Federal courts 14 “strictly construe the removal statute against removal jurisdiction.” Hansen v. 15 Grp. Health Coop., 902 F.3d 1051, 1056 (9th Cir. 2018) (citing Geographic 16 Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 17 2010)). 18 A plaintiff may challenge removal by timely filing a motion to remand. 28 19 U.S.C. § 1447(c). On a motion to remand, the removing defendant faces a strong 20 presumption against removal and bears the burden of establishing that removal 21 is proper. Carrington Mortgage Services, LLC v. Ticor Title of Nevada, Inc., 22 220CV699JCMNJK, 2020 WL 3892786, at *2 (D. Nev. July 10, 2020) (citing 23 Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403–04 (9th Cir. 1996); Gaus 24 v. Miles, Inc., 980 F.2d 564, 566–67 (9th Cir. 1992)). 25 Here, Defendants allege that USAA was fraudulently joined to destroy 26 diversity and keep the present action in state court. (ECF No. 19.) “There are two 27 ways to establish fraudulent joinder: ‘(1) actual fraud in the pleading of 28 jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action 1 against the non-diverse party in state court.’” Deutsche Bank Nat'l Tr. Co. as Tr. 2 for Am. Home Mortgage Inv. Tr. 2007-1 v. Old Republic Title Ins. Group, Inc., 532 3 F. Supp. 3d 1004, 1009 (D. Nev. 2021) (quoting Grancare, LLC v. Thrower by and 4 through Mills, 889 F.3d 543, 548 (9th Cir. 2018) (internal citations omitted)). 5 Defendants argue the second method. 6 To fulfill the second method, the defendant must show that an “individual[] 7 joined in the action cannot be liable on any theory.” Grancare, 889 F.3d at 548 8 (citing Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998)). “But ‘if 9 there is a possibility that a state court would find that the complaint states a 10 cause of action against any of the resident defendants, the federal court must 11 find that the joinder was proper and remand the case to the state court.’” Id. 12 (citing Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir. 2009) (emphasis 13 in original)). “[This] standard is similar to the ‘wholly insubstantial and frivolous’ 14 standard for dismissing claims under Rule (12)(b)(1) for lack of federal question 15 jurisdiction.” Grancare, 889 F.3d at 549–50. “A defendant invoking federal court 16 diversity jurisdiction on the basis of fraudulent joinder bears a ‘heavy burden’ 17 since there is a ‘general presumption against [finding] fraudulent joinder.’” Id. at 18 548 (citing Hunter, 582 F.3d at 1046). “While plaintiff may not ultimately recover 19 against [defendant], this does not mean that [defendant] was fraudulently joined. 20 In assessing whether a defendant was fraudulently joined, the court need not 21 look extensively at the merits of the claims . . .” Carrington Mortgage Services, 22 LLC, 2020 WL 3892786, at *5 (internal citation omitted). “When applying the 23 possible-claim standard for fraudulent joinder, a ‘district court must consider . . 24 . whether a deficiency in the complaint can possibly be cured by granting the 25 plaintiff leave to amend.’” Duncan Golf Management v. Nevada Youth 26 Empowerment Project, 3:23-cv-0666-ART-CSD, 2024 WL 4349454 at *2 (D. Nev. 27 Sept. 28, 2024) (quoting Grancare, 889 F.3d at 550). 28 1 III. Analysis 2 A. Joint Venture/Alter Ego 3 Mr. Yates contends that USAA CIC and USAA1 are jointly liable for all 4 claims under a theory of joint venture.2 (ECF No. 3 at 2–3.) Accordingly, he argues 5 that USAA is a proper party to this litigation, destroying diversity and mandating 6 remand. (ECF No. 11.) 7 Defendants respond that Mr. Yates has not set forth any factual allegations 8 establishing joint venture. (ECF No. 19 at 6.) Additionally, Defendants argue that 9 Mr. Yates cannot advance a viable claim of joint venture “because USAA and 10 USAA CIC are in an express and demonstrable parent-subsidiary relationship,” 11 contradicting “the existence of any joint venture between them.” (Id.) 12 Under Nevada law, a joint venture is a “contractual relationship in the 13 nature of an informal partnership wherein two or more persons conduct some 14 business enterprise, agreeing to share jointly, or in proportion to capital 15 contributed, in profits and losses.” Hook v. Giuricich, 823 P.2d 294, 296 (Nev. 16 1992) (citation omitted).
Free access — add to your briefcase to read the full text and ask questions with AI
5 GREGORY YATES, Case No. 2:25-cv-00935-ART-DJA 6 Plaintiff, ORDER 7 v.
ASSOCIATION et. al., 9 Defendants. 10 11 Plaintiff Gregory Yates sued Defendants United Services Automobile 12 Association Casualty Insurance Company (“USAA CIC”) and United Services 13 Automobile Association (“USAA”) for 1) breach of contract, 2) tortious breach of 14 the implied covenants of good faith and fair dealing, 3) contractual breach of the 15 implied covenant of good faith and fair dealing, 4) unfair claims practices, and 5) 16 declaratory relief, following a motor vehicle collision. (ECF No. 3.) Before the Court 17 is Mr. Yates’s Motion to Remand (ECF No. 11) and USAA’s Motion to Dismiss. 18 (ECF No. 6.) For the reasons stated below, the Court grants the motion to remand 19 and denies USAA’s motion to dismiss as moot. 20 I. Background 21 On December 15, 2023, Mr. Yates was driving and got into a car accident, 22 resulting in his injuries. (ECF No. 3 at ¶¶ 26–30.) Mr. Yates submitted his claim 23 to USAA CIC, who insured him at the time. (Id. at ¶¶ 25–33.) The other driver did 24 not have sufficient insurance to cover damages from the accident. (Id. at ¶ 31.) 25 As a result, Mr. Yates alleges that he is entitled to the full uninsured motorist 26 policy limit of $100,000, which he has not been paid. (ECF No. 11 at 14.) 27 Mr. Yates filed this action in state court against Defendants USAA CIC and 28 USAA (ECF No. 1-2), and Defendants removed the case to this Court based on 1 diversity jurisdiction, arguing that non-diverse defendant USAA was fraudulently 2 joined. (ECF No. 1-1.) Defendant USAA filed a motion to dismiss Mr. Yates’s 3 claims against it, asserting that Mr. Yates fails to state a valid claim for relief 4 against USAA. (ECF No. 6.) Mr. Yates subsequently filed a motion to remand 5 based on USAA’s lack of diversity as a Nevada corporation, and Defendants’ 6 failure to establish the amount in controversy. (ECF No. 11.) Defendants 7 responded that USAA was fraudulently joined, and Mr. Yates could not state a 8 possible claim against USAA. (ECF No. 19.) Mr. Yates replied. (ECF No. 20.) 9 II. Legal Standard 10 A defendant may only remove a case brought in state court if the federal 11 district court would have original jurisdiction over the case. 28 U.S.C. § 1441(a). 12 Federal courts have jurisdiction over lawsuits where the amount in controversy 13 is over $75,000 and the parties are diverse. 28 U.S.C. § 1332(a). Federal courts 14 “strictly construe the removal statute against removal jurisdiction.” Hansen v. 15 Grp. Health Coop., 902 F.3d 1051, 1056 (9th Cir. 2018) (citing Geographic 16 Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 17 2010)). 18 A plaintiff may challenge removal by timely filing a motion to remand. 28 19 U.S.C. § 1447(c). On a motion to remand, the removing defendant faces a strong 20 presumption against removal and bears the burden of establishing that removal 21 is proper. Carrington Mortgage Services, LLC v. Ticor Title of Nevada, Inc., 22 220CV699JCMNJK, 2020 WL 3892786, at *2 (D. Nev. July 10, 2020) (citing 23 Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403–04 (9th Cir. 1996); Gaus 24 v. Miles, Inc., 980 F.2d 564, 566–67 (9th Cir. 1992)). 25 Here, Defendants allege that USAA was fraudulently joined to destroy 26 diversity and keep the present action in state court. (ECF No. 19.) “There are two 27 ways to establish fraudulent joinder: ‘(1) actual fraud in the pleading of 28 jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action 1 against the non-diverse party in state court.’” Deutsche Bank Nat'l Tr. Co. as Tr. 2 for Am. Home Mortgage Inv. Tr. 2007-1 v. Old Republic Title Ins. Group, Inc., 532 3 F. Supp. 3d 1004, 1009 (D. Nev. 2021) (quoting Grancare, LLC v. Thrower by and 4 through Mills, 889 F.3d 543, 548 (9th Cir. 2018) (internal citations omitted)). 5 Defendants argue the second method. 6 To fulfill the second method, the defendant must show that an “individual[] 7 joined in the action cannot be liable on any theory.” Grancare, 889 F.3d at 548 8 (citing Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998)). “But ‘if 9 there is a possibility that a state court would find that the complaint states a 10 cause of action against any of the resident defendants, the federal court must 11 find that the joinder was proper and remand the case to the state court.’” Id. 12 (citing Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir. 2009) (emphasis 13 in original)). “[This] standard is similar to the ‘wholly insubstantial and frivolous’ 14 standard for dismissing claims under Rule (12)(b)(1) for lack of federal question 15 jurisdiction.” Grancare, 889 F.3d at 549–50. “A defendant invoking federal court 16 diversity jurisdiction on the basis of fraudulent joinder bears a ‘heavy burden’ 17 since there is a ‘general presumption against [finding] fraudulent joinder.’” Id. at 18 548 (citing Hunter, 582 F.3d at 1046). “While plaintiff may not ultimately recover 19 against [defendant], this does not mean that [defendant] was fraudulently joined. 20 In assessing whether a defendant was fraudulently joined, the court need not 21 look extensively at the merits of the claims . . .” Carrington Mortgage Services, 22 LLC, 2020 WL 3892786, at *5 (internal citation omitted). “When applying the 23 possible-claim standard for fraudulent joinder, a ‘district court must consider . . 24 . whether a deficiency in the complaint can possibly be cured by granting the 25 plaintiff leave to amend.’” Duncan Golf Management v. Nevada Youth 26 Empowerment Project, 3:23-cv-0666-ART-CSD, 2024 WL 4349454 at *2 (D. Nev. 27 Sept. 28, 2024) (quoting Grancare, 889 F.3d at 550). 28 1 III. Analysis 2 A. Joint Venture/Alter Ego 3 Mr. Yates contends that USAA CIC and USAA1 are jointly liable for all 4 claims under a theory of joint venture.2 (ECF No. 3 at 2–3.) Accordingly, he argues 5 that USAA is a proper party to this litigation, destroying diversity and mandating 6 remand. (ECF No. 11.) 7 Defendants respond that Mr. Yates has not set forth any factual allegations 8 establishing joint venture. (ECF No. 19 at 6.) Additionally, Defendants argue that 9 Mr. Yates cannot advance a viable claim of joint venture “because USAA and 10 USAA CIC are in an express and demonstrable parent-subsidiary relationship,” 11 contradicting “the existence of any joint venture between them.” (Id.) 12 Under Nevada law, a joint venture is a “contractual relationship in the 13 nature of an informal partnership wherein two or more persons conduct some 14 business enterprise, agreeing to share jointly, or in proportion to capital 15 contributed, in profits and losses.” Hook v. Giuricich, 823 P.2d 294, 296 (Nev. 16 1992) (citation omitted). 17 The Court finds that it is plausible that USAA and USAA CIC are “involved 18 in a joint venture to an extent sufficient to expose [USAA] to all policy-based 19 contractual claims and bad faith liability.” Albert H. Wohlers & Co. v. Bartgis, 969 20 P.2d 949, 959 (Nev. 1998). The Nevada Supreme Court found in Wohlers that 21 evidence to support a finding of joint venture included development of 22 promotional materials, issuing policies, billing and collecting premiums, paying 23 and adjudicating claims, and assisting in development of contractual provisions. 24 Id. 25 Mr. Yates similarly alleges, among other things, that USAA’s logo appears
26 1 The parties do not dispute that USAA is a citizen of Nevada. 27 2 Mr. Yates also advances an alter ego theory in his amended complaint. (ECF No. 3 at 3.) However, because he does not make any arguments regarding alter ego 28 in his motion to remand, the Court will not address it. (See ECF No. 11.) 1 on USAA CIC’s materials, USAA adjusted his claim, USAA employees made an 2 offer to settle Mr. Yates’s claim, USAA issues and develops USAA CIC’s policies, 3 and USAA bills and collects premiums for USAA CIC. (ECF Nos. 3 at 3; 11 at 3.) 4 Though USAA may not be the insurer and thus not a party to the contract, “under 5 Nevada law it is possible that USAA can be found to be involved in a joint venture 6 with the insurer and liable to [Mr. Yates] as alleged in the complaint.” Barbier v. 7 United Servs. Auto. Ass'n, No. 2:20-CV-00561-KJD-EJY, 2021 WL 694809, at *2 8 (D. Nev. Feb. 23, 2021).3 Additionally, Defendants have cited no case law 9 demonstrating that the existence of a parent-subsidiary relationship negates the 10 possibility of a joint venture. The Court thus finds that Mr. Yates has presented 11 enough evidence to warrant remand. 12 B. Bad Faith Liability of Third-Party Adjuster 13 Mr. Yates argues that even if no contract exists between him and USAA, he 14 could still advance bad faith claims against USAA. (ECF No. 11 at 12–14.) These 15 bad faith claims are purportedly related to his contractual and tortious breach of 16 the implied covenant of good faith and fair dealing claims against USAA as a 17 third-party adjuster. (Id.) Defendants respond that Nevada has not recognized 18 bad-faith liability claims against third-party adjusters and that Mr. Yates did not 19 advance this argument in his complaints. (ECF No. 19 at 9.) 20 As stated above, fraudulent joinder may be established “if the plaintiff fails 21 to state a cause of action against a resident defendant, and the failure is obvious 22 according to the settled rules of the state.” Morris v. Princess Cruises, Inc., 236 23 F.3d 1061, 1067 (9th Cir. 2001) (citation and internal quotations omitted). While 24 Defendants cite a District of Nevada case to show that Mr. Yates cannot maintain 25 a claim of bad-faith liability under Nevada law, they do not dispute that the 26
27 3 Though Defendants attempt to distinguish Barbier, arguing that the case fails to discuss the corporate relationship between USAA and the insurer, the Court 28 finds the case persuasive at the motion to remand stage. (ECF No. 19 at 8.) 1 || Nevada Supreme Court has never decided this issue. (ECF No. 19 at 9.) The Court 2 || is unable to conclude that there is no possibility that a state court would find 3 || that Mr. Yates can state a claim for bad-faith liability against USAA. Moreover, 4 || contrary to Defendants’ arguments, a “district court must consider . . . whether 5 || a deficiency in the complaint can possibly be cured by granting the plaintiff leave 6 || to amend.” Duncan Golf Management, 2024 WL 4349454 at *2 (quoting Grancare, 7 || 889 F.3d at 550). Thus, even if Mr. Yates failed to state a claim for bad-faith 8 || liability in his complaint, the Court finds that Mr. Yates can amend, and thus 9 || grants his motion for remand. 10 IV. Conclusion 11 IT IS THEREFORE ORDERED that Mr. Yates’s Motion to Remand (ECF No. 12 || 11) is GRANTED. 13 IT IS FURTHER ORDERED that Defendants’ Motion to Dismiss (ECF No. 6) 14 || is DENIED as moot. 15 16 Dated this 28th day of January 2026. 17 18 Aras jlosed Wn 20 UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28