Hoffman v. Cincinnati Insurance Company

CourtDistrict Court, D. Arizona
DecidedOctober 26, 2021
Docket4:21-cv-00106
StatusUnknown

This text of Hoffman v. Cincinnati Insurance Company (Hoffman v. Cincinnati Insurance Company) is published on Counsel Stack Legal Research, covering District Court, D. Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hoffman v. Cincinnati Insurance Company, (D. Ariz. 2021).

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 David Hoffman, et al., No. CV-21-00106-TUC-JCH 11 Plaintiffs, 12 v. ORDER 13 Cincinnati Insurance Company, et al., 14 Defendants.

16 Before the Court is Plaintiffs’ Motion to Remand. (Doc. 8.) The Motion is fully 17 briefed. (Docs. 11, 21.) As explained below, the Motion will be granted. 18 I. BACKGROUND 19 On July 22, 2019, Plaintiff David Hoffman suffered a traumatic brain injury and 20 other permanent injuries in a car accident. (Doc. 1-1 at 5 ¶¶ 13-16, 19-20; Doc. 6 at 3 ¶¶ 21 13-16, 19-20.) The other driver was solely at fault and had a liability insurance policy limit 22 of $100,000. (Doc. 1-1 at 5 ¶¶ 14, 23-24; Doc. 6 at 3-4 ¶¶ 14, 23-24.) David Hoffman and 23 his wife Molly (“Plaintiffs”) were insured by The Cincinnati Insurance Company 24 (“Cincinnati”) under three insurance policies that included Underinsured Motorist (“UIM”) 25 coverage with combined policy limits of $6,000,000. (Doc. 1-1 at 4 ¶¶ 6, 12; Doc. 6 at 1, 26 3 ¶¶ 6, 12.) 27 The at-fault driver’s insurance paid Plaintiffs its insured’s policy limits. (Doc. 1-1 28 at 5 ¶ 25; Doc. 6 at 4 ¶ 25.) Plaintiffs demanded that Cincinnati pay the combined 1 $6,000,000 policy limits. Plaintiffs’ demand was sent to Cincinnati adjuster Kathy Kerr 2 (“Kerr”). (Doc. 1-1 at 5-6, ¶ 26; Doc. 6 at 4 ¶ 26.) Cincinnati refused Plaintiffs’ demand 3 and the parties arbitrated Plaintiffs’ claim1 at the conclusion of which Plaintiffs were 4 awarded $2,850,000 distributed as follows: $2,750,000 to David and $100,000 to Molly. 5 (Doc. 1-1 at 7 ¶ 45; Doc. 6 at 7 ¶ 45.) 6 On February 10, 2021, Plaintiffs filed suit in Arizona Superior Court, Pima County 7 against Cincinnati and Kerr (“Defendants”) alleging that Cincinnati breached its duty of 8 good faith and fair dealing and that Kerr aided and abetted Cincinnati’s breach. (Doc. 1-1 9 at 8-10 ¶¶ 52-62, ¶¶ 66-71.) Defendants timely removed the case to this Court based on 10 diversity of citizenship pursuant to 28 U.S.C. § 1332(a). (Doc. 1.) 11 Plaintiffs and Kerr are Arizona residents. (Doc. 1-1 at 3 ¶¶ 1, 3; Doc. 6 at 1 ¶ 3.) 12 Cincinnati is an Ohio corporation with its principal place of business in Ohio. (Doc. 1-1 at 13 3 ¶ 2; Doc. 6 at 1 ¶ 2.) Plaintiffs’ claim satisfies the amount in controversy requirement. 14 (Doc. 1-1 at 10.) In their Notice of Removal, Defendants preemptively alleged that Kerr was fraudulently joined claiming that she was not the adjuster responsible for UIM portion 15 of Plaintiffs’ claim but that Gary Gluck (“Gluck”), an Ohio resident, was the adjustor 16 responsible for handling the UIM portion of the claim. (Doc. 1 at 1 ¶ 2.) 17 II. PLAINTIFFS’ MOTION TO REMAND 18 Plaintiffs move to remand arguing diversity jurisdiction is absent because Kerr 19 participated in the UIM claim handling process and she was not fraudulently joined. (Doc. 20 8 at 2-3.) They argue that Kerr was the UIM claim adjustor because her actions were 21 identical to those of a UIM claim adjustor. (Doc. 21 at 2.) Kerr testified she: (1) evaluated 22 the loss reserve of the UIM claim; (2) was the only Cincinnati employee who spoke with 23 Plaintiffs regarding their claim prior to Cincinnati retaining counsel; (3) was instructed to 24 summarize David Hoffman’s treatment and Plaintiffs’ demand; (4) was copied on almost 25 every email regarding the UIM claim; (5) authored every status report in the claim file, a 26 job that is part of an adjustor’s job; and (6) made the decision not to take Molly Hoffman’s 27

28 1 Plaintiffs’ claim appears to have included a med pay claim, an auto damage claim, and the UIM claim for which Cincinnati assigned one claim number. (Doc. 21-1 at 13.) 1 statement. (Doc. 21-1 at 4, 6-8, 10, 12-13.) Kerr testified that Cincinnati did not complete 2 an evaluation of their UIM claim because, “[t]hat was what the arbitration was for.” Id. at 3 7. She was the Cincinnati representative at the arbitration of Plaintiffs’ claim. Id. at 12. 4 Defendants urge that Kerr did not have “input as to any decision in how to conduct 5 the defense at the arbitration or whether or not to settle the claim and did not provide any 6 other assistance or encouragement with respect to the arbitration.” (Doc. 11 at 3.) They 7 argue that Kerr was only responsible for the medical payment portion of Plaintiffs’ claim 8 and that she had no responsibility for the UIM portion of the claim. Id. at 1-4. They insist 9 that Gluck set the UIM reserve and supervised the handling of the UIM claim and that Kerr 10 had no decision-making authority over the UIM claim. Id. at 2-3. 11 III. LEGAL STANDARDS 12 a. Diversity Jurisdiction 13 Federal district courts have diversity jurisdiction over a lawsuit where the amount 14 in controversy exceeds $75,000 and the citizen of each plaintiff differs from that of each defendant. See 28 U.S.C. § 1332(a). When a civil action meets these criteria and is filed in 15 a state court, the action may be removed to federal court. See 28 U.S.C. § 1441(b). An 16 exception to the complete diversity requirement exists where a non-diverse defendant has 17 been fraudulently joined. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 18 2001). 19 b. Fraudulent Joinder 20 Fraudulent joinder exists when the plaintiff “fails to state a cause of action against 21 a resident defendant, and the failure is obvious according to the settled rules of the state.” 22 Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). Where 23 joinder of a non-diverse defendant is fraudulent, the case may be removed to federal district 24 court provided that the remaining parties are completely diverse. Morris, 236 F.3d at 1067. 25 There is a “strong presumption” against removal jurisdiction and the burden of establishing 26 that removal is proper lies with the defendant; thus, all ambiguities are resolved in favor of 27 remand to state court. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). 28 “[I]f there is a possibility that a state court would find that the complaint states a 1 cause of action against any of the resident defendants, the federal court must find that the 2 joinder was proper and remand the case to the state court.” Hunter, 582 F.3d at 1046 3 (quoting Tillman v. R.J. Reynolds Tobacco, 340 F.3d 1277, 1279 (11th Cir. 2003)). 4 Moreover, where the possibility remains unclear, the defendant has not met his burden to 5 prove fraudulent joinder and remand is required. See Ward v. Travelers Pers. Ins. Co., No. 6 CV-20-01079-SPL, 2020 WL 4732153, at *2 (D. Ariz. Aug. 14, 2020). 7 While the standard for fraudulent joinder is similar to the analysis required for a 8 Rule 12(b)(6) motion to dismiss for failure to state a claim based upon which relief can be 9 granted, the two are not equivalent. Grancare, LLC v. Thrower by & through Mills, 889 10 F.3d 543, 549 (9th Cir. 2018). “A claim against a defendant may fail under Rule 12(b)(6), 11 but that defendant has not necessarily been fraudulently joined.” Id. This is because the 12 Rule 12(b)(6) standard requires plausibility while fraudulent joinder only requires the 13 possibility of sufficiently pleaded facts to state a claim to relief. Compare Bell Atl. Corp. 14 v.

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Related

Tillman v. R. J. Reynolds Tobacco
340 F.3d 1277 (Eleventh Circuit, 2003)
Bell v. Hood
327 U.S. 678 (Supreme Court, 1946)
Bell Atlantic Corp. v. Twombly
550 U.S. 544 (Supreme Court, 2007)
Hunter v. Philip Morris USA
582 F.3d 1039 (Ninth Circuit, 2009)
Hamilton Materials, Inc. v. Dow Chemical Corp.
494 F.3d 1203 (Ninth Circuit, 2007)
Burk v. Nance Petroleum Corp.
10 F.3d 539 (Eighth Circuit, 1993)
Morris v. Princess Cruises, Inc.
236 F.3d 1061 (Ninth Circuit, 2001)

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Hoffman v. Cincinnati Insurance Company, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hoffman-v-cincinnati-insurance-company-azd-2021.