1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8
Jeffrey Ward, ) No. CV-20-01079-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Travelers Personal Insurance ) 12 Company, et al., ) 13 ) ) Defendants. ) 14 ) 15
16 Before the Court is a Motion to Remand (Doc. 9) filed by Jeffrey Ward (“Plaintiff”). 17 For the reasons that follow, the Court will grant the motion and remand this case to state 18 court. 19 I. Background 20 Plaintiff owns a home in Scottsdale, Arizona (the “Property”). (Doc. 1-3 at 3) In 21 October of 2018, a wind and hailstorm caused damage to the Property. (Doc. 1-3 at 3) At 22 that time, Plaintiff had a homeowner’s insurance policy through Travelers Personal 23 Insurance Company (“Defendant Travelers”). (Doc. 1-3 at 3) Plaintiff submitted a claim to 24 Defendant Travelers for the hail damage, and Defendant Travelers valued the loss at 25 $2,310.85. (Doc. 1-3 at 3-4) Unsatisfied with the damage estimate, Plaintiff hired 26 independent parties to estimate the value of damage at the Property. (Doc. 1-3 at 4) 27 Plaintiff’s independent investigation estimated the damage to be approximately $19,000. 28 (Doc. 1-3 at 4) Plaintiff submitted the independent valuation to Defendant Travelers, and 1 Defendant Travelers increased its initial estimate to $16,463.85. (Doc. 1-3 at 5) 2 In September of 2019, Defendant Travelers retained J.S. Held LLC (“Defendant J.S. 3 Held”), a construction consulting company, to further estimate the value of the repairs at 4 the Property. (Doc. 1-3 at 5) Although Plaintiff believed that the hail damage to his stucco 5 roof required $374,146.53 in repairs, Defendant Travelers—after consulting with 6 Defendant J.S. Held—maintained that the roof damage was caused by oxidation and not 7 physical damage from the hail. (Doc. 1-3 at 6) On February 5, 2020, Defendant Travelers 8 issued a denial letter to Plaintiff, stating that much of the damage to the Property was not 9 caused by the hailstorm. (Doc. 1-3 at 8) 10 On May 1, 2020, Plaintiff filed this case in the Maricopa County Superior Court, 11 arguing that Defendant Travelers had breached its duty of good faith and fair dealing by 12 “lowballing” its damage estimate. (Doc. 1-3 at 10-11) Plaintiff also alleged a claim for 13 tortious bad faith in handling the insurance claim. (Doc. 1-3 at 12) Plaintiff further alleged 14 that Defendant J.S. Held (and its employee) illegally aided and abetted Plaintiff by failing 15 to conduct a formal inspection of the Property and failing to present a written report and 16 estimate using software programs that are customary in the insurance industry to calculate 17 the estimates. (Doc. 1-3 at 9, 13-14) 18 On June 2, 2020, Defendant Travelers removed the case to this Court pursuant to 28 19 U.S.C. § 1441(b), claiming diversity jurisdiction under 28 U.S.C. § 1332. (Doc. 1) Plaintiff 20 now moves to remand this action back to state court for lack of subject matter jurisdiction 21 and seeks an award of attorneys’ fees and costs. (Doc. 9) The motion is fully briefed and 22 ready for review. (Docs. 9, 11, 14) 23 II. Legal Standard 24 Any civil action brought in state court over which the federal district courts have 25 original jurisdiction may be removed to the federal district court for the district where the 26 action is pending. 28 U.S.C. § 1441(a). However, there is a “strong presumption” against 27 removal and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of 28 removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The 1 “defendant always has the burden of establishing that removal is proper.” Id. 2 For purposes of diversity jurisdiction under 28 U.S.C. § 1332, each plaintiff must 3 be of a different citizenship from each defendant. “In determining whether there is 4 complete diversity, district courts may disregard the citizenship of a non-diverse defendant 5 who has been fraudulently joined.” Grancare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 6 2018) (citation omitted). A defendant may establish fraudulent joinder by showing actual 7 fraud in the pleading of jurisdictional facts. Id. Alternatively, a defendant may establish 8 fraudulent joinder by showing an inability of the plaintiff to establish a viable cause of 9 action against the non-diverse party under state law. Id. “But if there is a possibility that a 10 state court would find that the complaint states a cause of action against any of the resident 11 defendants, the federal court must find that the joinder was proper and remand the case to 12 the state court.” Id. (internal quotations and citation omitted) (emphasis in the original). 13 III. Discussion 14 A. Aiding and Abetting Claim 15 Plaintiff argues that his aiding and abetting claim against Defendant J.S. Held could 16 possibly prevail under Arizona law, and therefore, Defendant Travelers fails to meet the 17 standard required to prove fraudulent joinder. (Doc. 9 at 6) In response, Defendant 18 Travelers asserts that a 2012 unpublished opinion from the Arizona Court of Appeals, 19 Bennett v. Insurance Company of State of Pennsylvania, No. 1 CA-CV 10-0815, 2012 WL 20 424913, at *8 (Ariz. Ct. App. Feb. 9, 2012), definitively establishes that aiding and abetting 21 an insurer’s alleged bad faith is not a viable cause of action under Arizona law because 22 consultants to an insurer cannot aid, abet, or conspire with the insurer to commit bad faith. 23 (Doc. 11 at 5-8) In the alternative, Defendant Travelers argues that even if aiding and 24 abetting is a recognized claim, Plaintiff has failed to plead a necessary element of his claim. 25 Citing Ortiz v. Zurich American Insurance Company, No. CV-13-02097-PHX-JAT, 2014 26 WL 1410433, *3 (D. Ariz. Apr. 11, 2014), Defendant Travelers further asserts that rulings 27 within the District of Arizona consistently conclude that there can be no aiding and abetting 28 claim against an insurer’s consultant in the absence of a separate tortious act by the 1 consultant. (Doc. 11 at 9) 2 Defendant Travelers cites cases from various federal districts in support of its 3 position, but Defendant ignores Chukly v. American Family Mutual Insurance Company, 4 No. CV-17-0088-TUC-RCC (LCK), 2017 WL 5952759 (D. Ariz. June 7, 2017). There, a 5 magistrate judge offered a report and recommendation in a case comparable to the facts 6 present here. The magistrate judge explained: 7 This Court has been presented with motions seeking dismissal of aiding and 8 abetting claims brought [under Arizona law] against adjusters numerous 9 times in the last ten years. In all of the cases, the actions of the adjuster 10 significantly (if not entirely) overlapped with the actions alleged as the basis 11 for the bad faith claim against the insurer. Despite the factual similarity in 12 the cases, the Court found the facts were sufficient to state a claim for aiding 13 and abetting only about half the time. The cases dismissing the aiding and 14 abetting claim found a separate tortious act by the adjuster was necessary and 15 had not been pled; the cases allowing the aiding and abetting claim 16 determined that pleading the elements of aiding and abetting by the adjuster 17 was sufficient without identifying two distinct tortious acts. 18 Id. at *3.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8
Jeffrey Ward, ) No. CV-20-01079-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Travelers Personal Insurance ) 12 Company, et al., ) 13 ) ) Defendants. ) 14 ) 15
16 Before the Court is a Motion to Remand (Doc. 9) filed by Jeffrey Ward (“Plaintiff”). 17 For the reasons that follow, the Court will grant the motion and remand this case to state 18 court. 19 I. Background 20 Plaintiff owns a home in Scottsdale, Arizona (the “Property”). (Doc. 1-3 at 3) In 21 October of 2018, a wind and hailstorm caused damage to the Property. (Doc. 1-3 at 3) At 22 that time, Plaintiff had a homeowner’s insurance policy through Travelers Personal 23 Insurance Company (“Defendant Travelers”). (Doc. 1-3 at 3) Plaintiff submitted a claim to 24 Defendant Travelers for the hail damage, and Defendant Travelers valued the loss at 25 $2,310.85. (Doc. 1-3 at 3-4) Unsatisfied with the damage estimate, Plaintiff hired 26 independent parties to estimate the value of damage at the Property. (Doc. 1-3 at 4) 27 Plaintiff’s independent investigation estimated the damage to be approximately $19,000. 28 (Doc. 1-3 at 4) Plaintiff submitted the independent valuation to Defendant Travelers, and 1 Defendant Travelers increased its initial estimate to $16,463.85. (Doc. 1-3 at 5) 2 In September of 2019, Defendant Travelers retained J.S. Held LLC (“Defendant J.S. 3 Held”), a construction consulting company, to further estimate the value of the repairs at 4 the Property. (Doc. 1-3 at 5) Although Plaintiff believed that the hail damage to his stucco 5 roof required $374,146.53 in repairs, Defendant Travelers—after consulting with 6 Defendant J.S. Held—maintained that the roof damage was caused by oxidation and not 7 physical damage from the hail. (Doc. 1-3 at 6) On February 5, 2020, Defendant Travelers 8 issued a denial letter to Plaintiff, stating that much of the damage to the Property was not 9 caused by the hailstorm. (Doc. 1-3 at 8) 10 On May 1, 2020, Plaintiff filed this case in the Maricopa County Superior Court, 11 arguing that Defendant Travelers had breached its duty of good faith and fair dealing by 12 “lowballing” its damage estimate. (Doc. 1-3 at 10-11) Plaintiff also alleged a claim for 13 tortious bad faith in handling the insurance claim. (Doc. 1-3 at 12) Plaintiff further alleged 14 that Defendant J.S. Held (and its employee) illegally aided and abetted Plaintiff by failing 15 to conduct a formal inspection of the Property and failing to present a written report and 16 estimate using software programs that are customary in the insurance industry to calculate 17 the estimates. (Doc. 1-3 at 9, 13-14) 18 On June 2, 2020, Defendant Travelers removed the case to this Court pursuant to 28 19 U.S.C. § 1441(b), claiming diversity jurisdiction under 28 U.S.C. § 1332. (Doc. 1) Plaintiff 20 now moves to remand this action back to state court for lack of subject matter jurisdiction 21 and seeks an award of attorneys’ fees and costs. (Doc. 9) The motion is fully briefed and 22 ready for review. (Docs. 9, 11, 14) 23 II. Legal Standard 24 Any civil action brought in state court over which the federal district courts have 25 original jurisdiction may be removed to the federal district court for the district where the 26 action is pending. 28 U.S.C. § 1441(a). However, there is a “strong presumption” against 27 removal and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of 28 removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The 1 “defendant always has the burden of establishing that removal is proper.” Id. 2 For purposes of diversity jurisdiction under 28 U.S.C. § 1332, each plaintiff must 3 be of a different citizenship from each defendant. “In determining whether there is 4 complete diversity, district courts may disregard the citizenship of a non-diverse defendant 5 who has been fraudulently joined.” Grancare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 6 2018) (citation omitted). A defendant may establish fraudulent joinder by showing actual 7 fraud in the pleading of jurisdictional facts. Id. Alternatively, a defendant may establish 8 fraudulent joinder by showing an inability of the plaintiff to establish a viable cause of 9 action against the non-diverse party under state law. Id. “But if there is a possibility that a 10 state court would find that the complaint states a cause of action against any of the resident 11 defendants, the federal court must find that the joinder was proper and remand the case to 12 the state court.” Id. (internal quotations and citation omitted) (emphasis in the original). 13 III. Discussion 14 A. Aiding and Abetting Claim 15 Plaintiff argues that his aiding and abetting claim against Defendant J.S. Held could 16 possibly prevail under Arizona law, and therefore, Defendant Travelers fails to meet the 17 standard required to prove fraudulent joinder. (Doc. 9 at 6) In response, Defendant 18 Travelers asserts that a 2012 unpublished opinion from the Arizona Court of Appeals, 19 Bennett v. Insurance Company of State of Pennsylvania, No. 1 CA-CV 10-0815, 2012 WL 20 424913, at *8 (Ariz. Ct. App. Feb. 9, 2012), definitively establishes that aiding and abetting 21 an insurer’s alleged bad faith is not a viable cause of action under Arizona law because 22 consultants to an insurer cannot aid, abet, or conspire with the insurer to commit bad faith. 23 (Doc. 11 at 5-8) In the alternative, Defendant Travelers argues that even if aiding and 24 abetting is a recognized claim, Plaintiff has failed to plead a necessary element of his claim. 25 Citing Ortiz v. Zurich American Insurance Company, No. CV-13-02097-PHX-JAT, 2014 26 WL 1410433, *3 (D. Ariz. Apr. 11, 2014), Defendant Travelers further asserts that rulings 27 within the District of Arizona consistently conclude that there can be no aiding and abetting 28 claim against an insurer’s consultant in the absence of a separate tortious act by the 1 consultant. (Doc. 11 at 9) 2 Defendant Travelers cites cases from various federal districts in support of its 3 position, but Defendant ignores Chukly v. American Family Mutual Insurance Company, 4 No. CV-17-0088-TUC-RCC (LCK), 2017 WL 5952759 (D. Ariz. June 7, 2017). There, a 5 magistrate judge offered a report and recommendation in a case comparable to the facts 6 present here. The magistrate judge explained: 7 This Court has been presented with motions seeking dismissal of aiding and 8 abetting claims brought [under Arizona law] against adjusters numerous 9 times in the last ten years. In all of the cases, the actions of the adjuster 10 significantly (if not entirely) overlapped with the actions alleged as the basis 11 for the bad faith claim against the insurer. Despite the factual similarity in 12 the cases, the Court found the facts were sufficient to state a claim for aiding 13 and abetting only about half the time. The cases dismissing the aiding and 14 abetting claim found a separate tortious act by the adjuster was necessary and 15 had not been pled; the cases allowing the aiding and abetting claim 16 determined that pleading the elements of aiding and abetting by the adjuster 17 was sufficient without identifying two distinct tortious acts. 18 Id. at *3. After reviewing several cases within the District of Arizona, the magistrate judge 19 concluded that “it is not obvious to the Court that [p]laintiffs have failed to state a claim 20 under Arizona law.” Id. at *4. The District Court ultimately adopted the magistrate judge’s 21 recommendation and remanded the case back to the Arizona state court. Chukly v. Am. 22 Family Mut. Ins. Co., No. CV-17-0088-TUC-RCC (LCK), 2017 WL 3262541 (D. Ariz. 23 Aug. 1, 2017). 24 Defendant Travelers has not identified a published Arizona Supreme Court or 25 Arizona Court of Appeals case since Chukly that clarifies a claim for aiding and abetting 26 in the context of insurance bad faith. It remains unclear whether Plaintiff has sufficiently 27 stated a claim for aiding and abetting against Defendant J.S. Held under Arizona law, and 28 therefore, this Court finds that Defendant Travelers has not met its burden to prove 1 fraudulent joinder. This case shall be remanded back to the Maricopa County Superior 2 Court. See Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (stating that 3 the burden is on the defendant to establish federal jurisdiction, and removal jurisdiction is 4 strictly construed by federal courts). 5 B. Attorneys’ Fees 6 Plaintiff argues that it is entitled to attorneys’ fees pursuant to 28 U.S.C. § 1447(c) 7 because Defendant Travelers did not have an “objectively reasonable basis” for removal. 8 (Doc. 9 at 6) The Court agrees remand is warranted but does not find that there was no 9 objectively reasonable argument for removal. The courts within this District have 10 interpreted claims for aiding and abetting in different fashions, and it is objectively 11 reasonable to argue that the complaint in this case does not state a claim against Defendant 12 J.S. Held. Thus, although Defendants have failed to satisfy the heavy burden of proving 13 fraudulent joinder for purposes of removal, the Court does not conclude that attorneys’ fees 14 should be awarded. 15 C. Remaining Motions 16 Because this case will be remanded, all the remaining motions before this Court are 17 denied as moot. The Court recognizes that the parties have an outstanding joint discovery 18 dispute. (Doc. 26) Defendants are requesting that the Court bar Plaintiff’s impending sale 19 of the Property. However, Defendants have not filed a temporary restraining order, 20 preliminary injunction, or any other motion that would allow this Court to provide legal 21 relief in this case. Therefore, the case will be remanded without addressing the discovery 22 dispute. 23 Accordingly, 24 IT IS ORDERED that Plaintiff’s Motion to Remand (Doc. 9) is granted. 25 IT IS FURTHER ORDERED that Defendant J.S. Held’s Motion to Dismiss (Doc. 26 10), Defendant J.S. Held’s Motion for Summary Adjudication (Doc. 13), Plaintiff’s Motion 27 to Strike (Doc. 12), and Defendants David Loucado and Jane Doe Loucado’s Motion to 28 Dismiss (Doc. 24) are denied as moot. ] IT IS FURTHER ORDERED that the Clerk of Court shall remand this case to the 2 Maricopa County Superior Court and terminate this action. 3 Dated this 13th day of August, 2020. 4
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