Abels v. State Farm Fire & Cas. Co., 84-3753

• Citation: 770 F.2d 26
• Decision Date: 08 August 1985
• Docket Number: No. 84-3753,84-3753
• Parties: Charles E. ABELS and Irene C. Abels, Appellants v. STATE FARM FIRE & CASUALTY COMPANY.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 26

770 F.2d 26

3 Fed.R.Serv.3d 545

Charles E. ABELS and Irene C. Abels, Appellants v. STATE FARM FIRE & CASUALTY COMPANY.

No. 84-3753.

United States Court of Appeals Third Circuit.

Argued June 12, 1985.

Decided Aug. 8, 1985.

Bruce S. Gelman, (argued), Mark B. Aronson, Pittsburgh, Pa., for appellants.

Paul K. Geer, (argued), Jones, Gregg, Creehan & Gerace, Pittsburgh, Pa., Tod M. Castronovo, Hill, Gensen, Even, Crandall & Wade, Los Angeles, Cal., for appellee.

Before HIGGINBOTHAM and BECKER, Circuit Judges and LACEY, District Judge. ^*

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, Jr., Circuit Judge.

This is an appeal from a final judgment of the United States District Court for the Western District of Pennsylvania ("the district court") 596 F.Supp. 1461, dismissing the claims of Charles and Irene Abels ("plaintiffs") against State Farm Fire & Casualty Company ("State Farm"). This lawsuit was originally filed in the Superior Court of the State of California, County of Los Angeles, was then removed to the United States District Court for the Central District of California, and finally was transferred to the district court. Because we find that federal subject matter jurisdiction was lacking at the time of removal, we will vacate the judgment of dismissal and remand to the district court with instructions that the case be further remanded to the Superior Court of California.

I.

This case arises out of a fire that destroyed plaintiffs' home in Beaver Falls, Pennsylvania on October 19, 1981. According to plaintiffs, they had vacated the house, which was up for sale, on October 11, 1981, and they first learned of the fire on October 22 upon their arrival in California, where they had gone to "start a new life". At the time of the fire the house was insured by State Farm under a homeowner's policy purchased in 1979.

In November of 1981 plaintiffs filed a claim under the policy. On August 31, 1982 State Farm notified plaintiffs that it denied liability for various reasons, including its belief that the fire was incendiary in origin and that it was caused by the insureds. Plaintiffs filed suit in the Superior Court of California on December 2, 1982.

                The complaint stated three causes of action sounding in tort against State Farm:  breach of duty of fair dealing and good faith;  breach of fiduciary duties;  and breach of statutory duties (unfair insurance practices) under Cal.Ins.Code Sec. 790.03 (West Supp.1984).  The statutory count also named as defendants "Does 1 through 10", and identified them as "employees and agents of [State Farm] who were responsible for processing plaintiffs' claim for benefits under the fire insurance policy which is the subject matter of this action."    The Does were alleged to be citizens of California.  On February 9, 1983, State Farm removed the case to federal district court in Los Angeles on a petition alleging diversity of citizenship.  Plaintiffs' first motion to remand for lack of diversity was denied
                

Once in federal court, State Farm promptly moved under 28 U.S.C. Sec. 1404 (1982) for transfer to the Western District of Pennsylvania, contending that all relevant documents and all witnesses, except the plaintiffs, were there. The motion for transfer was initially denied. Plaintiffs then moved to amend their complaint to name as defendants a State Farm employee and an attorney who allegedly participated in the investigation and denial of their claim. Both were alleged to be California citizens, and plaintiffs accordingly moved to remand because the amendment would destroy diversity.

Without ruling on plaintiffs' motions to amend and to remand, the district court in Los Angeles, on its own motion, reconsidered its earlier ruling and transferred the case to the Western District of Pennsylvania. Plaintiffs petitioned the United States Court of Appeals for the Ninth Circuit for a writ of mandamus or prohibition to prevent the transfer. A two-judge panel denied relief, stating that they doubted that there was jurisdiction in the Ninth Circuit once the files had been physically transferred, and noting in the alternative that the transfer was not "clearly erroneous". ¹ Plaintiffs then moved the district court for transfer back to the Central District of California, or, alternatively, remand to the California state court, again alleging lack of diversity. Because it felt that this would entail reviewing the decision of another district court, the court below denied the motion.

State Farm then filed a motion to dismiss, relying on the 12-month limitation of suit provision in the insurance policy. Plaintiffs contended that under California law this provision would not bar their suit. The district court, however, found that Pennsylvania law governed, and that plaintiffs' claims were time-barred. The district court also held that even if California law applied, the suit would be time-barred. In this appeal plaintiffs argue (1) that there is no federal subject matter jurisdiction over this case, (2) that the district court in Los Angeles abused its discretion in failing to rule on their motions to amend the complaint and to remand, and in transferring the case to Pennsylvania, ² and (3) that the district court here erred in applying Pennsylvania law and in finding their claims time-barred.

II.

The threshold question before us is whether there is federal subject matter jurisdiction over this case. State Farm contends that federal jurisdiction exists by virtue of the parties' complete diversity of citizenship, and that the case was properly removed to federal court pursuant to 28 U.S.C. Sec. 1441. The plaintiffs are alleged to be citizens of California, and State Farm is alleged to be incorporated and have its principal place of business in Illinois. We must decide what effect, if any, is to be given the joinder of ten fictitiously named "Doe" defendants, all alleged to be citizens of California. This appears to be a question of first impression for this court.

We are mindful of a number of general principles that should guide the exercise of the federal courts' removal jurisdiction. Because lack of jurisdiction would make any decree in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts should be resolved in favor of remand. 14 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3642, at 149 (2d ed. 1985) [hereinafter cited as Federal Practice ]; Wood v. Home Insurance Company, 305 F.Supp. 937, 938 (C.D.Cal.1969). The defendant's right to remove is to be determined according to the plaintiffs' pleading at the time of the petition for removal, and it is the defendant's burden to show the existence of federal jurisdiction. Pullman Company v. Jenkins, 305 U.S. 534, 537, 540, 59 S.Ct. 347, 348, 350, 83 L.Ed. 334 (1939). In determining whether diversity jurisdiction exists, the citizenship of purely "nominal" parties may be disregarded. 13B Federal Practice Sec. 3606, at 409 (2d ed. 1984).

Pullman Company v. Jenkins, supra, establishes that the presence of fictitiously named defendants in a state court complaint may, in certain circumstances, defeat diversity jurisdiction upon a petition for removal. ³ In that case the Pullman Company and a Pullman porter designated "John Doe One" were charged with negligence in permitting a disorderly passenger to board a train. As here, the plaintiffs were citizens of California and the defendant company a citizen and resident of Illinois. The complaint contained no allegation as to the unnamed porter's citizenship. Nonetheless, the Supreme Court held that diversity of citizenship was not present, and that remand to state court was required. The Court stressed that the Doe defendant's "relation to the Pullman Company and his negligence as its servant were fully alleged" and that therefore the "Company was bound to show that he was a non-resident in order to justify removal." 305 U.S. at 540, 59 S.Ct. at 350. The Court further noted that "[i]n the instant case there was no charge that the joinder was fraudulent. On the motion to remand it appeared that the Pullman porter, identified as Meyers, was a resident of California and had then been served with process." 305 U.S. at 541, 59 S.Ct. at 351. Pullman suggests to us a two-step analysis for determining whether the Doe defendants destroy diversity in this case. First we must ask whether, on the face of the complaint, there are sufficient allegations concerning their identity and conduct to justify consideration of their citizenship. Second, we must look beyond the face of the complaint for indicia of fraudulent joinder. In carrying out this analysis, we are greatly aided by the scholarly commentary, ⁴ and voluminous

case law ⁵ that the practice of pleading Doe defendants has generated.

A. Sufficiency of the Allegations

In determining whether allegations against a Doe defendant are sufficient on their face to destroy diversity, courts have looked for "some clue who the Doe might be, how the Doe might fit into the charging allegations, or how the Doe might relate to other parties." Hartwell Corporation v. Boeing Company, 678 F.2d 842, 843 (9th Cir.1982). The purpose of this inquiry is to determine whether the Does, though unnamed, are "real", or whether they are "shams" that have been inserted into the complaint out of "superstition" rather than any actual hope of obtaining a judgment. See Grigg v. Southern Pacific Company, 246 F.2d 613, 620 (9th Cir.1957) ("Certainly their phantoms, when Does live not and are accused of nothing, should not divert the course of justice."). Under this approach, "[a] plaintiff who wishes to sue unnamed defendants must articulate with greater particularity than notice pleading might otherwise demand the claimed involvement, capacity, and perhaps physical characteristics of the Doe defendants, or risk removal to federal court." Herrera v. Exxon Corporation, ...