Hunt v. Auto-Owners Ins. Co.
| Decision Date | 10 June 2015 |
| Docket Number | Case No. 2:15-cv-00520-JCM-NJK |
| Parties | RANDALL HUNT, Plaintiff(s), v. AUTO-OWNERS INSURANCE COMPANY, et al., Defendant(s). |
| Court | U.S. District Court — District of Nevada |
Presently before the court is plaintiff Randall K. Hunt's ("plaintiff") motion to remand. (Doc. # 8). Defendants Auto-Owners Insurance Company, Owners Insurance Company, and Auto-Owners Insurance Group (collectively "defendants") filed a response, (doc. # 10), and plaintiff filed a reply, (doc. # 12).
Also before the court is defendants' motion to dismiss for lack of personal jurisdiction. (Doc. # 11). Plaintiff filed a response, (doc. # 14), and defendants filed a reply, (doc. # 19).
The instant action arises out of an insurance dispute. On April 25, 2013, in Clark County, Nevada, plaintiff was driving a motorcycle when an unidentified vehicle pulled in front of him. Plaintiff swerved to avoid the vehicle and lost control of his motorcycle. The motorcycle fell on its side and skidded for over 100 feet, causing plaintiff severe injuries. Plaintiff received treatment for his injuries, and continues to require medical care. (Doc. # 1-2).
At the relevant time, plaintiff possessed an automobile insurance policy with defendants. Plaintiff is a resident of Utah, and defendants are Michigan corporations licensed to do business in the state of Nevada. (Doc. # 1-2). Following the accident, plaintiff requested payment of hisuninsured/underinsured motorist policy limit. Defendants refused to reimburse plaintiff pursuant to the policy. (Doc. # 1-2).
As a result of the foregoing, on February 10, 2015, plaintiff sued defendants in Nevada state court for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and unfair claims practices. Plaintiff seeks general, special, and punitive damages, as well as attorney's fees and costs. (Doc. # 1-2). On March 20, 2015, defendants removed the case to this court on diversity grounds. (Doc. # 1). The parties then filed the instant motions.
For a district court to have diversity jurisdiction under 28 U.S.C. § 1332, the parties must be completely diverse and the amount in controversy must exceed $75,000. See 28 U.S.C. § 1332(a); Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1098 (9th Cir. 2003).
Under 28 U.S.C. § 1441, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a).
Removal of a case to a United States district court may be challenged by motion. 28 U.S.C. § 1441(c). A federal court must remand a matter if there is a lack of jurisdiction. Id. Removal statutes are construed restrictively and in favor of remanding a case to state court. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
On a motion to remand, the removing defendant faces a strong presumption against removal, and bears the burden of establishing that removal is proper. Gaus, 980 F.2d at 566-67; Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996).
To avoid dismissal for lack of personal jurisdiction on the pleadings, a plaintiff bears the burden of demonstrating that his or her allegations would establish a prima facie case for personal jurisdiction. See Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). A plaintiff mustdemonstrate jurisdiction over each defendant individually. Sher v. Johnson, 911 F.2d 1357, 1365 (9th Cir. 1990). However, allegations in the plaintiff's complaint must be taken as true and factual disputes should be construed in the plaintiff's favor. Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002).
Nevada has authorized its courts to exercise jurisdiction over persons "on any basis not inconsistent with . . . the Constitution of the United States." Nev. Rev. Stat. § 14.065. An assertion of personal jurisdiction must comport with due process. See Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012). For specific jurisdiction, a plaintiff must demonstrate that each nonresident defendant has at least "minimum contacts" with the relevant forum. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004).
The Ninth Circuit has established a three-prong test for analyzing an assertion of specific personal jurisdiction:
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable.
Id. at 802. Id. (internal citations omitted).
"The purposeful availment prong of the minimum contacts test requires a qualitative evaluation of the defendant's contact with the forum state, in order to determine whether [the defendant's] conduct and connection with the forum State are such that [the defendant] should reasonably anticipate being haled into court there." Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1130 (9th Cir. 2003) (citations omitted) (internal quotation marks omitted).
Plaintiff contends that the direct action provision of 28 U.S.C. § 1332(c)(1) defeats diversity of citizenship in this case, such that remand is necessary. (Doc. # 8). As defendants note, plaintiff misreads this statute and downplays the effect of the controlling case law that interprets it.
28 U.S.C. § 1332(c)(1) provides, in relevant part:
[A] corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business, except that in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of . . . every State and foreign state of which the insured is a citizen
28 U.S.C. § 1332(c)(1).
The Ninth Circuit has specifically held that this provision does not apply to a bad faith action by an insured against his insurer. See Searles v. Cincinnati Ins. Co., 998 F.2d 728, 730 (9th Cir. 1993); Beckham v. Safeco Ins. Co. of Am., 691 F.2d 898, 901-02 (9th Cir. 1982); see also Vargas v. Cal. State Auto. Ass'n Inter-Ins. Bureau, 788 F.Supp. 462, 464 (9th Cir. 1992) ().
The above statutory section was enacted in response to state "direct action" laws. Beckham, 691 F.2d at 901. These laws allow an injured party to sue a tortfeasor's insurer without joining the tortfeasor as a defendant. Id. The direct action provision of 28 U.S.C. § 1332(c)(1)(A) eliminates these tort suits from diversity jurisdiction in cases where both the injured party and the insured tortfeasor are citizens of the same state. Id.
Accordingly, the Ninth Circuit has held that 28 U.S.C. § 1332(c)(1) defeats diversity jurisdiction only where "the cause of action urged against the insurance company is of such a nature that the liability sought to be imposed could be imposed against the insured . . . ." Id. at 902 (citation and quotation marks omitted). In Beckham, the Ninth Circuit concluded that becausethe plaintiff was suing the defendant insurer for its own bad faith rather than its insured's conduct, the district court properly found that diversity jurisdiction was present. Id.
Moreover, in Searles, the Ninth Circuit reversed the district court's dismissal without prejudice for lack of diversity jurisdiction in an insured's action against his own liability insurer. 998 F.2d at 728. In doing so, the court reiterated its interpretation in Beckham that "a bad faith action brought by an insured against the insurer is not a direct action within the meaning of 28 U.S.C. § 1332(c)(1)." Searles, 998 F.2d at 730 (internal quotation marks omitted).
Plaintiff brought the instant action against defendants for breach of contract and bad faith relating to his own insurance policy. (Doc. # 1-2). Because plaintiff could not bring the same claims against any alleged tortfeasor, the court finds that 28 U.S.C. § 1332(c)(1) does not defeat the parties' diversity of citizenship.
In support of his contrary reading of the statute, plaintiff cites Chavarria v. Allstate Insurance Company, 749 F. Supp. 220 (C.D. Cal. 1990). Notably, plaintiff mischaracterizes this district court case as a Ninth Circuit opinion. (Doc. # 8). Chavarria holds no such weight and is not binding on this court.
Further, in Searles, the Ninth Circuit expressly disapproved of Chavarria as improperly applying the standard set forth in 28 U.S.C. § 1332(c)(1). Searles, 998 F.2d at 729 (). Accordingly, plaintiff's citation to Chavarria does not help plaintiff's case and fails to provide any rationale for remand here.
In support of his motion, plaintiff also cites the Supreme Court's decision in Northbrook National Insurance Company v. Brewer, 493 U.S. 6 (1989). Again, the Searles cour...
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