Padilla v. Geico Gen. Ins. Co.
| Decision Date | 26 January 2021 |
| Docket Number | No. 20-CV-00633-MV-LF,20-CV-00633-MV-LF |
| Parties | VERONICA PADILLA, Plaintiff, v. GEICO GENERAL INSURANCE COMPANY; RANDI SPARKS; MICHAEL HENDERSON; GEICO INSURANCE AGENT JAY LAPIERRE; GEICO INSURANCE AGENT DON BROWN; GEICO INSURANCE AGENT EDUARDO LEMUS; and JOHN AND JANE DOES 1-10, Defendants. |
| Court | U.S. District Court — District of New Mexico |
THIS MATTER is before the Court on Plaintiff Veronica Padilla's ("Plaintiff's") Motion and Supporting Memorandum to Remand to State District Court. Doc. 13. Defendants GEICO General Insurance Company, Randi Sparks, and Michael Henderson ("Defendants") filed a response in opposition [Doc. 17] and Plaintiff filed a reply [Doc. 26]. Having considered the briefs, exhibits, relevant law, and being otherwise fully informed, the Court finds that the motion is well-taken and will be GRANTED. The Court will accordingly remand the case back to the First Judicial District Court pursuant to 28 U.S.C. §§ 1447(c) and (e).
After Plaintiff filed this case in New Mexico state court, Defendants removed it to this Court under 28 U.S.C. §§ 1332, 1441(a), and 1446 on the basis of federal diversity jurisdiction. See Doc. 1. Defendants argued that the removal satisfied § 1332's complete diversity requirement because Jay Lapierre, a non-diverse defendant named in Plaintiff's First Complaint, was fraudulently joined and should be disregarded. Id. at 4. For support, Defendants attached an affidavit stating that Mr. Lapierre was not involved in the sale of the insurance policy that forms the basis of Plaintiff's claims; instead, the affidavit names Don Brown and Eduardo Lemus as the relevant GEICO employees involved in the sale. Id. at Ex. B.
Armed with this new information, Plaintiff filed an Amended Complaint joining Mr. Brown and Mr. Lemus as defendants. Doc. 12. She then moved to remand the case back to state court because, like Mr. Lapierre, Mr. Brown and Mr. Lemus are citizens of New Mexico whose joinder defeats complete diversity and thus this Court's federal subject-matter jurisdiction [Doc. 13]. In opposing the requested remand, Defendants do not argue that Mr. Brown and Mr. Lemus were improperly joined; instead, they argue that the Court should ignore the Amended Complaint altogether and only consider whether federal jurisdiction existed at the time they removed the case. See Doc. 17. But that argument overlooks 28 U.S.C. § 1447, which requires a case removed to federal court to be remanded to state court if "at any time before final judgment it appears that the district court lacks subject matter jurisdiction" and which explicitly allows district courts to "permit joinder and remand [an] action to the State court" from which it was removed if "after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction." 28 U.S.C. §§ 1447(c) and (e). Because Plaintiff properly joined Mr. Brown and Mr. Lemus as defendants in her Amended Complaint, and because their presence destroys the complete diversity upon which Defendants relied in removing this case to federal court, the Court will remand the case back to state court under 28 U.S.C. §§ 1447(c) and (e).
On May 7, 2020, Plaintiff filed her First Complaint in the First Judicial District Court in Santa Fe. Doc. 1 Ex. A. The First Complaint alleges the following: Plaintiff is a New Mexico resident who purchased a car insurance policy from GEICO General Insurance Company("GEICO"). Id. at 1-2. On November 17, 2017, Plaintiff and her husband, Thomas Padilla, were driving on Unser Boulevard Northwest in Albuquerque when they were rear-ended by another driver, Mireya Guadalupe Garcia, who was driving a vehicle owned and insured by an individual named Carlos Zazueta Gutierrez. Id. at 5. Ms. Garcia negligently and/or recklessly caused the accident and as a result Plaintiff suffered property damage to her vehicle as well as serious injuries for which she required medical care. Id. at 6. Ms. Garcia and Mr. Gutierrez had car insurance through the Hallmark Insurance Company, but they were "grossly underinsured" because their liability coverage was limited to $25,000 per person and $50,000 per occurrence. Id. at 7. And although Plaintiff's injuries extended "far beyond" the limits of Ms. Garcia and Mr. Gutierrez's insurance policy, Hallmark Insurance tendered only $25,000, the applicable policy maximum, to Plaintiff in resolution of her claims. Id.
The First Complaint continues that on March 5, 2020, Plaintiff notified GEICO of the situation and asked it to assent to her $25,000 settlement with Hallmark. Id. GEICO assented four days later, and as a result Plaintiff accepted the settlement, "thereby placing her trust in Defendant GEICO to make her whole within the terms of her policy insurance and pursuant to her Underinsured coverage limits." Id. After the resolution of the underlying claims with Hallmark, however, GEICO "failed to promptly or adequately evaluate [Plaintiff's] claims for serious personal injuries and punitive damages emanating from the underlying crash;" it "willfully, intentionally, and/or deliberately undervalued Plaintiff's claims, for a corporate profit motive;" it "acted unreasonably thereby exercising frivolous or unfounded refusal to pay a valid claim for UM/UIM motorist benefits;" and it "failed to act in good faith and deal honestly and fairly with the insured, forcing Plaintiff to institute lawsuit for breach of contract and insurance bad faithagainst GEICO for violation of the insurers' Contractual, Common Law and Statutory duties." Id. at 8-9.
Plaintiff's First Complaint ultimately states seven claims: (1) Breach of Contract and Fiduciary Duties Arising Therefrom; (2) Claim for Underinsured Motorist Benefits; (3) Insurance Bad Faith; (4) Breach of the Implied Covenant of Good Faith and Fair Dealing; (5) Violation of the Trade Practices and Frauds Act (Article 16) of the Insurance Code ("TPFA") & NMSA Unfair Claims Practices Act (UIPA) § 59A-16-20 et. seq.; (6) Violation of Unfair Trade Practices (Article 12) & NMSA Unfair Practices Act (UPA) § 57A-12-1 et. seq.; and (7) Negligent Misrepresentation.1 Id. at 17-33. As defendants, the First Complaint names GEICO; GEICO claim representatives Randi Sparks and Michael Henderson; GEICO Agent Jay Lapierre, who is a New Mexico resident; and John Does 1-10, who are "presently unknown entities, employees, adjusters, claim representatives, individuals, agents, contractors, employers, or subsidiaries of Defendant GEICO." Id. at 1-4. For relief, Plaintiff requests compensatory, exemplary, and punitive damages; treble damages under NMSA 1978, § 57-12-10(B) and any and all damages permitted under NMSA 1978, §§ 57-12-1 through 26; costs and expenses, including attorney's fees; pre- and post-judgment interest; and any other relief the court deems necessary and appropriate. Id. at 33-34.
On July 1, 2020, Defendants GEICO and Michael Henderson filed a Notice of Removal removing the case from the First Judicial District Court to this Court under 28 U.S.C. §§ 1332, 1441(a), and 1446. Doc. 1 at 1. The Notice submits that this Court has subject-matter jurisdictionover the case pursuant to § 1332 because the amount in controversy exceeds $75,000 and because "complete diversity exists among the properly-joined parties." Id. at 2. With regard to complete diversity, the Notice represents that defendants GEICO, Michael Henderson, and Randi Sparks are citizens of states other than Plaintiff's home state of New Mexico and that the New Mexico citizenship of defendant Jay Lapierre "may be disregarded for purposes of diversity" because Mr. Lapierre was fraudulently joined as a defendant in the lawsuit. Id. at 3-4. More specifically, the Notice argues that there is "no basis in fact or law for Plaintiffs [sic] to assert any claims against Defendant Jay Lapierre" because Plaintiff did not purchase her GEICO insurance policy from him. Id. at 5. Instead, according to an affidavit Defendants attached to the Notice of Removal as Exhibit B, a GEICO field representative named Don Brown sold Plaintiff's policy to her in 2013 and another GEICO employee named Eduardo Lemus took payment for the policy. Id. at Ex. B. at 2.
On July 17, 2020, just over two weeks after Defendants filed their Notice of Removal and approximately 17 days after Plaintiff was served with an Answer to her First Complaint by Defendants GEICO and Michael Henderson, Plaintiff filed an Amended Complaint. Doc. 12; see also Doc. 13 at 6. The Amended Complaint largely echoes the First Complaint but adds Mr. Brown and Mr. Lemus as defendants and incorporates them into Plaintiff's factual allegations and claims.2 See id. at 4-5. The Amended Complaint also states that Mr. Brown and Mr. Lemus are citizens of New Mexico and were residents of Albuquerque at all times relevant and material to this case. Id. at 4.
Then, on July 18, 2020, Plaintiff filed the instant motion to remand the case back to statecourt. Doc. 13. In it, Plaintiff argues that this Court lacks diversity jurisdiction over the case under § 1332 because she and "one or more of the Defendants share the same state of citizenship (New Mexico) ... and, as such, jurisdiction and venue rest with the First Judicial District Court for the State of New Mexico." Id. at 1. More specifically, Plaintiff argues that the Court lacked jurisdiction over this case at the time of removal because her First Complaint properly named a non-diverse defendant, Jay Lapierre, and that, in any event, the Court lacks jurisdiction now that her Complaint, which she amended as of a matter of course under Rule 15(a)(1)(B) of the Federal Rules of Civil Procedure, properly names two additional non-diverse defendants: Don Brown and Eduardo Lemus. Id. at 7.
In response, Defendants reiterate their argument that Mr....
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