Preaseau v. Prudential Ins. Co. of America

Citation591 F.2d 74
Decision Date15 February 1979
Docket NumberNo. 77-1665,77-1665
PartiesBillie J. PREASEAU, Plaintiff-Appellant, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Mark G. Steidlmayer (argued), of Trezza, Ithurburn, Steidlmayer & Bower, Yuba City, Cal., for plaintiff-appellant.

Forrest A. Plant (argued), of Diepenbrock, Wulff, Plant & Hannegan, Sacramento, Cal., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of California.

Before CHOY and SNEED, Circuit Judges, and KERR *, District Judge.

CHOY, Circuit Judge:

Billie Preaseau, plaintiff below, appeals from the district court's denial of her motion to remand to state court her action removed to federal court at the instance of Prudential Insurance Company of America (Prudential), defendant below. Preaseau also appeals from the federal district court's granting of Prudential's motion for summary judgment. We affirm.

I. Statement of the Case

On January 1, 1970, Prudential issued two group insurance policies to Amelco Corporation. These policies were a "Term Life Policy" which provided life insurance coverage in the amount of $30,000, and a "Personal Accident Policy" which provided for, among other benefits, accidental death benefit in the amount of $100,000. As an employee of a subsidiary of Amelco Corporation, Jesse Preaseau received a certificate indicating his status as an insured under the Amelco group policies. Jesse Preaseau designated his wife, appellant Billie Preaseau, as his beneficiary.

On June 1, 1973, Jesse Preaseau voluntarily terminated his employment with Amelco. Except for the notice in his certificate, he was not given notice of his right to convert his group life insurance coverage to individual coverage. He did not at any time ask to convert it to individual coverage.

Ninety days after his termination of employment, Jesse Preaseau died an accidental death in an automobile accident. Shortly thereafter, Prudential paid to appellant Billie Preaseau the sum of $30,000 plus interest as the beneficiary under the Term Life Policy. Prudential refused to make any payments under the Personal Accident Policy, contending that Jesse Preaseau's coverage ceased upon his termination of employment.

Billie Preaseau filed suit in California state court on June 10, 1974, seeking recovery of benefits under the Personal Accident Policy. Her complaint named as defendants Prudential, Amelco Corporation, Amelco Industries, a wholly-owned subsidiary of Amelco Corporation, and Doe I through Doe X. Following some discovery, Prudential unsuccessfully moved for summary judgment. On July 25, 1974, all the named defendants except Prudential were dismissed.

At the state court's pretrial conference on May 6, 1976, Prudential requested that either the fictitious defendants be dismissed or that the trial scheduled for May 18, 1976, be continued. Prudential's request was denied. On the morning of May 18, 1976, the fictitious defendants were dismissed. Prudential's attorneys thereupon requested a recess. After the recess they announced that they had filed a petition for removal of the action in the United States District Court for the Eastern District of California. The state court took no further action.

Billie Preaseau filed a motion in federal district court for remand of the action to California state court. This motion was denied. On February 4, 1977, the federal district court granted Prudential's motion for summary judgment. From these two rulings Billie Preaseau appeals.

II. Removal

28 U.S.C. § 1441(b) provides:

Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. All other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

(emphasis added). 28 U.S.C. § 1446(b) defines the time limitation for petitioning for removal:

The petition for removal of a civil action . . . shall be filed within thirty days after the receipt by the defendant . . . of a copy of the initial pleading setting forth the claim for relief . . . or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

If the case stated by the initial pleading is not removable, a petition for removal may be filed within thirty days after receipt by the defendant . . . of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

Appellant Preaseau argues that Prudential's petition to remove was untimely and that the matter should therefore have been remanded to state court upon Preaseau's motion. She contends that the Doe defendants named in her complaint should be ignored for the purposes of determining removability because they had not been served, so that the initial complaint manifested removability. Because Prudential's petition was filed more than 30 days after receipt of the complaint, Preaseau concludes it was untimely. Prudential counters that it could not ascertain the existence of the required diversity until after the dismissal of the Doe defendants because of the possibility that one or more of the Doe defendants would destroy the required diversity.

Our decision in Southern Pacific Co. v. Haight, 126 F.2d 900 (9th Cir.), Cert. denied, 317 U.S. 676, 63 S.Ct. 154, 87 L.Ed. 542 (1942), compels the conclusion that Prudential's petition was timely. There a California citizen filed suit in California state court against Southern Pacific, a Kentucky corporation, and two fictitiously-named employees of Southern Pacific, alleged to be California citizens. By the time the case was called to trial, the fictitious defendants had not been served and had not made any appearance in court. When the plaintiff announced that she was ready to proceed to trial without serving the two fictitious defendants, Southern Pacific filed a petition for removal. It claimed that by proceeding to trial without serving the two fictitious defendants, the plaintiff had agreed to sever her claims against Southern Pacific from those against the fictitious defendants and therefore the required diversity existed. The next day the plaintiff served one fictitious defendant. The district court found removal jurisdiction.

We held that removal was proper. We noted that by acknowledging readiness to go to trial when the fictitious defendants had not been brought into court, the plaintiff severed her Southern Pacific claims and the required diversity existed. Id. at 904. We then addressed the timeliness of the removal. Noting the policy of encouraging removal as soon as possible, we wrote:

(I)n Pullman Co. v. Jenkins (, 305 U.S. 534, 59 S.Ct. 347, 83 L.Ed. 334 (1939)) . . . the fact of non-service of the resident defendant was not a sufficient ground for removal, and it was therefore not until the plaintiff took some affirmative action to sever the cause of action that the right to remove the cause arose. The petition to remove was made immediately after the plaintiff announced herself ready to proceed with the trial against the Southern Pacific Company alone, and was therefore timely. The fact that the resident defendant was not served or would not appear at the time set for trial would not of necessity be known to the non-resident defendant and therefore his right to remove could not be denied because he did not move for the severance upon his being served with notice of setting the case for trial.

However, the fact that plaintiff had the case set for trial, knowing that the resident defendant had not been served and appeared in court with such knowledge and answered that she was ready for trial is conclusive evidence that she regarded the action as severed . . . .

Id. at 905.

Haight thus established that a defendant's petition for removal is timely when made immediately after fictitious defendants are no longer part of the action and therefore can no longer destroy the required diversity. See Self v. General Motors Corp., 588 F.2d 655, 659 & n. 5 (9th Cir. 1978). In the present case, as in Haight, Prudential sought removal as soon as the Doe defendants were no longer part of the action, here because of dismissal. 1 Haight thus compels the conclusion that Prudential's petition was timely. 2

Preaseau retorts that § 1441(b) means that in determining diversity, Prudential could have ignored the Does and thus the petition was untimely. Citing the language of § 1441(b) about "parties in interest properly joined and served as defendants," Preaseau contends that all persons who are not "properly joined and served" are irrelevant in determining diversity. Preaseau concludes: "Clearly within . . . § 1446(b) PRUDENTIAL could have sought removal notwithstanding the presence of the fictitious defendants because the fictitious defendants had not been served."

Preaseau's argument is contrary to the conclusion in Haight that the presence of fictitious defendants prevented the finding of diversity until they were severed from the Southern Pacific suit. Moreover, this court has specifically rejected the contention that § 1441(b) implies that service is the key factor in determining diversity. In Clarence E. Morris, Inc. v. Vitek, 412 F.2d 1174 (9th Cir. 1969), plaintiff, a California corporation, filed suit in Nevada state court against a California citizen and a Washington corporation. The Washington corporation successfully sought removal to federal court. At the time the federal court assumed jurisdiction the California citizen had not been served; the California citizen was served before the federal...

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