Silver v. EP Loya Grp.
| Docket Number | Civ. 23-448 MV/SCY |
| Decision Date | 07 November 2023 |
| Parties | RONALD SILVER and NICOLE CHAVEZ, individually and as personal representatives of the ESTATE OF JAYDON CHAVEZ-SILVER, Plaintiffs, v. EP LOYA GROUP, LP, YOUNG AMERICA INSURANCE COMPANY, FRED LOYA INSURANCE AGENCY, INC., LOYA INSURANCE COMPANY, RODNEY D. YOUNG INSURANCE AGENCY, INC., NATIONAL INSURANCE, YVETTE LERMA, and MARK GROVES, Defendants. |
| Court | U.S. District Court — District of New Mexico |
PROPOSED FINDINGS AND RECOMMENDED DISPOSITION
Plaintiffs are the parents of a teenager who was tragically killed in a drive-by shooting. The owner of the vehicle used in the shooting, Felicia Villasenor, had previously met with an insurance broker, Yvette Lerma, to add the vehicle to her existing insurance policy. But Villasenor failed to pay her monthly insurance premium just prior to the drive-by shooting. The insurance company therefore took the position that the policy had lapsed and refused to defend or settle the claim Plaintiffs brought against the driver and Villasenor. Defendants removed this case from state court to federal court, alleging that Lerma-a non-diverse defendant-is fraudulently joined. Plaintiffs filed the present Motion to Remand to state court, arguing that she is not. Because Defendants have failed to prove there is no possibility that Lerma could be found liable, the Court should reject their arguments of fraudulent joinder and grant the Motion to Remand (Doc. 11).[1] Further, if the Court accepts this recommendation and grants Plaintiffs' motion to remand based on its analysis of the claims against Defendant Lerma no need exists to address Defendants' second argument that Plaintiff also fraudulently joined Defendant Fred Loya Insurance Agency, Inc.
On June 26, 2015, Nicholas Gonzales used his mother's Nissan Maxima to drive multiple intoxicated teenagers to a house on Nakomis Drive in Albuquerque, where they shot at the house as they drove by. Doc. 1-2 at 5, Complaint for Insurance Bad Faith (“Compl.”) ¶¶ 18-19.[2] One of the bullets fired from the car broke through the kitchen window and struck Jaydon Chavez-Silver, a teenager who happened to be attending a party at the Nakomis house and the son of Plaintiffs Ronald Silver and Nicole Chavez. Compl. ¶¶ 1-2, 19. Jaydon Chavez-Silver later passed away as a result of the gunshot wound. Compl. ¶ 23.
Felicia Villasenor owned the Nissan Maxima used in the shooting. On May 6, 2015- about a month and a half before the shooting-she had added the Nissan Maxima to her existing insurance policy for a Kia Sentra issued by the Loya Defendants.[3] Compl. ¶¶ 16-17, 24, 34-35. Villasenor purchased the Nissan for Gonzales' sixteenth birthday and allowed him to drive it. Compl. ¶¶ 16-17.
Plaintiffs Silver and Chavez filed a wrongful-death lawsuit against Villasenor and Gonzales in state court. Compl. ¶ 51. The Loya Defendants denied coverage and refused to provide a defense on grounds that the loss occurred outside the policy territory. Compl. ¶¶ 59-90. Defendants' position is that the policy renewed on a monthly basis; that is, Villasenor agreed to pay premiums each month by automatic charges to her credit card. Doc. 1 ¶¶ 27, 33. On June 3, 2015, Villasenor's credit card declined payment of the monthly premium; therefore, the policy lapsed on June 10, 2015 (sixteen days before the drive-by shooting). Doc. 1 ¶¶ 30-36; Compl. ¶ 71.
Plaintiffs Silver and Chavez subsequently obtained a judgment in excess of $71 million (including prejudgment interest), which Villasenor and Gonzales lack the resources to pay. Compl. ¶¶ 99-103. In the present lawsuit, Plaintiffs bring claims against the Loya Defendants, contending they are liable to pay the judgment, and bringing causes of action for (1) violations of the Trade Practices and Frauds Act, (2) bad faith claims handling, (3) bad faith failure to negotiate with Plaintiffs; and (4) illegal dealing in violation of the Trade Practices and Frauds Act. Compl. ¶¶ 105-40. Neither Villasenor nor Gonzales is a party to the present case.
Plaintiffs filed this Complaint in state court on April 13, 2023. Doc 1-2 at 5.[4] On May 22, Defendant EP Loya Group, LP removed the case to federal court, citing diversity jurisdiction. Doc. 1. No party disputes that the amount in controversy requirement is met with respect to the $71 million judgment. As it pertains to citizenship, the Notice of Removal alleges the following:
Plaintiffs disagree with the assertion that Defendants Lerma and Fred Loya Insurance Agency are fraudulently joined. Accordingly, Plaintiffs filed this Motion to Remand to state court for lack of complete diversity between the parties. Doc. 11 at 1.
Fraudulent joinder requires the defendant to show an “inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” Dutcher v. Matheson, 733 F.3d 980, 988 (10th Cir. 2013). “‘The defendant seeking removal bears a heavy burden of proving fraudulent joinder, and all factual and legal issues must be resolved in favor of the plaintiff.'” Id. (quoting Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998)). Fraudulent joinder is “a high hurdle” to clear. Id. at 989. The question of fraudulent joinder is not the same as whether “plaintiffs have stated a valid claim” against the allegedly fraudulently joined party. Id. The fraudulent joinder standard “is more exacting than that for dismissing a claim under Fed.R.Civ.P. 12(b)(6); indeed, the latter entails the kind of merits determination that, absent fraudulent joinder, should be left to the state court where the action was commenced.” Montano v. Allstate Indem., 211 F.3d 1278, at *2 (10th Cir. 2000) (unpublished table decision)[7] (citing Batoff v. State Farm Ins. Co., 977 F.2d 848, 851-53 (3d Cir. 1992)).“‘To prove their allegation of fraudulent joinder the removing parties must demonstrate that there is no possibility that plaintiff would be able to establish a cause of action against the joined party in state court.'” Id. at *1 (quoting Hart v. Bayer Corp., 199 F.3d 239, 243 (5th Cir. 2000)) (alterations omitted).
“‘A contention that the plaintiff has engaged in fraudulent joinder must be alleged with particularity by the party seeking removal, and supported by clear and convincing evidence.'” Woods v. Ross Dress for Less, Inc., 833 Fed.Appx. 754, 757 n.1 (10th Cir. 2021) (quoting 14C Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure - Jurisdiction and Related Matters § 3723.1 (4th ed., July 2020 update)). The court does not examine all possible bases for a finding of fraudulent joinder; instead, it limits its analysis to the grounds the defendant raises. See Dutcher, 733 F.3d at 989 ().
This case involves two transactions: the purchase of a policy for the Kia Sentra in December 2014, and the addition of the Nissan Maxima to that policy in May 2015. Defendants focus on the first transaction while Plaintiffs focus on the second. Defendants focus on the first because Defendant Yvette Lerma was not involved in that transaction.
They allege in their Notice of Removal that Villasenor purchased an automobile liability insurance policy on December 12 2014[8] from Defendant Young America Insurance Company for the policy period from December 12, 2014 through January 11, 2015. Doc. 1 ¶ 25. The policy would automatically renew each month that Villasenor made payments of the premium. Id.
Villasenor agreed to make monthly payments of premiums and agreed to the dates her credit card would have payments deducted from it. Doc. 1 ¶ 27. At this time, however, Lerma worked at a National Insurance location other than the Eubank location where Villasenor purchased this policy. Id. ¶ 28. Lerma apparently had no involvement in the December 2014 transaction. Id.
Nor do Plaintiffs contend that Lerma was involved in the December 2014 transaction.
Instead they focus on the May 6, 2015 transaction. They allege that, in May 2015, Lerma made misrepresentations in connection with adding the Nissan Maxima to Villasenor's pre-existing policy. Doc. 11 at 5-7; Doc. 26 at 4-5. Defendants' response is that paragraph 113 of Plaintiffs' Complaint, which contains the cause of action against Defendant Lerma, references her sale of a “policy” to Ms. Villasenor, and this paragraph does not...
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