McCarthy v. Minnesota Lawyers Mutual Insurance Company
3:23-cv-00450
M.D. Penn.Dec 29, 2023Background
- Plaintiffs filed a declaratory judgment action in Pennsylvania state court seeking determination of insurance coverage under a professional liability policy issued by Minnesota Lawyers Mutual Insurance Company (MLM) to Raul Jauregui and his law firm.
- The underlying action involved multiple tort claims (battery, abuse of process, IIED, wrongful use of civil proceedings) against Jauregui and his client, arising from an alleged sexual assault at King's College and related litigation.
- MLM removed the action to federal court based on diversity jurisdiction, arguing Jauregui was fraudulently joined to defeat removal under the resident-defendant rule.
- Plaintiffs moved to remand, asserting removal was improper because Jauregui (a Pennsylvania citizen) was a necessary party under state law.
- Magistrate Judge Carlson recommended remand, finding no fraudulent joinder; defendants objected.
- The district court was asked to rule on remand, fraudulent joinder, supplemental jurisdiction, and objections regarding forum bias.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper removal under resident-defendant rule | Removal improper because Jauregui is a resident defendant | Jauregui was fraudulently joined, so resident-defendant rule does not apply | Removal was improper; case must be remanded |
| Fraudulent joinder of Jauregui | Joinder of Jauregui required by Pennsylvania declaratory judgment law | Plaintiffs joined Jauregui solely to defeat federal jurisdiction | No fraudulent joinder; joinder mandated by state law |
| Supplemental jurisdiction over insurance claim | Insurance and tort claims are distinct; no supplemental jurisdiction | The claims arise out of the same series of events as the underlying tort case | No supplemental jurisdiction; claims are separate |
| Bias or unfairness of state forum | No evidence; argument is groundless | State forum is biased, magistrate judge is biased against Jauregui | Objection overruled; no bias shown |
Key Cases Cited
- Wilson v. Republic Iron & Steel Co., 257 U.S. 92 (fraudulent joinder standard in removal cases)
- Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006 (strict construction against removal and heavy burden to prove fraudulent joinder)
- Boyer v. Snap-on Tools Corp., 913 F.2d 108 (burden on removing party to prove fraudulent joinder)
- MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (Article III requirements for declaratory judgment standing)
- DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (standing requires personal injury traceable to defendant’s conduct)