791 F. Supp. 2d 790
N.D. Cal.2011Background
- Palma filed a state court action against Prudential seeking disability benefits and claims under California Insurance Code § 790.03(h)(1).
- Palma sought a writ of mandate against the California Insurance Commissioner to review, revoke, or reform the policy’s definition of total disability.
- Prudential removed the case to federal court on the basis of diversity jurisdiction, arguing the Commissioner is a sham non-diverse party.
- Palma argues the Commissioner is not a sham defendant and that diversity is defeated by the Commissioner’s presence.
- The court analyzes mandamus relief against the Commissioner, exhaustiveness of administrative remedies, statute of limitations, misjoinder, and diversity for remand purposes.
- The court remands to state court and denies attorneys’ fees, and ultimately holds that diversity does not exist due to the Commissioner’s presence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Diversity—does Commissioner defeat complete diversity | Palma contends Commissioner is a proper defendant and not a sham. | Prudential argues Commissioner is non-diverse and defeats removal. | Diversity lacking; case remanded. |
| Availability of mandamus against the Commissioner | Plaintiff may seek mandamus to compel review under Insurance Code. | Schwartz shows discretion, not ministerial duty. | Plaintiff may bring mandamus based on abuse of discretion. |
| Exhaustion of administrative remedies | Administrative remedies were unavailable or inadequate. | Exhaustion required. | Exhaustion not required; remedies unavailable. |
| Statute of limitations for mandamus action | Limitations accrue upon denial of benefits, not policy issuance. | Accrual at policy approval or denial may apply. | Limitations issue unresolved at this stage; remand appropriate. |
| Misjoinder under Rule 20(a) | Joinder valid due to related questions and relief. | Claims against Commissioner and Prudential lack commonality. | Joinder proper; misjoinder defense rejected. |
Key Cases Cited
- Van Ness v. Blue Cross of California, 87 Cal.App.4th 364 (Cal. Ct. App. 2001) (mandamus review of insurer approvals; discretionary vs ministerial duties)
- Peterson v. American Life & Health Ins. Co., 48 F.3d 404 (9th Cir. 1995) (insurer policy approval and mandamus authority)
- Common Cause of Cal. v. Bd. of Supervisors, 49 Cal.3d 432 (Cal. 1989) (mandamus can compel exercise of discretion under proper interpretation of law)
- Schwartz v. Poizner, 187 Cal.App.4th 592 (Cal. App. 4th Dist. 2010) (abuse of discretion standard for mandamus review)
- Carrancho v. California Air Resources Bd., 111 Cal.App.4th 1255 (Cal. App. 4th Dist. 2003) (mandamus review framework for official actions)
- Morongo Band of Mission Indians v. California State Bd. of Equalization, 858 F.2d 1376 (9th Cir. 1988) (state officers have no citizenship for §1332; diversity implications)