Toma & Petros, DDS, Inc. v. The Hartford
3:17-cv-01029
S.D. Cal.Aug 8, 2017Background
- Plaintiffs Toma & Petros, DDS, Inc. (a California corporation) and individual dentists Drs. Omeed Toma and Dahfir Petros sued Hartford-related entities and adjuster Wendy Cervantes in San Diego Superior Court over payment for April 2015 water damage to their dental office.
- Corporate plaintiff alleges breach of contract and bad faith against the insurers; individual plaintiffs assert only an intentional infliction of emotional distress (IIED) claim against Cervantes.
- Defendants removed to federal court asserting diversity jurisdiction; Cervantes is a California resident (non-diverse).
- Defendants argued Cervantes was fraudulently joined and therefore her citizenship should be disregarded for diversity.
- The district court considered evidence beyond the pleadings (judicially noticed Exhibits B–F and a declaration) and concluded Cervantes was not fraudulently joined.
- Because Cervantes is a California citizen and plaintiffs include California citizens, the court held it lacked complete diversity and granted remand to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cervantes was fraudulently joined so her citizenship can be ignored for diversity | Cervantes is a properly joined defendant; IIED claim by the individuals is plausible and could be cured by amendment | Cervantes is a sham defendant; IIED claim fails as a matter of law because individuals are not named insureds | Cervantes is not fraudulently joined; defendants did not meet heavy burden to show impossibility of recovery against her |
| Whether individual plaintiffs have standing to sue Cervantes for IIED | Individual dentists sued for personal injuries (emotional distress) and therefore have standing despite not being named insureds | Individuals lack standing to assert insurance-related claims because they are not insured under the policy | Court held the individuals have standing to bring IIED claims for injuries to themselves (citing analogous authority) |
| Whether the IIED claim pleads extreme and outrageous conduct sufficient to establish fraudulently joined non-diverse defendant | Plaintiffs contend allegations (threats to recoup payments, misrepresentations, evasive conduct, pressure, and a fraud investigation) could support IIED | Defendants contend the pleaded facts are conclusory and do not meet California’s high IIED standard | Court found current IIED allegations insufficient on their face but remand required because defendants failed to show amendment or recovery is impossible |
| Whether federal court has subject-matter jurisdiction based on diversity | Plaintiffs: no, because Cervantes is a California citizen and not fraudulently joined | Defendants: yes, because Cervantes was fraudulently joined and should be disregarded | Court held it lacks subject-matter jurisdiction and remanded the case to state court |
Key Cases Cited
- Ritchey v. Upjohn Drug Co., 139 F.3d 1313 (9th Cir.) (district courts may look beyond pleadings when fraudulent joinder is alleged)
- Hunter v. Philip Morris USA, 582 F.3d 1039 (9th Cir.) (party seeking removal bears heavy burden to prove fraudulent joinder)
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (U.S. 1996) (diversity requires complete diversity of citizenship)
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir.) (statute construed strictly against removal; doubts resolved against removal)
- McCabe v. Gen Foods Corp., 811 F.2d 1336 (9th Cir.) (courts may consider facts showing joinder is fraudulent)
- Albi v. St. & Smith Publ’ns, 140 F.2d 310 (9th Cir.) (historical statement on fraudulent joinder doctrine)
- Bender v. Williamsport Area Sch. Dist., 475 U.S. 534 (U.S. 1986) (federal courts are courts of limited jurisdiction)