TOMA & PETROS, DDS, INC.; OMEED TOMA, DDS, an individual; and DAHFIR PETROS, DDS, an individual, v. THE HARTFORD; THE HARTFORD FINANCIAL SERVICES GROUP, INC.; SENTINEL INSURANCE CO., LTD; and WENDY CERVANTES, an individual
Case No.: 17cv1029-MMA (NLS)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
August 8, 2017
HON. MICHAEL M. ANELLO
[Doc. No. 4]
Plaintiffs Toma & Petros, DDS, Inc. (“Toma & Petros“), Dr. Omeed Toma, and Dr. Dahfir Petros (collectively “Plaintiffs“) commenced the instant action against The Hartford, The Hartford Financial Services Group, Inc. (“HFSG“), Sentinel Insurance Co., Ltd. (“Sentinel Insurance“), and Wendy Cervantes (“Cervantes,” collectively “Defendants“) in the Superior Court of California, County of San Diego. See Doc. No. 1. On May 17, 2017, Defendants removed the action to this Court based on diversity jurisdiction. See id. On June 7, 2017, Plaintiffs filed a motion to remand the action back to state сourt, arguing the parties are not diverse. See Doc. No. 4. Defendants filed an opposition to Plaintiffs’ motion, to which Plaintiffs replied. See Doc. Nos. 6, 10.
BACKGROUND
This lawsuit arises out of an insurance coverage dispute between the parties regarding a water damage loss that occurred in April 2015 at Plaintiffs’ dental office in San Diego, California. Complaint ¶ 12.
Plaintiff Toma & Petros is a corporation incorporated in the State of California. Complaint ¶ 1. Toma & Petros is “engaged in the business of dentistry within the County of San Diego, in the State of California.” Id. Individual plaintiffs Omeed Toma and Dahfir Petros, who are both dentists, are “citizens of the State of California, residing within the County of San Diego.” Id. ¶ 2. Defendant The Hartford is not a legal entity, but rather is a service mark owned by Hartford Fire Insurance Company. See Doc. No. 1 at 9. Defendant HFSG is a publicly traded holding company that is incorporated under the laws of Delaware, and has its principal placе of business in Connecticut. See id. Defendant Sentinel Insurance is incorporated under the laws of Connecticut, and has its principal place of business in Connecticut. See id. Defendant Wendy Cervantes is a property large loss adjuster for Sentinel Insurance who participated in the adjustment of Plaintiffs’ water damage claim. See Doc. No. 1. Cervantes is a citizen and resident of the State of California. See id.
Defendant Sentinel Insurance issued a business owners insurance policy (the “policy“) to Toma & Petros, which was in effect from August 1, 2014 to August 1, 2015. Complaint ¶ 9; See Doc. No. 6 at 2. The policy covered the business personal property, including damage caused by water or flooding, at the dental office located at 3530 Camino Del Rio, Suite 109, San Diego, California. Complaint ¶ 10; See Doc. No. 6 at 2.
On April 3, 2017, Plaintiffs filed suit in the Superior Court of California, County of San Diego. See Complaint. Plaintiffs allege causes of action for: (1) declaratory relief; (2) breach of contract; (3) breach of the imрlied covenant of good faith and fair dealing; and (4) intentional infliction of emotional distress (“IIED“).1 See id.
DISCUSSION
I. Defendants’ Request for Judicial Notice and Plaintiffs’ Objections
As an initial matter, Defendants request the Court take judicial notice of six documents in support of their notice of removal (Exhibits A-F). See Doc. No. 1-2. Specifically, Defendants request the Court take judicial notice of: (1) the summons and complaint of the instant action filed in the Superior Court of California, County of San
Generally, a court must take judicial notice if a party requests it and supplies the court with the requisite information.
Here, the Court need not take judicial notice of the complaint filed in this action in state court. As such, the Court DENIES AS MOOT Defendants’ request for judicial notice as to Exhibit A. Regarding Exhibits B-F, the Court finds that the authenticity of each document is not subject to reasonable dispute, and that many of the exhibits are matters of public record. See
Plaintiffs further object and move to strike Cervantes’ declaration and exhibits filed in support of Defendants’ opposition to Plaintiffs’ motion to remand (Doc. No. 6-1). See Doc. No. 10-2. Plaintiffs argue “[t]he facts in the declaration and the exhibits thereto are simply not propеrly considered in relation to a motion to remand so they are not relevant.” See id. at 1 (citing
II. Motion to Remand
Plaintiffs argue that the Court should remand this action to state court because Cervantes is not diverse from Drs. Toma and Petros. See Doc. No. 4 at 1. In oрposition, Defendants assert Cervantes “has been fraudulently joined as a defendant and plaintiffs’ motion to remand should be denied.” Doc. No. 6 at 2.
a. Legal Standard
Federal courts are of limited jurisdiction. Lowdermilk v. U.S. Bank Nat‘l Ass‘n, 479 F.3d 994, 997 (9th Cir. 2007). Federal courts possess only that power authorized by the Constitution or a statute. See Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986). Pursuant to
There is an exception to the complete diversity rule for a “sham” defendant. A non-diverse defendant who has been fraudulently joined may be disregarded for diversity jurisdiction purposes. See Hunter v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009). “‘Fraudulent joinder is a term of art’ and does not implicate a plaintiff‘s subjective intent.” Rangel v. Bridgestone Retail Operations, LLC, 200 F. Supp. 3d 1024, 1030 (C.D. Cal. 2016) (citing McCabe v. Gen Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). “Joinder is fraudulent if the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious acсording to the settled rules of the state.” Hunter, 582 F.3d at 1043 (internal quotation marks and citations omitted). “It is only where the plaintiff has not, in fact, a cause of action against the resident defendant, and has no reasonable ground for supposing he has, and yet joins him in order to evade the jurisdiction of the federal court, that the joinder can be said to be fraudulent.” Albi v. St. & Smith Publ‘ns, 140 F.2d 310, 312 (9th Cir. 1944). District courts may also consider “the facts showing the joinder to be fraudulent.” McCabe, 811 F.2d at 1339; see also Ritchey, 139 F.3d at 1318 (еxplaining that where fraudulent joinder is at issue, a district court may look beyond the pleadings because “a defendant must have the opportunity to show that the individuals joined in the action cannot be liable on any theory.“).
The statute is construed strictly against removal, and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “The party seeking removal bears a heavy
b. Analysis
i. Standing
As an initial mattеr, Defendants assert individual plaintiffs Drs. Toma and Petros “have no standing to assert a cause of action for IIED against Cervantes” because the individual plaintiffs are not named as insureds on the policy—rather, Sentinel Insurance only issued the policy to Toma & Petros, DDS, Inc. Doc. No. 6 at 13. The individual plaintiffs, however, argue they are not pursuing claims for breach of contract or bad faith against Cervantes. Rather, Drs. Toma аnd Petros are only pursuing an IIED claim against Cervantes for injuries they suffered. See Doc. No. 10 at 7. Thus, the individual plaintiffs assert they do not need to be named as insureds under the policy in order to bring a claim for IIED.2 See id.
California courts have held that insurance plans’ and adjusters’ “conduct in handling a claim may result in liability for intentional infliction of emotional distress.” Bock v. Hansen, 225 Cal. App. 4th 452, 473 (Cal. Ct. App. 2007), as modified on denial of reh‘g (Jan. 22, 2008); see also Hernandez v. Gen. Adjustment Bureau, 199 Cal. App. 3d 999, 1007 (Cal. Ct. App. 1988) (holding the claimant stated a claim for intentional
Defendants cite to several cases in support of their proposition that the individual plaintiffs lack standing to bring an IIED claim against Cervantes. See Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566 (Cal. 1973); Hatchwell v. Blue Shield of Cal., 198 Cal. App. 3d 1027 (Cal. Ct. Appl. 1988); C & H Foods Co. v. Hartford Ins. Co., 163 Cal. App. 3d 1055 (Cal. Ct. App. 1984); Austero v. Nat‘l Cas. Co., 62 Cal. App. 3d 511 (Cal. Ct. App. 1976). Defendants’ reliance on such cases, however, is misplaced because all of the cases cited did not involve an independent cause of action for IIED. Rather, the plaintiffs in those cases asserted claims for breach of contract and breach of the implied covenant of good faith and fair dealing.
For example, the court in Austero noted that “liability for ‘bad faith’ has been strictly tied to the implied-in-law covenant of good faith and fair dealing arising out of an underlying contractual relationship. Where no such relationship exists, no recovery for ‘bаd faith’ may be had.” 62 Cal. App. 3d at 516-17 (citing Gruenberg, 9 Cal. 3d at 576). Notably, the plaintiff in Austero sought damages for the defendants’ refusal to pay disability benefits allegedly due to her husband under the insurance policy and for defendants’ alleged breach of the implied covenant of good faith and fair dealing. 62 Cal. App. 3d at 514. Here, however, Drs. Toma and Petro do not assert claims for breach of contract or breach of the covenant of good faith and fair dealing. Rather, the corporate plaintiff Toma & Petros brings such claims, while the individual plaintiffs bring a claim for IIED. Thus, the cases cited by Defendants do not aid the Court in determining whether the individual plaintiffs have standing to sue Cervantes for IIED.
Health Pro Dental Corporation v. Travelers Property Casualty Company of America is particularly instructive due to the factual and legal similarities to the case at bar. 2017 WL 1033970 (C.D. Cal. Mar. 17, 2017). In Health Pro, plaintiffs Health Pro
Here, the Court is not persuaded that Drs. Tomа and Petros lack standing to bring a claim for IIED. As mentioned above, Drs. Toma and Petros do not sue for breach of contract or breach of the implied covenant of good faith and fair dealing where an underlying contractual relationship is a prerequisite to bringing suit. Rather, the individual plaintiffs bring a claim for IIED based on injuries that they suffered individually. See Doc. No. 10 at 7. Defendants do not present, nor is the Court aware of, any binding authority supporting Defendants’ argument that Drs. Toma and Petros cannot sue for IIED based on injuries they suffered. Accordingly, the Court concludes that the individual plaintiffs do have standing to assert their claim for IIED against Cervantes. See Health Pro, 2017 WL 1033970, at *7 n.8 (“Because Defendants fail to offer clear and convincing evidence that Ginzburg (as a shareholder) is not an insured under the Policy, and because Ginzburg brings the IIED claim for injuries to himself,” Ginzburg had
ii. Intentional Infliction of Emotional Distress Claim
A claim for IIED requires Plaintiffs tо show: “(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff‘s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant‘s outrageous conduct.” Christensen v. Superior Court, 820 P.2d 181, 202 (Cal. 1982) (citing Davidson v. City of Westminster, 649 P.2d 894, 901 (Cal. 1982)). To constitute “outrageous,” the defendant‘s conduct “must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.” Id. (citing Davidson, 649 P.2d at 901). Additionally, “[t]he defendant must have engaged in ‘conduct intended to inflict injury or engaged in with the realization that injury will result.‘” Id. (citing Davidson, 649 P.2d at 901).
Here, in addition to the allegations outlined above, Plaintiffs allege Cervantes “falsely claimed the defendants were going to compensate the plaintiffs for the portion of the specialist office that was used to see patients from the flood location.” Complaint ¶ 16. Cervantes “also represented that, in addition to the total loss at the flood location, the plaintiffs would be paid for the value of the treatment of the patients that were traveling to the specialist location from the Mission Valley location,” but plaintiffs allege defendants did not provide any such compensation for the specialist location. Complaint ¶¶ 16-17. Plaintiffs allege Cervаntes “continually evaded the dentists’ request for an explanation of how lost business income would be calculated” in an attempt to “conceal[] an intent to . . . minimize the claim.” Complaint ¶ 20. Finally, Cervantes “kept insisting upon oral communications so there would be no documentation of the defendants’ position.” Complaint ¶ 28. Cervantes only “provided a written explanation” after “repeated insistence by the рlaintiffs.” Complaint ¶ 28. As a result of such conduct, Drs. Toma and Petros allege they suffered severe emotional distress, damage to reputation, damage to their credit rating, the loss of patients, and were forced to expend “substantial
In viewing these fаcts in a light most favorable to Plaintiffs, Drs. Toma and Petros fail to state a claim for IIED against Cervantes. The allegations supporting the individual plaintiffs’ IIED claim are conclusory and fail to indicate which of Cervantes’ alleged acts were extreme and outrageous. Plaintiffs argue that Cervantes’ alleged acts, taken together, constitutes “extreme and outrageous” conduct. See Doc. No. 10 at 8-9. However, even considering Cervantes’ alleged conduct in totality, Cervantes’ alleged acts, as currently pleaded, do not rise to the level of extreme and outrageous conduct that goes “beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” Alcorn v. Anbro Eng‘g Inc., 2 Cal. 3d 493, 499 n.5 (Cal. 1970) (internal citations and quotation marks omitted).
“However, ‘a defendant seeking removal based on an alleged fraudulent joinder must do more than show that thе complaint at the time of removal fails to state a claim against the non-diverse defendant.‘” Rangel, 200 F. Supp. 3d at 1033 (citing Padilla v. AT&T Corp., 697 F. Supp. 2d 1156, 1159 (C.D. Cal. 2009)). While some of Plaintiffs’ allegations are presently stated in a conclusory manner, “the question is simply whether there is any possibility that [the] plaintiff will be able to establish liability against the party in question.” Briano v. Conseco Life Ins. Co., 126 F. Supp. 2d 1293, 1296 (C.D. Cal. 2000) (emphasis added); see also Martinez v. Michaels, 2015 WL 4337059, at *10 (C.D. Cal. July 15, 2015) (“[E]ven where the allegations underlying an IIED claim appear to be relatively weak, courts generally do not find fraudulent joinder, given that the sufficiency of the plaintiff‘s factual allegations is of limited import in deciding a motion to remand attacking a removal based on fraudulent joinder.“). Thus, “[i]f there is a possibility that the plaintiff could amend his pleading to state a cause of action against the allegedly sham defendant, then remand is warranted.” Rangel, 200 F. Supp. 3d at 1034 (citing Padilla, 697 F. Supp. 2d at 1159).
iii. The Court Lacks Subject Matter Jurisdiction
Removal was improper because this Court lacks subject matter jurisdiction over this action. As noted above, the Supreme Court has interpreted
Here, the diversity of citizenship requirement is not met because Drs. Toma and Petros and Cervantes are not diverse. Dr. Toma and Dr. Petros are “citizеns of the State of California, residing within the County of San Diego.” Complaint ¶ 2. In their notice of removal, Defendants concede Cervantes is a citizen of California. See Doc. No. 1 at 9. In light of the Court‘s conclusion that Cervantes is not a sham defendant, Cervantes’ citizenship may not be disregarded for purposes of diversity of citizenship in this case.
Thus, because Cervantes is not diverse from Drs. Toma and Petros, the Court lacks subjeсt matter jurisdiction over this action. Accordingly, the Court GRANTS Plaintiffs’ motion to remand.
Based on the foregoing, the Court GRANTS Plaintiffs’ motion to remand, and REMANDS this action back to state court. The Clerk of Court is instructed to terminate all pending motions, deadlines, and hearings.
IT IS SO ORDERED.
Dated: August 8, 2017
HON. MICHAEL M. ANELLO
United States District Judge