Opinion
A99-573 CV (JWS).
March 2000.
ORDER FROM CHAMBERS [Re: Motions at Dockets 12 and 13]
I. MOTIONS PRESENTED
At docket 12, plaintiff Regina Johnson ("Johnson") moves to remand. Defendant Progressive Specialty Insurance Company ("Progressive") responds, and Johnson replies. At docket 13, Johnson moves to file a second amended complaint. Progressive responds and Johnson replies. Neither party requests oral argument nor would argument materially aid the court.
II. BACKGROUND
This is a motorist insurance case arising out of an automobile accident that occurred on February 26, 1996. Johnson seeks coverage under the medical payment provision of her automobile insurance policy, damages for Progressive's alleged breach of the implied covenant of good faith and fair dealing, and punitive damages based on the egregiousness of Progressive's conduct.
Johnson claims to have "suffered emotional and mental distress, intimidation, humiliation, incurred costs and attorney's fees and other monetary damages." Docket 2, Amended Complaint and Jury Demand, ¶ 10 at 2-3.
Johnson originally filed this case in the Superior Court for the State of Alaska. Progressive removed. Progressive contends that federal jurisdiction exists pursuant to 28 U.S.C. § 1332, federal diversity jurisdiction. To support its claim of federal jurisdiction, Progressive alleges that the amount in controversy exceeds $75,000 and that Progressive is an Ohio corporation and Johnson is an Alaskan resident.
Docket 1, ¶ 4 at 2.
Id., ¶ 6 at 2.
Id., ¶ 2 at 2.
Id., ¶ 5 at 4.
Johnson now moves to remand. Johnson seeks leave of the court to file a second amended complaint that names Shelly R. Hickman ("Hickman"), a Progressive adjuster and an Alaska resident, as an additional defendant. By naming Hickman, Johnson hopes to destroy the diversity of the parties. Johnson alleges that Hickman negligently handled her claims in that she failed to perform an adequate investigation, interfered in Johnson's relationship with her health care providers, denied Johnson's claims without grounds to do so, and failed to re-evaluate Johnson's claims in light of new information. Progressive argues that both the motion to amend and motion to remand should be denied because Hickman has been fraudulently joined solely to defeat diversity.
Docket 13.
Id., Second Amended Complaint and Jury Demand, ¶ 9 at 2-3.
Docket 17.
III. STANDARD OF REVIEW
A lawsuit may be removed to federal court under 28 U.S.C. § 1441 if the suit could have been brought in federal court originally. Where the court's jurisdiction is based on the diversity of the parties, 28 U.S.C. § 1332 requires, among other elements, that the amount in controversy exceeds $75,000 and that the case be between citizens of different states. If there is any doubt regarding the right of removal under 28 U.S.C. § 1441, removal jurisdiction is to be rejected.IV. DISCUSSION
A. Amount in ControversyBecause it was not evident from the face of Johnson's complaint that more than $75,000 was in controversy, the court ordered Progressive to provide evidence that the amount in controversy in fact exceeded the jurisdictional amount. On February 22, 2000, Progressive complied with the court's order. Johnson's initial disclosures total her alleged damages as $505,000. Johnson's disclosures satisfy Progressive's burden under Sanchez v. Monumental Life Ins. Co. B. Motion to Amend
See docket 21.
Docket 22, exh. 3 at 8.
102 F.3d 398, 403-04 (9th Cir. 1996).
The court's scheduling and planning order of December 8, 1999, required motions to amend the pleadings to be filed by December 13, 1999, and thereafter only by leave of the court and for good cause shown. Johnson filed her motion to amend December 6, 1999. Johnson's motion is timely. Because Federal Rule of Civil Procedure 15(b) requires that leave to amend be freely given, Johnson's motion to amend must be granted.
Docket 14 at 1.
C. Diversity of the Parties
Diversity jurisdiction under 28 U.S.C. § 1332 extends to cases between citizens of different states. Diversity jurisdiction is not evident on the face of Johnson's second amended complaint because Johnson and Hickman are both Alaska residents. Nevertheless, removal based on the diversity of the parties cannot be defeated by the presence of a fraudulently joined defendant. A resident defendant is fraudulently joined "'[i]f the plaintiff fails to state a cause of action against [him or her], and the failure is obvious according to the settled rules of the state.'" In determining whether a cause of action is stated, the court need only look to the plaintiff's pleadings. Where fraudulently joined defendants are at issue, the court may also consider facts presented by the defendants.
Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998).
Id. (quoting McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)).
Id.
Id.
Progressive argues that Johnson cannot maintain any claims against Hickman because Alaska does not recognize claims against insurance adjusters. The court disagrees. In Continental Ins. Co. v. Bayless Roberts, Inc., the Alaska Supreme Court held that insurance adjusters may be personably liable in tort where they do not exercise ordinary care with respect to an insured. Although criticized in other jurisdictions, no subsequent Alaska case has overruled this holding, and the cases cited by Progressive are not inconsistent with it. In Jones v. Central Peninsula Gen. Hosp., the court held that an agent could not be liable for breach of contract but could be liable for his or her own tortious acts; in Alaska Pacific Assurance Co. v. Collins, the court held that a claim an insurer negligently breached a contractual duty sounded in contract rather than in tort; and in O.K. Lumber Co., Inc. v. Providence Washington Ins. Co., the court held that an insured's cause of action against its insurer for breach of the implied covenant of good faith and fair dealing could be assigned to a third-party claimant. These cases do not overrule the holding of Continental Ins. Co. Consequently, the law in Alaska allows Johnson to plead a tort claim action against Hickman. While the state court may eventually determine that Johnson's claim lacks merit, that proposition is not determinative at this stage.
Docket 17, at 2.
608 P.2d 281 (Alaska 1980).
Id. at 287-88.
779 P.2d 783 (Alaska 1989).
Id. at 791.
794 P.2d 936 (Alaska 1990).
Id. at 946-47.
759 P.2d 523 (Alaska 1988).
Id. at 525 (citing Continental Ins. Co., 608 P.2d at 287-88, for the proposition that an insurance agent is subject to liability to an insured for independent torts).
Ritchey, 139 F.3d at 1318-19.