United States District Court, D. New Mexico
A Biscup Zebrowski Law Shelby Township, Michigan and Geoffrey
R. Romero Law Offices of Geoffrey R. Romero Albuquerque, New
Mexico Attorneys for the Plaintiff.
Meloney Cargil Perry Stacy Hemby Thompson Perry Law P.C.
Dallas, Texas Attorneys for Defendant Government Employees
Day Hill Civerolo, Gralow & Hill, P.A. Albuquerque, New
Mexico Attorneys for Defendant American Modern Home Insurance
A. Frase Resnick & Louis, PC Albuquerque, New Mexico
Attorneys for Defendants Don Brown Insurance and Properties
Inc. and Donald G. Brown.
MEMORANDUM OPINION AND ORDER
MATTER comes before the Court on the Plaintiff's
Motion for Remand, filed July 13, 2016 (Doc.
9)(“Motion”). The Court held a hearing on January
20, 2017. The primary issues are: (i) whether 28 U.S.C.
§ 1446 requires defendants to join in or consent to
removal of an action within thirty days after they receive a
copy of the initial pleading; and (ii) whether the Plaintiff
Christopher Padilla fraudulently joined two of the Defendants
in order to defeat federal diversity jurisdiction. The Court
concludes that, while all defendants must join in or consent
to removal, they need not do so within thirty days after they
receive a copy of the initial pleading. The Court also
concludes that the Plaintiff did not fraudulently join the
non-diverse Defendants, so the Court will grant the Motion
and remand the case.
provide context, the Court takes its recitation of the facts
from Padilla's Complaint for Breach of Contract and
Insurance Bad Faith, filed April, 26, 2016, in Padilla v.
American Modern Home Ins. Co., D-202-CV-2016-02675
(Second Judicial District Court, County of Bernalillo, State
of New Mexico), in file at July 10, 2016 (Dec.
1-1)(“Complaint”). The Court relies on this
factual account for background purposes only, and it
recognizes that the Complaint's factual account is
largely Padilla's version of events. The Court also takes
undisputed facts from the Notice of Removal, filed June 10,
2016 (Doc. 1)(“Notice of Removal”).
is a resident of Bernalillo County, New Mexico. Complaint
¶ 2, at 2. Defendant American Modern Home Insurance
Company (“American Home”) is incorporated in
Ohio, and it has its principle place of business in Ohio.
Notice of Removal, ¶ 8, at 2. Defendant Government
Employees Insurance Company (“GEICO”) is
incorporated in Maryland, and it has its principal place of
business in Maryland. Notice of Removal, ¶ 11, at 2.
Defendant Don Brown Insurance and Properties, Inc.
(“Brown Insurance”) is a New Mexico corporation,
and it has its principal place of business in Bernalillo
County. Complaint ¶ 5, at 2. Defendant Donald G. Brown
is a resident of Bernalillo County. See Complaint
¶ 6, at 2.
owned a 1971 Chevrolet pickup truck that two distinct
insurance policies covered. See Complaint
¶¶ 10-13, at 3. American Home issued Padilla a
policy covering three collector vehicles, including the 1971
Chevrolet pickup truck. See Complaint ¶ 11, at
3. An insurance policy that GEICO sold to Padilla also
covered Padilla's truck, and that policy included
uninsured motorist (“UM”) coverage. Complaint
¶ 13, at 3. GEICO sold the policy to Padilla through
Brown Insurance, which Brown operated and managed.
See Complaint ¶ 14, at 3. GEICO and Brown
Insurance told Padilla that his insurance policy's UM
coverage would “protect him from damages sustained by
an uninsured or underinsured motorist.” Complaint
¶ 15, at 3-4.
February, 2013, as part of the maintenance and repair process
for a ruptured fuel line, Padilla parked his truck in his
driveway “for safety reasons.” Complaint ¶
17, at 4. Someone stole Padilla's truck on February 8,
2013. See Complaint ¶ 18, at 4. A few days
later, Padilla's truck was found burning, and it was a
total loss. See Complaint ¶ 19, at 4. The thief
remains unidentified. See Complaint ¶ 19, at 4.
Padilla filed an insurance claim with American Home.
See Complaint ¶ 20, at 4. On February 12, 2013,
American Home denied the claim, because a provision of
Padilla's American Home policy restricts its coverage to
damage that occurs while the vehicle is stored in a locked
garage facility. See Complaint ¶ 21, at 4-5.
That coverage restriction applies, however, only when a
vehicle is not being used for “‘Occasional
Pleasure Use, '” meaning “‘activities
consistent with and related to participation in vehicle
exhibitions, vehicle club activities, parades,
leisure/pleasure drives, or maintenance.'”
Complaint ¶ 22, at 5 (quoting Padilla's American
also filed a claim for UM coverage both with American Home
and with GEICO, because, “once the [truck] was taken
unlawfully, it was operated without permission by an unknown
individual, and thus the driver was an uninsured motorist who
caused damage to Mr. Padilla's property (i.e.,
the pickup).” Complaint ¶ 24, at 5-6. American
Home denied Padilla's UM claim in February, 2014, and it
asserted that Padilla had rejected UM coverage when
purchasing his American Home policy. See Complaint
¶ 26, at 5. Padilla disputes that assertion and says
that he “never signed a rejection of [UM]
limits.” Complaint ¶ 27, at 6.
also denied Padilla's UM claim, although it acknowledged
that Padilla's policy contained UM coverage, because,
under GEICO's understanding of New Mexico law, UM
coverage does not apply to Padilla's loss. See
Complaint ¶ 28, at 6-7. Padilla disagrees with
GEICO's understanding of New Mexico law. See
Complaint ¶ 34, at 7-8.
April 26, 2016, Padilla filed his Complaint in “[t]he
Second Judicial District Court, County of Bernalillo, State
of New Mexico.” Notice of Removal ¶ 2, at 1. On
May 2, 2016, Padilla served notice on Brown Insurance and
Brown. See Motion at 1-2. On May 11, 2016, both
American Home and GEICO received service. See Motion
at 2-3. On June 10, 2016, GEICO removed the case to federal
court. See Notice of Removal at 8. The Notice of
Removal alleges that Brown Insurance and Brown consented to
removal. See Notice of Removal ¶ 35, at 6. On
June 17, 2016, American Home filed a separate Notice of
Consent to Removal, filed June 17, 2016 (Doc.
4)(“Notice of Consent to Removal”).
The Notice of Removal.
removed the case “on the basis of diversity
jurisdiction.” Notice of Removal ¶ 36, at 7.
According to GEICO, “diversity of citizenship is
present in this matter as [Brown Insurance's and
Brown's] citizenship does not defeat diversity, ”
Notice of Removal ¶ 29, at 5, because Padilla
“does not have a viable claim against” Brown
Insurance or Brown, so they “are improperly joined,
” Notice of Removal ¶ 27, at 5. As justification
for its claim that Padilla has no viable claim against Brown
Insurance or Brown, GEICO asserts that Padilla “had no
contact with [Brown Insurance or Brown] prior to the date of
loss of February 8, 2013.” Notice of Removal ¶ 27,
The Motion to Remand.
13, 2016, Padilla moved to remand the case to state court on
two grounds. First, Padilla argued that the case should be
remanded, because “GEICO's removal notice is
procedurally defective.” Motion at 2. The Notice of
Removal is procedurally defective, according to Padilla,
because it does not allege that American Home consented to
removal, and because American Home's subsequent Notice of
Consent -- filed more than thirty days after American Home
received a copy of the Complaint -- was untimely.
See Notice of Removal at 7-8. Second, Padilla argued
that the case should be remanded on jurisdictional grounds,
because Brown Insurance and Brown were not fraudulently
joined, so “complete diversity does not exist
here.” Motion at 11. The joinder of Brown Insurance and
Brown was not fraudulent, according to Padilla, because
GEICO's assertion that Padilla “purchased the
policy through the internet and had no contact with Donald G.
Brown or Don Brown Insurance and Properties, Inc. prior to
the February 8, 2013 date of loss, ” Notice of Removal
¶ 21, at 4, is factually incorrect, see Motion
at 9-10. Padilla says that he obtained an insurance quote
from GEICO's website, but he says that he later purchased
the policy -- and paid his premium via credit card -- at
Brown Insurance's office. See Motion at 10.
Padilla swore to this version of events in an affidavit and
attached it to his Motion, see Affidavit of
Christopher R. Padilla ¶¶ 3-5, at 1-2 (dated July
12, 2016), filed July 13, 2016 (Doc. 9-1), and his Complaint
accuses Brown Insurance and Brown of misrepresenting the
policy that they sold to him in violation of the New Mexico
Unfair Practices Act, N.M. Stat. Ann. § 57-12-2
(“UPA”), see Complaint ¶¶ 69,
75, at 21, 23 (“When Defendants . . . sold their
policies to Mr. Padilla, they represented to and assured Mr.
Padilla that he would be provided the coverages described
herein . . . .”).
Padilla “requests an award of attorneys' fees and
costs incurred in responding to the Notice of Removal and
obtaining a remand to State court, pursuant to 28 U.S.C.
§ 1447(c).” Motion at 11. Such an award is
justified, Padilla contends, because “GEICO lacked an
objectively reasonable basis for seeking removal.”
Motion at 11.
response to the Motion, GEICO argues that the Notice of
Removal is not procedurally defective, because American
Home's Notice of Consent to Removal should be considered
timely even though it was filed more than thirty days after
American Home received a copy of the Complaint, because,
“as it had not made an appearance or answered, American
[Home] could not file its own joinder or consent prior to the
30-day deadline.” Defendant Government Employees
Insurance Company's Response in Opposition to
Plaintiff's Motion to Remand at 6, filed July 27, 2016
(Doc. 15)(“GEICO Response”). According to GEICO,
“[a]pplication of the 30-day requirement as asserted by
Plaintiff would work an injustice to any defendant that seeks
to remove a multi-party lawsuit which is properly removable
due to diversity jurisdiction.” GEICO Response at 6.
GEICO also asserts that remand is inappropriate, even if
American Home's consent was not timely, because GEICO
contends that its failure to obtain American Home's
timely consent to removal is a de minimis procedural defect
that can be cured by amending the Notice of Removal.
See GEICO Response at 6-7.
says that Padilla fraudulently joined Brown Insurance and
Brown, because its “records demonstrate that on
November 10, 2012, Plaintiff purchased his policy online and
finalized the purchase via a telephone call to a GEICO
representative located in Dallas, Texas.” GEICO
Response at 2-3. GEICO acknowledges that the “Plaintiff
has provided an affidavit purporting to establish that he
purchased the policy at the Don Brown Insurance office,
” but GEICO maintains that “there are no records
which support his contention.” GEICO Response at 2-3.
GEICO supports those factual claims by attaching to the GEICO
Response an employee affidavit and a copy of its policy log
records. See Affidavit of Ruben Garay ¶¶
1-9, at 1-3 (dated June 10, 2016), filed July 27, 2016 (Doc.
15-1); Policy Log Records at 1-13, filed July 27, 2016 (Doc.
addition to contesting Padilla's version of events, GEICO
indicates that the “Plaintiff's Complaint asserts
no causes of action against the Brown Defendants, ” and
it contends that, “[w]hen no cause of action is alleged
against a non-diverse defendant, fraudulent joinder is
established.” GEICO Response at 9-10.
Home also filed a response to the Motion. See
Defendants' Response to Plaintiff's Motion to Remand,
filed August 2, 2016 (Doc. 16)(“American Home
Response”). American Home argues that removal was
proper even though the Notice of Removal did not allege that
American Home consented to removal, because “the
removal statute, 28 U.S.C. § 1446, only speaks generally
to the manner of removal” without detailed requirements
regarding “how the other defendants should ‘join
in or consent to the removal.'” American Home
Response at 3 (quoting 28 U.S.C. 1446(b)(2)(B)). American
Home also observes that the United States Court of Appeals
for the Tenth Circuit “has not stated what is necessary
to satisfy the requirement that all defendants” join in
or consent to removal. American Home Response at 3. Given
that neither Congress nor the Tenth Circuit has established
strict or specific requirements, American Modern
“submits that filing a notice of removal can be
effective even without concurrently filed statements of
individual consent from each defendant. To hold otherwise
would . . . create procedural hurdles that Congress did not
intend and that provide pitfalls for all but the most
experienced federal court litigants.” American Home
Response at 3. In the alternative, American Home urges that,
“if this Court should find that the Notice of Removal
is defective, GEICO should be allowed to file an Amended
Notice of Removal, signed by all defense counsel to cure any
deficiency.” American Home Response at 4. American Home
also reiterates GEICO's argument that Brown Insurance and
Brown were fraudulently joined, because the
“Plaintiff's Complaint does not assert a claim
against” Brown Insurance or Brown “under any
theory.” American Home Response at 8.
Insurance and Brown also filed a pro forma response to the
Motion in which they incorporate by reference “all
arguments and authorities” in the GEICO Response and in
the American Home Response. Defendant Don Brown Insurance and
Properties, Inc., and Don Brown's First Joinder in
Defendants American Home Insurance Company and Government
Employees Insurance Company's Responses to
Plaintiff's Motion to Remand, filed August 12, 2016 (Doc.
August 22, 2016, Padilla filed a reply brief. See
Brief in Support of Plaintiff's Motion to Remand, filed
August 22, 2016 (Doc. 24)(“Reply”). Padilla
asserts that the 2011 amendments to 28 U.S.C. 1446
“codif[y] the unanimity rule and set forth strict
timing requirements.” Reply at 2. Padilla characterizes
GEICO's argument -- that American Home did not need to
consent to removal within thirty days of receiving the
Complaint -- as an attempt to rewrite the statute, because
“[t]he plain language of the statute does not say only
those joined and served defendants who have answered or
appeared must consent.” Reply at 2. Padilla also argues
that American Home could have consented to removal
“prior to the statutory deadline, ” even though
“it had not answered or appeared in state court,
” because “Congress did not include such
prerequisite language and the strict construction of the
Congressional language is required.” Reply at 2.
also argues that treating the Notice of Removal's failure
to allege that American Home consented to removal as a
curable procedural defect “requires ignoring the
statutory requirements and is improper.” Reply at 5-6.
Padilla notes that the “Defendants rely heavily on
pre-amendment caselaw” when arguing that the defect in
GEICO's Notice of Removal is curable, but “[t]he
problem for Defendants is that indeed Congress has amended
the statute to include requirements that must be met
strictly.” Reply at 5.
addition to arguing that the Notice of Removal is
procedurally defective, Padilla attacks the evidence attached
to the GEICO Response purporting to establish that Padilla
fraudulently joined Brown Insurance and Brown. See
Reply at 5-6. Padilla characterizes the Garay Aff. as
“a conclusory statement” that “provides
nothing to explain the basis for his assertions, provides no
detail, etc.” Reply at 6. As to GEICO's Policy Log
Records that “purport to show a phone call to GEICO
in Dallas, ” Padilla says that “the documentation
does not show who allegedly placed the call. It is certainly
a reasonable inference that the Brown defendants placed the
call with Mr. Padilla right there in the agency's
office.” Reply at 6.
Court held a hearing on the Motion on January 20, 2017.
See Draft Transcript of Motion Hearing held on
January 20, 2017 (“Tr.”). At the beginning of the
hearing, the Court indicated that it was troubled by attempts
to “get around the requirement that [all Defendants]
got to consent within 30 days, ” because the text of
the removal statute “is fairly plain.” Tr. at
3:4-7 (Court). The Court also indicated that it was inclined
to grant the Motion for lack of subject-matter jurisdiction,
because “there is enough evidence here that the Court
shouldn't be deciding or assuming that Mr. Padilla
didn't go to Brown and the Brown Agency to order the
insurance policy.” Tr. at 4:3-22 (Court).
then argued that the removal statute “allows for
removal or joinder in removal after the 30-day period”
only “if there are later served defendants.” Tr.
5:19-22 (Romero). Padilla emphasized that American Home did
not consent to GEICO's Notice of Removal before the time
to do so had lapsed. See Tr. at 10:3-12 (Romero,
Court). Padilla also said that Brown Insurance and Brown
signaled that they wished to litigate in state court instead
of in federal court by timely filing their amended answer in
state court rather than in federal court. See Tr. at
10:13-17 (Romero). Padilla later conceded, however, that
“[w]e are not arguing that the Brown defendants did not
timely consent . . . . We believe that they did advise GEICO
of their consent.” Tr. 10:21-24 (Romero).
Court then asked GEICO for its perspective on the procedural
issue, specifically how GEICO could justify ignoring the
statute's plain language about the consent deadline.
See Tr. at 14:11-14 (Court). GEICO referred the
Court to its earlier decision in Thompson v. Intel
Corporation, 2012 WL 3860748 (August 27, 2012)(Browning,
J.), in which the Court addressed the most recent amendment
to the removal statute's legislative history.
See Tr. at 14:17-15:14 (Perry). Quoting from the
House Report that the Court cites in a footnote in
Thompson v. Intel Corporation, GEICO said that the
2011 amendment adds a new paragraph that “clarifies the
rule of timeliness and provides for equal treatment of all
defendants and their ability to obtain Federal jurisdiction
over the case against them without undermining the Federal
interest in ensuring that defendants act with reasonable
promptness in invoking Federal jurisdiction.” Tr. at
16:1-8 (Perry)(quoting H.R. Rep. No. 112-10 (2011)). GEICO
argued that is vital to keep such legislative intent in mind,
because § 1446's text “doesn't say [all
defendants] must join in . . . thirty days.” Tr. at
16:11-13 (Perry). Instead, GEICO said that the statute
indicates that, “[i]f defendants are served at
different times, and a later served defendant files a notice
of removal, any earlier served defendant may consent to the
removal, even though the earliest served defendant did not
purposely initiate or consent to removal.” Tr. at
16:22-17:2 (Perry). Conspicuous by its absence, GEICO
asserted, is any indication of a thirty-day window for
consent. See Tr. at 17:3-4 (Perry). According to
GEICO, the combination of text and legislative history
indicates that defendants need only act with
“reasonable promptness” when seeking to remove to
federal court. Tr. at 17:4-7 (Perry). GEICO said that the
one-business-day turnaround time from when it filed the
Notice for Removal and American Home consented qualifies as
reasonable promptness and, therefore, conformed to
Congress' intent. See Tr. at 17:8-19:25 (Perry,
Home then offered its perspective on the procedural issue.
See Tr. at 24:1-3 (Court, Hill). American Home
insisted that it tried, unsuccessfully, to discover the
identity of GEICO's counsel before GEICO filed the Notice
of Removal. See Tr. at 25:3-20 (Hill). American Home
maintained that, once the Notice of Removal's filing made
GEICO's counsel's identity clear, it immediately
filed its Notice of Consent to Removal. See Tr. at
25:20-22 (Hill). American Home protested, therefore, that it
would be unfair and unjust to strictly apply a thirty-day
deadline. See Tr. at 25:23-26:2 (Hill).
Court then asked American Home how, in its opinion, the
deadline rule should read. See Tr. at 26:3-4
(Court). American Home suggested that the rule should be read
to require defendants to consent to a notice of removal
within a reasonable time after they have identified all other
defendants' counsel. See Tr. at 26:5-10 (Hill).
The Court pushed back, noting that Congress had not written
the rule that way. See Tr. at 26:12-13 (Court).
American Home speculated that Congress did not write the rule
in that way because Congress did not take into account: (i)
the difficulties inherent in coordinating among many
defendants -- especially when one or more of those defendants
is a corporation from outside the state; and (ii) New
Mexico's idiosyncratic process of routing service on
insurance companies through the Superintendent of Insurance.
See Tr. at 26:14-21 (Hill).
then returned to the podium and conceded that he had not
previously familiarized himself with the legislative history
that GEICO introduced, but he cautioned that the Court is one
of “very limited jurisdiction” that must strictly
construe the removal rules. Tr. at 27:11-16 (Romero). Padilla
then suggested that GEICO hoisted itself on its own petard by
arguing that equal treatment ought to be a consideration in
this case. See Tr. at 27:19-28:7
(Romero)(referencing Tr. at 20:6-14 (Perry)). According to
Padilla, equal treatment to all defendant corporations
demands that the consent deadline be strictly enforced;
otherwise, the voice of those defendants who do not wish to
consent to removal have their voices muted. See Tr.
at 27:19-28:7 (Romero). Resisting any implication that the
deadline could be relaxed, Padilla urged the Court to
strictly apply the thirty-day window that he found in
subsection (C). See Tr. at 28:8-29:15 (Romero,
American Home's arguments, Padilla attacked the
contention that American Home had been unable to identify
GEICO's counsel before GEICO filed the Notice of Removal.
See Tr. at 29:16-30:10 (Romero). According to
Padilla, the New Mexico bar is small, and court dockets
readily reveal dozens of cases against GEICO that the same
even smaller collection of attorneys handled. See
Tr. at 29:21-30:3 (Romero). Padilla asserted that it would
not be very difficult to focus on, identify, and communicate
with the counsel handling this specific case for GEICO.
See Tr. at 30:2-10 (Romero). Prompted by the Court
to say how it would write the consent deadline rule, Padilla
extemporized that “a defendant can consent or remove
within thirty days of, I'm adding actually to the
language, Your Honor, but that's the way I'm reading
the rule or thinking of the rule. If they're within their
right to remove within their thirty days, they can
remove.” Tr. at 32:22-33:2 (Romero). Enumerating some
of the benefits that he saw to reading the rule this way,
Padilla maintained that it: (i) prevents defendants who do
not want to be removed from being removed; (ii) prevents
state courts from losing jurisdiction incorrectly; and (iii)
removes the lexical ambiguity that inheres to GEICO's
preferred language of “within a reasonable time.”
Tr. at 33:10-19 (Romero).
Court then turned its attention to the fraudulent joinder
issue, and it asked Padilla what Brown Insurance and Brown
did wrong that would permit naming them as Defendants in this
case. See Tr. at 33:23-24 (Court). Padilla indicated
that he believed Brown Insurance and Brown breached their
contract with him, because Brown allegedly promised to obtain
full UM coverage for Padilla and failed to do what he said he
would do. See Tr. at 35:2-36:7 (Romero, Court). The
Court noted -- and Padilla conceded -- that Padilla had
received some UM coverage, even if it was not full coverage.
See Tr. at 36:8-12 (Court, Romero). Padilla
insisted, however, that he had wanted full coverage and not
partial coverage. See Tr. at 36:16-37:1 (Romero,
then took its turn at the podium to respond regarding the
fraudulent joinder issue. See Tr. at 44:2-6 (Perry,
Court). GEICO stated that Padilla pleads no viable claim
against Brown Insurance and Brown. See Tr. at 44:7-9
(Perry). GEICO asserted that a breach-of-contract claim
cannot apply to Brown Insurance or to Brown, because: (i)
GEICO denied Padilla's insurance claim; (ii) Brown
Insurance and Brown are not GEICO; and (iii) the
breach-of-contract claim has to be brought against the
company that sold the policy. See Tr. at 44:19-45:8
(Perry). The Court challenged GEICO on this position,
observing that Padilla could have a viable claim against
Brown Insurance and Brown for breach of contract if Padilla
“walked in, for example, and said [that he] wanted to
buy insurance, ” and if Brown responded “you got
it, we got it for you, ” but then Brown Insurance and
Brown never bought a single policy. Tr. at 45:9-17 (Court).
Furthermore, the Court highlighted that Brown Insurance and
Brown receive a commission for providing customers with the
GEICO policies that they purchase through him. See
Tr. at 46:24-47:7 (Court, Perry). GEICO posited that the
commission is immaterial, because a straight
breach-of-contract claim requires that a contract exist
between the parties, and Brown Insurance and Brown never
entered into a contract with Padilla. See Tr. at
47:8-48:5 (Perry, Romero, Court).
chimed that his first claim in fact includes a
breach-of-contract claim against Brown Insurance and Brown,
based on Padilla's contract with them to procure the
coverage with GEICO. See Tr. at 48:15-24 (Romero).
GEICO scoffed at the idea that “there is a mysterious
third contract that we've never seen, because it's
not in writing, ” suggesting that -- at worst --there
might be a negligent misrepresentation claim or an agency
claim to be had in the case of an oral contract, but that
breach of contract requires an agreement in writing. Tr. at
48:25-50:6 (Perry, Court). The Court, not fully convinced,
asked analogically whether breach of contract exists if
someone walks into a store and buys a piece of wood but the
owner does not give him or her the wood. See Tr. at
50:7-11 (Court). GEICO suggested that the analogy was
imperfect, on the grounds that Brown and Brown were only
agents who sold GEICO's contract, i.e., that
Brown and Brown did not have their own policy to sell.
See Tr. at 50:12-51:5 (Perry).
Court then offered Brown Insurance and Brown an opportunity
to speak to the merits question, asking them to focus why
they believe that Padilla does not have a viable claim
against them. See Tr. at 53:13 (Court). The Court
expressed qualms about concluding that Brown Insurance and
Brown could not have breached a contract with Padilla under
any circumstances, as GEICO suggested. See Tr. at
53:16-19 (Court). After all, the Court surmised, insurance
brokers could “really do bad things to consumers if
there isn't some law out there that says, when people
walk in and [the brokers] don't purchase what they say
they purchased, ” that the broker is liable for breach
of contract. Tr. at 53:19-24 (Court). Brown Insurance and
Brown explained that it did not believe that insurance
brokers in general are immune from breach-of-contract suits,
but they believed that Padilla does not prove a viable
breach-of-contract claim against them in this particular
instance. See Tr. at 53:25-54:3 (Frase). According
to Brown Insurance and Brown, there was no consideration
exchanged between Padilla, and Brown Insurance or Brown; they
stated that even an insurance broker commission, if any,
would arise out of the contractual relationship that GEICO
has with Brown and Brown Insurance. See Tr. at
54:3-15 (Frase). Burrowing more deeply into this point, the
Court suggested that it does not seem to matter from whence
the broker commission comes insofar as the commission arises
from Brown Insurance and Brown selling Padilla an insurance
contract. See Tr. at 54:16-24 (Court). Brown
Insurance and Brown indicated that they disputed that they
even sold the GEICO policy to Padilla. See Tr.
Court asked Brown Insurance and Brown whether Brown would
even be able to state under oath that Brown Insurance and
Brown had not sold the insurance policy to Padilla.
See Tr. at 55:20-24 (Court). Brown Insurance and
Brown responded that it is likely that Brown will never be
able to make such a statement under oath, because he (i)
retired before the case was filed; (ii) gave away all his
records; and (iii) has no direct interactions with Padilla.
See Tr. at 55:25-56:4 (Frase). Brown Insurance and
Brown acknowledged that, as a result, it was staking its
defense primarily on GEICO's documentation. See
Tr. at 56:5-9 (Frase, Court). Brown Insurance and Brown then
conceded that they believe GEICO's and Padilla's
conflicting accounts of how Padilla purchased the GEICO
policy could be reconcilable, at least for the purposes of
the Motion. See Tr. at 56:10-13 (Court,
then took advantage of his opportunity to reply to further
address his breach-of-contract claim against Brown Insurance
and Brown. See Tr. at 56:18-23 (Court, Romero).
Padilla asserted that there are “lots of different
claims related to failing to procure coverage, ”
including breach of contract. Tr. at 57:4-18 (Romero, Court).
Padilla contended that Brown Insurance and Brown failed to
obtain the unlimited UM coverage that Padilla requested, and
that New Mexico requires under the Mandatory Financial
Responsibility Act, N.M. Stat. Ann. §§ 66-5-201 to
-239. See Tr. at 57:25-58:9 (Romero).
REGARDING DIVERSITY JURISDICTION
jurisdiction under 28 U.S.C. § 1332(a)(1) requires: (i)
complete diversity among the parties; and (ii) that
‘the matter in controversy exceeds the sum or value of
$75, 000, exclusive of interest and costs.'”
Thompson v. Intel Corp., 2012 U.S. Dist. LEXIS
126311, at *12 (D.N.M. 2012)(Browning, J.)(citing 28 U.S.C.
§ 1332(a)). As the Court has previously explained,
“[t]he Supreme Court of the United States has described
this statutory diversity requirement as ‘complete
diversity, ' and it is present only when no party on one
side of a dispute shares citizenship with any party on the
other side of a dispute.” McEntire v. Kmart
Corp., 2010 U.S. Dist. LEXIS 13373, at *3 (D.N.M.
2010)(Browning, J.)(citing Strawbridge v. Curtiss, 7
U.S. (3 Cranch) 267, 267-68 (1806), overruled in part by
Louisville & N. R. Co. v. Mottley, 211 U.S. 149
(1908); McPhail v. Deere & Co., 529 F.3d 947,
951 (10th Cir. 2008)). The amount-in-controversy requirement
is an “estimate of the amount that will be put at issue
in the course of the litigation.” Valdez v. Metro.
Prop. & Cas. Ins. Co., 867 F.Supp.2d 1143, 1163
(D.N.M. 2012)(Browning, J.)(citing McPhail v. Deere &
Co., 529 F.3d at 956). The Court will discuss the two
requirements in turn.
Diversity of Citizenship.
diversity jurisdiction purposes, a person's domicile
determines citizenship. See Crowley v. Glaze, 710
F.2d 676, 678 (10th Cir. 1983). “A person's
domicile is defined as the place in which the party has a
residence in fact and an intent to remain indefinitely, as of
the time of the filing of the lawsuit.” McEntire v.
Kmart Corp., 2010 U.S. Dist. LEXIS 13373, at *3 (citing
Crowley v. Glaze, 710 F.2d at 678). See
Freeport-McMoRan, Inc. v. KN Energy, Inc., 498 U.S. 426,
428 (1991)(“We have consistently held that if
jurisdiction exists at the time an action is commenced, such
jurisdiction may not be divested by subsequent
events.”). If neither a person's residence nor the
location where the person has an intent to remain can be
established, the person's domicile is that of his or her
parents at the time of the person's birth. See Gates
v. Comm'r of Internal Revenue, 199 F.2d 291, 294
(10th Cir. 1952)(“[T]he law assigns to every child at
its birth a domicile of origin. The domicile of origin which
the law attributes to an individual is the domicile of his
parents. It continues until another domicile is lawfully
acquired.”). Additionally, “while residence and
citizenship are not the same, a person's place of
residence is prima facie evidence of his or her
citizenship.” McEntire v. Kmart Corp., 2010
U.S. Dist. LEXIS 13373, at *3 (citing State Farm Mut.
Auto. Ins. Co. v. Dyer, 19 F.3d 514, 520 (10th Cir.
1994)). A corporation, on the other hand, is
“‘deemed to be a citizen of any State by which it
has been incorporated and of the State where it has its
principal place of business.'” Gadlin v. Sybron
Int'l Corp., 222 F.3d 797, 799 (10th Cir.
2000)(quoting 28 U.S.C. § 1332(c)(1)); Thompson v.
Intel Corp., 2012 WL 3860748, at *12 (D.N.M.
Amount in Controversy.
statutory amount-in-controversy requirement, which presently
stands at $75, 000.00, must be satisfied as between a single
plaintiff and a single defendant for a federal district court
to have original jurisdiction over the dispute; “a
plaintiff cannot aggregate independent claims against
multiple defendants to satisfy the amount-in-controversy
requirement, ” nor can multiple plaintiffs aggregate
their claims against a single defendant to exceed the
threshold. Martinez v. Martinez, 2010 U.S. Dist.
LEXIS 38109, at *18 (D.N.M. 2010)(Browning, J.). If multiple
defendants are jointly liable, or jointly and severally
liable, on some of the claims, however, the amounts of those
claims may be aggregated to satisfy the amount-in-controversy
requirement as to all defendants jointly liable for the
claims. See Alberty v. W. Sur. Co., 249 F.2d 537,
538 (10th Cir. 1957); Martinez v. Martinez, 2010
U.S. Dist. LEXIS 38109, at *18. Similarly, multiple
plaintiffs may aggregate the amounts of their claims against
a single defendant if the claims are not “separate and
distinct.” Martin v. Franklin Capital Corp.,
251 F.3d 1284, 1292 (10th Cir. 2001)(Seymour, C.J.),
abrogated on other grounds by Dart Cherokee Basin
Operating Co. v. Owens, 135 S.Ct. 547 (2014). Multiple
claims by the same plaintiff against the same defendant may
be aggregated, even if the claims are entirely unrelated.
See 14AA Charles A. Wright, Arthur R. Miller, Edward
H. Cooper, Vikram D. Amar, Richard D. Freer, Helen Hershkoff,
Joan E. Steinman, & Catherine T. Struve, Federal
Practice and Procedure, Jurisdiction § 3704, at
566-95 (4th ed. 2011). While the rules on aggregation sound
complicated, they are not in practice: if a single plaintiff
-- regardless whether he or she is the only plaintiff who
will share in the recovery -- can recover over $75, 000.00
from a single defendant --regardless whether ...