United States District Court, D. New Mexico
M. Dominguez, Dominguez Law Firm, LLC, Albuquerque, New
Mexico, for Plaintiff.
R. Guebert and Elizabeth M. Piazza, Guebert Bruckner P.C.,
Albuquerque, New Mexico, for Defendant State Farm Mutual
Automobile Insurance Co.
Richard Leverick and Kylee J. Berger, Leverick and Musselman,
LLC, Albuquerque, New Mexico, for Defendant Union Development
Corp. d/b/a/ Build New Mexico.
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S
MOTION TO REMAND
MATTER comes before the court on Plaintiff Erin Foy's
Motion to Remand to the Second Judicial District Court of New
Mexico filed October 25, 2017 (ECF No. 7). Upon consideration
thereof, the Motion is not well taken and should be denied,
and the claims against Defendant Union Development Corp.
d/b/a Build New Mexico (“Build NM”) should be
dismissed without prejudice.
filed this action against Defendants Build NM, her employer,
and State Farm Mutual Automobile Insurance Co., her
employer's insurer, alleging that Defendants failed to
provide her with uninsured/underinsured motorist coverage for
an automobile accident that occurred during the scope of her
employment. Compl. 1-3, 6, ECF No. 1-2. Ms. Foy resides in
New Mexico, Build NM is incorporated and has its principal
place of business in New Mexico, and State Farm is
incorporated and has its principal place of business in
Illinois. Id. at 1; Notice of Removal 2, ECF No. 1.
Ms. Foy initially filed in New Mexico state court, see
Foy v. Union Dev. Corp., No. D-202-CV-201706083 (N.M.
Dist. Ct. filed Aug. 22, 2017), then State Farm removed to
this court as allowed by 28 U.S.C. §§ 1332, 1441.
Notice of Removal 1.
invoking diversity jurisdiction must show complete diversity
of citizenship between adverse parties and that the amount in
controversy exceeds $75, 000. E.g., Dutcher v.
Matheson, 733 F.3d 980, 987 (10th Cir. 2013). State Farm
submits - and Ms. Foy does not contest - that the amount in
controversy exceeds $75, 000, Guebert Aff. 2, ECF No. 1-4,
and it alleges that Ms. Foy fraudulently joined Build NM to
defeat federal diversity jurisdiction, Notice of Removal 2. A
defendant alleging fraudulent joinder must demonstrate that
the plaintiff either (1) pled fraudulent jurisdictional facts
or (2) cannot establish a cause of action against the
nondiverse party. Dutcher, 733 F.3d at 988. This is
a “heavy burden, ” and “all factual and
legal issues must be resolved in favor of the
plaintiff.” Id. (quoting Pampillonia v.
RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998)). If
a court determines that a defendant has been fraudulently
joined, it must dismiss the claims against that defendant
without prejudice. See Albert v. Smith's Food &
Drug Ctrs., Inc., 356 F.3d 1242, 1249 (10th Cir. 2004).
alleges six causes of action in her complaint but mentions
Build NM in only three of them. The first of these causes of
action is for declaratory judgment: the complaint alleges
that “Defendant State Farm and Defendant Build NM have
failed to provide underinsured motorist coverage under the
Policy to Plaintiff, an undisputed beneficiary under the
Policy, ” and it asks the court to “review the
Policy . . . and issue an Order declaring the parties'
respective rights and obligations and directing their
behavior accordingly.” Compl. 6-7. The complaint's
facts focus on State Farm's actions, though, and
do not suggest that Build NM failed to do anything.
Nor is it clear what relief the court could grant against
Build NM regarding State Farm's obligations to Ms. Foy
under the policy. Ms. Foy states that she is seeking an order
declaring coverage under the insurance contract issued by
State Farm, and she concedes that she is not seeking to hold
Build NM liable for the injuries she suffered in the
accident. Pl.'s Reply in Supp. of Mot. to Remand 3, ECF
second cause of action involving Build NM is for
“insurance bad faith”: the complaint alleges that
Defendants State Farm and Build NM (a) “Failed and
refused to timely, thoroughly, and/or fairly investigate,
evaluate, settle, or pay the claims and failed to give the
interests of its insured the same consideration as its
own”; (b) “Failed and refused to conduct an
adequate investigation into the facts and circumstances of
Plaintiff's claims”; (c) “Failed to conduct a
competent investigation of the claim and to honestly and
fairly balance its own interests and the interests of the
insured in denying the claim”; and (d) “Placed
its own financial interests above those of its
insured.” Compl. at 8-9. As Ms. Foy has not alleged
that Build NM is an insurer, the court fails to see how this
can be a cause of action against Build NM.
third cause of action involving Build NM is for unfair trade
practices: the complaint alleges that Defendant State
Farm's and Defendant Build NM's “wrongful
conduct, as described above, including the failure to
properly investigate, timely communicate, or resolve
Plaintiff's claim stemming from the tortious conduct of
the Underinsured Driver, constitutes both unfair practices
and unconscionable practices as set forth in the Unfair Trade
Practices Act, NMSA 1978, §57-12-1 et seq.”
Id. at 11. However, an unfair or deceptive trade
practice must be “knowingly made in connection with the
sale, lease, rental or loan of goods or services or in the
extension of credit or in the collection of debts by a person
in the regular course of the person's trade or
commerce.” N.M. Stat. Ann. § 57-12-2 (2017);
accord Stevenson v. Louis Dreyfus Corp., 811 P.2d
1308, 1311 (N.M. 1991). All of the conduct alleged in Ms.
Foy's unfair trade practices cause of action relates to
the provision of insurance, which Ms. Foy has not alleged
Build NM is in the business of providing.
short, Ms. Foy's allegations might form a cause of action
against an insurer - not an employer.
Accordingly, State Farm has met its burden of demonstrating
that Ms. Foy's allegations against Build NM cannot
establish a cause of action, and the claims against Build NM
should be dismissed without prejudice.
issue remains: whether Build NM must be a party to this
litigation for the court to determine State Farm's
liability (if any) to Ms. Foy. Ms. Foy contends that Build NM
is a proper party to this action because it is the holder of
the insurance contract at issue. Pl.'s Mot. to Remand
2-3. But suits to recover uninsured/underinsured motorist
benefits under an employer's policy are against the
insurer, not the employer. See Draper v. Mountain States
Mut. Cas. Co., 867 P.2d 1157, 1160 (N.M. 1994)
(“[W]e find no merit in [the] argument that [the
plaintiff] was indirectly suing his employer . . . .”).
argues that Build NM is a necessary party because it has an
interest that would be affected by the declaratory judgment
sought in the complaint and because Build NM would otherwise
be at risk of incurring duplicative obligations. Pl.'s
Reply in Supp. of Mot. to Remand 3-4. Even if Build NM has an
interest as a policyholder, though, Ms. Foy has not
articulated how disposing of the action without Build NM
would affect that interest. Ms. Foy does note that the
outcome of this action would affect Build NM's
subrogation rights on workers' compensation benefits paid
to Ms. Foy, citing Draper v. Mountain States Mutual
Casualty Co., 867 P.2d 1157. But in Draper,
significantly, the plaintiff-employee sued the
defendant-insurer alone - the employer was not a party to the
litigation. 867 P.2d at 1158, 1160. And while an employer has
a right of subrogation under N.M. Stat. Ann. §
52-5-17(C), there is no reason why, if Ms. Foy succeeds in
her current action against State Farm, Build NM could not
institute a separate action seeking reimbursement. See,
e.g., Chavez v. S.E.D. Labs., 14 P.3d 532, 534
also asserts that Build NM “may be at risk of issuing
duplicate payments to Plaintiff as a result of the
underinsured motorist claim and the workers' compensation
claim, ” citing New Mexico's version of Federal
Rule of Civil Procedure 19. Pl.'s Reply in Supp. of Mot.
to Remand 4. Build NM does not appear to share her concern,
as it joined State Farm's opposition to Ms. Foy's
motion to remand. Joinder in Opp'n to Mot. to Remand 1,
ECF No. 14. Regardless, this argument misses the mark. The
inquiry under Rule 19 as to whether an absent party must be
joined involves asking whether an existing party
would be at risk of incurring duplicative obligations.
See Fed.R.Civ.P. 19(a)(1)(B)(ii). There is no risk