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Smith v. Liberty Mutual Fire Insurance Co.

United States District Court, D. New Mexico

April 4, 2019

JUSTIN SMITH, Plaintiff,



         THIS MATTER is before the Court on Plaintiff Justin Smith's Motion to Remand to State District Court and Memorandum in Support. (Doc. 9.) Having considered the notice of removal, the submissions of counsel, and the applicable law, the Court is unpersuaded by the arguments Plaintiff raises in his motion to remand and will deny the motion. However, the Court also finds that the notice of removal does not sufficiently address the citizenship of the individually named parties in this lawsuit. Accordingly, the Court orders Defendant Liberty Mutual Fire Insurance Company to show cause within ten calendar days why the Court should not remand the case.

         I. Background

         a. State Court Proceedings

         On August 3, 2017, Plaintiff filed suit in the Second Judicial District Court for the State of New Mexico against Defendants Liberty Mutual Insurance Company (Liberty), Matthew Chalan, Cheryl VanDusen, and "John Doe" Agents and Adjusters. (See Doc. 2-1.) The lawsuit stemmed from a July 20, 2013 motor vehicle accident in which a vehicle ran a red light, struck Plaintiffs vehicle, and then fled the scene. (Id. ¶¶ 14-17.) At the time of the accident, Plaintiff was covered under an automobile insurance policy issued by Defendant Liberty. (Id. ¶ 68.) In his complaint, Plaintiff alleged that Mr. Chalan was the driver of the hit-and-run vehicle and that Defendant VanDusen was the authorized claims representative employed by Defendant Liberty who handled Plaintiffs claim. (Id. ¶¶ 2-3, 14-17.) Plaintiff identified both himself and Mr. Chalan as New Mexico residents. (Id. ¶¶ 1-2.) Plaintiff asserted 14 causes of action against Defendants arising from the accident and the subsequent investigation and handling of Plaintiff s claim. (Id. ¶¶ 67-180.)

         Shortly after Plaintiff filed suit in state court, Defendant Liberty moved to dismiss Plaintiffs complaint. (Doc. 2-4.) The state court denied the motion on June 6, 2018, after holding a hearing. (Doc. 2-21.) Thereafter, the state court granted Plaintiff leave to amend his complaint and on August 1, 2018, Plaintiff filed his first amended complaint. (Docs. 2-28; 2-29.) In the amended complaint, Plaintiff removed Mr. Chalan as a party. (Doc. 2-29.) Plaintiff alleged that, rather than Mr. Chalan, it was "a 'phantom vehicle' and/or unidentified uninsured motorist" that struck his vehicle. (Id. ¶ 15.) In a footnote, Plaintiff explained that a witness to the accident followed the fleeing vehicle and obtained a license plate number. (Id. at 4 n.l.) Based on the information the eyewitness provided, the uniform crash report initially identified Mr. Chalan as the owner of the fleeing vehicle. (Id.) However, according to Plaintiff, "subsequent investigation by the police failed to validate or confirm that the offending driver was Mr. Chalan or the offending vehicle was owned by Mr. Chalan. No. [supplemental [p]olice report was ever filed confirming the identity of the driver or the offending vehicle that fled the scene." (Id.)

         Aside from removing Mr. Chalan as a defendant, Plaintiff added Liberty claims handler Cheryl Sloan as a defendant in the amended complaint and modified Defendant Liberty's name slightly to reflect the correct entity being sued.[1] (Id. ¶¶ 4-5, 8-9.) Plaintiff also reduced the number of claims he was asserting against Defendants to the following 11 causes of action: (1) breach of contract, negligence, intentional infliction of emotional distress, negligent misrepresentation, negligence per se, unreasonable delay, and punitive damages against all Defendants; (2) fraud and misrepresentation, breach of implied covenant of good faith and fair dealing, insurance bad faith and violation of the New Mexico Unfair Claims Practices Act against Defendant Liberty and its adjusters and claim representatives/handlers; and (3) violation of the New Mexico Insurance Code Unfair Trade Practices Act against Defendant Liberty. (Id. ¶¶ 70-162.)

         b. Removal

         The day after Plaintiff filed his amended complaint, Defendant Liberty removed the case to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). (Doc. 1.) In its notice of removal, Defendant Liberty asserts that Plaintiffs dismissal in his amended complaint of the only non-diverse defendant, Mr. Chalan, has resulted in complete diversity of citizenship between Plaintiff and all remaining defendants.[2] (Id. ¶¶ 9-10, 17.) As to the citizenship of the i defendants, Defendant Liberty asserts that it is a foreign corporation incorporated in Wisconsin with its principal place of business in Boston, Massachusetts, that Defendant VanDusen is a resident of Washington, and that Defendant Sloan is a resident of Illinois. (Id. ¶ 17.) Defendant Liberty also asserts that the amount in controversy exceeds the jurisdictional amount of $75, 000 based on Plaintiffs June 2, 2014 demand for $100, 000 in damages, his allegations of pain and suffering continuing to the present date, and his request for statutory penalties, punitive damages, and attorney fees. (Id. ¶¶ 13-14.)

         As to the timeliness of removal, Defendant Liberty asserts that it timely removed the case within 30 days of the date the case became removable - i.e., when Plaintiff filed the amended complaint - and within one year of commencement of the lawsuit in state court. (Id. ¶ 20.) See 28 U.S.C. 1446(b)(3) (stating that if a case is not removable based on the initial pleading, "a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable"); see also 28 U.S.C. § 1446(c) (providing that a case may not be removed from state to federal court on the basis of diversity of citizenship more than one year after commencement of the action.).

         Finally, because Defendants VanDusen and Sloan were not served prior to removal, Defendant Liberty asserts that their consent to removal is not needed. (Doc. 1 ¶ 12 (citing 28 U.S.C. § 1446(b)(2)(A) (requiring consent to removal by "all defendants who have been properly joined and served").)

         On September 1, 2018, Plaintiff moved to remand this matter to state court, focusing on whether diversity of citizenship exists. (Doc. 9.) Defendant Liberty filed a response in opposition on September 14, 2018 (Doc. 10), and Plaintiff filed a reply on September 29, 2018 (Doc. 11).

         II. Legal Standard

         An action is removable from state court if the federal district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). Pursuant to 28 U.S.C. § 1332(a), a federal district court possesses original subject-matter jurisdiction over a case when the parties are diverse in citizenship and the amount in controversy exceeds $75, 000.00. See Johnson v. Rodrigues,226 F.3d 1103, 1107 (10th Cir. 2000). As the party invoking the Court's jurisdiction in this case, Defendant Liberty "bear[s] the burden of establishing that the requirements for the exercise of diversity jurisdiction are present." See Martin v. Franklin Capital Corp.,251 F.3d 1284, 1290 (10th Cir. 2001), abrogated on other grounds by Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547 (2014); see also Montoya v. Chao,296 F.3d 952, 955 (10th Cir. 2002) ("The burden of establishing subject-matter jurisdiction is on the party asserting jurisdiction."). There is a presumption against removal jurisdiction. See Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995); see also Okla. Farm Bureau ...

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