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Hudgens v. New York Life Insurance Co.

March 17, 2009

STARLLA HUDGENS, INDIVIDUALLY, AND AS GUARDIAN AD LITEM FOR CH, PLAINTIFFS,
v.
NEW YORK LIFE INSURANCE COMPANY, BRADLEY JOHNSON, AND DOES 1-100, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Margaret M. Morrow United States District Judge

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND DENYING PLAINTIFF'S MOTION TO AMEND AS MOOT

On November 3, 2008, plaintiff Starlla Hudgens, on behalf of herself and as guardian ad litem for her minor child C.H., filed a complaint against defendants New York Life Insurance Company ("New York Life") and Bradley Johnson in San Luis Obispo Superior Court. New York Life removed the action to this court on December 24, 2008, asserting that the matter fell within the court's diversity jurisdiction under 28 U.S.C. §§ 1441(a) and 1332(a). On January 23, 2009, Hudgens filed a motion to remand and a motion for leave to amend her complaint. The court first considers whether Hudgens' motion to remand should be granted based on her original complaint.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Allegations in Hudgens' Complaint

Hudgens' husband, Michael Dee Hudgens (the "decedent"), purchased a life insurance policy from New York Life, naming Hudgens and the couple's child as beneficiaries.*fn1 The policy had a five-year term beginning June 1, 2005, and a $100,000 death benefit.*fn2 Defendant Johnson, an agent of New York Life, sold the decedent the policy.*fn3 On April 27, 2007, Hudgens' husband died of "hemorrhagic shock secondary to acute hepatic failure as a result of excessive alcohol intake."*fn4

Hudgens filed a claim under the policy, which New York Life denied. The insurer contended that the decedent falsely represented that he had not been counseled, treated or hospitalized for alcoholism on his policy application.*fn5 Hudgens asserts that Johnson instructed the decedent to leave portions of the application, including questions regarding his alcoholism, blank.*fn6 Johnson allegedly stated that New York Life's paramedic examiner would fill in the required information after examining the decedent.*fn7 According to Hudgens, Johnson represented that the "paramedic examiner would ask [the decedent] all medical questions necessary for [New York Life] to insure and guarantee that death benefits would be paid."*fn8 Hudgens contends that the examiner did not ask the decedent any questions about alcoholism.*fn9

Hudgens alleges claims for breach of contract and breach of the duty of good faith and fair dealing against New York Life, and claims for intentional and negligent misrepresentation against New York Life and Johnson.

B. New York Life's Notice of Removal

New York Life filed a notice of removal on December 24, 2008, asserting that the matter fell within the court's diversity jurisdiction under 28 U.S.C. §§ 1441(a) and 1332(a). In its notice of removal, New York Life asserts that it is a mutual corporation organized and existing under the laws of New York, with its principal place of business in New York, and that Hudgens and C.H. are citizens of California.*fn10 New York Life contends that the court should disregard Johnson's citizenship because he is a sham defendant who has been joined only to defeat diversity jurisdiction.*fn11

II. DISCUSSION

A. Legal Standard Governing Removal Jurisdiction

The right to remove a case to federal court is entirely a creature of statute. See Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). The removal statute, 28 U.S.C. § 1441, allows defendants to remove when a case originally filed in state court presents a federal question or is between citizens of different states and involves an amount in controversy that exceeds $75,000. See 28 U.S.C. §§ 1441(a), (b); see also 28 U.S.C. §§ 1331, 1332(a). Only state court actions that could originally have been filed in federal court may be removed.

28 U.S.C. § 1441(a); see Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); Ethridge v. Harbor House Rest., 861 ...


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