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Lozano v. Jake Harless Insurance Brokerage

March 26, 2010

DONALD LOZANO AND ESTHER LOZANO, PLAINTIFFS,
v.
JAKE HARLESS INSURANCE BROKERAGE AND JAKE HARLESS AKA JACOB HARLESS, INDIVIDUALLY AND DOING BUSINESS AS JAKE HARLESS STATE FARM INSURANCE, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY AND DOES 1 TO 100, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Gary S. Austin United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS REGARDING DEFENDANTS' MOTION TO DROP OR SEVER THE CLAIMS AGAINST PLAINTIFFS' MOTION TO REMAND ACTION TO STATE COURT (Documents 11 & 12)

I. FACTUAL AND PROCEDURAL BACKGROUND

For several years prior to December 2008, Plaintiffs Donald and Esther Lozano ("Plaintiffs" or "the Lozanos") consulted with Jake Harless of Jake Harless Insurance Brokerage ("Harless" or "JHIB") regarding insurance coverage for their motor vehicles through State Farm Mutual Automobile Insurance Company ("State Farm") (collectively "Defendants"). Plaintiffs contend they were advised and ensured that their uninsured/underinsured ("UM/UIM") coverage limits were $250,000/$500,000. (Doc. 11 at 2; Doc. 19 at 2.)

On or about December 7, 2008, Plaintiffs were involved in a motor vehicle accident with an uninsured driver. Thereafter, Plaintiffs learned their UM/UIM policy limits were in fact only $30,000/$60,000. (Doc. 11 at 2; Doc. 19 at 2.)

On December 7, 2009, Plaintiffs originally filed suit against Defendants in Stanislaus County Superior Court asserting claims for intentional or negligent misrepresentation, breach of fiduciary duty and general negligence. (Doc. 1, Ex. A.) On February 5, 2010, Defendants removed the action to this Court. (Doc. 1.) In the notice of removal, Defendants asserted that Defendant Harless's citizenship should be disregarded because he had been fraudulently joined and there was no legal basis to find him independently liable. (Doc. 1 at 2-3.)

On February 12, 2010,*fn1 Defendants filed a motion to drop or sever the claims against Harless and JHIB. (Doc. 11.) On February 24, 2010, Plaintiffs filed a motion to remand this action to state court. (Docs. 12-14.) That same date, Plaintiffs filed an opposition to Defendants' motion to drop or sever the claims. (Doc. 19.) On March 12, 2010, Defendants filed an opposition to Plaintiffs' motion to remand. (Doc. 21.) Finally, on March 19, 2010, Defendants filed a reply to Plaintiffs' opposition to the motion to drop or sever claims. (Doc. 23.)

On March 24, 2010, this Court determined these matters were suitable for decision without oral argument pursuant to Local Rule 230(g).*fn2 The hearing scheduled for March 26, 2010, was vacated and the matters were deemed submitted for written findings. (Doc. 24.)

Because resolution of one motion resolves the other, the Court will address both matters in the instant findings.

II. LEGAL STANDARD

Rule 21 of the Federal Rules of Civil Procedure provides, in pertinent part, that "[o]n motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party."

Title 28 of the United States Code section 1441(a) provides that a defendant may remove "any civil action brought in a State court of which the district courts . . . have original jurisdiction . . .." Removal is proper when a case originally filed in state court presents a federal question or where there is diversity of citizenship among the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. §§ 1331, 1332(a).

Section 1447(c) provides that "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." "The removal statute is strictly construed against removal jurisdiction [and] [t]he defendant bears the burden of establishing that removal is proper." Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083 (9th Cir. 2009). The Ninth Circuit has held that "[w]here doubt regarding the right to removal exists, a case should be remanded to state court." Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).

A defendant seeking to avoid remand must prove fraudulent joinder. In other words, defendant must prove that plaintiff has named a defendant against whom no cause of action lies and that defendant's joinder defeats diversity jurisdiction. McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). A defendant is fraudulently joined when there is no possibility that the plaintiff will succeed in ...


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