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Koop v. AMCO Insurance Co.

United States District Court, N.D. California, San Francisco Division

June 27, 2016

JAMIE KOOP, Plaintiff,


          LAUREL BEELER United States Magistrate Judge.


         This is a bad-faith insurance claim for alleged wrongful delays in paying-out policy benefits.[1]Jamie Koop alleges that, after she was injured by an underinsured motorist, AMCO wrongfully denied her claims under the parties' insurance contract.[2] Ms. Koop sued in California State court but AMCO removed the case upon learning that Ms. Koop valued the underlying damages at near or exceeding "six figures."[3] Ms. Koop now moves to remand the case for lack of diversity jurisdiction.[4] The court denies the motion.


         Ms. Koop had a California car insurance policy with AMCO.[5] The policy covered bodily injuries caused by underinsured motorists up to a maximum of $500, 000 per person per accident.[6]This case arises out of AMCO's alleged dilatory and bad-faith processing of Ms. Koop's claim under this coverage.[7]

         During the policy period, in July 2011, "an underinsured driver negligently . . . collided into [Ms. Koop's] vehicle[, ] . . . caus[ing] bodily injuries[.]"[8] Because of the injuries, Ms. Koop had a claim against the driver exceeding $150, 000 and was entitled to benefits under her AMCO policy (a fact of which AMCO was allegedly aware).[9] Ms. Koop accordingly demanded that AMCO compensate her under the underinsured motorist coverage.[10]

         Ms. Koop demanded that AMCO pay the policy maximum - $500, 000.[11] AMCO rejected her demand, allegedly failing to "fully and thoroughly inquire and investigate" the claim.[12] Ms. Koop also alleges that AMCO utilized "delays and stall tactics" in dealing with her claim, "even though it was aware that the delay in making payment . . . adversely affected her recovery from and her treatment of [her] injuries."[13] Because AMCO rejected her demands and utilized delay tactics, Ms. Koop was "forced to retain the services of an attorney[.]"[14]

         After Ms. Koop retained an attorney, and approximately ten months after she demanded the policy limits, AMCO offered to settle her claim for $150, 000.[15] Ms. Koop rejected the offer as "[un]reasonable in light of the information that [she] provided to . . . AMCO."[16] AMCO allegedly knew that Ms. Koop 1) was diagnosed with multiple injuries (including nerve trauma and knee, back, and neck pain); 2) had received "almost continuous medical care" since the accident (including pain medication, physical therapy, injections, radiofrequency, and psychological treatment) and would need extensive future treatment; 3) "was taking medication that impacted her ability to safely get pregnant, which was in the family plan"; and 4) missed three weeks of work.[17] After rejecting the $150, 000 offer, Ms. Koop again requested payment of the policy maximum, AMCO again refused, and she then demanded arbitration (as required by the policy).[18]

         Before arbitration, the parties unsuccessfully attended mediation, during which Ms. Koop incurred approximately $4, 000 in costs.[19] The parties arbitrated the claim several months later, and in the end, AMCO paid Ms. Koop a total of $254, 079: $150, 000 in advance of the mediation and $104, 079 after arbitration.[20] Nevertheless, during the claims process, Ms. Koop suffered "emotional and mental distress and anguish, embarrassment, mortification, humiliation, and indignity[.]"[21] She also racked up attorney's fees, litigation costs, and medical expenses as a result of AMCO's "wrongful" and "unreasonable" conduct.[22] Ms. Koop accordingly sued AMCO in California state court, alleging three claims: 1) tortious breach of insurance contract ("bad faith/breach of the implied covenant"); 2) intentional infliction of emotional distress; and 3) negligent infliction of emotional distress.[23]

         AMCO removed the case to this court on the basis of diversity jurisdiction and Ms. Koop now moves to remand back to state court.[24] AMCO opposed the motion and Ms. Koop untimely replied - a tardiness to which AMCO objects.[25]


         1. The court considers Ms. Koop's late reply brief

         Ms. Koop filed her reply brief three days late in violation of Civil Local Rule 7-3 and, as a result, AMCO objects to the court's consideration of her arguments therein.[26] AMCO does not, however, identify how the untimeliness will prejudice it, and the court will accordingly consider the brief and request for judicial notice. See Morales v. Laborers' Union Local 304, No. C 11-02278 WHA, 2012 WL 70578, at *6 (N.D. Cal. Jan. 9, 2012) (considering a late brief in part because the defendant did "not claim[] that prejudice would flow from [its] acceptance"). In the future, Ms. Koop must file her papers on time.

         2. Requests for judicial notice

         Both parties make requests for judicial notice under Federal Rule of Evidence 201.[27] "[A] court may judicially notice a fact that is not subject to reasonable disputes because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201.

         First, AMCO asks that the court judicially notice three documents: 1) Morello v. AMCO Ins. Co., No. C 11-6623-SI, 2012 WL 628911 (N.D. Cal. Feb. 27, 2012); 2) Allied Group's Certificate of Standing/Certificate of Existence issued by the Iowa Secretary of State; and 3) the Iowa Secretary of State's Business Entity Summary for Allied Group.[28] The court considers the Morello order without taking judicial notice. See Fed. R. Evid. 201 advisory comm. n. (1972); Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 (9th Cir. 2010); Toth v. Grand Trunk R.R., 306 F.3d 335, 349 (6th Cir. 2002) ("[J]udicial notice is generally not the appropriate means to establish the legal principles governing the case.") And the court takes judicial notice of the two Iowa Secretary of State documents as public records. See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001), overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002); Farina Focaccia & Cucina Italiana, LLC v. 700 Valencia Street LLC, No. 15-cv-02286-JCS, 2015 WL 4932640, at *4 (N.D. Cal. Aug. 18, 2015) (taking judicial notice of state secretaries' websites); Shurkin v. Golden State Vintners, No. C 04-3434 MJJ, 2005 WL 1926620, at *6 (N.D. Cal. Aug. 10, 2005) (taking judicial notice of certificate of organization). The court therefore grants AMCO's request.

         Second, Ms. Koop requests judicial notice of two website printouts: 1) Allied Group's website listing its office locations,; and 2) an AMCO insurance company profile,[29] She argues these webpages show AMCO is a subsidiary of Allied Group, a company with a "regional office" in Sacramento, California.[30] Whether or not the court can judicially notice these webpages, the request is denied as irrelevant because (as described below) even if these facts were accepted as true, they do not establish that AMCO is domiciled in California.

         3. The court has diversity jurisdiction

         A state-court defendant, such as AMCO, may remove an action to federal court based on diversity jurisdiction. 28 U.S.C. § 1441(b). For diversity jurisdiction to exist there must be complete diversity amongst opposing parties, and the amount in controversy must exceed $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332(a). Here, Ms. Koop argues that remand is necessary because these requirements are not met: she argues the parties are not diverse and the amount in controversy is not satisfied. The court concludes that it has jurisdiction.

         3.1 The parties are diverse

         The first issue is whether AMCO is a citizen of California, rendering the parties non-diverse and the court without jurisdiction. A corporation is "deemed to be a citizen of every State . . . [in] which it has been incorporated and of the State . . . where it has its principal place of business[.]" 28 U.S.C. § 1332(c)(1). The Supreme Court defined a corporation's "principal place of business" as its "nerve center":

[A] "principal place of business" is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities. It is the place that Courts of Appeals have called the corporation's "nerve center." And in practice it should normally be the place where the corporation maintains its headquarters - provided that the headquarters is the actual center of direction, control, and coordination, i.e., the "nerve center, " and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).

Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010); see also Harris v. Rand, 682 F.3d 846, 851 (9th Cir. 2012). A corporation's "nerve center" is its only "principal place of business": "[f]or example, if the bulk of a company's business activities visible to the public take place in New Jersey, while its top officers direct those activities just across the river in New York, the ‘principal place of business' is New York." Hertz, 559 U.S. at 96 (reasoning that the nerve center test provides a necessary "clearer rule").

         In cases involving a subsidiary corporation, courts generally "look[] to the state of incorporation and principal place of business of the subsidiary, and not its parent." Danjaq, S.A. v. Pathe Comm'ns Corp., 979 F.2d 772, 775 (9th Cir. 1992) (internal quotations omitted). An exception lies where "the subsidiary is the alter ego of the parent corporation." Id.

         Here, the parties are diverse. Ms. Koop is a citizen of California;[31] AMCO is not, and instead is a citizen of Iowa and maybe Ohio.[32] Ms. Koop alleges in her complaint that AMCO is domiciled in Iowa.[33] AMCO's Associate Vice President and Assistant Secretary, Parag Shah, also declares: 1) AMCO is incorporated in Iowa, 2) "AMCO's corporate headquarters and principal office" are in Iowa, and 3) AMCO's officers and directors are located in Ohio and Iowa, from where they "coordinate the corporation's activities[.]"[34] By state of incorporation, AMCO is a citizen of Iowa. By nerve center location, AMCO is a citizen of Iowa (again) or Ohio. Recognizing the ambiguity of Mr. Shah's declaration - i.e. he declares that AMCO headquarters are in Iowa, but operations are controlled from both Iowa and Ohio - the court finds this sufficient to establish that diversity exists between Ms. Koop (California) and AMCO (Iowa/Ohio). Accord Morello v. Amco Ins. Co., No. C 11-6623 SI, 2012 WL 628911, at *2 (N.D. Cal. Feb. 27, 2012) (finding that AMCO is a citizen of Iowa).

         That AMCO's parent company, Allied Group, has a "regional office" in California does not alone change this conclusion - it does not, without more, make AMCO a citizen of California.[35]See Danjaq, 979 F.2d at 775. Similarly, that AMCO has business operations in the State - and is subject to personal jurisdiction (as Ms. Koop argues) - does not alter the conclusion.[36] See Hertz, 449 U.S. at 96. AMCO has satisfied its burden on this element. On this record, then, the court concludes that the parties are diverse.

         3.2 The amount in controversy is more likely than not greater than $75, 000

         The second issue is whether the amount in controversy exceeds the jurisdictional floor - $75, 000. See 28 U.S.C. § 1332. "The amount in controversy includes claims for general and special damages (excluding costs and interest), attorney[']s fees if recoverable by statute or contract, and punitive damages if recoverable as a matter of law." J. Marymount, Inc. v. Bayer Healthcare, LLC, No. C 09-03110 JSW, 2009 WL 4150126, at * (N.D. Cal. Nov. 30, 2009) (quoting Conrad Assocs v. Hartford Accident & Indem. Co., 994 F.Supp. 1196, 1198 (N.D. Cal. 1998)) (internal quotations omitted).

         "Where, as here, it is unclear or ambiguous from the face of a state-court complaint whether the requisite amount in controversy is pled, the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold." Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1121-22 (9th Cir. 2013) (internal quotations and citations omitted). The Ninth Circuit has "not addressed the types of evidence defendants may" use to satisfy this burden. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). It has, however, endorsed the "practice of considering facts presented in the removal petition as well as any summary-judgment-type evidence relevant to the amount in controversy ...

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