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Health Pro Dental Corp. v. Travelers Property Casualty Co. of America

United States District Court, C.D. California

March 17, 2017


          Present: The Honorable BEVERLY REID O'CONNELL, United States District Judge


         Proceedings: (IN CHAMBERS)



         Pending before the Court is Plaintiffs Health Pro Dental Corp. (“Health Pro”) and Dr. William E. Ginzburg's (“Ginzburg”) (collectively, “Plaintiffs”) Motion to Remand. (See Dkt. No. 14 (hereinafter, “Motion” or “Mot.”).) After considering the papers filed in support of and in opposition to the instant Motion, the Court deems this matter appropriate for resolution without oral argument of counsel. See Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. For the following reasons, the Court GRANTS Plaintiffs' Motion to Remand and DENIES Plaintiffs' request for attorneys' fees.


         A. The Parties

         Plaintiff Health Pro is a Nevada corporation with its principal place of business in California. (See Dkt. No. 1-2 (hereinafter, “Compl.”) at 2, ¶ 5.)[1] Plaintiff Ginzburg, a resident of California, owns 100 percent of Health Pro's outstanding equity shares. (Id. at 2, ¶ 6.) Defendant Travelers Casualty Insurance Company of America (“Travelers” or “Defendant”) is a corporation organized under the laws of the State of Connecticut, and maintains its principal place of business in Hartford, Connecticut. (Removal ¶ 10.)

         Defendant Michael Baker (“Baker”) resides in the County of San Francisco, California and works as claim adjuster for Travelers. (Compl. at 3, ¶ 8; 5, ¶ 19; see also Removal ¶ 12.)

         B. Factual Background

         On or about July 1, 2014, Travelers prepared and issued a custom insurance policy for Health Pro-Policy Number 680-5D327378-14-42[2] (“the Policy”). (See Compl. at 3-4, ¶ 10.) The Policy's aggregate coverage was four million dollars and covered two Health Pro dentist offices. (See id at 4, ¶ 11; Ex. A at 22.) In August 2015, the Health Pro office located at 13155 Mindanao Way, Marina Del Rey, CA 90292, “sustained significant water intrusions, ” which resulted in extensive mold growth. (See Compl. at 4, ¶¶ 12-13.) Health Pro submitted a loss claim to Travelers; Jonathan L. Monk (“Monk”) was the assigned claim professional and adjuster. (See id at 4, ¶¶ 14-15.) Health Pro claims it provided “significant requested documentation” to Monk and Travelers, but Travelers failed to address its claim of loss. (See id at 4, ¶ 17.)

         In 2015, Travelers transferred Health Pro's loss claim from Monk to Baker. (See id at 5, ¶ 19.) On February 12, 2016, Health Pro's counsel, Ginzburg, and Baker met to physically inspect the alleged damage. (See id at 5, ¶ 23.) Plaintiffs allege that based upon this visit, Travelers sent a letter on March 7, 2016, which stated “coverage exists for water damage to our business personal property, including structural improvements/betterments owned by you caused by the 8/10/15 plumbing leak.” (See id at 6, ¶ 25; Ex. B.) On March 18, 2016, Travelers issued a payment in the amount of $46, 526.63. (See Compl. at 6, ¶ 26.) In May 2016, Plaintiffs allege Travelers made numerous requests to conduct a fourth site visit. (See Id. at 7, ¶¶ 28-30.) On May 14, 2016, Travelers issued a letter and payment for “mold remediation related to the 8/10/15 plumbing leak, ” in the amount of $46, 526.63. (See Id. at 8, ¶¶ 32-33.) In response, Health Pro e-mailed a Statement of Claim to Travelers on May 27, 2016, but Travelers failed to respond. (See Id. at 8, ¶¶ 35-36.)

         Plaintiffs claim that as a result of Travelers' delayed responses and payments, Heath Pro was unable to pay its rent “after August 2015, ” which resulted in “serious economic peril” and a threat of eviction. (See Id. at 7, ¶ 30; 8, ¶¶ 31, 36.) In August of 2016, Health Pro was evicted and discontinued its dental practice at the Marina Del Rey location.[3] (See Id. at 9, ¶¶ 38-39.)

         C. Procedural Background

         Plaintiffs filed this action on December 28, 2016, in the Superior Court of the State of California, County of Los Angeles (“Los Angeles Superior Court”). (See Compl.) Plaintiffs allege the following causes of action: (1) breach of contract and declaratory relief; (2) breach of the covenant of good faith and fair dealing; (3) intentional infliction of emotional distress (“IIED”); (4) intentional interference with prospective economic relations; (5) unfair competition, in violation of Business & Professions Code Section 17200; and, (6) conspiracy to defraud and interfere with prospective economic relations. (See Id. at 9-16, ¶¶ 40-79.)

         Travelers[4] removed this action on January 26, 2017. (See Dkt. No. 1 (hereinafter, “Removal”).) Additionally, Defendants filed the Declaration of Michael Baker in support of their Notice of Removal. (See Declaration of Michael Baker (Dkt. No. 4 (hereinafter, “Baker Removal Decl.”).) Plaintiffs filed the instant Motion on February 16, 2017. (See Mot.) Travelers opposed Plaintiffs' Motion to Remand on February 27, 2017. (See Dkt. No. 18 (hereinafter, “Opp'n”).) Defendants attached the Declaration of Michael Baker to their opposition. (See Declaration of Michael Baker (Dkt No. 18-1 (hereinafter, “Baker Remand Decl.”).) Plaintiffs replied in support of their Motion on March 6, 2017. (See Dkt. No. 19.) Additionally, Plaintiffs filed a response containing evidentiary objections to Baker's Declaration on March 6, 2017.[5] (See Dkt. No. 20.)


         Federal courts are of limited jurisdiction and possess only that jurisdiction as authorized by the Constitution and federal statute. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Original jurisdiction may be established pursuant to the diversity statute, 28 U.S.C. § 1332. Under § 1332(a)(1), a federal district court has jurisdiction over “all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, ” and the dispute is between citizens of different states. 28 U.S.C. § 1332(a)(1). The United States Supreme Court has interpreted § 1332 to require “complete diversity of citizenship, ” meaning that each plaintiff must be diverse from each defendant. Caterpillar Inc. v. Lewis, 519 U.S. 61, 67-68 (1996).

         Under 28 U.S.C. § 1441(a), a civil action may be removed to the district court only if the plaintiff could have originally filed the action in federal court. This means removal is proper only if the district court has original jurisdiction over the issues alleged in the state court complaint. If a matter is removable solely on the basis of diversity jurisdiction under § 1332, it may not be removed if any properly joined and served defendant is a citizen of the forum state. See 28 U.S.C. § 1441(b)(2).

         There is an exception to the complete diversity rule for fraudulently joined or “sham” defendants. A non-diverse defendant who has been fraudulently joined may be disregarded for diversity jurisdiction purposes. See Hunter v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009). Fraudulent joinder is a term of art and does not implicate a plaintiff's subjective intent. See McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Fraudulent joinder exists, and the non-diverse defendant is ignored for purposes of determining diversity of the parties, if the plaintiff “fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state.” Id.; accord Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). “A merely defective statement of the plaintiff's action does not warrant removal.” Albi v. St. & Smith Publ'ns, Inc., 140 F.2d 310, 312 (9th Cir. 1944). “It is only ...

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