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Korsun v. Progressive Northern Insurance Co.

October 31, 2006

MARY CATHERINE KORSUN, PLAINTIFF,
v.
PROGRESSIVE NORTHERN INSURANCE CO. AND GERALD J. PRICE INSURANCE AGENCY, INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court is Plaintiff Mary Catherine Korsun's Motion to Remand. (Doc. 13-1.) For the reasons set forth below, Plaintiff's Motion to Remand will be granted.

BACKGROUND

The facts as alleged in Plaintiff's Complaint filed in the Court of Common Pleas of Lackawanna County Pennsylvania, are as follows. On December 3, 2002, the Plaintiff was struck involved in a motor vehicle accident when the vehicle she was operating was struck by the vehicle of Matthew A. Burnett ("Burnett"). (Doc. 1-4 Ex. A ¶ 10.) Plaintiff suffered and will continue to suffer from a number of severe and permanent injuries, including headaches, neck pain, cervical strain, numbness, and great shock to her nervous system and musculature. (Doc. 1-4 Ex. A ¶ 11.)

At the time of the collision, Burnett was insured by Defendant Progressive Northern Insurance Co. ("Progressive"), with bodily injury liability protection limits in the amount of $25,000.00. (Doc. 1-4 Ex. A ¶ 16.) That amount was insufficient to compensate Plaintiff for the injuries she sustained. (Doc. 1-4 Ex. A ¶ 17.) Plaintiff was also insured by Progressive. The Progressive policy was sold to Plaintiff by Defendant Gerald J. Price Insurance Agency, Inc. ("Price Agency"), an authorized agent or representative of Progressive. (Doc. 1-4 Ex. A ¶ 19.)

At the time Plaintiff purchased her insurance policy, she elected to purchase underinsured motorist benefits. (Doc. 1-4 Ex. A ¶ 23.) Plaintiff also requested that Price Agency obtain and maintain proper and adequate automobile insurance coverage for her, including underinsured motorist coverage which provided for arbitration of disputed claims. (Doc. 1-4 Ex. A ¶ 52.) On November 15, 2004, Plaintiff informed Progressive that she intended to pursue an underinsured motorist claim. (Doc. 1-4 Ex. A ¶ 29.)

On March 7, 2006, Plaintiff appointed her arbitrator and requested that Progressive appoint its arbitrator within thirty (30) days. (Doc. 1-4 Ex. A ¶ 41.) Progressive informed Plaintiff on March 21, 2006, that it would not agree to proceed with arbitration. (Doc. 1-4 Ex. A ¶ 42.)

On May 9, 2006, Plaintiff filed her Complaint in the Court of Common Pleas of Lackawanna County. (Doc. 1-4 Ex. A.) On June 8, 2006, Progressive removed the case to federal court on the basis of diversity jurisdiction. (Doc. 1-1.) Progressive contends the joinder of Gerald J. Price was solely to defeat diversity, that there is no legitimate claim against Price Agency, and therefore joinder is fraudulent and diversity does exist. Plaintiff now moves to remand. (Doc. 13-1.)

DISCUSSION

In the present case, Plaintiff is a citizen of Pennsylvania, Defendant Progressive is a citizen of Ohio and Wisconsin. Defendant Price Agency is a citizen of Pennsylvania. Defendants argue that Price Agency was fraudulently joined and therefore should be disregarded for the purposes of determining diversity of citizenship. Alternatively, Defendants argue that Price Agency is a nominal partyand should be disregarded for the purposes of determining diversity of citizenship.

A. Fraudulent Joinder

A defendant has the right to remove a civil action from state court if the case could have been brought originally in federal court. 28 U.S.C. § 1441(a). "For a removal predicated upon diversity of citizenship, a proper exercise of federal jurisdiction requires satisfaction of the amount in controversy requirement as well as complete diversity between the parties, that is, every plaintiff must be of diverse state citizenship from every defendant." In re Briscoe,448 F.3d 201, 215-216 (3d Cir. 2006) (citing Grand Union Supermarkets of the Virgin Islands, Inc. v. H.E. Lockhart Mgmt., Inc., 316 F.3d 408, 410 (3d Cir. 2003)).

However, "[t]he doctrine of fraudulent joinder represents an exception to the requirement that removal be predicated solely upon complete diversity." Id. at 215-216. In a suit with named defendants who are not of diverse citizenship from the plaintiff, the diverse defendant may still remove the action if it can establish that the non-diverse defendants were "fraudulently" named or joined solely to defeat diversity jurisdiction.

Id. at 216. Joinder is fraudulent if "there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendant or seek a joint judgment." Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 32 (3d Cir. 1985) (citation and quotation marks omitted). In evaluating the alleged fraud, the Court must focus on the plaintiff's complaint at the time the petition for removal was filed. Batoff v. State Farm Ins. Co., 977 F.2d 848, 851-52 (3d Cir. 1992). The Court must also assume as true all factual allegations ...


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