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Gentile v. Travelers Personal Insurance Co.

February 21, 2007


The opinion of the court was delivered by: A. Richard Caputo United States District Judge



Presently before the Court is Plaintiffs Renee and Mark Gentile's Motion to Remand. (Doc. 5.) For the reasons set forth below, Plaintiff's motion will be granted.


This case arises out of a first party medical claim that was made under an insurance policy as a result of an automobile accident that occurred on May 8, 2005. Plaintiffs initiated suit by filing a Complaint in the Court of Common Pleas of Lackawanna County, Pennsylvania, on November 3, 2006. The suit was filed against Travelers Personal Insurance Company ("Travelers"), St. Paul Travelers Companies, Inc. ("St. Paul"), and Ms. Susan Adamitis ("Adamitis"), individually, as the claims representative who handled Plaintiffs' insurance claim. Travelers is a citizen of the State of Connecticut, St. Paul is a citizen of the State of Minnesota, and Plaintiffs and Ms. Adamitis are citizens of the Commonwealth of Pennsylvania.

The thrust of Plaintiffs' Complaint is that Defendants wrongfully handled and denied Plaintiff Renee Gentile's claim for first party medical benefits. The Complaint contains a total of eight counts, all of which are directed against Travelers and St. Paul. Counts II ("Breach of Fiduciary Duty"), III ("Negligent Infliction of Emotional Distress"), and V ("Negligence") are directed against Defendant Susan Adamitis.

On November 27, 2006, Defendants filed a notice of removal, averring that Defendant Adamitis's state of residency should be disregarded for purposes of determining diversity jurisdiction under the "fraudulent joinder" doctrine. On December 26, 2006, Plaintiffs filed the present motion to remand. (Doc. 5.) Briefs in support and opposition to this motion were thereafter filed. (Docs. 8, 12, 13.) This motion is fully briefed and ripe for disposition.


A. Fraudulent Joinder

Pursuant to 28 U.S.C. § 1447(c), this Court must remand any action if "it appears that the district court lacks subject matter jurisdiction." Thus, since this case is before the Court on the basis of our diversity jurisdiction, we must remand if there exists a want of diversity of citizenship. The United States Supreme Court has held that in order for a federal court to exercise its jurisdiction on the basis of diversity of citizenship, there must be "complete diversity" between the parties. Thus, "diversity jurisdiction is not to be available when any plaintiff is a citizen of the same State as any defendant." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). Although Travelers and St. Paul are of diverse citizenship, since both Plaintiffs and Ms. Adamitis are citizens of Pennsylvania, it appears that there is a lack of "complete diversity" in this matter.

Nevertheless, Defendants ask the Court to deny Plaintiffs' Motion to Remand on the grounds that Ms. Adamitis was fraudulently joined as a party. The "fraudulent joinder" doctrine does not require a showing of fraud as the term is generally understood. Cook v. Pep Boys-Mannie, Moe & Jack, Inc., 641 F.Supp. 43, 46 (E.D. Pa. 1985). Instead, the Third Circuit Court of Appeals has noted that joinder is considered fraudulent "where 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) (quoting Goldberg v. CPC Int'l, Inc., 495 F.Supp. 233, 239 (N.D. Cal. 1980)). Thus, joinder may be considered fraudulent if the plaintiff has failed to state a cause of action against the nondiverse defendant. Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111-12 (3d Cir.1990) (citations omitted), cert. denied, 498 U.S. 1085 (1991). But, "if there is even a possibility that a state court would find that the complaint states a cause of action against [the] resident[] defendant, the federal court must find that joinder was proper and remand the case to state court." Id. at 111 (citation omitted). Furthermore, the Third Circuit Court of Appeals has held that "where there are colorable claims or defenses asserted against or by diverse and non-diverse defendants alike, the court may not find that the non-diverse parties were fraudulently joined based on its view of the merits of those claims or defenses." Id. at 113 (citing Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S. 146 (1914)).

The removing party bears the burden of demonstrating that the plaintiff has fraudulently joined a party in an effort to defeat diversity jurisdiction, and this burden is a heavy one. Id. at 111; Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1011 (3d Cir. 1987), cert. dismissed sub nom., Am. Standard, Inc. v. Steel Valley Auth., 484 U.S. 1021 (1988). In determining whether a defendant has met this burden, a district court must analyze the complaint, assuming as true all factual allegations made therein. Steel Valley, 809 F.2d at 1011. The Court must also "resolve any uncertainties as to the current state of controlling substantive law in favor of the plaintiff." Boyer, 913 F.2d at 111. Thus, if we determine that Defendant Adamitis has been fraudulently joined, we must dismiss the complaint as to Ms. Adamitis while maintaining jurisdiction over the dispute in this Court. If, however, we find that Plaintiffs have properly stated a claim against Ms. Adamitis, we must remand this matter to the Court of Common Pleas in accordance with 28 U.S.C. § 1447(c). With this in mind, we turn to the complaint and ask whether Plaintiffs have properly stated a claim against Ms. Adamitis under Pennsylvania law.

Finally, in determining the legitimacy of a complaint in a jurisdictional analysis, a court does not apply the Rule 12(b)(6) standard, that is, has the plaintiff "failed to state a claim upon which relief may be granted". Rather, the Court may conclude that parties have been fraudulently joined only upon a finding that a claim is "wholly insubstantial and frivolous". Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (1992) (citing Lunderstadt v. Colafella, 885 F.2d 66 (3d Cir. 1989). Put another way, the inquiry into the validity of a complaint triggered by a motion to dismiss under Rule 12(b)(6) is more searching than permissible when a party makes a claim of fraudulent joinder. Thus, it is ...

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