United States District Court, W.D. Pennsylvania
OPINION AND ORDER Re: ECF Nos. 3 and 6
MAUREEN P. KELLY, Chief Magistrate Judge.
Plaintiffs Charles Istik and his wife Deborah Istik (collectively, "Plaintiffs") filed a Complaint in the Court of Common Pleas of Beaver County, Pennsylvania, on December 19, 2014, bringing claims against Defendant State Farm Mutual Automobile Insurance Company ("State Farm") and two of State Farm's adjusters, Defendants Jill D'Agnostino ("D'Agnostino"), and Michael Dingman ("Dingman") (collectively, "Defendants"). Plaintiffs allege that Defendants wrongfully withheld underinsured motorist ("UIM") benefits under an insurance policy purchased by Charles Istik after he was injured in a motor vehicle accident in May of 2012. Counts I, II and IV of the Complaint set forth breach of contract claims against State Farm and Counts III and V of the Complaint set forth claims against D'Agnostino and Dingman under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. §§ 201-1, et seq . ("UTPCPL").
On January 29, 2015, Defendants removed the case to this Court based on diversity pursuant to 28 U.S.C. §§ 1332, despite the fact that Plaintiffs are alleged to be citizens and residents of Pennsylvania and Defendants D'Agnostino and Dingman are also alleged to be citizens and residents of Pennsylvania. ECF No. 1-1, ¶¶ 1, 3, 4. Defendants claim that because Plaintiffs knowingly filed claims against Defendants D'Agnostino and Dingman that are not cognizable under Pennsylvania law, and that they did so for the sole purpose of destroying diversity, D'Agnostino and Dingman's citizenship should be ignored in determining whether this Court has subject matter jurisdiction.
Presently before the Court is a Motion for Remand submitted on behalf Plaintiffs and a Motion to Dismiss filed on behalf of Defendants D'Agnostino and Dingman. ECF Nos. 3, 6. For the reasons that follow, the Motion for Remand will be granted and the Motion to Dismiss will be denied without prejudice.
I. APPLICABLE STANDARDS
A defendant in a civil action brought in state court has a statutory right to remove the action to federal court if the claims brought by the plaintiff could have been brought originally in federal court. See 28 U.S.C. § 1441(a). Under the statutory scheme, if the defendant removes a case to federal court based 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 (3d Cir. 2006).
An exception to the rule that removal be based upon complete diversity is recognized, however, where a non-diverse defendant has been fraudulently joined or added to the action solely for the purposes of defeating diversity jurisdiction. Id . Under these circumstances, the court may "disregard, for jurisdictional purposes, the citizenship of certain non-diverse defendants, and thereby retain jurisdiction." Id., quoting Mayes v. Rapoport, 198 F.3d 457, 461 (4th Cir. 1999) (citations omitted). Where, however, the district court determines that the non-diverse defendant was not fraudulently joined and that subject matter jurisdiction is therefore lacking, the district court must remand the case to state court. 28 U.S.C. 1447(c).
Joinder is 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 defendants or seek a joint judgment. Grossi v. Travelers Ins. Co., 2010 WL 483797, at *1 (W.D. Pa. Feb. 5, 2010). See Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (3d Cir. 1992) (fraudulent joinder is found only where the plaintiff's claims are "wholly insubstantial and frivolous"); West v. Marriott Hotel Servs., Inc., 2010 WL 4343540, at *3 (E.D. Pa. Nov. 2, 2010) (fraudulent joinder is "reserved for situations where recovery from the nondiverse defendant is a clear legal impossibility").
In making this determination, the court must resolve any legal uncertainties in the plaintiff's favor and assume as true all factual allegations in the complaint. Pa. Employees Benefit Trust Fund v. Eli Lilly & Co., 2007 WL 2916195, at *7 (E.D. Pa. Oct. 5, 2007). Although the court is permitted to look outside the pleadings to resolve the issue, it must refrain from delving into the merits of the claims. In re Briscoe, 448 F.3d at 219. See Lyall v. Airtran Airlines, Inc., 109 F.Supp.2d 365, 367-68 (E.D. Pa. 2000) (a district court may not find that joinder is fraudulent "[s]imply because [the district court has] come to believe that, at the end of the day, a state court could dismiss the allegations against a defendant for failure to state a cause of action"). Finally, the party claiming that the plaintiff has fraudulently joined a party in order to defeat diversity jurisdiction has a heavy burden of persuasion and all doubts concerning the propriety of removal are to be resolved in favor of remand. Batoff v. State Farm Ins. Co., 977 F.2d at 851-52.
As previously noted, Charles Istik has brought claims under the UTPCPL against Defendants D'Agnostino and Dingman at Counts III and V of the Complaint. Defendants contend that there is no reasonable basis in fact or colorable ground to support these claims thereby evidencing that D'Agnostino and Dingman have been fraudulently joined, and that diversity jurisdiction therefore lies with this Court. To support their position, Defendants advance three arguments: 1) that D'Agnostino and Dingman, as insurance adjusters, cannot be held liable under the UTPCPL because there is no privity of contract between them and Plaintiffs; 2) that Plaintiffs are unable to succeed on their UTPCPL claims because they have failed to allege that D'Agnostino and Dingman engaged in any fraudulent activity and allegations of improper claim handling are insufficient to state a UTPCPL claim; and 3) that Plaintiffs' claims against Defendants boil down to the allegation that they merely failed to perform their contractual duties by refusing to pay additional UIM benefits which constitutes nonfeasance and is not actionable under the UTPCPL. See Kakule v. Progressive Cas. Ins. Co., 2007 WL 1101271, at *5 (E.D. Pa. April 10, 2007), Opinion vacated in part on other grounds on reconsideration, 2007 WL 1810667 (June 20, 2007) ("[o]nly malfeasance, the improper performance of a contractual obligation, raises a cause of action under the UTPCPL, whereas failure to perform a contractual duty, or nonfeasance, is not actionable").
These arguments, however, have been repeatedly rejected by various district courts within the Third Circuit as being insufficient to establish fraudulent joinder. See Kapton v. Ohio Cas. Ins. Co., 2014 WL 1572474 (W.D. Pa. April 17, 2014); Ozanne v. State Farm Mut. Auto Ins. Co., 2011 WL 1743683 (W.D. Pa. May 5, 2011); Grossi v. Travelers Ins. Co., 2010 WL 483797 (W.D. Pa. Feb. 5, 2010); Amitia v. Nationwide Mut. Ins. Co., 2009 WL 111578 (M.D. Pa. Jan. 15, 2009); Kenia v. Nationwide Mut. Ins. Co., 2008 WL 220421 (M.D. Pa. Jan. 25, 2008); Alberty v. Nationwide Mut. Ins. Co., 2006 WL 2601324 (W.D. Pa. Sept. 11, 2006); Fenkner v. Nationwide Mut. Ins. Co., 2005 WL 1172642 (M.D. Pa. May 18, 2005); Simon v. UnumProvident Corp., 2002 WL 1060832 (E.D. Pa. May 23, 2002); Smith v. Nationwide Mut. Fire Ins. Co., 935 F.Supp. 616 (W.D. Pa. 1996); Parasco v. Pacific Indem. Co., 870 F.Supp. 644 (E.D. Pa. 1994). See also Pekular v. Eich, 355 Pa. Super. 276, 513 A.2d 427 (1986). Recognizing that Pennsylvania courts have permitted UTPCPL claims brought against insurance adjusters to proceed in certain cases, these courts concluded that they were unable to find that the UTPCPL claims before them were wholly insubstantial and frivolous. These courts also found that delving into questions such as contractual privity and whether the defendant's conduct rose to the level of misfeasance, as Defendants here have asked this Court to do, would require the court to improperly evaluate the merits of the plaintiff's UTPCPL claims. As noted by many of these courts: "if there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that joinder was proper and remand the case to state court." See e.g. Kapton v. Ohio Cas. Ins. Co., 2014 WL 1572474, at *3, quoting Batoff v. State Farm Ins. Co., 977 F.2d at 851-52. Because these cases make it clear that there is a possibility that the state court would find that the Complaint in this matter states a cause of action under the UTPCPL against D'Agnostino and Dingman, this Court is unable to conclude that their joinder is fraudulent.
Defendants also argue that fraudulent joinder should be found because Plaintiffs have no intention of prosecuting Defendants D'Agnostino and Dingman, as evidenced by other cases in which counsel for Plaintiffs has voluntarily dismissed the non-diverse individual defendants after the case has been remanded. It is well established, however, that a plaintiff's motive for joining a defendant, even if it is to defeat diversity, is not considered indicative of fraudulent joinder. Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 32 (3d Cir. 1985). See Reid v. Albizem, 2014 WL 2915883, at *3 (E.D. Pa. June 25, 2014) ("[a] plaintiff's subjective motive for suing a non-diverse defendant, even if that motive is a desire to defeat removal, is not relevant to the inquiry of fraudulent joinder); Greenberg v. Macy's, 2011 WL 4336674, at *7 (E.D. Pa. Sept. 15, 2011) ("even though it is apparent that Plaintiff joined Peticca-Melso and Rogers simply to defeat diversity, I cannot conclude that the joinder is fraudulent"); Mount Olivet Tabernacle Church v. Emerson Elec. Co., 1997 WL 89118, at *4 (E.D. Pa. Feb. 26, 1997), quoting Mecom v. Fitzsimmons Drilling Co., Inc., 284 U.S. 183, 189 (1931) ("in a removal proceeding the motive of a plaintiff in joining defendants is immaterial.... [W]here there is  prima facie joint liability, averment and proof that resident and nonresident tortfeasors are jointly sued for the purpose of preventing removal does not amount to an allegation that the joinder was fraudulent, and will not justify a removal from the state court"). Rather, the question is whether there is a possibility that the state court would find that Plaintiff has stated a cause of action against one of the non-diverse defendants. Having found that Pennsylvania court have recognized UTPCPL claims brought against insurance adjusters, that possibility clearly exists. Whether or not Plaintiffs have actually stated a UTPCPL claim against D'Agnostino and Dingman in this case is not for this Court to decide.
Moreover, the District Court for the Eastern District of Pennsylvania has found that serving a non-diverse defendant with the complaint is sufficient to demonstrate the actual intention to prosecute an action against him or her. Gaynor v. Marriott Hotel Servs., Inc., 2013 WL 4079652, at *6 (E.D. Pa. Aug. 13, 2013). Defendants do not dispute that D'Agnostino and Dingman were served with the ...