United States District Court, E.D. Pennsylvania
Austin McHugh, United States District Judge
a case arising out of a fraudulent “Ponzi” scheme
on the part of a now deceased Allstate broker, brought by one
of its victims. In addition to suing Allstate, Plaintiff
Brian Chaborek has named two Allstate supervisors
individually. Allstate takes umbrage at their inclusion as
defendants, contending that they were fraudulently joined to
defeat diversity. Because Allstate cannot meet the heavy
burden imposed on a party claiming fraudulent joinder, this
case will be remanded to state court.
Godlewski was an insurance broker for Allstate, where he was
supervised by Megan Gaardsmoe and Kevin Powell. On the side,
and for a long time unbeknownst to Allstate, he ran a Ponzi
scheme disguised as a venture capital fund called
“GEIVC.” He advertised GEIVC on social media and
promoted it in numerous televised interviews. When people
“invested” with him, he took their money and
placed it in a bank account from which he withdrew and spent
money at will.
ran GEIVC undetected for a number of years. In 2014, however,
the New Jersey Office of the Attorney General began
investigating him. In October 2014, prosecutors contacted
Allstate “regarding certain of Godlewski's business
activities, ” Compl. at 6, and Allstate undertook an
investigation of its own. In early 2015, Allstate fired
Godlewski and terminated his FINRA registration. On June 9,
2015, Godlewski died while snorkeling in Turks & Caicos.
is alleged to have swindled Plaintiff out of more than $500,
000. Specifically, he induced Plaintiff to make two
“investments” in GEIVC: one for $500, 000 in
2010, and another for $10, 738.15 in April 2015. In his
dealings with Plaintiff, Godlewski used Allstate's logo,
stationery, and office. Moreover, he led Plaintiff to believe
that GEIVC was a fund approved and monitored by Allstate.
2014, Godlewski hired Plaintiff as an Allstate agent and
stated his intention to sell his insurance practice to
Plaintiff when he retired. Late that year, while Allstate was
investigating Godlewski, Godlewski convinced Plaintiff to
purchase the agency from him. Gaardsmoe and Powell supervised
and approved this transaction. Plaintiff alleges that as he
and Godlewski were negotiating the specifics of the deal,
Allstate fired Godlewski and terminated his FINRA
registration. Gaardsmoe and Powell, however, allowed
Godlewski to continue to represent himself as an Allstate
employee and to use his Allstate email address, telephone
number, voicemail, and office in the agency sale.
Complaint alleges that Gaardsmoe and Powell also reviewed and
approved Plaintiff's financial documents in preparations
for the sale. These documents stated that in early 2015,
Plaintiff had more than $600, 000 invested in GEIVC. Though
they knew by this time that GEIVC was a fraud, Gaardsmoe and
Powell did not tell Plaintiff that he had been scammed.
Instead, they purportedly told him “that Godlewski had
been a model broker-dealer, and suggested that [Plaintiff]
accept Godlewski as his ‘mentor' and discuss
business problems and dilemmas” with him. Compl. at 8.
In April 2015, Plaintiff purchased the Allstate office from
Godlewski and made his second ($10, 738.15) investment with
has not requested rescission of, or damages flowing from, his
purchase the Allstate office. Rather, he claims that
Allstate, Gaardsmoe, and Powell are liable for making various
misstatements that led him to lose approximately $600, 000 in
Godlewski's Ponzi scheme.
the doctrine of fraudulent joinder, a defendant may remove a
non-diverse case if it can establish that all in-state
defendants were sued solely to prevent removal to federal
court. Wilson v. Republic Iron & Steel Co., 257
U.S. 92, 97 (1921). But defendants alleging fraudulent
joinder bear a “heavy burden of persuasion, ”
Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d
Cir. 1992) - “if there is even a possibility that a
state court would find that the complaint states a cause of
action, ” then the case must be remanded. In re
Briscoe, 448 F.3d 201, 217 (3d Cir. 2006) (internal
quotation marks omitted). To prevail, the defendant must show
that there is “no reasonable basis in fact or colorable
ground supporting the claim against the joint defendant, or
no real intention in good faith to prosecute the action
against the defendant or seek a joint judgment.”
Brown v. Jevic, 575 F.3d 322, 326 (3d Cir. 2009)
(internal quotation marks omitted). The removal statute must
be construed narrowly, and “all doubts should be
resolved in favor of remand.” Steel Valley Auth. v.
Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d
review at this stage is limited: the issue is not whether
Plaintiff has stated a claim upon which relief can be
granted. A defendant claiming a fraudulent joinder has an
even heavier burden to carry than on a motion to dismiss.
Batoff, 977 F.2d at 852. As Judge DuBois elegantly
stated the rule, fraudulent joinder is “reserved for
situations where recovery from the non-diverse defendant is a
clear legal impossibility.” Salley v. AMERCO,
2013 WL 3557014 at *3 (E.D. Pa.) (July 15, 2013). I have
jurisdiction only to determine whether I have jurisdiction. I
will thus look no further into the merits of the case than is
necessary to make that determination.
Plaintiff has set forth at least two potentially valid claims
against the individualdefend ...