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EILLIS v. Liberty Mutual Insurance Company

United States District Court, E.D. Pennsylvania

July 26, 2018

DOMINIQUE ELLIS Plaintiff,
v.
LIBERTY MUTUAL INSURANCE COMPANY et al., Defendants.

          MEMORANDUM

          GENE E. K. PRATTER UNITED STATES DISTRICT JUDGE

          Introduction

         After Liberty Mutual Insurance Company denied her claim for underinsured motorist coverage, Dominique Ellis sued both the insurer and the claims adjuster, Clare MacNabb. Against Ms. MacNabb, whose presence in the case defeats complete diversity between the parties, Ms. Ellis brought a single count for violations of Pennsylvania's consumer protection statute. Liberty Mutual removed the case to this Court, arguing that Ms. MacNabb was fraudulently joined. Ms. Ellis has moved to remand.

         The Court grants the motion to remand for three reasons. First, Ms. MacNabb is not fraudulently joined solely because of her role as a claims adjuster. Second, although a colorable claim under the consumer protection statute requires active malfeasance, it is too early to tell whether the complaint alleges only passive nonfeasance by Ms. MacNabb. Third, even though Ms. Ellis's mother is the "named insured" in the insurance policy, at this stage, Ms. Ellis herself could possibly maintain a claim under the consumer protection statute. Thus, Ms. MacNabb is not fraudulently joined and the motion to remand is granted.

         Background

         Dominique Ellis was hit by a car while walking down the street. At the time of the accident, she was insured by Liberty Mutual under an auto insurance policy that listed her mother as the "named insured." Because the driver in the accident was underinsured, Ms. Ellis sought to recover the balance of her medical expenses from Liberty Mutual.

         Clare MacNabb, a Liberty Mutual employee, was the claims adjuster assigned to Ms. Ellis's case. Ms. Ellis alleges that Ms. MacNabb dragged her feet during a six-month investigation into whether Ms. Ellis actually lived at the address listed in the insurance policy. At the end of that drawn-out process, Ms. MacNabb concluded that Ms. Ellis was being truthful about her address. Yet she denied Ms. Ellis's claim anyway on the ground that her medical expenses were less than the limit of the policy owned by the underinsured driver. Ms. Ellis alleges that the investigation into the address issue was phony and meant to intimidate her. She posits that Liberty Mutual was always going to deny her claim no matter what the investigation revealed.

         Ms. Ellis brought this suit in state court against Liberty Mutual and Ms. MacNabb. The complaint contains three counts against Liberty Mutual: (i) an "underinsured motorist claim," (ii) a claim for bad faith insurance denial, and (iii) a claim for violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL). Ms. Ellis brought only the UTPCPL claim against Ms. MacNabb.

         Because Ms. Ellis and Ms. MacNabb are both residents of Pennsylvania, and Liberty Mutual is a Massachusetts corporation, Ms. MacNabb's presence in the case defeats complete diversity of citizenship. Liberty Mutual argues that Ms. MacNabb was fraudulently joined because Ms. Ellis has no colorable UTPCPL claim against Ms. MacNabb. Liberty Mutual removed the case to this Court, and Ms. Ellis has moved to remand.

         Standard of Review

         A defendant in a civil case in state court may remove the case to federal court as long as the federal court would have original jurisdiction over the case. See 28 U.S.C. § 1441(a). "The removal statutes 'are to be strictly construed against removal and all doubts should be resolved in favor of remand.'" Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (quoting Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987)) (additional citations omitted).

         Under 28 U.S.C. § 1332, a federal court has diversity jurisdiction only if all plaintiffs are diverse from all defendants. The doctrine of fraudulent joinder, an exception to this complete diversity requirement, allows a defendant to remove an action if a non-diverse defendant was fraudulently joined solely to defeat diversity jurisdiction. Brown v. Jevic, 575 F.3d 322, 326 (3d Cir. 2009). If the non-diverse defendant was fraudulently joined, the court may disregard the citizenship of the non-diverse defendant for the purpose of determining diversity of citizenship. In re Briscoe, 448 F.3d 201, 216 (3d Cir. 2006)). If the court determines that joinder was not fraudulent, it must remand. Id.

         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 defendant or seek a joint judgment." Boyer, 913 F.2d at 111 (quotations omitted). "The presence of a party fraudulently joined cannot defeat removal." In re Diet Drugs, 220 F.Supp.2d 414, 419 (E.D. Pa. 2002).

         The Third Circuit Court of Appeals set forth the standards applicable to ...


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