Palma v. Prudential Insurance Company Of America et al, No. 4:2011cv00957 - Document 20 (N.D. Cal. 2011)
Court Description: ORDER GRANTING PLAINTIFFS 14 MOTION FOR REMAND AND DENYING PLAINTIFFS REQUEST FOR ATTORNEYS FEES. Signed by Judge Claudia Wilken on 5/25/2011. (ndr, COURT STAFF) (Filed on 5/25/2011)
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Palma v. Prudential Insurance Company Of America et al Doc. 20 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 9 United States District Court For the Northern District of California 10 11 MIGUEL A. PALMA, 12 13 14 15 16 17 No. 11-00957 CW Plaintiff, ORDER GRANTING PLAINTIFF’S MOTION FOR REMAND AND DENYING PLAINTIFF’S REQUEST FOR ATTORNEYS’ FEES v. PRUDENTIAL INSURANCE COMPANY, COMMISSIONER OF THE CALIFORNIA DEPARTMENT OF INSURANCE, and DOES 150, Defendants. / 18 19 Plaintiff Miguel A. Palma moves to remand this removed action 20 to state court and requests attorneys’ fees and costs. 21 Prudential Insurance Company opposes the motion. 22 all of the papers filed by the parties, the Court grants 23 Plaintiff's motion for remand and denies Plaintiff’s request for 24 attorneys’ fees and costs. 25 Defendant Having considered BACKGROUND 26 Plaintiff filed this case in state court alleging that 27 Prudential wrongfully denied benefits owing to him under his long 28 Dockets.Justia.com 1 term disability insurance policy, when he became disabled from his 2 occupation as a certified public accountant. 3 alleges that Prudential violated California Insurance Code 4 § 790.03(h)(1)1 by knowingly misrepresenting the correct definition 5 of “total disability” to California claimants, including Plaintiff. Plaintiff also 6 7 Plaintiff asserts claims against Prudential for breach of 8 contract, breach of the covenant of good faith and fair dealing, 9 intentional misrepresentation and intentional infliction of United States District Court For the Northern District of California 10 emotional distress. 11 of mandate against the Commissioner of the California Department of 12 Insurance, under California Insurance Code § 10290, which requires 13 the Commissioner to review and approve all disability insurance 14 policies sold, issued or delivered in California; California 15 Insurance Code § 10291.5, which provides standards for the 16 Commissioner's approval of insurance policies; and California 17 Insurance Code § 12926, which provides that the Commissioner shall 18 require insurers to comply with all provisions of Insurance Code. 19 Plaintiff seeks a mandate compelling the Commissioner (1) to 20 discharge a duty under § 10291.5 to determine whether his policy 21 should be revoked or reformed in accordance with California law and 22 (2) to revoke and or reform the definition of total disability in 23 the policy. 24 In the same complaint, Plaintiff seeks a writ Prudential removed this action to federal court on the basis 25 26 27 28 1 California Insurance Code § 790.03(h)(1) prohibits insurers from misrepresenting to claimants pertinent facts of insurance policy provisions. 2 1 of diversity jurisdiction, claiming that there is complete 2 diversity between the parties once the citizenship of the 3 Commissioner is disregarded because he is a sham defendant. 4 Plaintiff moves to remand, arguing that the Commissioner is not a 5 sham defendant, and seeks to recover his attorneys’ fees and costs 6 incurred as a result of the removal. 7 8 9 LEGAL STANDARD A defendant may remove a civil action filed in state court to federal district court so long as the district court could have United States District Court For the Northern District of California 10 exercised original jurisdiction over the matter. 11 § 1441(a). 12 means that the defendant always has the burden of establishing that 13 removal is proper." 14 Cir. 1992). 15 doubt as to the right of removal in the first instance." 16 Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (citations omitted). 17 28 U.S.C. "The 'strong presumption' against removal jurisdiction Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Federal jurisdiction "must be rejected if there is any Duncan v. District courts have original jurisdiction over all civil 18 actions "where the matter in controversy exceeds the sum or value 19 of $75,000, exclusive of interest and costs, and is between . . . 20 citizens of different States." 21 subject matter jurisdiction is predicated on diversity of 22 citizenship, complete diversity must exist between the opposing 23 parties. 24 373-74 (1978). 25 28 U.S.C. § 1332(a). When federal Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, A non-diverse party named in a complaint can be disregarded 26 for purposes of determining whether diversity jurisdiction exists 27 if a district court determines that the party's inclusion in the 28 3 1 action is a "sham" or "fraudulent." 2 811 F.2d 1336, 1339 (9th Cir. 1987). 3 state a cause of action against a resident defendant, and the 4 failure is obvious according to the settled rules of the state, the 5 joinder of the resident defendant is fraudulent." 6 defendant need not show that the joinder of the non-diverse party 7 was for the purpose of preventing removal. 8 demonstrate that there is no possibility that the plaintiff will be 9 able to establish a cause of action in state court against the McCabe v. General Foods Corp., "If the plaintiff fails to Id. The The defendant need only United States District Court For the Northern District of California 10 alleged sham defendant. 11 1313, 1318 (9th Cir. 1998). 12 against finding fraudulent joinder and defendants who assert it 13 have a heavy burden of persuasion. 14 846 F.2d 1190, 1195 (9th Cir. 1988). Id.; Ritchey v. Upjohn Drug Co., 139 F.3d 15 16 However, there is a presumption Emrich v. Touche Ross & Co., DISCUSSION The parties do not dispute that Plaintiff and Prudential are 17 citizens of different states. 18 Commissioner’s presence as a defendant defeats diversity 19 jurisdiction. 20 Plaintiff cannot petition for a writ of mandate against the 21 Commissioner and, even if he can do so, the Commissioner's presence 22 does not defeat diversity. 23 I. Petition for Writ of Mandate Against Commissioner 24 Therefore, the issue is whether the Prudential argues that, under California law, The issuance of a disability policy in California requires 25 approval from the Commissioner. 26 California, 87 Cal. App. 4th 364, 368 (2001); see also Cal. Ins. 27 Code § 10290. 28 Van Ness v. Blue Cross of The Commissioner may give explicit endorsement to a 4 1 policy by "written approval" or implicit consent by failing to act 2 within thirty days of receipt of the copy of the policy that must 3 be sent to the Commissioner by the insurer. 4 may also, with good cause, revoke approval for any policy that does 5 not comply with the California Insurance Code. 6 § 2196.4(a). 7 8 9 The Commissioner 10 Cal. Code Regs. Section 10291.5(b)(1) of the California Insurance Code provides that the Commissioner: 11 shall not approve any disability policy for insurance . . . if he finds that it contains any provision . . . which is unintelligible, uncertain, ambiguous, or abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued. 12 The purpose of § 10291.5(b) is to prevent fraud and unfair 10 United States District Court For the Northern District of California Id. 13 trade practices and to insure that the language of all insurance 14 policies can be readily understood and interpreted. 15 § 10291.5(a). 16 obligation to fulfill the duties imposed by the Insurance Code. 17 Peterson v. American Life & Health Ins. Co., 48 F.3d 404, 410 (9th 18 Cir. 1995). 19 Cal. Ins. Code Under § 12921.5(a), the Commissioner has an The Code also provides that "the commissioner shall require 20 from every insurer a full compliance with all the provisions of the 21 code." 22 subject to judicial review. 23 Cal. Ins. Code § 12926. The Commissioner's actions are Cal. Ins. Code §§ 12940; 10291.5(h). Under California law, a writ of mandate may be issued by a 24 court to any inferior tribunal . . . to compel the performance of 25 an act which the law specially enjoins, as a duty resulting from an 26 office, trust or station.” 27 also Cal. Civ. Pro. Code § 1094.5 (providing procedures for 28 Cal. Civ. Proc. Code § 1085(a); see 5 1 mandamus actions). 2 ministerial duties as well as quasi-legislative acts of public 3 agencies. 4 A mandamus court may “compel the performance of a clear, present, 5 and ministerial duty where the petitioner has a beneficial right to 6 performance of that duty." 7 the exercise of quasi-legislative discretionary power, but only if 8 the action taken is so unreasonable and arbitrary that abuse of 9 discretion is shown as a matter of law. Section 1085(a) permits judicial review of Schwartz v. Poizner, 187 Cal. App. 4th 592, 596 (2010). Id. Mandamus may also issue to correct Id. (citing Carrancho v. United States District Court For the Northern District of California 10 California Air Resources Bd., 111 Cal. App. 4th 1255, 1264-65 11 (2003)). 12 Plaintiff seeks a mandate that the Commissioner exercise 13 discretion to determine if his policy should be reformed or revoked 14 so as to conform to California law or, if the Court finds the 15 Commissioner abused his discretion in approving his policy, to 16 compel the Commissioner to reform it so that it conforms to 17 California law. 18 properly sought in a mandamus action. 19 that Plaintiff cannot obtain the mandamus relief that he seeks. 20 Citing Schwartz, Prudential argues that the Commissioner’s 21 enforcement duties are not ministerial, but are discretionary and, 22 as such, are not subject to mandamus review. 23 In Schwartz, the court explained: 24 A ministerial act is an act that a public officer is required to perform in a prescribed manner in obedience to the mandate of legal authority and without regard to his own judgment or opinion concerning such act’s propriety or impropriety, when a given state of facts exists. . . . Thus, where a statute or ordinance clearly defines the specific duties or course of conduct that a 25 26 27 28 Pursuant to the above authority, this relief is 6 Prudential, however, argues 1 governing body must take, that course of conduct becomes mandatory and eliminates any element of discretion. 2 187 Cal. App. 4th at 596-97. The court held that mandamus relief 3 was not available under §§ 129212 and 12926 of the Insurance Code, 4 even though they state that the Commissioner shall take enforcement 5 actions against certain insurer misconduct. Id. The court 6 reasoned that the Commissioner's enforcement acts are not 7 ministerial because other provisions of the Insurance Code indicate 8 that the Commissioner has discretion to pursue particular remedies. 9 Id. at 597. Prudential argues that the insurance statutes relied United States District Court For the Northern District of California 10 upon by Plaintiff also authorize the Commissioner to take 11 enforcement action as a matter of discretion and, thus, are not 12 subject to mandamus review. 13 In Common Cause of Cal. v. Bd. of Supervisors, 49 Cal. 3d 432, 14 442 (1989), the California Supreme Court explained that, although 15 mandamus will not lie to control an exercise of discretion--that 16 is, to compel an official to exercise discretion in a particular 17 manner--mandamus may issue to compel an official both to exercise 18 discretion, if required by law to do so, and to exercise it under a 19 proper interpretation of the law. In its opinion, the Schwartz 20 court did not address the distinction made in Common Cause. 21 Plaintiff is not requesting that the Court order the Commissioner 22 to exercise discretion in a particular manner. He seeks an order 23 requiring that the Commissioner use the authority granted in 24 California Insurance Code §§ 23926 and 10291.5(b)(1) to exercise 25 26 2 27 Section 12921 provides, "The commissioner shall perform all duties imposed upon him or her by the provisions of this code . . . and shall enforce the execution of those provisions . . ." 28 7 1 discretion to review the allegedly illegal language in the policy. 2 Under Common Cause this relief could properly be sought by way of a 3 writ of mandate. 4 Furthermore, mandamus lies to correct an abuse of discretion 5 by an official acting in an administrative capacity. 6 49 Cal. 3d at 442; see also Glendale City Employees' Ass'n, Inc. v. 7 City of Glendale, 15 Cal. 3d 328, 344 n.24 (1975). 8 California law, the Ninth Circuit has held that, if an insured 9 believes that the Commissioner has abused his or her discretion by Common Cause, Relying on United States District Court For the Northern District of California 10 approving a policy in violation of the Insurance Code or its 11 implementing regulations, the insured may petition for a writ of 12 mandamus requiring the Commissioner to revoke the approval. 13 Peterson, 48 F.3d at 410. 14 Contreras v. Metropolitan Life Ins. Co., 2007 WL 4219167, *7 (N.D. 15 Cal.) (“in this circuit, if an insured believes that the 16 Commissioner has abused his discretion by approving a policy in 17 violation of the Insurance Code . . . then he may petition for a 18 writ of mandamus requiring the Commissioner to revoke his 19 approval”); Brazina v. Paul Revere Life Ins. Co., 217 F. Supp. 2d 20 1163, 1167 (N.D. Cal. 2003) (same); Van Ness, 87 Cal. App. 4th at 21 371-72 (if insured believes Commissioner has abused discretion in 22 approving a policy in violation of section 10291.5, insured may 23 petition for writ of mandamus requiring Commissioner to revoke 24 approval). Other cases hold the same. See 25 Prudential argues that these prior opinions cannot be followed 26 because they did not have the benefit of the reasoning in Schwartz. 27 In Schwartz, the court explained that, to show an abuse of 28 8 1 discretion for purposes of mandamus relief, a claimant must allege 2 that the decision was arbitrary, capricious, unlawful, entirely 3 lacking in evidentiary support, or procedurally unfair. 4 App. 4th at 615-16. 5 discretion standard is not new law; for authority it cited 6 Carancho, 111 Cal. App. 4th at 1265, which, in turn, relied on 7 Fullerton Joint Union High Sch. Dist. v. State Bd. of Educ., 32 8 Cal. 3d 779, 786 (1982). 9 mandamus is a proper remedy for a claim that the Commissioner 187 Cal. However, Schwartz's statement of the abuse of Therefore, the prior cases holding that United States District Court For the Northern District of California 10 abused his or her discretion cannot be distinguished based on any 11 new reasoning in Schwartz. 12 Based on the weight of authority on this issue, the Court 13 concludes that Plaintiff properly may bring a claim for mandamus 14 relief based on an abuse of the Commissioner’s discretion. 15 II. Bars to Mandamus Relief 16 Prudential argues that, even if Plaintiff may seek mandamus 17 relief, it is barred because: (1) the Commissioner cannot regulate 18 in-force insurance; (2) the claim was not properly exhausted; 19 (3) the claim is barred by the statute of limitations; and (4) the 20 Commissioner has been misjoined under Federal Rule of Civil 21 Procedure 20. 22 A. Regulation of In-Force Insurance Policy 23 Prudential argues that a writ of mandate may not be used to 24 reform or revoke an in-force insurance policy. 25 87 Cal. App. 4th at 371-72, cited by Prudential, stated that "if an 26 insured believes the commissioner has abused his or her discretion 27 in approving a policy in violation of section 10291.5, the insured 28 9 However, Van Ness, 1 may petition for a writ of mandamus requiring the commission to 2 revoke the approval." 3 specifically provide that the Commissioner may revoke a policy if 4 it does not comply with the provisions of the Insurance Code. 5 Cal. Code Regs. § 2196.4(a). 6 Commissioner may not revoke an in-force policy, therefore, is not 7 correct as a matter of settled California law. Furthermore, the insurance regulations 10 Prudential's argument that the 8 B. Exhaustion of Administrative Remedies 9 Prudential argues that Plaintiff's claim for mandamus is United States District Court For the Northern District of California 10 barred because he has failed to exhaust available administrative 11 remedies. 12 for state court jurisdiction and, thus, the failure to exhaust may 13 be considered for purposes of determining fraudulent joinder. 14 Brazina, 271 F. Supp. 2d at 1171. 15 remedies does not apply, however, if an administrative remedy is 16 unavailable or inadequate. 17 State Univ. & Colls., 33 Cal. 3d 211, 217 (1982)). 18 Exhaustion of administrative remedies is a prerequisite Exhaustion of administrative Id. (citing Tiernan v. Trustees of Cal. Brazina held that the defendant had not established that there 19 was any administrative appeal process available to challenge the 20 Commissioner's approval of an insurance policy, notwithstanding the 21 public complaint process in § 12921.3 of the Insurance Code. 22 at 1171; see also Blake v. Unumprovident Corp., 2007 WL 4168235, *3 23 (N.D. Cal) (ability of an insured to complain under § 12921.3 is 24 not an administrative appeal); Contreras, 2007 WL 4219167, at *6 25 (same). 26 27 28 Id. Prudential argues that the Brazina court was incorrect because it did not address all of the statutory avenues for administrative 10 1 review. 2 Prudential's argument that §§ 12921.3 and 12921.4, which provide a 3 "process for the public to complain about the conduct of insurers," 4 are a means of administrative appeal. 5 Furthermore, Contreras rejected Prudential's argument that 6 Insurance Code §§ 790.04, 790.05, and 790.06 provide a means for an 7 administrative appeal. 8 Prudential fails to show how three additional statutes it cites 9 provide an administrative process for an insured who contests the United States District Court For the Northern District of California 10 However, Brazina specifically addressed and rejected 271 F. Supp. 2d at 1169. 2007 WL 4219168, at *6. Likewise, Commissioner's approval of an insurance policy. 11 Accordingly, Prudential fails to establish that there is an 12 administrative process that Plaintiff could have utilized before 13 proceeding with his mandamus action. 14 failed, under settled California law, to exhaust administrative 15 remedies. Plaintiff, therefore, has not 16 C. Statute of Limitations 17 The parties agree that, because the Insurance Code provides no 18 specific statute of limitations for judicial review of an action 19 taken by the Commissioner, see Cal. Ins. Code § 10291.5(h), the 20 appropriate statute of limitations is the three-year limitation 21 provided in California Code of Civil Procedure § 338(a) for "an 22 action upon a liability created by a statute." 23 disagree, however, when the three-year period accrues. 24 argues that it begins to run at the time a claimant first obtains 25 the policy; Plaintiff argues that it begins to run upon the denial 26 of benefits. 27 Plaintiff filed his complaint more than ten years after the 28 The parties Prudential The outcome of this dispute is significant because 11 1 issuance of the policy, but within two years from the denial of 2 benefits. 3 No California decisions directly address this issue. However, 4 at least five Northern District courts have addressed the statute 5 of limitations for this precise application of the writ of 6 mandamus. 7 limitations began to run on the date of the Commissioner's approval 8 of a policy. 9 C-03-630 VRW (N.D. Cal. 2003) (Docket No. 26). Only one district court found that the statute of See Borsuk v. Massachusetts Mut. Life Ins. Co., No. The remaining four United States District Court For the Northern District of California 10 courts were unwilling to hold that the statutory clock began to run 11 on the date of the Commissioner's approval because the plaintiff 12 may not have sufficient notice of his injury until the insurance 13 company rejects his claim. 14 71; Sullivan v. Unum Life Ins. Co. of Amer., 2004 WL 828561, *4 15 (N.D. Cal.); Glick v. UnumProvident Corp., No. C 03-4025 WHA (N.D. 16 Cal. 2004) (Docket No. 17); Maiolino v. UnumProvident Corp., 2004 17 WL 941235, *5 (N.D. Cal.). 18 See Brazina, 271 F. Supp. 2d at 1170- In Borsuk, the court found that the statute of limitations had 19 expired, summarily concluding that "Borsuk was on notice . . . no 20 later than . . . the date he agreed to the terms of the policy" and 21 that the statute began to run either on the date of that agreement 22 or on the date the Commissioner approved the policy. 23 Because the Borsuk court did not provide the basis for its decision 24 on this matter, the Court finds that decision unpersuasive. 25 Furthermore, subsequent to Borsuk, the same judge decided the same 26 issue in Sukin v. State Farm Mut. Ins. Co., No. C-07-2829 VRW (N.D. 27 Cal. 2007) (Docket No. 27), holding that the plaintiff did not have 28 12 Borsuk at 18. 1 standing to sue until his claim for insurance benefits had been 2 denied and, therefore, the statute did not begin to run until then. 3 In Brazina, the court did not address the triggering of the 4 statute of limitations directly, but rejected the defendants' 5 argument that the writ of mandamus was unavailable at any time 6 after the effective date of the Commissioner's decision. 7 the fact that the plaintiff filed suit fourteen years after the 8 issuance of the policy, the Brazina court stated that "it seems 9 likely that a California court would interpret the language [of United States District Court For the Northern District of California 10 section 10291.5(h)] to allow this action to proceed." 11 Despite F. Supp. 2d at 1171. 12 Brazina, 271 Sullivan, Maiolino, and Glick directly addressed the statute 13 of limitations and, finding the issue of when the statute begins to 14 run to be uncertain, construed the ambiguity in favor of granting 15 remand because a cause of action had been stated. 16 court concluded, "It seems unfair to hold categorically that 17 Plaintiff had notice of the way defendants would administer the 18 policy before Unum denied him benefits" and decided that remand was 19 appropriate because the complaint had been filed within three years 20 of the denial of benefits. 21 Glick adopted similar reasoning. 22 (granting remand in the absence of well-settled rules of state law 23 on the statute of limitations issue); Glick, at 3-4 (noting that 24 although defendants' contention that statute of limitations had 25 expired might ultimately prevail in state court, they had not met 26 their high burden of establishing absence of viable claim against 27 Commissioner). 28 2004 WL 828561 at *4. In Sullivan, the Maiolino and Maiolino 2004 WL 941235 at *5 13 1 This reasoning is bolstered by California cases holding that, 2 where it would be manifestly unjust to deprive a plaintiff of a 3 cause of action before it is aware it has been injured, accrual 4 begins when the plaintiff actually discovers its injury and the 5 cause or could have discovered its injury and the cause through 6 reasonable diligence. 7 App. 3d 1125, 1150 (1991). 8 doubtful that insurance policy holders would be aware of the harm 9 posed by the Commissioner's approval of ambiguous terms in their Mangini v. Aerojet-General Corp., 230 Cal. As noted by the Sullivan court, it is United States District Court For the Northern District of California 10 policies before they "had notice of the way [insurers] would 11 administer the policy" to deny them benefits. 12 828561 at *4. 13 policy holders would be "put on notice" of the injury caused by the 14 Commissioner's approval of an illegal policy simply by his or her 15 inaction--i.e. failure to disapprove of the policy within thirty 16 days. 17 Sullivan, 2004 WL Furthermore, it is unreasonable to assume that See Cal. Ins. Code § 10290(b). These observations are not to suggest that Plaintiff will 18 necessarily succeed in persuading a state court to follow his 19 suggested application of the statute of limitations, but support 20 the conclusion that, on the face of the pleading, Plaintiff's claim 21 for a writ of mandate is not barred by settled California law on 22 the statute of limitations. 23 D. Misjoinder 24 Federal Rule of Civil Procedure 20(a)(2) permits the joinder 25 of defendants in one action if: (1) the plaintiffs assert any right 26 to relief arising out of the same transaction, occurrence, or 27 series of transactions or occurrences; and (2) there are common 28 14 1 questions of law or fact. 2 (9th Cir. 1997). 3 dismissing an action." 4 20(a) test for permissive joinder is not satisfied, "a court, in 5 its discretion, may sever the misjoined parties, so long as no 6 substantial right will be prejudiced by the severance." 7 at 1350. 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 Coughlin v. Rogers, 130 F.3d 1348, 1350 "Misjoinder of parties is not ground for Fed. R. Civ. P. 21. However, if the Rule Coughlin Under California law, defendants may be joined if there is asserted against them: (a) (1) Any right to relief jointly, severally, or in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action; or (2) A claim, right or interest adverse to them in the property or controversy which is the subject of the action. (b) It is not necessary that each defendant be interested as to every cause of action or as to all relief prayed for. . . . Cal. Code Civ. Proc. § 379.3 Prudential argues that Plaintiff cannot meet the first element 19 of Rule 20(a) because, against Prudential, he seeks money damages 20 based upon breach of contract and torts arising from the alleged 21 improper handling of his disability claim and, against the 22 Commissioner, he seeks a writ of mandate ordering the Commissioner 23 24 3 27 The parties both assume Federal Rule of Civil Procedure 20(a) applies. However, in a diversity action, state law may apply. See HVAC Sales, Inc. v. Zurich American Ins. Gp., 2005 WL 2216950, *6 n.13 (N.D. Cal.) (applying state law to similar misjoinder issue); Osborn v. Metropolitan Life Ins. Co., 341 F. Supp. 2d 1123, 1127-28 (E.D. Cal. 2004) (raising question whether state or federal joinder law applies). 28 15 25 26 1 to exercise discretion and to rescind approval of his policy. 2 Prudential also argues that the second element of Rule 20(a) is not 3 met because there are no questions of law or fact common to the 4 contract and tort claims against it, and the administrative claims 5 against the Commissioner. 6 7 8 9 United States District Court For the Northern District of California 10 In Brazina, the court rejected a similar misjoinder claim, reasoning as follows: Since a policy approved by the Commissioner is presumed valid in compliance with section 10291.5, Peterson, 48 F.3d at 410, the outcome of the insurance contract dispute between defendants and Brazina may very well depend on whether the Commissioner will withdraw approval of the policy in question. 11 271 F. Supp. 2d at 1172. 12 Likewise, the Court finds that there is sufficient overlap 13 between the claims against Prudential and the Commissioner for 14 joinder to be proper under Rule 20(a). Under California law, the 15 result would be the same because its joinder rule is broader than 16 the federal rule. See Osborn, 341 F. Supp. 2d at 1128. 17 Therefore, all of Prudential's arguments for barring 18 Plaintiff's mandamus action against the Commissioner fail. 19 III. Commissioner’s Effect on Diversity Jurisdiction 20 Prudential argues that, even if the Commissioner is a 21 Defendant, this does not affect diversity because the Commissioner 22 has no citizenship for diversity purposes. This argument is based 23 on two premises. First, Prudential correctly points out that the 24 Commissioner, in his or her official capacity, is not a "citizen of 25 California." See Morongo Band of Mission Indians v. California 26 State Bd. of Equalization, 858 F.2d 1376, 1382 n.5 (9th Cir. 1988) 27 28 16 1 (state officers have "no citizenship" for purposes of 28 U.S.C. § 2 1332). 3 non-citizen, should be ignored for the purposes of analyzing 4 diversity jurisdiction. 5 Second, Prudential contends that the Commissioner, as a Prudential's argument has no basis in the text of the removal 6 statute or any precedent in this or any other circuit. 7 infrequently raised, this argument has been rejected by other 8 courts. 9 1045, 1049 (D. Neb. 2003); Batton v. Georgia Gulf, 261 F. Supp. 2d United States District Court For the Northern District of California 10 11 Although Jakoubek v. Fortis Benefits Ins. Co., 301 F. Supp. 2d 575, 583 (M.D. La. 2003). In Batton, the court rejected an argument identical to that 12 raised by Prudential after examining the diversity statute and 13 concluding, "Nowhere is there any provision allowing diversity 14 jurisdiction where a non-citizen state is a party. 15 Congress contemplated the situation of non-citizens and 16 specifically allowed for suits by those non-citizens it thought 17 appropriate." 18 similarly found the plain language of the statute dispositive, 19 stating: 20 21 22 23 24 261 F. Supp. 2d at 582. Clearly, The court in Jakoubek 28 U.S.C. § 1332(a)(1) grants federal diversity jurisdiction only when plaintiffs and defendants are citizens of different states. Since the State defendants are not citizens, they and the plaintiff cannot be citizens of different states. If a party is not a citizen of a state at all, then it is not a citizen of a different state and it would be inappropriate to allow that party . . . to be subject to federal jurisdiction based only on diversity of citizenship. 25 301 F. Supp. 2d at 1049; see also Contreras, 2007 WL 4219167, *4 26 (no diversity because Commissioner is not a citizen). 27 agrees with the reasoning of the Batton and Jakoubek courts and 28 17 The Court 1 concludes that diversity jurisdiction does not exist here because 2 of the presence of the Commissioner, a non-citizen, as a Defendant. 3 This case must be remanded. 4 III. Attorneys' Fees and Costs 5 On granting a motion to remand, the court may order the 6 defendant to pay the plaintiff its "just costs and any actual 7 expenses, including attorney fees, incurred as a result of the 8 removal." 9 attorney’s fees should not be awarded when the removing party has 28 U.S.C. § 1447(c). “Absent unusual circumstances, United States District Court For the Northern District of California 10 an objectively reasonable basis for removal.” 11 Capital Corp., 546 U.S. 132, 136 (2005). Martin v. Franklin 12 Although the Court was not persuaded by Prudential's 13 arguments, it had an objectively reasonable basis for removal. 14 Therefore, the Court declines to award Plaintiff's attorneys’ fees 15 and costs under § 1447(c). 16 17 CONCLUSION For the foregoing reasons, the Court grants Plaintiff's motion 18 for remand and denies his request for attorneys' fees and costs. 19 The Clerk of the Court shall remand the case to the Superior Court 20 for the County of San Francisco and close the file in this Court. 21 22 IT IS SO ORDERED. 23 24 Dated: 5/25/2011 CLAUDIA WILKEN United States District Judge 25 26 27 28 18
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