Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-00139/USCOURTS-caed-1_06-cv-00139-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 12:635 Breach of Insurance Contract

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1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

VICKY GUERRA, CASE NO. CV F 06-0139 AWI LJO

Plaintiff, ORDER ON REMAND MOTION

vs. (Doc. 10.)

NORTH AMERICAN COMPANY

FOR LIFE AND HEALTH INSURANCE, 

et al.,

Defendants.

 /

INTRODUCTION

In this insurance breach of contract, bad faith and related action, plaintiff Vicky Guerra (“Ms.

Guerra”) seeks to remand this action to Stanislaus CountySuperior Court and to recover $2,250 attorney

fees to seek remand after defendant North American Company for Life and Health Insurance (“North

American”) removed this action to this Court. This Court considered Ms. Guerra’s remand motion on

the record and without the April 14, 2006 hearing or oral argument, pursuant to this Court’s Local Rule

78-230(h). For the reasons discussed below, this Court:

1. REMANDS this action to Stanislaus County Superior Court; and

2. ORDERS North American, no later than April 14, 2006, to pay Ms. Guerra $750 for

attorney fees to secure remand.

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BACKGROUND

The Parties And Life Insurance Policy

On December 16, 2000, Jennifer Perry (“Ms. Perry”), then a California resident and now

deceased, purchased a $300,000 life insurance policy (“life policy”) issued by North American, an

Illinois corporation. Defendant Roger J. Moore (“Mr. Moore”), a current Ohio resident, assisted Ms.

Perry as an independent agent to acquire the life policy. Defendant Victor Davis (“Mr. Davis”), a

California resident, is the beneficiary under the life policy. Ms. Guerra, a Stanislaus County resident,

is the administrator of Ms. Perry’s Stanislaus County estate.

In February 2005, Mr. Davis was convicted of the June 2001 murders of Ms. Perry and her

daughter. Mr. Davis serves two life sentences in a Calipatria, California prison and appeals his

convictions. According to North American, Ms. Guerra has not served Mr. Davis with the summons

and complaint.

Ms. Guerra submitted a claim to North American under the life policy. North American denied

the claim and rescinded the life policy on grounds that Ms. Perry made material misrepresentations in

her life policy application.

Ms. Guerra’s Claims

Ms. Guerra proceeds on her first amended complaint (“complaint”), filed December 7, 2005 in

Stanislaus County Superior Court. The complaint alleges against North American and Mr. Moore causes

of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud

in connection with applying for and rescinding the life policy. The complaint alleges a (fourth)

declaratory relief cause of action against only Mr. Davis to allege that his conviction for Ms. Perry’s

murder disqualifies him from receiving life policy benefits, pursuant to California Probate Code section

252. The declaratory relief cause of action further alleges that since Mr. Davis appeals his conviction,

there is no final judgment and that Mr. Davis may maintain a claim for proceeds as named beneficiary

under the life policy. The declaratory relief cause of action seeks a declaration “whether DAVIS

feloniously and intentionally killed Jennifer Perry for purposes of establishing whether DAVIS is

considered to have predeceased Jennifer Perry.”

/ / /

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1 Ms. Guerra pursues state law claims exceeding $75,000. Since no substantial federal question

appears from the face of Ms. Guerra’s complaint, no federal question jurisdiction exists under 28

U.S.C. § 1331.

3

North American’s Removal

On February 8, 2006, North American filed its notice to remove this action to this Court on

grounds that Mr. Moore and Mr. Davis “are fraudulently joined, and therefore, their citizenship must

be ignored for the purpose of determining the propriety of removal. . . . Accordingly, there is a complete

diversity between plaintiff and the only properly joined defendant, North American.” In its removal

notice, North American contends that Ms. Guerra’s claims against Mr. Moore, in his role as an insurance

agent, fail. As to the declaratory relief cause of action against Mr. Davis, North American argues in its

removal notice that after Mr. Davis’ appeal is determined, Ms. Guerra “will not need a declaration from

this Court to make an identical determination which will be made by Davis’ appeal” to render requested

declaratoryrelief “neither necessary nor proper at this time.” North American concludes that Ms. Guerra

cannot state a viable claim against Mr. Davis and “his citizenship should therefore be ignored for

purposes of removal.”

Ms. Guerra’s Remand Motion

On March 9, 2006, Ms. Guerra filed her motion to remand to the Stanislaus County Superior

Court on grounds that diversity jurisdiction does not exist in that Ms. Guerra and Mr. Davis, an

indispensable party, reside in California. In its opposition papers, North American agrees with Ms.

Guerra that the remand motion “centers on” Mr. Davis.

DISCUSSION

Removal And Remand

Under 28 U.S.C. § 1441(a), a defendant may remove from state court any action “of which the

district courts of the United States have original jurisdiction.” Original diversity jurisdiction exists under

28 U.S.C. § 1332(a) when the parties are of diverse citizenship and the amount in controversy exceeds

$75,000 “exclusive of interest and costs.” When an action is removed based on diversity, complete 1

diversity must exist at removal. Gould v. Mutual Life Ins. Co. of New York, 790 F.2d 769, 773 (9 Cir. th

1986), cert. denied, 479 U.S. 987, 107 S.Ct. 580 (1986); Miller v. Grgurich, 763 F.2d 372, 373 (9 Cir. th

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2 “At the core of the federal judicial system is the principle that the federal courts are courts of

limited jurisdiction.” Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9 Cir. 1979). th

4

1985). Complete diversity requires each plaintiff to be a citizen of a different state than each defendant.

Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467 (1996); Morris v. Princess Cruises, Inc., 236

F.3d 1061 (9 Cir. 2001). Generally, diversity is determined from the face of a complaint. Gould, 790 th

F.2d at 773; Miller, 763 F.2d at 373.

Because of the “Congressional purpose to restrict the jurisdiction of the federal courts on

removal,” the removal statute is strictly construed against removal. Shamrock Oil & Gas Corp. v. 2

Sheets, 313 U.S. 100, 108-109, 61 S.Ct. 868, 872 (1941); Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9

th

Cir. 1996). Federal jurisdiction “must be rejected if there is any doubt as to the right of removal in the

first instance.” Duncan, 76 F.3d at 1485; Gaus v. Miles, Inc., 980 F.2d 564, 566 (9 Cir. 1992). A th

defendant “has the burden of establishing that removal was proper.” Duncan, 76 F.3d at 1485; Harris

v. Provident Life and Accident Ins. Co., 26 F.3d 930, 932 (9 Cir. 1994). th

“If at any time before final judgment it appears that the district court lacks subject matter

jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). “Without jurisdiction the court cannot

proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only

function remaining to the court is that of announcing the fact and dismissing the cause.” Ex parte

McCardle, 7 Wall 506, 514, 19 L.Ed. 264 (1869).

With these standards in mind, this Court turns to whether North American’s removal was proper.

Felonious And Intentional Killing

California Probate Code section 252 prevents a felonious and intentional killer to recover

benefits under the life policy of the killer’s victim:

A named beneficiary of a . . . life insurance policy . . . who feloniously and

intentionally kills . . . the person upon whose life the policy is issued is not entitled to any

benefit under the . . . policy . . . and it becomes payable as though the killer had

predeceased the decedent.

California Probate Code section 254 addresses the effect or absence of a judgment of conviction:

(a) A final judgment of conviction of felonious and intentional killing is

conclusive for purposes of this part.

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3 According to Ms. Guerra, Mr. Moore resides in Ohio, a “diverse” residence from Ms. Guerra, to

moot the need to “analyze or rule on whether a cause of action has been stated as to Mr. Moore.” 

North American agrees and notes “the only dispute on plaintiff’s motion to remand is whether

Victor Davis is properly joined in this action.”

5

(b) In the absence of a final judgment of conviction of felonious and intentional

killing, the court may determine by a preponderance of evidence whether the killing was

felonious and intentional for purposes of this part. The burden of proof is on the party

seeking to establish that the killing was felonious and intentional for the purposes of this

part.

Ms. Guerra contends that since Mr. Davis appeals his conviction, there is no final judgment to

satisfy California Probate Code section 254(a), and that such a judgment or judicial declaration is

necessary to determine Ms. Guerra and Mr. Davis’ rights under the life policy. Ms. Guerra notes that

although her cause of action against Mr. Davis is styled as declaratory relief, it “is one brought directly

under Probate Code § 254(b)” and Ms. Guerra “could have titled the cause of action accordingly. The

purpose of Probate Code § 254(b) would be eviscerated if a plaintiff is forced to wait until a criminal

defendant has exhausted his/her appeals and could not initiate a civil action.” North American responds

that Ms. Guerra cannot state a viable declaratory relief claim against Mr. Davis in the absence of an

actual justiciable controversy. 

Sham Defendant/Fraudulent Joinder

North American contends that Ms. Guerra joined Mr. Davis and Mr. Moore as sham defendants 3

to destroy diversity jurisdiction. Ms. Guerra argues that she has stated a viable claim against Mr. Davis,

an indispensable party whose rights under the life policy are at issue, and that Ms. Guerra, Ms. Perry and

Mr. Davis’ common California “citizenship” destroys diversity jurisdiction. According to Ms. Guerra,

until Mr. Davis’ rights are determined and extinguished, she cannot proceed on her remaining claims.

Fraudulently joined defendants will not defeat removal on diversity grounds. Ritchey v. Upjohn

Drug Co., 139 F.3d 1313, 1318 (9 Cir.), cert. denied, 525 U.S. 963, 119 S.Ct. 407 (1998). “Fraudulent th

joinder is a term of art.” McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9 Cir. 1987). “If a th

plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according

to the well-settled rules of the state, the joinder is fraudulent and ‘the defendant’s presence in the lawsuit

is ignored for purposes of determining diversity.’” United Computer Systems, Inc. v. A.T. & T. Corp.,

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298 F.3d 756, 761 (9 Cir. 2002) (quoting Morris, 236 F.3d at 1067). Joinder is fraudulent if there is th

no intention to get a joint judgment and there is no colorable ground for claiming so. Lewis v. Time,

Inc., 83 F.R.D. 455, 460 (E.D. Cal. 1979), aff’d, 710 F.2d 549. However, there is no fraudulent joinder

if the defendant’s assertions go to “‘the merits of the action as an entirety, and not to the joinder; that

is to say, it indicated that the plaintiff’s case was ill founded as to all the defendants.’” Ritchey, 139 F.3d

at 1318 (quoting Chesapeake & Ohio R. Co. v. Cockrell, 232 U.S. 146, 153-154, 34 S.Ct. 278 (1914)).

North American bears the burden to demonstrate Mr. Davis is a sham defendant:

The burden of proving fraudulent joinder is a heavy one. The removing party

must prove that there is absolutely no possibility that the plaintiff will be able to establish

a cause of action against the in-state defendant in state court, or that there has been

outright fraud in the plaintiff’s pleadings of jurisdictional facts.

Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5 Cir. 1983). th

“The defendant seeking removal to the federal court is entitled to present facts showing the

joinder to be fraudulent.” McCabe, 811 F.2d at 1339. A removing defendant may attempt to submit

facts that the resident defendant had “no real connection with the controversy.” Wilson v. Republic Iron

& Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 37 (1921); Ritchey, 139 F.3d at 1318. 

A court addressing a sham defendant does not “decide whether the plaintiff will actually or even

probably prevail on the merits, but look[s] only for a possibility that he may do so.” Dodson v. Spiliada

Maritime Corp., 951 F.2d 40, 42 (5 Cir. 1992). A court must not take “an overly mechanistic approach

th

to defendant’s fraudulent joinder claim.” Alderman v. Pitney Bowes Management Services, 191

F.Supp.2d 1113, 1116 (N.D. Cal. 2002). “Given the presumption against removal jurisdiction, disputed

questions of fact should be decided in favor of the nonremoving party.” Levine v. Allmerica Financial

Life Ins. & Annuity Co., 41 F.Supp.2d 1077, 1078 (C.D. Cal. 1999); see Green, 707 F.2d at 204; Good

v. Prudential Ins. Co. of America, 5 F.Supp.2d 804, 806 (N.D. Cal. 1998). “[D]oubt arising from

inartful, ambiguous, or technically defective pleadings should be resolved in favor of remand.” Lewis,

83 F.R.D. at 460.

North American claims that Ms. Guerra’s declaratory relief claim against Mr. Davis “is merely

a procedural device” and fails “because no substantive claim has been alleged against Davis.” North

American appears to take the untenable position that declaratory relief is unavailable in an action based

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on diversity jurisdiction and ignores the Declaratory Judgment Act, 28 U.S.C. § 2201. North American’s

cited authority, In re Joint Eastern and Southern District Asbestos Litigation, 14 F.3d 726, 731 (2nd

1993), contradicts North American’s supposition:

A necessary prerequisite to the exercise of judicial power, then, is the presence

before a court of a claim of substantive right. . . . In other words, the plaintiff’s complaint

must allege a substantive claim that triggers the court’s adjudicative function. Except

when a party seeks declaratory relief, the plaintiff must assert that some conduct on

the part of the defendants that has caused or is causing actual or threatened injury to the

plaintiff that will be remedied or avoided by determination of liability. (Bold added;

citation omitted).

North American’s position makes no sense.

Next, North American argues that Ms. Guerra fails “to show that declaratory relief against Davis

is proper because there is no actual and justiciable controversy to be decided by this Court. North

American claims that since Mr. Davis’ criminal appeal remains pending and there is no final conviction,

“the parameters of that controversy are still unknown and therefore not ripe for declaratory relief. Once

the appeal is decided, [Ms. Guerra] will not need a declaration from this Court to make an identical

determination which will be made by Davis’s [sic] appeal.” North American points to California Code

of Civil Procedure section 1061 which permits a court to refuse declaratory relief “in any case where its

declaration or determination is not necessary or proper at the time under all the circumstances.” North

American relies on the following from Taliaferro v. Taliaferro, 179 Cal.App.2d 787, 791, 4 Cal.Rptr.

689, 691 (1960): “A dispute that is the subject of another action pending between the same parties and

arising out of the same subject matter may not be the subject of an independent action for declaratory

relief because the controversy will have been rendered moot by judgment in the former action.”

Conceding that this action and Mr. Davis’ criminal appeal do not “involve the same parties,” North

American claims the above quote is “instructive” in that Ms. Guerra’s declaratory relief claim and Mr.

Davis’ criminal appeal involve the same subject matter whether Mr. Davisfeloniously and intentionally

killed Ms. Perry.

North American presumes the criminal appeal will resolve the felonious, intentional killing

question but does not explain how. The parties fail to indicate the issues or disputed matters of the

criminal appeal and whether they are simply limited to guilt or innocence. There may be procedural

issues to require retrial whether Mr. Davis feloniously and intentionally killed Ms. Perry. Ms. Guerra

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correctly notes the dissimilarity of parties in this action and the criminal appeal to mitigate the authority

relied upon by North American. Moreover, as noted by Ms. Guerra, California Probate Code section

254 addresses a situation such as that here and provides for a presumably quicker civil determination

pending criminal appeals. California Probate Code section 254(b) places the burden on Ms. Guerra to

prove felonious, intentional killing to allay North American’s “procedural” concerns.

North American has failed to meet its heavy burden to demonstrate fraudulent joinder and to

demonstrate that Ms. Guerra’s declaratory relief claim fails obviously under California law. This Court

is unable to conclude that no possibility exists that Ms. Guerra will be able to obtain her requested

declaratory relief or that Ms. Guerra has fraudulently pled jurisdictional facts. This Court is unable to

determine that Mr. Davis lacks a connection to the controversy. The presumptions against removal

weigh in favor of Ms. Guerra. 

Unanimity Requirement

Although not addressed by the parties, a question arises whether North American’s removal is

defective because the other defendants neither joined in nor consented to it. North American notes that

Mr. Davis has not been served with the summons and complaint. Ms. Guerra’s papers mention that Mr.

Moore has been located in Ohio although this Court is unsure whether he has been served with the

summons and complaint.

Pursuant to subdivision (a) of 28 U.S.C. § 1446 (“section 1446"), a “defendant or defendants

desiring to remove any civil action . . . from a State court shall file in the district court of the United

States for the district and division within which such action is pending a notice of removal signed

pursuant to Rule11 of the Federal Rules of Civil Procedure . . .” Section 1446(b) specifies the “notice

of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the

defendant, through service or otherwise, of a copy of the initial pleading . . .”

“Section 1446 requires all proper defendants to join or consent to the removal notice.” Prize

Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1266 (9 Cir. 1999); see Parrino v. FHP, Inc., 146 F.3d th

699, 703 (9 Cir.), cert. denied, 525 U.S. 1001, 119 S.Ct. 510 (1998) (“All defendants must join a notice th

of removal”). Under the “unanimity requirement,” when there is more than one defendant in the action,

all defendants must unanimously agree to join in the removal. Hewitt v. City of Stanton, 798 F.2d 1230,

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F.R.Civ.P. 11 “does not authorize one party to make representations or file pleadings on behalf of another.” 4

Miles, 928 F.Supp. at 1076.

9

1232 (9 Cir. 1986); Ford v. New United Motors Manufacturing, Inc., 857 F.Supp. 707, 708 (N.D. Cal. th

1994). 

Each defendant must “file a document in which the defendant formally concurs with removal.”

Ford, 857 F.Supp. at 708, n. 3 (citing Getty Oil v. Insurance Co. of N. Am., 841 F.2d 1254, 1262,t n. 11

(5 Cir. 1988)0. “[O]ne defendant may not speak for another in a removal petition.” Unicom Systems,

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Inc. v. National Louis Univ., 262 F.Supp.2d 638, 642, n. 5 (S.D.W.Va. 2002). Section 1446 requires

“all defendants, individually, or through their counsel, to voice their consent before the court, not

through another party’s attorney.” Creekmore v. Food Lion, 797 F.Supp. 505, 509 (E.D. Va. 1992).

“[I]n a civil action where there are several served defendants the mere bald, unsupported assertion in a

notice of removal by one removing defendant that all the other defendants consent to the removal fails

to constitute a sufficient consent to removal.” Miles v. Kilgore, 928 F.Supp. 1071, 1075-1076 (N.D. Ala.

1996). “Where fewer than all the defendants have joined in a removal action, the removing party has 4

the burden under section 1446(a) to explain affirmatively the absence of any co-defendants in the notice

for removal.” Prize Frize, 167 F.3d at 1266 (holding “[t]he case was improperly removed because not

all defendants consented to the removal.”);see Northern Illinois Gas Co. v. Airco Industrial Gases, 676

F.2d 270, 273 (7 Cir. 1982). th

“Failure to comply with the thirty-day time limitation or the unanimity requirement renders the

removal procedurally defective.” Ford, 857 F.Supp. at 708; see Emerich v. Touche Ross & Co., 846

F.2d 1190, 1192 n. 1 (9 Cir. 1988). Because section 1446(a)’s requirements are mandatory, “there is th

no federal jurisdiction when one of the defendants fails to join in, file his own, or officially and

unambiguously consents to, a removal petition within 30 days of service.” Miles, 928 F.Supp. at 1075-

1076 (italics in original). 

Here, North American solely filed notice to remove this action. A question remains whether Mr.

Davis and Mr. Moore have consented or will consent officially and unambiguously to removal. North

American is not in a position to speak for other defendants, is silent as to their consent to removal, and

fails to explain the absence of their consent. Doubts as to the unanimity requirement favor remand. 

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Attorney Fees

To pursue remand, Ms. Guerra seeks to recover $2,250 attorney fees, comprising:

1. 1.5 hours at $300 hourly partner rate to prepare the remand motion papers ($450);

2. One hour at $300 hourly partner rate to prepare reply papers ($300); and

3. Five anticipated hours at $300 hourly partner rate to travel to and attend hearing

($1,500).

To support his $300 hourly billing rate, Ms. Guerra’s attorney notes he is a California certified specialist

in estate planning and probate law.

“An order remanding the case may require payment of just costs and any actual expenses,

including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). “The purpose of such

an award is not to punish defendants, but rather to reimburse plaintiffs for unnecessary litigation costs.”

Kanter v. Warner-Lambert Co., 52 F.Supp.2d 1126, 1132 (N.D. Cal. 1999), aff’d, 265 F.3d 853 (9 Cir. th

2001). A showing of the removing defendant’s bad faith is not required for an award of attorney fees

and costs. “Indeed, the statute as amended makes no reference at all to the state of mind or intent of the

party removing the action, instead focusing strictly on the mere absence of subject matter jurisdiction.”

Moore v. Permanente Medical Group, Inc., 981 F.2d 443, 446 (9 Cir. 1992) (quoting Morgan Guar.

th

Trust Co. v. Repub. of Palau, 971 F.2d 917, 923 (2 Cir. 1992)); Balcorta v. Twentieth Century-Fox nd

Film Corp., 208 F.3d 1102, 1106, n. 6 (9 Cir. 2000). “The decision of whether to award costs and fees th

lies within the sound discretion of the trial judge who may take into account the particular circumstances

of the case and the legal issues involved.” Schrader v. Hamilton, 959 F.Supp. 1205, 1212 (C.D. Cal.

1997). 

An attorney fees award is appropriate to reimburse Ms. Guerra to secure remand. The $300

hourly billing rate of Ms. Guerra’s attorney is reasonable given his experience. Devotion of 2.5 hours

to prepare the remand and reply papers is appropriate, not excessive. Since this Court considers remand

on the record and without a hearing, Ms. Guerra’s counsel will not need to devote five hours to travel

and appear at a hearing. As such, an award of $750 (2.5 hours multiplied by $300 hourly rate) is in order

to secure remand under the circumstances.

/ / /

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CONCLUSION AND ORDER

For the reasons discussed above, this Court:

1. REMANDS this action to Stanislaus County Superior Court and DIRECTS this Court’s

clerk to take necessary action to remand this action to Stanislaus County Superior Court

and to close this action; 

2. ORDERS North American, no later than April 14, 2006, to pay Ms. Guerra $750 for

attorney fees to secure remand; and

3. VACATES the June 6, 2006 scheduling conference.

IT IS SO ORDERED.

Dated: March 31, 2006 /s/ Lawrence J. O'Neill 

66h44d UNITED STATES MAGISTRATE JUDGE

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