Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_09-cv-00049/USCOURTS-azd-4_09-cv-00049-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

ELIAS FREIG IBARRA and 

MARTHA E. FREIG, husband and wife, 

Plaintiffs, 

vs.

PROTECTIVE LIFE INSURANCE

COMPANY, a corporation;

INTERSTATE ASSURANCE

COMPANY, a corporation; and

GUILLERMO M. SAPIENS, an

unmarried man d/b/a/ 

Sapiens Insurance Services

Defendants. 

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No. CV-09-049-TUC-CKJ

ORDER

Pending before the Court is Plaintiffs’ Motion to Remand [Doc. #5]. Defendant

Protective Life Insurance Company filed a Response in Opposition [Doc. #6]. In its

discretion, the Court finds this case suitable for decision without oral argument. See LRCiv.

7.2(f). The Parties have adequately presented the facts and legal arguments in their briefs

and supporting documents, and the decisional process would not be significantly aided by

oral argument.

 . . .

 . . .

 . . .

Case 4:09-cv-00049-CKJ Document 9 Filed 06/12/09 Page 1 of 6
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Factual Background

On January 22, 2009, this case was removed from Santa Cruz County Superior Court

by Defendant Protective Life Insurance Company, which is a Tennessee corporation with its

principal place of business in Alabama. Plaintiffs are residents and citizens of the Republic

of Mexico. Defendant Guillermo M. Sapiens is a citizen of Arizona. It is undisputed that

complete diversity of citizenship exists amongst the parties.

This cause of action was originally filed on December 17, 2008 in Santa Cruz County

Superior Court for the State of Arizona. On that same date, the process server received

copies of both the Summons and Complaint for service upon both Defendants Protective Life

Insurance Company and Guillermo Sapiens. Defendant Sapiens is an insurance producer

residing in Green Valley, Arizona. Defendant Protective Life was served via its statutory

agent on December 23, 2008. The process server attempted service upon Defendant Sapiens

eleven (11) times at both his home and place of business beginning December 18, 2008.

Defendant Sapiens was successfully served on the twelfth attempt on January 23, 2009 at his

place of business.

On January 22, 2009, Defendant Protective Life removed the matter to this Court

based on diversity of citizenship. 28 U.S.C. § 1332; 28 U.S.C. § 1441(a). On February 2,

2009, Plaintiffs filed their Motion for Remand citing the presence of Defendant Sapiens as

a forum defendant causing removal to be improper. See 28 U.S.C. § 1441(b) (removal is

improper where one of the “defendants is a citizen of the State in which such action is

brought.”).

Analysis

Federal courts are courts of limited jurisdiction. U.S. Const. art. III. As such, there

exists a “‘strong presumption’ against removal jurisdiction [which] means that the defendant

always has the burden of establishing that removal is proper.” Gaus v. Miles, Inc. 980 F.2d

564, 566 (9th Cir. 1992) (citations omitted). Further, the removal statute is to be strictly

construed against removal jurisdiction. Id. (citations omitted). Additionally, “[f]ederal

Case 4:09-cv-00049-CKJ Document 9 Filed 06/12/09 Page 2 of 6
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jurisdiction must be rejected if there is any doubt as to the right of removal in the first

instance.” Id.

Section 1441, 28 U.S.C., delineates which actions are removable. “Except as

otherwise expressly provided by Act of Congress, any civil action brought in a State court

of which the district courts of the United States have original jurisdiction, may be removed

by the defendant or the defendants to the district court of the United States for the district and

division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). A parties’

right to removal is further limited in cases where the district court’s jurisdiction is founded

on diversity. 28 U.S.C. § 1441(b). Diversity actions are “removable only if none of the

parties in interest properly joined and served as defendants is a citizen of the State in which

such action is brought.” 28 U.S.C. § 1441(b). This axiom is commonly referred to as the

“forum defendant rule.”

Defendant Protective Life urges this Court to rely on the plain language of the statute

in support of its petition for removal. More specifically, it relies on the “joined and served”

language of § 1441(b), arguing that removal is proper because Defendant Sapiens had not

yet been served at the time of removal. The plain language is compelling, but “district courts

are split on the proper interpretation of the ‘and served’ language.” Standing v. Watson

Pharmaceuticals, Inc., 2009 WL 842211, *3 (C.D. Cal. Mar. 26, 2009). Furthermore, the

Ninth Circuit has yet to address this issue. Id. Other circuit courts “have provided little

guidance on the statutory interpretation of the ‘properly joined and served’ language of

section 1441(b), owing to the fact that the orders of district courts made pursuant to section

1441, generally are not reviewable.” Sullivan v. Novartis Pharmaceuticals Corp., 575

F.Supp.2d 640, 644 (D. N.J. 2008); See also, 28 U.S.C. § 1447(d). The Eighth Circuit Court

of Appeals has noted, however, “that allowing unserved defendants to be ignored for removal

purposes would create needless jurisdictional problems. Because simultaneous service upon

multiple defendants is unlikely to occur, removal could be proper one day when service of

certain defendants was completed, but improper the next day when all defendants have been

served.” Percherski v. General Motors Corp., 636 F.2d 1156, 1161 n.6 (8th Cir. 1981)

Case 4:09-cv-00049-CKJ Document 9 Filed 06/12/09 Page 3 of 6
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(relying on Ninth Circuit precedent to establish the “joined and served” language of §

1441(b) did not modify previous precedent requiring complete diversity of citizenship

regardless of service). The Ninth Circuit described the purpose of the forum defendant rule

stating, “Removal based on diversity jurisdiction is intended to protect out-of-state

defendants from possible prejudices in state court. . . . The need for such protection is absent,

however, in cases where the defendant is a citizen of the state in which the case is brought.”

Lively v. Wild Oats, 946 F.3d 933, 940 (9th Cir. 2006). “Thus, the overarching purpose of

the forum defendant rule is to prevent certain cases properly brought in state court from

ending up in federal court.” Standing, 2009 WL 842211, *3. In 1948, “Congress added the

‘properly joined and served’ requirement in order to prevent a plaintiff from blocking

removal by joining as a defendant a resident party against whom it does not intend to

proceed, and whom it does not even serve.” Sullivan, 575 F.Supp.2d at 645. Apparently,

Congress added the language to combat the problem of “fraudulent joinder.” Id. Prior to the

rule change, the United States Supreme Court held that non-service of a resident defendant

“does not justify removal by the non-resident defendant.” Pullman Co. v. Jenkins, 305 U.S.

534, 541, 59 S.Ct. 347, 350, 83 L.Ed. 334 (1939). The Court went on to recognize that “the

non-resident defendant should not be permitted to seize an opportunity to remove the cause

before service upon the resident co-defendant is effected. It is always open to the nonresident defendant to show that the resident defendant has not been joined in good faith and

for that reason should not be considered in determining the right to remove.” Id. (citations

omitted). Courts continue to rely on Pullman by limiting removal where the fact of service,

or non-service, would defeat diversity. See Preaseau v. Prudential Insurance Co. of

America, 591 F.2d 74 (9th Cir. 1979).

As the Sullivan court noted “the fact that the legislative history is all but silent on the

issue [of the “joined and served” language] suggests that Congress did not intend to address

a novel concern or fundamentally change the nature of, or narrow the scope of the rule.

Indeed, the very lack of discussion in the legislative history strongly suggests that Congress

intended nothing more than to bolster the already existing efforts of lower federal courts to

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prevent improper joinder.” Sullivan, 575 F.Supp. 2d at 645. Furthermore, where the purpose

of the statute is to prevent gamesmanship by plaintiffs, it is difficult to comprehend why it

should be allowed to promote gamesmanship by defendants. See Standing, 2009 WL 842211

at *4. 

In the instant case, Plaintiffs aver that Defendant Sapiens was avoiding service of

process. Defendant Protective Life refutes this allegation by providing an affidavit of

Defendant Sapiens which claims that he was ultimately served with the Summons and

Complaint at a location unrelated to his home or place of business. Furthermore, Defendant

Sapiens claims that he was unaware of any of the service attempts that occurred at his home

and place of business, despite the fact that the lights were on and the blinds were open at his

home on at least one service attempt. Defendant Sapiens further claims that he learned about

the lawsuit from his ex-wife on or about January 27, 2009. Defendant Sapiens does not

explain, however, how his ex-wife knew about the lawsuit before him.

Defendant Protective Life correctly asserts that the subsequent joinder of a resident

defendant post-removal does not divest the district court of jurisdiction; however, it is

apparent from the face of the Complaint that Defendant Sapiens is a resident defendant, and

whom none of the parties suggest is fraudulently joined. See Harris v. Bankers Life and

Casualty Co., 425 F.3d 689, 694 (9th Cir. 2005) (holding “notice of removability under §

1446(b) is determined through examination of the four corners of the applicable

pleadings[.]”). “[T]o allow a resident defendant to remove a case before a plaintiff even has

a chance to serve him would provide a vehicle for defendants to manipulate the operation of

the removal statutes. Allowing either party to do that would be against what the courts have

long understood to be Congress’s intent.” Vivas v. The Boeing Co., 486 F.Supp.2d 726, 734

(N.D. Ill. 2007). Moreover, “[w]hen the meaning [of a statute] has led to absurd or futile

results, . . . this Court has looked beyond the words to the purpose of the act. Frequently,

even when the plain meaning did not produce absurd results but merely an unreasonable one

‘plainly at variance with the policy of the legislation as a whole’ this Court has followed that

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purpose, rather than the literal words.” Standing, 2009 WL 842211 at *4 (quoting U.S. v.

Am. Trucking Ass’ns, 310 U.S. 534, 543, 60 S.Ct. 1059, 84 L.Ed. 1345 (1940)).

This Court finds that the policy against removal generally, and in favor of allowing

plaintiffs to choose their forum, make remand to the Arizona state court proper. Defendant

Protective Life was on notice from the face of Plaintiffs’ Complaint that a non-fraudulently

joined resident defendant was named in the lawsuit. Furthermore, Defendant Sapiens’s

statement that he did not avoid service is weak. If there is any doubt about the propriety of

removal, defendants bear the burden of demonstrating that it is proper. Defendants have

failed to meet that burden.

Accordingly, IT IS HEREBY ORDERED:

1. This case is REMANDED to Santa Cruz County Superior Court (Cause # CV08774);

2. The Clerk of the Court shall mail a certified copy of this Order to the Clerk of

the Santa Cruz County Superior Court; and

3. The Clerk of the Court shall then close its file in this matter.

DATED this 11th day of June, 2009.

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