Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01087/USCOURTS-azd-2_06-cv-01087-0/pdf.json

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

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NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

P&E Productions, LLC, 

Plaintiff, 

vs.

The Chubb Corp., et al., 

Defendants. 

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No. CV-06-1087-PHX-FJM

ORDER

The court has before it defendants' notice of removal (doc. 1), plaintiff's motion for

remand (doc. 10), defendants' response (doc. 11), and plaintiff's reply (doc. 13). Plaintiff

originally filed this action in the Superior Court of Arizona in Maricopa County on February 27,

2006. On April 17, 2006, defendants The Chubb Corporation, Chubb & Son, Inc., Chubb

Services Corporation, and Federal Insurance Company (collectively, the "Chubb

Defendants") filed their notice of removal, alleging that plaintiff fraudulently joined

defendants Willis of Arizona, Inc. ("Willis") and Greg Gross ("Gross") in order to defeat

diversity jurisdiction in federal court. Because Willis and Gross are citizens of Arizona, their

presence in the lawsuit defeats diversity jurisdiction unless they were fraudulently joined. 

The party seeking removal has the burden of establishing federal jurisdiction. Wilson

v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S. Ct. 35, 37 (1921). All defendants who

may properly join in the removal notice must join. 28 U.S.C. § 1446(a)-(b). If all defendants

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do not unanimously agree to join, the action cannot be removed. Hewitt v. City of Stanton,

798 F.2d 1230, 1232 (9th Cir. 1986). 

An exception to the unanimity requirement exists, however, where a non-diverse party

has been added solely for the purpose of depriving the federal court of jurisdiction. If a

defendant's joinder is found to be fraudulent, "the defendant's presence in the lawsuit is

ignored for purposes of determining diversity." United Computer Sys., Inc. v. AT&T Corp.,

298 F.3d 756, 761 (9th Cir. 2002) (quotation omitted). To prove fraudulent joinder, the

Chubb Defendants have the burden of proving that the plaintiff failed to state a claim against

Willis and Gross and that "the failure is obvious according to the settled rules of the state."

McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Courts strictly

construe the removal statute against removal jurisdiction. See Gaus v. Miles, Inc., 980 F.2d

564, 566 (9th Cir. 1992). Any doubt about the propriety of removal is resolved in favor of

remand. Id.

Plaintiff purchased insurance on a videotaped copy of historical baseball footage

valued at $1.2 million. This action arose when the videotape was stolen and the insurance

company failed to pay plaintiff's claim. Plaintiff filed this action alleging breach of contract,

bad faith refusal to pay an insurance claim, negligence and seeking declaratory relief. In the

amended complaint, plaintiff alleges that Willis was the "Producer/Broker/Agent which

issued [the policy]," Amended Complaint ¶ 3, and that Gross is the agent for Willis who

produced or issued the policy. Id. ¶ 5. The complaint alleges that Willis and Gross "owed

a duty of care to Plaintiff to carefully and reasonably advise, underwrite, obtain information

and assist Plaintiff in the acquisition of insurance and the interpretation and application of

the insurance coverages and benefits." Id. ¶ 78. According to plaintiff, these allegations are

intended to prove that Willis and Gross had a duty to reasonably inform plaintiff of its rights

and obligations under the policy and to advise it of the extent of coverage and the relevant

exclusions. The complaint further alleges that these agents acted negligently, recklessly and

incompetently in the selection of the appropriate coverage for plaintiff's specific needs,

Amended Complaint ¶¶ 78-83, and misrepresented the terms of the policy by making

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Defendants also contend that plaintiff waived any objection to removal by filing a

demand for trial by jury prior to their motion for remand. Plaintiff's objection to removal,

however, attacks not just procedural defects in the removal process, but calls into question

whether this court has subject matter jurisdiction. Jurisdictional defects cannot be waived.

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assurances that the value of the property would be recovered in the event of a loss, as

opposed to replacement of the property. Plaintiff's Opposition to Remand at 11.

Under Arizona law, an insurance agent "owes a duty to the insured to exercise

reasonable care, skill and diligence in carrying out the agent's duties in procuring insurance."

Darner Motor Sales, Inc. v. Univ. Underwriters Ins., Co., 140 Ariz. 383, 397, 682 P.2d 388,

402 (1984) (citation omitted). If an agent fails to "perform his activities according to the

standard of his profession, . . . he may be held liable under ordinary tort principles of

negligence for the damage he causes." Id. at 398, 682 P.2d at 403. See also Premium Cigars

Int'l, Ltd. v. Farmer-Butler-Leavitt Ins. Agency, 208 Ariz. 557, 564, 96 P.3d 555, 566 (Ct.

App. 2004). 

The Chubb Defendants have a heavy burden to overcome before a court can determine

that fraudulent joinder renders the case removable. In essence, they must show that "there

is no possibility that the plaintiff would be able to establish a cause of action against the

instate defendant in state court." Bertrand v. Aventis Pasteur Labs., Inc., 226 F. Supp. 2d

1206, 1213 (D. Ariz. 2002) (citing Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th

Cir. 1998)). Defendants failed to meet this burden. Plaintiffs have adequately asserted a

valid claim under Arizona law against Willis and Gross, and accordingly, their joinder is not

fraudulent.1

Plaintiff further requests the award of attorney's fees and costs pursuant to 28 U.S.C.

§ 1447(c), which provides that "[a]n order remanding the case may require payment of just

costs and any actual expenses, including attorney fees, incurred as a result of the removal."

Fees may be awarded "only where the removing party lacked an objectively reasonable basis

for seeking removal." Martin v. Franklin Capital Corp., 126 S. Ct. 704, 711 (2005).

Although we were not ultimately persuaded by the Chubb Defendants' arguments, we do not

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find that their removal was entirely lacking in objective reasonableness or motivated by bad

faith. The court, therefore, declines to exercise its discretion to award plaintiff's fees and

costs under section 1447(c). 

Therefore, IT IS ORDERED GRANTING plaintiff's motion for remand (doc. 10),

and remanding the case to the Superior Court of Maricopa County. IT IS FURTHER

ORDERED DENYING plaintiff's motion for fees and costs.

DATED this 27th day of June, 2006.

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