Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-03178/USCOURTS-cand-5_05-cv-03178-0/pdf.json

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

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 This disposition is not designated for publication and may not be cited.

Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

**E-Filed 11/2/05**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

EDUARDO CECENA and MARIA CECENA

 Plaintiffs,

 v.

ALLSTATE INSURANCE COMPANY,

MICHAEL ROMERO and DOES 1-100, 

inclusive,

 Defendants.

Case Number C 05-03178-JF

ORDER1 (1) GRANTING

DEFENDANT MICHAEL ROMERO’S

MOTION TO STRIKE; AND (2)

DENYING PLAINTIFFS’ MOTION

FOR REMAND

[Docket Nos. 12 & 20]

Defendant Michael Romero (“Romero”) moves to strike the complaint brought against

him by Eduardo Cecena and Maria Cecena (collectively “Plaintiffs”) pursuant to Rule 12(f) of

the Federal Rules of Civil Procedure. In the alternative, Romero moves to dismiss the complaint

pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiffs simultaneously

move to remand the instant action pursuant to Rule 7(b) of the Federal Rules of Civil Procedure

and 28 U.S.C. § 1447(c), and ask the Court to take judicial notice of the papers submitted in

Case 5:05-cv-03178-JF Document 27 Filed 11/02/05 Page 1 of 8
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 Plaintiffs are, and for all relevant times have been, residents of the State of California. 

Allstate is, and for all relevant times has been, a corporation organized and existing under the

laws of the State of Illinois, with its principal place of business in Northbrook, Illinois. Romero

is, and for all relevant times has been, a resident of the State of California.

2

Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

support of their motion for remand for use in their opposition to Romero’s motion to strike or

dismiss. Having considered the briefs, relevant evidence, and the arguments of counsel at the

hearing on October 28, 2005, the Court will GRANT Romero’s motion to strike and DENY

Plaintiffs’ motion for remand for the reasons set forth below.

I. BACKGROUND

On February 15, 2005, Plaintiffs filed suit in the San Benito Superior Court against

Allstate Insurance Company (“Allstate”) and Romero (collectively “Defendants”), alleging

claims for breach of contract, bad faith and negligence.2 See San Benito Superior Court Case No.

CU-05-00019; see also Complaint, ¶¶ 6-15. Plaintiffs’ claims stem from Allstate’s alleged

failure timely to pay benefits owed to Plaintiffs under a homeowners insurance policy when

Plaintiffs’ home sustained fire damage. Complaint, ¶¶ 8, 12. In addition, Plaintiffs allege that

Romero, the Allstate sales agent who serviced Plaintiffs’ policy, negligently breached his duty to

advise Plaintiffs of the coverage requirements for their home. Id., ¶ 14. On June 2, 2005,

Defendants separately demurred to the complaint. On July 14, 2005, the Superior Court

sustained Allstate’s demurrer with leave to amend and sustained Romero’s demurrer without

leave to amend, expressly dismissing the complaint in its entirety as to Romero. Notice of entry

of the Superior Court’s order was filed by Defendants on July 25, 2005.

On July 26, 2005, Plaintiffs filed a first amended complaint (“FAC”) in the Superior

Court. Plaintiffs’ FAC continued to include Romero as a defendant, alleging new claims against

him for fraud and negligent misrepresentation. See FAC, ¶¶ 29-44. Plaintiffs admit that

“[t]echnically, [they] should have sought Leave to Amend from the court” before filing the new

causes of action against Romero. Motion to Remand, at 2. Nonetheless, Plaintiffs maintain that

by including new causes of action against Romero, they sought to “save judicial resources.” Id. 

Defendants contend that Plaintiffs included Romero as a defendant in the FAC in order to defeat

Case 5:05-cv-03178-JF Document 27 Filed 11/02/05 Page 2 of 8
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3

 According to Allstate’s notice of removal, federal jurisdiction is based upon diversity of

citizenship and satisfaction of the amount in controversy requirement. See 28 U.S.C. § 1332(a). 

Plaintiffs are California residents and Allstate is an Illinois corporation. See supra, note 2. 

Plaintiffs served Statements of Damages — Eduardo Cecena on July 8, 2005 and Maria Cecena

on July 12, 2005 — indicating that each Plaintiff seeks to recover more than $75,000, exclusive

of costs and interest.

4

 Plaintiffs also refer to this filing as a “Motion for Reconsideration” pursuant to Cal. Civ.

Proc. Code § 1008. 

3

Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

diversity and to preclude Allstate from removing the instant case to federal court. 

On August 4, 2005, Plaintiffs learned that counsel for Allstate intended to remove the

action to federal court, given Allstate’s belief that the new causes of action against Romero were

not permitted. Id., at 3. On the following day, Allstate filed a notice of removal with this Court

pursuant to 28 U.S.C. § 1441(a).3 Hours later, Plaintiffs attempted to file a motion with the

Superior Court seeking leave to file their claims for fraud and negligent misrepresentation against

Romero.4 See Shepardson Dec., ¶ 12, Ex. 1. Although Plaintiffs’ motion and supporting papers

initially were accepted and file-stamped by the Superior Court, the filing subsequently was

vacated because it occurred after the case had been removed to federal court. See Woelfel Dec.,

¶ 3, Ex. B.

II. DISCUSSION

A. Motion for Remand

1. Legal Standard

Pursuant to 28 U.S.C. § 1441(a), a defendant may remove an action to federal court if the

plaintiff could have initially filed the action in federal court. See Ethridge v. Harbor House

Restaurant, 861 F.2d 1389, 1393 (9th Cir. 1988). A party may file an action in federal court if

there is diversity of citizenship among the parties or if the action raises a substantial federal

question. Ethridge, 861 F.2d at 1393. The party invoking the removal statute bears the burden

of establishing federal jurisdiction. Id. The removal statute is strictly construed against removal. 

Id. The matter therefore should be remanded if there is any doubt as to the existence of federal

jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

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Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

2. Compliance With Removal Procedure

Plaintiffs ask this Court to remand this action to the Superior Court so that their motion

for leave to amend and motion for reconsideration may be heard. Plaintiffs contend that by

removing the action from the Superior Court before the time period had run for a motion for

reconsideration, Allstate sought to “usurp Plaintiffs’ rights by denying them an opportunity to

defeat diversity.” Motion to Remand, at 4. In other words, Plaintiffs maintain that Allstate’s

removal was premature. Although Plaintiffs do not cite any authority holding that removal is

prohibited prior to the expiration of the time period for filing of a motion for reconsideration,

Plaintiffs argue that in order for removal to occur, diversity must exist at the time the action was

commenced and at the time of removal. Id., at 3 (citing United Food & Commercial Workers

Union, Local 919, AFL-CIO v. Centermark Properties Meriden Square, Inc., 30 F.3d 298, 301

(2nd Cir. 1994)). Thus, Plaintiffs imply that removal is inappropriate in this case, given that

complete diversity did not exist at the time the action was commenced in the Superior Court. 

Although their general statement of the law is correct, Plaintiffs fail to discuss the

exception set forth in 28 U.S.C. § 1446(b), which states in pertinent part:

If the case stated by the initial pleading is not removable, a notice of removal may

be filed within thirty days after receipt by the defendant, through service or

otherwise, of an amended pleading, motion, order or other paper from which it

may first be ascertained that the case is one which is or has become removable,

except that a case may not be removed on the basis of jurisdiction conferred by

section 1332 of this title more than 1 year after commencement of the action.

28 U.S.C. § 1446(b). While this section initially appears to permit Allstate’s removal, an

examination of cases construing § 1446(b) cast doubt upon its applicability in the present

context. Under the traditional rule, only a voluntary act of the plaintiff justifies removal of an

action not initially removable, such as in the case of a settlement or stipulation of dismissal. See

Whitcomb v. Smithson, 175 U.S. 635, 638 (1900) (holding that a ruling on the merits, adverse to

plaintiff and without his assent did not render the case removable). This traditional rule serves to

“promote judicial efficiency by ‘prevent[ing] removal of those cases in which the issue of the

resident defendant’s dismissal has not been finally determined in the state courts.’” Self v.

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Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

General Motors Corp., 588 F.2d 655, 658 (9th Cir. 1979) (quoting Weems v. Louis Dreyfus

Corp., 380 F.2d 545, 547 (5th Cir. 1967)). There is some dispute as to whether the traditional

rule survives, given the statement in § 1446(b) that removal is permitted after receipt of an

“order” from which the case is or has become removable. However, the majority of courts,

including the Ninth Circuit, have concluded that voluntary abandonment of a claim is required in

order to remove a case under § 1446(b). See Self, 588 F.2d 655; Insigna v. LaBella, 845 F.2d

249 (11th Cir. 1988); DeBry v. Transamerica Corp., 601 F.2d 480 (10th Cir. 1979); see also

Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3723 n.22 (3d ed.

1998). In light of the foregoing authorities and the undisputed fact that Romero was dismissed

from the Superior Court case on a contested demurrer, Allstate’s notice of removal arguably was

not authorized by statute.

3. Fraudulent Joinder

Nonetheless, the Court concludes that removal is appropriate on the alternate ground of

fraudulent joinder. “Fraudulent joinder is a term of art. If the plaintiff fails to state a cause of

action against a resident defendant, and the failure is obvious according to the settled rules of the

state, the joinder of the resident defendant is fraudulent.” McCabe v. General Foods Corp., 811

F.2d 1336, 1339 (9th Cir. 1987). Plaintiffs’ FAC alleges that Romero, an “authorized agent” for

Allstate, was “acting within the scope of [his] authority” when he made the purported

misrepresentations to Plaintiffs. FAC, ¶ 4. Under California law, it is “well established” that an

insurance agent has no liability for acts undertaken within the scope of his or her agency. 

Mercado v. Allstate Ins. Co., 340 F.3d 824, 826 (9th Cir. 2003); see also Icasiano v. Allstate Ins.

Co., 103 F. Supp. 2d 1187, 1189-90 (N.D. Cal. 2000); Good v. Prudential Ins. Co., 5 F. Supp. 2d

804, 807-09 (N.D. Cal. 1998); Charlin v. Allstate Ins. Co., 19 F. Supp. 2d 1137, 1142 (C.D. Cal.

1998); Gasnick v. State Farm Ins. Co., 825 F. Supp. 245, 249 (E.D. Cal. 1992). In light of these

authorities, Plaintiffs’ attempt to amend its Complaint in order to state new causes of action

///

///

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5

 Plaintiffs cite two cases which purportedly hold that an insurance agent may be held

personally liable for acts committed within the scope of her agency. However, these cases are

clearly distinguishable. In Barbara L. McNeill v. State Farm Life Ins. Co., 116 Cal. App. 4th 597

(2004), the court relied upon an important factual distinction, noting the “present complaint’s

indication of a long-term relationship between [the agent] and plaintiff.” Id. at 603. Likewise, in

Doctor’s Co. v. Superior Court, 49 Cal. 3d 39 (1989), the plaintiff sought to impose liability

upon various agents of the insurance company for engaging in an alleged conspiracy to violate

California Insurance Code § 790.03. In the instant action, Plaintiffs have not alleged a

conspiracy to commit fraud or negligent representation.

6

Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

against Romero for fraud and negligent misrepresentation was futile.5 The Court concludes that

such failure is obvious according to settled legal principles, and accordingly that Plaintiffs’

inclusion of Romero as a defendant was fraudulent.

B. Motion to Strike

The Court may strike “from any pleading any insufficient defense or any redundant,

immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Motions to strike

generally will not be granted unless it is clear that the matter to be stricken could not have any

possible bearing on the subject matter of the litigation. LeDuc v. Kentucky Central Life Ins. Co.,

814 F. Supp. 820, 830 (N.D. Cal. 1992). Allegations “supplying background or historical

material or other matter of an evidentiary nature will not be stricken unless unduly prejudicial to

defendant.” Id. Moreover, allegations that contribute to a full understanding of the complaint as

a whole need not be stricken. Id.

As described above, the Superior Court sustained Romero’s demurrers without leave to

amend, expressly dismissing the Complaint in its entirety as to Romero. In defiance of the

court’s Order, Plaintiffs subsequently filed a FAC alleging new claims against Romero for fraud

and negligent misrepresentation. Because these new claims were expressly prohibited by the

court and were filed in violation of California law, the FAC is a nullity as to Romero. 

Accordingly, Romero’s motion to strike is granted. 

///

///

///

Case 5:05-cv-03178-JF Document 27 Filed 11/02/05 Page 6 of 8
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Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

III. ORDER

(1) Defendant Romero’s motion to strike Plaintiffs’ fourth and fifth causes of action

is GRANTED; and

(2) Plaintiffs’ motion for remand is DENIED.

DATED: November 2, 2005

 /s/ electronic signature authorized 

JEREMY FOGEL

United States District Judge

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Case No. C 05-03178-JF

ORDER (1) GRANTING DEFENDANT MICHAEL ROMERO’S MOTION TO STRIKE; AND (2) DENYING

PLAINTIFFS’ MOTION FOR REMAND

(JFEX1)

This Order has been served upon the following persons:

Counsel for Plaintiffs

johnshepardson@hotmail.com

Counsel for Defendants

mbarnes@sonnenschein.com

smartin@sonnenschein.com

jwoelfel@sonnenschein.com

Case 5:05-cv-03178-JF Document 27 Filed 11/02/05 Page 8 of 8