Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_15-cv-04913/USCOURTS-cand-5_15-cv-04913-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

J.T. ASSOCIATES, LLC,

Plaintiff,

v.

FAIRFIELD DEVELOPMENT, L.P., et al.,

Defendants.

Case No. 15-cv-04913-BLF 

ORDER GRANTING PLAINTIFF'S 

MOTION TO REMAND AND DENYING 

DEFENDANT'S MOTION TO SEVER

AND REMAND

[Re: ECF 9, 12]

Plaintiff, a California citizen, brought this action in state court to sue Fairfield 

Development, L.P., Fairfield Investment Co., and Fairfield Residential Co. (“Fairfield 

Defendants”), also California citizens, for property damage and Hartford Casualty Insurance 

Company (“Hartford”), a citizen of Indiana, for improper denial of insurance coverage. See First 

Amended Compl. (“FAC”), ECF 1-1. Hartford removed this action to federal court on the basis of

diversity, contending that Plaintiff “procedurally misjoined” Fairfield Defendants and that they 

should therefore be disregarded for purposes of diversity. See Notice of Removal ¶¶ 8-12 , ECF 1. 

Hartford now moves to sever Plaintiff’s claims against Fairfield Defendants and remand 

those claims back to state court. Def.’s Mot., ECF 9. Plaintiff, in turn, moves to remand the entire 

case back to state court, arguing that Hartford improperly removed the case and that the Court 

therefore lacks jurisdiction over it. Pl.’s Mot., ECF 12. The Court has considered both motions 

and, for the reasons set forth below, GRANTS Plaintiff’s motion and DENIES Hartford’s motion.

I. BACKGROUND

Plaintiff alleges the following. On or around August 1, 2012, Fairfield Defendants were 

engaged in construction—excavation, building, and development—on the property directly 

adjacent to Plaintiff’s property. FAC at 4, ECF 1-1. Through this construction, Fairfield 

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Defendants damaged Plaintiff’s property such that Plaintiff lost use of it. Id.

Plaintiff then filed a first-party insurance claim with Hartford on the basis of a policy it had 

with Hartford, which began on or about October 11, 2011 and insures Plaintiff’s building for 

$7,564,400.00. Id. at 5. By letter dated September 8, 2014, Plaintiff explained to Hartford why 

coverage should be extended. Id. By letter dated September 23, 2014, Hartford refused to provide 

coverage. Id. Plaintiff sent a second letter, dated September 29, 2014, again explaining why 

coverage was warranted. Id. As of September 11, 2015, Hartford continued to deny coverage. Id. 

On June 15, 2015, Plaintiff filed suit against Defendants in Santa Clara Superior Court

alleging negligence against the Fairfield Defendants and breach of contract and bad faith against 

Hartford. See Notice of Removal ¶ 1. Plaintiff amended its complaint in state court on September 

11, 2015. Id. Hartford removed this action to federal court on October 26, 2015 pursuant to 28 

U.S.C. §§ 1441 and 1332 based on diversity jurisdiction between Plaintiff and Hartford only. Id 

¶¶ 6-12. Hartford requested that the Court disregard the citizenship of the Fairfield Defendants

because they had been procedurally misjoined. Id ¶¶ 8-12. 

Hartford now moves to sever and remand Plaintiff’s claims against Fairfield, ECF 9, while 

Plaintiff moves to remand the entire action, which it asserts was improperly removed for lack of 

diversity, back to state court, ECF 12. 

II. LEGAL STANDARD

A defendant may remove a state court action to federal court if the action could have been 

brought there originally. 28 U.S.C. § 1441(b). Removal may be proper on the basis of complete 

diversity of citizenship between the plaintiffs and defendants and where the amount in controversy

exceeds $75,000.00. 28 U.S.C. § 1332(a). The removing defendant must also obtain consent of 

all defendants, with the exception of nominal parties, in addition to the requirements of diversity. 

28 U.S.C. § 1446(b); see also Hewitt v. City of Stanton, 798 F.2d 1230, 1232-1233 (9th Cir. 1986). 

“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). 

In considering whether removal was proper, the federal court must strictly construe the 

removal statute. See Watson v. Gish, No. C 10-03770 SBA, 2011 WL 2160924, at *2 (N.D. Cal. 

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June 1, 2011) (quoting Luther v. Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 

(9th Cir. 2008)). “The presumption against removal means that the defendant always has the 

burden of establishing that removal is proper.” Id. (quoting Moore–Thomas v. Alaska Airlines, 

Inc., 553 F.3d 1241, 1244 (9th Cir. 2009)). “[A]ny doubts regarding the proprietary of the 

removal favor remanding a case.” Id.

III. DISCUSSION

The parties do not dispute the lack of complete diversity in this case, nor do they dispute 

the fact that Plaintiff’s claims against Fairfield Defendants must be remanded back to state court. 

What they do dispute is the proper place for Plaintiff’s claims against Hartford. Hartford argues 

that those claims belong before this Court because Plaintiff “procedurally misjoined” Fairfield 

Defendants. Plaintiff, on the other hand, argues that the entirety of this case belongs in state court 

because the Court lacks jurisdiction over it.

In seeking to sever and remand the claims against Fairfield Defendants back to state court, 

Hartford asks this Court to apply the doctrine of “procedural misjoinder,” a doctrine developed by

the Eleventh Circuit in Tapscott v. MS Dealer Serv. Corp and not adopted by the Ninth Circuit. 

Under this doctrine, a federal court may exercise jurisdiction over a diverse defendant 

where that defendant “is joined with a nondiverse defendant as to whom there is no joint, several 

or alternative liability and where the claim against the diverse defendant has no real connection to 

the claim against the nondiverse defendant.” Watson v. Gish, No. C 10-03770 SBA, 2011 WL 

2160924, at *3 (N.D. Cal. June 1, 2011) (citing Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 

1360 (11th Cir. 1996)). Pursuant to Tapscott, the doctrine applies if: (1) one defendant has been 

misjoined with another defendant in violation of the applicable joinder rules; and (2) the 

misjoinder is sufficiently egregious to rise to the level of a fraudulent misjoinder. Tapscott, 77 F.

3d at 1360. The Eleventh Circuit has explained that “[m]isjoinder may be just as fraudulent as the 

joinder of a resident defendant against whom a plaintiff has no possibility of a cause of action.” 

Id. at 1360.

Under Ninth Circuit law, the doctrine of fraudulent joinder—rather than procedural 

misjoinder—provides an exception to the diversity requirement. See Hunter v. Phillip Morris 

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USA, 582 F.3d 1039, 1043 (9th Cir. 2009) (quoting Morris v. Princess Cruises, Inc., 236 F.3d 

1061, 1067 (9th Cir. 2001)). “Joinder is fraudulent ‘[i]f 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.’” 

Id. (quoting Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007)). 

While acknowledging that the Ninth Circuit has not adopted the procedural misjoinder 

doctrine, Hartford offers three district court opinions within the Ninth Circuit—not one of which 

comes from this district—that have adopted and applied the doctrine. Def.’s Mot. 2-3, ECF 9.

See Sutton v. Davol Inc., 251 F.R.D. 500, 504 (E.D. Cal. 2008) (remanding medical malpractice 

claims against a nondiverse doctor and hospital but retaining jurisdiction over products liability 

claims against diverse medical device manufacturers and developers); Greene v. Wyeth, 344 F. 

Supp. 2d 674 (D. Nev. 2004) (remanding claims against a non-diverse doctor and sales 

representatives but retaining jurisdiction over a defendant drug manufacturer and its affiliates); 

Anglada v. Bank of Am. Corp., No. 3:11-CV-00524-RCJ, 2011 WL 5196710, at *4 (D. Nev. Oct. 

27, 2011) (remanding one of the four plaintiffs’ claims against a lender that no other plaintiff had 

challenged). On the basis of these cases, as well as a Fifth Circuit opinion, Hartford urges this 

Court to sever and remand the claims against the Fairfield Defendants.

Plaintiff argues against the adoption of the procedural misjoinder doctrine1because its 

application here would be inconsistent with the removal statute, 28 U.S.C. § 1441(b), which 

requires narrow construction and the requirement that any doubts be resolved in favor of remand. 

Pl.’s Mot. at 7, ECF 12. Plaintiff further argues that Hartford’s reliance on the procedural 

misjoinder doctrine is misguided because the Ninth Circuit has clearly not adopted the doctrine, 

and, contrary to Hartford’s contentions, district courts have not widely applied and accepted it. 

Pl.’s Opp. at 3, ECF 20. Plaintiff urges the Court to remand the action in its entirety back to state 

court. 

Plaintiff counters Hartford’s contention that procedural misjoinder has been widely applied 

by directing the Court to several decisions in this district that have declined to apply the doctrine. 

 

1

The Court notes that Plaintiff uses the phrase fraudulent misjoinder to reference the doctrine. For 

consistency, the Court uses procedural misjoinder.

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Pl.’s Opp. 3, ECF 20. See Jurin v. Transamerica Life Ins. Co., No. C 14-02882 LB, 2014 WL 

4364901, at *3 (N.D. Cal. Sept. 3, 2014) (“The Ninth Circuit ‘has not adopted, approved, nor 

applied,’ the theory of fraudulent misjoinder upon which Transamerica relies.”); see Lopez v. 

Pfeffer, No. 13-CV-03341 NC, 2013 WL 5367723, at *2 (N.D. Cal. Sept. 25, 2013) (“The Ninth 

Circuit has not adopted the Tapscott rationale, nor has any other court in our district adopted the 

fraudulent misjoinder theory.”); see Caouette v. Bristol-Myers Squibb Co., No. C-12-1814 EMC, 

2012 WL 3283858, at *6 (N.D. Cal. Aug. 10, 2012) (“other than the Eleventh and Fifth Circuits, 

no other circuit court has adopted the fraudulent misjoinder doctrine”); see also Early, 2013 WL 

3872218, at *2 (C.D. Cal. July 24, 2013) (“the doctrine of procedural or fraudulent misjoinder is a 

recent and unwarranted expansion of jurisdiction, one which the Court is not inclined to adopt”).

Having reviewed the relevant caselaw, the Court agrees with Plaintiff. “The reasons 

against the doctrine are many and persuasive.” Thee Sombrero, Inc. v. Murphy, No. 

EDCV15001004VAPSPX, 2015 WL 4399631, at *4 (C.D. Cal. July 17, 2015). It is well 

established that § 1441 must be narrowly construed and that any doubts must be resolved in favor 

of remand. “Fraudulent misjoinder flips this maxim on its head by making cases removable that 

by § 1441’s plain terms should not be.” Early v. Northrop Grumman Corp., No. 2:13-CV-3130-

ODW MRW, 2013 WL 3872218, at *3 (C.D. Cal. July 24, 2013). Procedural misjoinder would 

require the Court to sever non-diverse defendants under Federal Rule of Civil Procedure 20, but, 

Rule 20 “presumes the Court has jurisdiction to act.” Thee Sombrero, 2015 WL 4399631, at *4. 

“It makes little sense for a court first to sever part of the case under Rule 20, “and only then find it 

has jurisdiction.” Id. 

Additionally, courts have recognized the “need for simple and precise jurisdictional rules 

to spare judges and lawyers from wasted time and resources,” and that “enormous judicial

confusion” has followed in the ten years since Tapscott was decided. Id. at *5 (“confusion is not 

likely to abate after further development” because determining proper joinder is highly 

discretionary). Applying procedural misjoinder here would contravene judicial efficiency.

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Thus, Hartford has failed to meet its burden to show that removal was proper. 2 Hartford 

fails to offer any Ninth Circuit or even Northern District authority in support of its position. Of 

the district court opinions Hartford does offer, both Sutton and Greene acknowledge the 

uncertainty surrounding the applicability of procedural misjoinder in the Ninth Circuit. See

Sutton, 251 F.R.D. at 504; see Greene, 344 F. Supp. 2d at 684-685. “This uncertainty is another 

reason not to adopt [procedural] misjoinder without proper guidance.” Thee Sombrero, 2015 WL 

4399631, at *4 n.5. 

Furthermore, the facts of Sutton, Greene, and Anglada differ too greatly from those at issue 

here to provide even persuasive authority. For example, Sutton considered a complex, 

multidistrict products liability case that was pending transfer to a multidistrict litigation. The court

retained jurisdiction over the diverse defendants in order to “preserv[e] the removing Defendants’ 

right to removal in the remaining multidistrict action and [] preserv[e] the interests of judicial 

expediency and justice so that all pre-trial discovery on the products liability case can be 

coordinated in a single forum.” Sutton, 251 F.R.D. at 505. Such considerations are not present in 

this case. And even where they have been present, courts in this district have refused to apply the 

procedural misjoinder doctrine. See Lopez v. Pfeffer, No. 13-CV-03341 NC, 2013 WL 5367723, at 

*2 (N.D. Cal. Sept. 25, 2013) (declining to apply Tapscott and finding lack of subject matter 

jurisdiction in medical products liability case that was pending transfer to the Judicial Panel on 

Multidistrict Litigation). 

Therefore, it would be “inappropriate to apply the novel theory of fraudulent misjoinder, 

 

2 Hartford makes two additional arguments that the Court finds irrelevant to its analysis: first, that 

procedural misjoinder should apply because Plaintiff would not suffer prejudice due to severance,

Def.’s Mot. 10, ECF 9, and second that Hartford would lose its right to removal in state court due 

to the voluntary-involuntary rule, Def.’s Mot. 4, ECF 9. The Court finds both arguments 

unpersuasive. A finding of prejudice to one of the parties is irrelevant and entirely separate from 

the analysis of subject matter jurisdiction. See Thee Sombrero, 2015 WL 4399631, at *5 (“District 

courts, [] should not expand jurisdictional rules on equitable grounds.”). Moreover, it is unclear 

whether the voluntary-involuntary rule would prevent Hartford from removing its case should the

state court sever Plaintiff’s claims against it from the rest of the case. Under the rule, only a 

voluntary act by a plaintiff makes the case removable based on diversity. Id. at *5 n.5. However,

the applicability of procedural misjoinder is an independent analysis. “The reasons against 

adopting [procedural] misjoinder stand whether or not the voluntary-involuntary rule precludes 

removal after severance.” Id. 

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especially considering the requirement that federal jurisdiction ‘must be rejected if there is any 

doubt as to the right of removal in the first instance.’” Jurin, 2014 WL 4364901, * 4 (quoting 

Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996)). Thus, construing removal under § 1441 

narrowly and resolving any doubts in favor of remand, the Court declines to apply the procedural 

misjoinder doctrine. The Court therefore finds that removal was improper and that the Court lacks 

subject matter jurisdiction over this case. 3

Accordingly, the Court GRANTS Plaintiff’s motion to remand the action back to state 

court and DENIES Hartford’s motion to sever and remand Plaintiff’s claims as to Fairfield. 

IT IS SO ORDERED.

Dated: March 31, 2016

 ______________________________________

BETH LABSON FREEMAN

United States District Judge

 

3

The parties devote a substantial amount of briefing to what the outcome would be if the Court 

chose to apply procedural misjoinder. Though the Court need not reach this issue, it finds that, 

even if it chose to adopt the Eleventh Circuit’s doctrine, it would not alter the outcome on these 

motions. Hartford argues that Plaintiff has impermissibly attempted to join claims against Hartford 

with separate and discrete claims against unrelated non-diverse defendants because the claims 

neither arise out of the same transaction or occurrence nor do they involve common questions of 

law or fact. Def.’s Mot. 9, ECF 9. Plaintiff argues that the common fact between all Defendants 

is determination of the cause of damage to Plaintiff’s building. Pl.’s Opp. 6, ECF 20. 

The Court agrees with Plaintiff. Hartford ignores the likelihood that review of its grounds for 

denial of coverage will be impacted by a finding of what caused damage to Plaintiff’s building, 

which is also central to Plaintiff’s claims against Fairfield. Hartford also claims the denial of 

insurance occurred two years after the alleged damage, constituting a separate occurrence. 

However, Plaintiff alleges it submitted the insurance claim in October 2011 and Hartford denied 

the coverage for the damage in May 15, 2014. Pl.’s Opp. 2, ECF 20. Hartford misconstrues the 

timeline and the dates are not suggestive of separate transactions or occurrences. Thus, even if the 

Court applied procedural misjoinder here, Hartford would not prevail. 

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