1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER

Page - 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

 

BRUCE A. RICE,

Plaintiff,

v.

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY, and ROB

KLINE,

Defendants.

Case No. C05-5595RJB

ORDER DENYING MOTION TO 

REMAND

This matter comes before the court on plaintiff’s Motion to Remand. Dkt. 4. The court has

considered the pleadings filed in support of and in opposition to the motion and the file herein.

I. FACTUAL AND PROCEDURAL BACKGROUND

On August 12, 2005, the plaintiff filed a civil action in the Superior Court of Washington in and for

Pierce County, against defendants State Farm Mutual Automobile Insurance Company (State Farm) and

Rob Kline. Dkt. 1, Exh. A. The plaintiff was allegedly injured in an automobile accident on August 18,

2000. He sought benefits from State Farm under his underinsured motorist coverage. The complaint stems

from defendants’ actions in responding to the plaintiff’s demand for benefits. The plaintiff alleges (1)

violation of state insurance regulations, (2) violation of the Washington Consumer Protection Act (CPA),

(3) breach of contract, (4) negligent and intentional infliction of emotional distress, (5) civil fraud, and (6)

insurance bad faith. Id. The civil fraud claim is brought against only State Farm. Id. at 14. The remaining

Case 3:05-cv-05595-RJB Document 11 Filed 10/07/05 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER

Page - 2

claims are asserted against “the defendant.” Id. at 13-14. The complaint makes numerous references to “the

defendant” without distinguishing between State Farm and Mr Kline. The complaint refers to “the

defendants,” plural, only in the prayer for relief. Id. at 15.

On September 12, 2005, State Farm removed this case to federal court on the basis of diversity of

citizenship pursuant to 28 U.S.C. § 1332. Dkt. 1. State Farm is a citizen of Illinois, and the amount in

controversy appears to exceed $75,000. The complaint alleges that Mr. Kline is an agent of State Farm and

that all acts performed by Mr. Kline were within the scope of his employment with State Farm. Dkt. 1,

Exh. A., at 1. Mr. Kline is a citizen of Washington. Dkt. 1, Notice of Removal, at 2. 

Included with the Notice of Removal is a document captioned STIPULATION OF COUNSEL ON

BEHALF OF STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY RE: LIABILITY

OF ROB KLINE, signed by Scott C. Wakefield, Attorney for State Farm Mutual Automobile Insurance

Company. This document, dated September 12, 2005 provides as follows:

COMES NOW, defendant State Farm Mutual Automobile Insurnce Company (“State Farm”), by

and through its undersigned counsel of record in the above-captioned matter, and hereby stipulates

that all acts of Rob Kline complained of in this action were done in the course and scope of Rob

Kline’s employment with State Farm. State Farm further hereby agrees to defend, indemnify and

hold Rob Kline harmless from and against any and all liability in the above-captioned matter.

Dkt. 1.

The plaintiff moves the court to remand the case for lack of complete diversity. The plaintiff argues

that he has at least a possibility of recovering against Mr. Kline because (1) in Washington, agents are

personally liable for their own tortious conduct; (2) Washington law expressly imposes a duty of good faith

on the representatives of insurance companies, in addition to insurance companies themselves; (3)

Washington law expressly permits actions against an adjuster for negligent handling of the insured’s claim;

(4) Mr. Kline’s actions constitute tortious interference; (5) Mr. Kline’s actions constitute negligent and

intentional infliction of emotional distress; and (6) Washington law permits a plaintiff to sue either the

principal or agent, or both, for fraud and misrepresentation. Dkt. 4.

State Farm alleges that Mr. Kline was fraudulently joined because plaintiff has no bona fide claim

against him personally, because all of Mr. Kline’s relevant actions were done within the scope of his

employment with State Farm, and because it has agreed to indemnify Mr. Kline. Dkt. 8.

In his reply, the plaintiff contends that State Farm’s willingness to indemnify Mr. Kline does not

Case 3:05-cv-05595-RJB Document 11 Filed 10/07/05 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER

Page - 3

confer jurisdiction upon the court and that the court’s sole inquiry is whether the complaint states a claim

against Mr. Kline. Dkt. 10.

II. DISCUSSION

Any civil action may be removed to federal district court so long as original jurisdiction would lie in

the court to which the case is removed. 28 U.S.C. § 1441(a). Jurisdiction arising under 28 U.S.C. § 1332

requires that the parties be in complete diversity and that the amount in controversy exceed $75,000.

Ruhrgas A.G. v. Marathon Oil Co., 526 U.S. 574, 579-80 n. 2 (1999) (section 1332 requires complete

diversity); Kanter v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir. 2001). In this case, the amount

in controversy apparently exceeds $75,000. Plaintiff is a resident of Washington. State Farm is

incorporated and has its principal place of business in Illinois. Mr. Kline is a resident of Washington. On

the face of the complaint, it appears that this action meets the amount in controversy requirement but lacks

complete diversity of citizenship. 

Fraudulently joined defendants, however, will not defeat removal on diversity grounds. McCabe v.

General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Fraudulent joinder is a legal term of art and

does not include “fraud in the traditional legal sense. Id. 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. Id. In determining whether a defendant has been

fraudulently joined, the district court is not limited to the plaintiff's pleadings. Ritchey v. Upjohn Drug Co.,

139 F.3d 1313, 1818 (9th Cir. 1998). The defendant seeking removal to the federal court is entitled to

present facts showing the joinder to be fraudulent. Id. 

As a threshold matter, several of the plaintiff’s arguments are inapplicable because they do not

pertain to the plaintiff’s claims as alleged in the complaint. In his motion and reply, the plaintiff contends

that insurance adjusters may be held liable for negligent claim management, but the plaintiff’s complaint

does not state a claim for negligence. Similarly, the plaintiff contends that Mr. Kline committed tortious

interference, but the complaint makes no such claim. Finally, the plaintiff contends that he has a possibility

to recover from Mr. Kline on his civil fraud claim. In his complaint, the plaintiff expressly asserts this claim

against only State Farm. Dkt. 1, Exh. A. at 14 (“The conduct of State Farm constitutes the tort of civil

fraud.”).

Case 3:05-cv-05595-RJB Document 11 Filed 10/07/05 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER

Page - 4

The complaint does not differentiate between actions for which State Farm is directly liable and

those for which it is vicariously liable. Dkt. 4 at 6 (“An individual is always liable for his or her own torts,

regardless of whether another (such as the individual’s employer) is also vicariously liable.”). Under either

analysis, the plaintiff must first establish a duty owed by the individual and may then proceed to establish an

independent duty owed by the employer or that the employer is vicariously liable for the employee’s breach

of that duty. See Robel v. Roundup Corp., 148 Wn.2d 35, 53 (2002). Because the majority of the plaintiff’s

claims are asserted against “the defendant” without any indication of whether the claim is against State

Farm, Mr. Kline, or both; it is impossible to know which claims are premised upon Mr. Kline’s duties. For

purposes of determining whether the plaintiff has stated a claim against Mr. Kline, the court will assume

that “the defendant” refers to Mr. Kline alone or in conjunction with State Farm.

A. REGULATORY AND STATUTORY VIOLATIONS AND BAD FAITH

The complaint first alleges violations of several statutory and regulatory provisions. The plaintiff

contends that RCW 48.01.030 imposes a duty on the defendant and that the defendant violated this duty

(the complaint does not reference this provision, but the sixth cause of action is insurance bad faith). The

plaintiff cites no authority for the proposition that the language contained in RCW 48.01.030 (“and their

representatives”) imposes a duty of good faith on insurance company employees such as the defendant, and

the court has found no cases that so hold. RCW 48.01.030 cannot be read in isolation. It is administratively

implemented through the Washington Administrative Code. WAC 284-30-300 et seq., which contains the

regulatory provisions that the plaintiff alleges the defendant violated. The plaintiff’s insurance bad faith and

regulatory violation claims must therefore be read in conjunction with one another.

The plaintiff contends that Mr. Kline violated provisions pertaining to unfair claims settlement

practices (WAC 284-30-330), failure to acknowledge pertinent communications (WAC 284-30-360), and

prompt claims investigation practices (WAC 284-30- 370). These provisions apply to “insurers,” which are

defined as follows:

any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds

insurer, fraternal mutual insurer, fraternal mutual life insurer, and any other legal entity engaged in

the business of insurance, authorized or licensed to issue or who issues any insurance policy or

insurance contract in this state.

WAC 284-30-320(5).

Case 3:05-cv-05595-RJB Document 11 Filed 10/07/05 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER

Page - 5

There is no evidence that Mr. Kline falls within this definition. The plaintiff has not demonstrated

that Mr. Kline was authorized or licensed to issue insurance policies or that he does actually issue such

policies. Therefore, these provisions do not impose a duty of good faith upon Mr. Kline.

The plaintiff also alleges that the defendant violated RCW 48.17. This claim appears to be asserted

against only State Farm. Dkt. 1, Exh. A at 13 (“RCW 48.17 et seq. requires that insurance companies

employ properly trained and licensed adjusters for the investigation of insurance claims.”), emphasis

added.

Because Mr. Kline does not owe the plaintiff a duty under the regulatory and statutory provisions

listed in the complaint, his joinder is fraudulent with respect to the plaintiff’s first cause of action.

B. CONSUMER PROTECTION ACT VIOLATION AND BREACH OF CONTRACT

In order to be liable under the Consumer Protection Act, RCW 19.86, there must be a contractual

relationship between the parties. International Ultimate, Inc. v. St. Paul Fire & Marine Ins. Co., 122 Wn.

App. 736, 758 (2004). The plaintiff notes that an action for bad faith management of insurance claims gives

rise to a remedy independent of the insurance contract, but this does not negate the requirement that the

defendant be a party to a contract with the plaintiff. Griffin v. Allstate Ins. Co., 108 Wn. App. 133, 143

(2001). The Consumer Protection Act does not contemplate suits against employees of insurance

companies, and the plaintiff has not demonstrated that Mr. Kline was party to a contract with the plaintiff.

See International Ultimate, 122 Wn. App. at 758. The court should therefore find that Mr. Kline was

fraudulently joined with respect to the plaintiff’s second and third causes of action for violation of the CPA

and breach of contract.

C. NEGLIGENT AND INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

The plaintiff’s fourth cause of action is for negligent and intentional infliction of emotional distress.

The plaintiff’s allegation is as follows:

The defendant negligently and intentionally failed to properly investigate Bruce Rice’s claim,

conspired to undermine their [sic] insured’s legal and financial position, [and] negligently and

intentionally failed to comply with the Washington Administrative Code. As a direct and proximate

result of the defendant’s negligence and intentional conduct, the insured has suffered serious

emotional distress and other damages in an amount that will be proved at trial. 

Case 3:05-cv-05595-RJB Document 11 Filed 10/07/05 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER

Page - 6

Dkt. 4, Exh. A at 14. The majority of these allegations suggest that he is claiming emotional distress

damages for his first cause of action (regulatory and statutory violations). The plaintiff’s motion supports

this construction of the complaint. Dkt. 4 at 10. (“Mr. Kline took no action on Mr. Rice’s claim for almost

four years, in spite of a clear statutory mandate to do so, and in spite of his knowledge that Mr. Rice was

unable to work and provide for himself. Moreover, he ignored Mr. Rice’s claim even though he knew that

Mr. Rice would be able to recover only a very small portion of his actual damages from the tortfeasor.”).

The allegation that the defendants “conspired to undermine their insured’s legal and financial positions”

appears to constitute a separate claim for negligent and intentional infliction of emotional distress, but the

plaintiff does not offer any facts to support this allegation. See Dkt. 4 at 10 (facts supporting emotional

distress claim all pertain to statutory and regulatory violations; no facts concerning “conspiracy” issue).

The court should therefore find that joinder of Mr. Kline is fraudulent for purposes of the claims for

emotional distress.

D. CIVIL FRAUD

The plaintiff brings the civil fraud claim against only State Farm.

E. CONCLUSION

The only claims asserted against Mr. Kline for which Mr. Kline arguably owed the plaintiff a duty

are the claims for negligent and intentional infliction of emotional distress. The plaintiff’s complaint alleges

that the defendants conspired to undermine the plaintiff’s legal and financial positions. Neither the

complaint nor the motion to remand addresses this allegation or offers facts to support it. The court should

therefore find that Mr. Kline is a sham defendant whose presence in the case should be disregarded for

purposes of determining the court’s jurisdiction.

Case 3:05-cv-05595-RJB Document 11 Filed 10/07/05 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER

Page - 7

III. ORDER

Therefore, it is hereby

ORDERED that the Plaintiff’s Motion to Remand (Dkt. 4) is DENIED.

The Clerk of the Court is directed to send uncertified copies of this Order to all counsel of record

and to any party appearing pro se at said party’s last known address. The Clerk is further directed to send

certified copies of this order to the Clerk of the Court for Clark County Superior Court. 

DATED this 7th day of October, 2005.

ARobert J. Bryan

United States District Judge 

Case 3:05-cv-05595-RJB Document 11 Filed 10/07/05 Page 7 of 7