Duncan Golf Management v. Nevada Youth Empowerment Project

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 DUNCAN GOLF MANAGEMENT, et al., Case No. 3:23-cv-00666-ART-CSD 4 Plaintiffs, ORDER v. 5 (ECF No. 5) Nevada Youth Empowerment Project, 6 et al., 7 Defendants. [8] 9 Defendants Wesco and Amtrust, insurance companies for Defendant 10 Nevada Youth Empowerment Project (“NYEP”), removed this case from the Second 11 Judicial District of Washoe County, Nevada. Plaintiffs Duncan Golf Management 12 (“Duncan”) and Samantha Beauchamp (“Beauchamp”) allege that Defendants 13 Wesco and Amtrust owe them a duty to indemnify and damages, respectively, for 14 injuries suffered by Beauchamp at the Big Hunt Golf Tournament in 2019. 15 Defendants Wesco and Amtrust removed this action to federal court based on 16 diversity jurisdiction, arguing that NYEP, a Nevada citizen, was fraudulently 17 joined. Now pending before the Court is Plaintiff Beauchamp’s motion to remand. 18 (ECF No. 5.) For the reasons stated, the Court finds that NYEP was not 19 fraudulently joined, grants Plaintiff Beauchamp’s motion to remand the case to 20 the Second Judicial District of Washoe County, Nevada, and denies all other 21 pending motions as moot. 22 I. FACTUAL AND PROCEDURAL HISTORY 23 This case is an insurance dispute over the bill for injuries suffered by 24 Samantha Beauchamp at the 2019 Big Hunt Open golf tournament. 25 In April 2019, non-parties Rudy Grant (“Grant”) and Charles Kazemi 26 (“Kazemi”) started planning a charity golf tournament that would become the Big 27 Hunt Open. (ECF No. 161-1.) They chose a golf course, Lakeridge, owned by 28 Duncan. (Id.) A few weeks before the tournament, Blake Hinkle, sales director of 1 Duncan, told Grant that the sponsors needed to either obtain one million dollars 2 of insurance covering Duncan or pay Duncan $100, presumably for Duncan to 3 obtain additional insurance. (ECF No. 160-2.) Grant or Kazemi told this to DuPea. 4 (Id.) DuPea offered to obtain the insurance and asked her insurer, nonparty 5 Alpine, for a “waiver.” (ECF No. 1.) Alpine sent DuPea NYEP’s certificate of 6 insurance, then DuPea forwarded it to Grant and Kazemi. (ECF No. 20-4.) Grant 7 sent the certificate of insurance to Blake, who removed the $100 charge. (ECF 8 No. 160-3.) 9 Defendants assert that DuPea agreed only to provide proof that NYEP 10 volunteers at the event were covered by NYEP’s insured. (ECF No. 161.) Plaintiffs 11 assert that DuPea intended to provide the coverage sought by Duncan as 12 communicated to her by Grant and Kazemi. (ECF No. 160-2.) 13 At the tournament, Plaintiff Samantha Beauchamp suffered a serious 14 injury. (ECF No. 1-2.) Beauchamp sued Duncan in state court. (Id.) In 2021, 15 Duncan’s insurer sought indemnification from NYEP’s insurer, Defendant Wesco, 16 a subsidiary of Defendant Amtrust. (ECF No. 15-1.) Wesco and Amtrust declined. 17 (ECF No. 77-5.) In a bench trial in 2023, the court found Duncan liable for 18 Beauchamp’s injuries. (ECF No. 5.) Duncan and Beauchamp then settled and 19 prepared to seek indemnity and damages from Wesco and Amtrust. (ECF No. 1.) 20 Beauchamp and Duncan together sued Amtrust and Wesco in the Second 21 Judicial District Court for Washoe County, Nevada. (ECF No. 1-2.) Duncan also 22 named and made claims against NYEP. (Id.) Duncan, Beauchamp, and NYEP are 23 Nevada citizens. (Id.) Defendants Amtrust and Wesco are not. (Id.) Duncan sued 24 Amtrust and Wesco seeking indemnification and damages and sued NYEP in the 25 alternative for breach of contract or “detrimental reliance.” (Id.) 26 Amtrust and Wesco removed the case to federal court, arguing that NYEP 27 had been fraudulently joined because neither of the claims Duncan made against 28 NYEP were colorable. (ECF No. 1.) Plaintiffs Beauchamp and Duncan moved to 1 remand. (ECF No. 5.) 2 II. STANDARD OF REVIEW 3 “Federal courts are courts of limited jurisdiction” and possess only the 4 power granted by the Constitution and statute. Kokkonen v. Guardian Life Ins. 5 Co. of Am., 511 U.S. 375, 377 (1994). Without a federal question, federal courts 6 may exercise diversity jurisdiction over suits for over $75,000 where each 7 plaintiff’s citizenship differs from each defendant’s. 28 U.S.C. § 1332 (a). A 8 defendant may remove a case filed in state court to federal court based on 9 diversity jurisdiction if the 1332(a) requirements are met. Id. U.S.C. § 1441. 10 Federal courts exercise a “strong presumption against removal 11 jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). 12 “The defendant always has the burden of establishing that removal is proper,” 13 and “the court resolves all ambiguity in favor of remand to state court.” Id. 14 The presence of a single non-diverse defendant is enough to destroy 15 diversity jurisdiction, but if the court finds that a joinder of a non-diverse 16 defendant is fraudulent, then “the defendant’s presence in the lawsuit is ignored 17 for purposes of determining diversity.” Morris v. Princess Cruises, Inc., 236 F.3d 18 1061, 1067 (9th Cir. 2001). 19 A defendant may show fraudulent joinder by providing clear and 20 convincing evidence that the defendant at issue “cannot be liable on any theory.” 21 Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). “If there is a 22 possibility that a state court would find that the complaint states a cause of action 23 against any of the resident defendants, the federal court must find that the 24 joinder was proper and remand the case to the state court.” Grancare, LLC v. 25 Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018) (cleaned up) 26 (emphasis in original). 27 Courts may consider summary judgment-type evidence such as deposition 28 testimony when deciding whether a defendant is fraudulently joined. See Morris, [1] 236 F.3d at 1068 (citing Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256 , 2 263 (5th Cir.1995)). 3 III. DISCUSSION 4 A. Plaintiff Duncan Has a Possible Claim Against NYEP. 5 Plaintiff Duncan need only have a possible claim against NYEP to show that 6 its joinder was not fraudulent. Defendants argue that Duncan’s complaint fails 7 to state viable claims for breach of contract and “detrimental reliance” against 8 NYEP. (See ECF No. 1-2.) Defendants argue that Duncan has not shown, nor 9 could it show, the existence of a contract between Duncan and NYEP. 10 Additionally, Defendants argue that no independent cause of action for 11 detrimental reliance exists under Nevada law, and that Duncan has no claim 12 against NYEP under equitable causes of action for which detrimental reliance is 13 an element, like promissory estoppel or equitable estoppel. (See ECF Nos. 15, 18, 14 44, 45, 67.) 15 Duncan may refute fraudulent joinder by showing that they could amend 16 their complaint to add a possible claim against NYEP. When applying the 17 possible-claim standard for fraudulent joinder, a “district court must 18 consider . . . whether a deficiency in the complaint can possibly be cured by 19 granting the plaintiff leave to amend.” Grancare, 889 F.3d at 550 . At the hearing, 20 counsel for Plaintiffs listed additional possible claims against NYEP that they 21 would seek to add to the complaint if given leave to amend. The Court must grant 22 the motion for remand if a state court could possibly find a claim against NYEP 23 under any of them. Id. at 548 (cleaned up). In this procedural posture, “the court 24 resolves all ambiguity in favor of remand to state court.” Hunter, 582 F.3d at 25 1042. 26 B. Duncan May Have a Breach of Implied Contract Claim. 27 Duncan contends that even if there is no written contract between it and 28 NYEP, it could allege that NYEP breached an implied contract. The elements of a 1 contract are offer, acceptance, meeting of the minds, and consideration. May v. 2 Anderson, 119 P.3d 1254, 1257 (Nev. 2005). "The terms of an express contract 3 are stated in words while those of an implied contract are manifested by conduct." 4 Smith v. Recrion Corp., 541 P.2d 663, 664 (Nev. 1975). Both types of contracts 5 require an intent to contract. Id. (citing Horacek v. Smith, 199 P.2d 929 (Cal. 6 1948)). "In an implied contract, such intent is inferred from the conduct of the 7 parties and other relevant facts and circumstances." Warrington v. Empey, 590 8 P.2d 1162 , 1163 (Nev. 1979). 9 Resolving all ambiguities and inconsistencies in favor of Plaintiffs, Duncan 10 could possibly state a claim for breach of an implied contract. Duncan offered to 11 reduce the fee paid by sponsors by $100 if the sponsors provided additional 12 insurance. The $100 reduction apparently benefitted NYEP, the tournament 13 beneficiary, by increasing the amount of return it would receive from the event. 14 (See ECF No. 18.) Duncan communicated this offer to DuPea through Grant and 15 Kazemi. DuPea accepted the offer by telling Grant and Kazemi that she would 16 provide insurance. Enough evidence, though disputed, suggests that DuPea 17 knew the terms of this exchange, satisfying the meeting of the minds. (See, e.g., 18 ECF No. 20-4 (“Monica this saves us some money, thank you so much! :) … Rudy, 19 can you forward onto Blake to get that $100 policy removed from the final 20 invoice?”) Duncan’s consideration was the applied $100 discount based on the 21 sponsors’ provision of the insurance policy. DuPea represented performance by 22 forwarding emails from Alpine with the certificate of insurance, and Duncan 23 performed by removing the $100 fee for the sponsors. Plaintiffs’ claims in the 24 alternative allege that DuPea inadvertently breached by not ensuring that she 25 actually obtained the correct insurance and that Duncan suffered damages as a 26 result of that breach. This is enough to state a possible claim for breach of an 27 implied contract. 28 // 1 C. Duncan May Have a Negligent Misrepresentation Claim. 2 Duncan also may be able to state a claim against NYEP for negligent 3 misrepresentation. Nevada uses the standard for negligent misrepresentation 4 from the Restatement (Second) of Torts. The Restatement provides that a 5 defendant who, in the course of a business transaction in which she has a 6 pecuniary interest, supplies false information for the guidance of others in their 7 business transactions, is subject to liability for pecuniary loss caused by the 8 plaintiff’s justifiable reliance upon the information, if the defendant fails to 9 exercise reasonable care or competence in obtaining or communicating the 10 information. See Halcrow, Inc. v. Eighth Jud. Dist. Ct., 302 P.3d 1148 , 1153 11 (2013), as corrected (Aug. 14, 2013). This claim is only available in the context of 12 business transactions and may only be used for claims akin to recovery of lost 13 property. Reynolds v. Tufenkjian, 461 P.3d 147, 153 (2020) (citing (citing 14 Barmettler v. Reno Air, Inc., 956 P.2d 1382, 1387 (1998)). 15 Resolving all factual disputes in favor of remand, Duncan could state a 16 claim for negligent misrepresentation against NYEP. NYEP had a pecuniary 17 interest in the golf tournament. DuPea represented to Grant and Kazemi that 18 NYEP had insurance for the tournament, which Grant and Kazemi then sent to 19 Duncan to reduce their fee. DuPea’s representation amounted to false 20 information for guidance in a business transaction that led Duncan, or its real 21 party in interest, to lose money. Without the proof of insurance from NYEP, 22 Duncan would have charged the sponsors a $100 fee, presumably to cover the 23 cost of obtaining additional insurance for the event. Duncan could allege that 24 DuPea failed to exercise reasonable care or competence in representing that NYEP 25 had or would obtain insurance to cover the event. 26 No binding precedent forecloses the “possibility” that Plaintiffs could state 27 a claim for negligent misrepresentation against NYEP. See Grancare, LLC, 889 28 F.3d at 549. Defendants contend that Duncan was not justified in relying on the 1 || certificate of insurance that DuPea provided. Defendants cite NRS 687.460(1)-(2) 2 || and four non-precedential decisions to insist that any reliance on a certificate of 3 || insurance is legally invalid. See Multicare Health Sys. v. Lexington Ins. Co., 539 4 || F. App'x 768, 770 (9th Cir. 2013)); Prime Ins. Syndicate, Inc. v. Concepcion, No. 5 || 206-CV-00884-KJD-LRL, 2008 WL 682412 , at *3 (D. Nev. Mar. 6, 2008); T.H.E. 6 || Ins. Co. v. Boise Hot Air, Inc., 593 F. Supp. 3d 1008 , 1014 (D. Nev. 2022); Empire 7 || Fire & Marine Ins. Co. v. Bell, 55 Cal.App.4th 1410 , 1423 n. 25 (Ct. App. 1997). 8 || NRS 687.460(1)-(2) states that a certificate of insurance does not constitute any 9 || part of the contract or policy of insurance and does not amend any term or alter 10 || or extend any coverage, exclusion, or condition of the contract. But that statute 11 || does not explicitly state that reliance upon a certificate of insurance or the policy 12 || it represents can never be justified. Neither the statute nor non-precedential 13 || decisions foreclose a possible claim for negligent misrepresentation. 14 Because the Court resolves ambiguity in favor of remand, Hunter, 582 F.3d 15 || at 1042, it finds that Duncan could allege a claim against NYEP for negligent 16 || misrepresentation based on its assertion that it justifiably relied on DuPea’s 17 || representation that NYEP had or would obtain insurance to cover the event. 18 || IV. CONCLUSION 19 IT IS THEREFORE ORDERED that Plaintiffs Motion for Remand (ECF No. 20 || 5) is GRANTED. 21 IT IS FURTHER ORDERED that all pending motions be rendered moot. 22 The Clerk of the Court is directed to remand the case to the Second Judicial 23 || District Court for Washoe County, Nevada and close the case. [24] 95 DATED THIS 28th day of September 2024. 26 os flosed Jd 27 ANNE R. TRAUM 28 UNITED STATES DISTRICT JUDGE