Volzhenina v. Safeco Insurance Company of America

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 VIKTORIYA VOLZHENINA, Case No. 24-cv-08002-HSG 8 Plaintiff, ORDER GRANTING MOTION TO REMAND AND TERMINATING 9 v. MOTION TO DISMISS AS MOOT 10 SAFECO INSURANCE COMPANY OF Re: Dkt. Nos. 5, 15 AMERICA, et al., [11] Defendants. [12] 13 Pending before the Court is pro se Plaintiff Viktoriya Volzhenina’s motion to remand, 14 briefing for which is complete. Dkt. Nos. 15 (“Mot.”), 24 (“Opp.”), 16 (“Reply”).1 The Court 15 finds this matter appropriate for disposition without oral argument and the matter is deemed 16 submitted. See Civil L.R. 7-1(b). For the reasons discussed below, the Court GRANTS the 17 motion to remand. Dkt. No. 15. Accordingly, Defendant Mandy Esrock’s motion to dismiss is 18 TERMINATED AS MOOT. Dkt. No. 5. 19 I. BACKGROUND 20 Plaintiff owns real property in San Pablo, California insured by Defendant Safeco 21 Insurance Company (“Safeco”). See Dkt. No. 1 (“Compl.”). Plaintiff alleges that a fire in July 22 2023 damaged the property, leading her to initiate a claim with Safeco. According to Plaintiff, 23 Safeco and its adjuster, Defendant Mandy Esrock, “began lowballing [her] claim,” “refused to 24 reimburse Plaintiff for legitimate . . . costs,” provided unrealistic repair estimates, and declined to [26] 1 Plaintiff, who appears pro se, filed her reply brief at the same time as her motion to remand. See Dkt. No. 16. As such, the brief does not “reply” to Defendants’ arguments. However, “a [27] document filed pro se is ‘to be liberally construed,’” so the Court considers the substance of 1 supply Plaintiff with requested information. Id. at 21. As a result, Plaintiff alleges that she lacks 2 sufficient “funds to start the restoration project” and has been unable to find a contractor willing to 3 undertake the project within “the scope and cost of the estimate provided by” Defendant Esrock. 4 Id. at 23. 5 In October 2024, Plaintiff filed the operative complaint against Safeco and Ms. Esrock in 6 Contra Costa County Superior Court. See Dkt. No. 1. As relevant here, Plaintiff’s complaint 7 includes a negligent misrepresentation claim against Ms. Esrock. Id. at 25. In November 2024, 8 Safeco removed this action to federal court on the basis of diversity jurisdiction. See 28 U.S.C. § 9 1332. Plaintiff now moves to remand, arguing that removal is improper because both she and 10 Defendant Esrock are citizens of California. Defendants oppose, asserting that Ms. Esrock was 11 fraudulently joined as a defendant to defeat diversity jurisdiction. 12 II. LEGAL STANDARD 13 A defendant may remove a state court action to federal court on the basis of diversity 14 jurisdiction. See 28 U.S.C § 1441; see also Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 15 975, 977 (9th Cir. 2013) (“A defendant may remove to federal district court an action first brought 16 in state court when the district court would have original jurisdiction.”). Diversity jurisdiction 17 exists where the matter in controversy exceeds $75,000 and the dispute is between citizens of 18 different states. 28 U.S.C. § 1332 (a). “If a case is improperly removed, the federal court must 19 remand the action because it has no subject-matter jurisdiction to decide the case.” ARCO Envtl. 20 Remediation, L.L.C. v. Dep’t of Health & Envtl. Quality of Mont., 213 F.3d 1108, 1113 (9th Cir. 21 2000). On a motion to remand, federal courts must presume that a cause of action lies beyond its 22 subject matter jurisdiction, Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009), and 23 must reject federal jurisdiction “if there is any doubt as to the right of removal in the first 24 instance,” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The removing party bears the 25 burden of establishing federal jurisdiction. See id. at 566–67. 26 III. DISCUSSION 27 It is undisputed that Plaintiff Volzhenina and Defendant Esrock are both citizens of 1 . . . citizens of different States,” only applies when “the citizenship of each plaintiff is diverse from 2 the citizenship of each defendant.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). At issue 3 here, then, is whether Defendant Esrock was fraudulently joined, such that her citizenship does not 4 destroy the parties’ diversity. 5 A. Legal Standard for Fraudulent Joinder 6 “In determining whether there is complete diversity, district courts may disregard the 7 citizenship of a non-diverse defendant who has been fraudulently joined.” Grancare, LLC v. 8 Thrower ex rel. Mills, 889 F.3d 543, 548 (9th Cir. 2018). Joinder is fraudulent “[i]f the plaintiff 9 fails to state a cause of action against a resident defendant, and the failure is obvious according to 10 the settled rules of the state.” Id. (citations omitted). 11 Fraudulent joinder is established on that ground if the individuals “joined in the action 12 cannot be liable on any theory.” Id. (citation omitted). However, “if there is a possibility that a 13 state court would find that the complaint states a cause of action against any of the resident 14 defendants, the federal court must find that the joinder was proper and remand the case to the state 15 court.” Id. (emphasis in original) (citation omitted). In other words, joinder is only fraudulent if it 16 is “obvious according to the settled rules of the state that [Plaintiff] has failed to state a claim 17 against [Defendant Esrock].” Hunter, 582 F.3d at 1046 . 18 Courts have found fraudulent joinder “where a defendant presents extraordinarily strong 19 evidence or arguments that a plaintiff could not possibly prevail on its claims against the allegedly 20 fraudulently joined defendant,” including where “a plaintiff is barred by the statute of limitations 21 from bringing claims against that defendant.” Grancare, 889 F.3d at 548 . By contrast, fraudulent 22 joinder is not established where “a defendant raises a defense that requires a searching inquiry into 23 the merits of the plaintiff’s case, even if that defense, if successful, would prove fatal.” Id. at 548– 24 49 (citing Hunter, 582 F.3d at 1046 ). There is a “general presumption against fraudulent joinder,” 25 and defendants who assert that a party is fraudulently joined carry a “heavy burden,” Hunter, 582 26 F.3d at 1046, particularly since “[f]raudulent joinder must be proven by clear and convincing 27 evidence,” Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). 1 claim under Rule 12(b)(6) are not equivalent.” Grancare, 889 F.3d at 549 . Even “[i]f a defendant 2 cannot withstand a Rule 12(b)(6) motion, the fraudulent inquiry does not end there.” Id. at 550 . 3 Instead, the Court “must consider . . . whether a deficiency in the complaint can possibly be cured 4 by granting the plaintiff leave to amend.” Id. “If the plaintiff could cure this deficiency by 5 amending his or her complaint, then fraudulent joinder does not obtain.” Browand v. Ericsson 6 Inc., No. 18-CV-02380-EMC, 2018 WL 3646445 , at *6 (N.D. Cal. Aug. 1, 2018). 7 B. Defendants Fail to Establish Fraudulent Joinder 8 i. Negligent Misrepresentation Claim 9 Defendants first argue that Plaintiff’s negligent misrepresentation claim fails as a matter of 10 law because insurance company employees cannot be liable for such conduct under California law 11 when acting within the scope and course of their employment. Opp. at 8–11. This matter is not as 12 clear-cut as Defendants suggest. Several decades ago, courts in this circuit applying California 13 law held that “an agent of an insurance company is generally immune from suits brought by 14 claimants for actions taken while the agent was acting within the scope of its agency.” Icasiano v. 15 Allstate Ins. Co., 103 F. Supp. 2d 1187, 1189 (N.D. Cal. 2000); see Good v. Prudential Ins. Co. of 16 Am., 5 F. Supp. 2d 804, 808 (N.D. Cal. 1998) (collecting cases). The Ninth Circuit similarly 17 found that “[i]t is well established that, unless an agent or employee acts as a dual agent . . . she 18 cannot be held individually liable as a defendant unless she acts for her own personal advantage.” 19 Mercado v. Allstate Ins. Co., 340 F.3d 824, 826 (9th Cir. 2003). In 2014, the California Court of 20 Appeal addressed this issue. See Bock v. Hansen, 225 Cal. App. 4th 215, 219 (2014). In doing so, 21 it explicitly rejected Icasiano and Good and held that “a cause of action for negligent 22 misrepresentation can lie against an insurance adjuster,” even when the adjuster is acting in the 23 course of her employment. See Bock, 225 Cal. App. 4th at 230–231. 24 Post-Bock, federal courts in this circuit have split as to whether an insurance adjuster 25 acting in the scope of her employment may be liable for negligent misrepresentation under 26 California law. Some courts continue to find that “in California, an insurance agent when acting 27 in the name of a disclosed principal is not liable for acts done within the scope of his or her 1 Cal. Apr. 17, 2024). See Dobbel v. Liberty Ins. Corp., No. 217CV02114MCEEFB, 2018 WL 2 3495661, at *4 (E.D. Cal. July 20, 2018) (“Under California law, insurance company employees 3 who act within the course and scope of their employment cannot be held individually liable for 4 that conduct unless they act as a dual agent or for their own personal benefit.”); Durben v. State 5 Farm Gen. Ins. Co., No. 216CV00754MCEEFB, 2016 WL 4096801 , at *2 (E.D. Cal. Aug. 1, 6 2016); Devillena v. Am. States Preferred Ins. Co., No. 2:22-CV-00261-KJM-AC, 2022 WL 7 1211273, at *2 (E.D. Cal. Apr. 25, 2022). But “[m]any federal district courts interpreting Bock 8 have concluded that remand is appropriate where an adjuster is named as a defendant to a 9 negligent misrepresentation claim because such claims are not ‘obviously foreclosed according to 10 settled principles.’” Livshetz v. Fed. Ins. Co., No. 220CV03374ODWASX, 2020 WL 4748461 , at 11 *3 (C.D. Cal. Aug. 17, 2020) (quoting Zuccolotto v. Zurich Am. Ins. Co., No. 8:16-cv-01277-JLS 12 (KESx), 2016 WL 10981515 , at *3 (C.D. Cal. Sept. 26, 2016)). See Kirk v. Gen. Ins. Co. of Am., 13 No. 23-CV-05506-HSG, 2024 WL 2304566 , at *3 (N.D. Cal. May 20, 2024) (collecting cases). 14 Defendants ask the Court to not read “Bock to be the talisman that Plaintiff makes it seem.” 15 Opp. at 10. But as this Court has previously stated, “Bock makes plain that it is not obvious under 16 California law that a negligent misrepresentation claim cannot lie against Esrock.” Kirk, 2024 WL 17 2304566, at *3. While courts may debate Bock’s scope, the California Court of Appeal has 18 “opened the door, even a little, to negligent misrepresentation claims against adjusters.” Livshetz, [19] 2020 WL 4748461 , at *3 (quoting 818Computer, Inc., 2019 WL 698102 , at *4). Since there exists 20 at least some possibility that Plaintiff could proceed with her negligent misrepresentation claim 21 against Ms. Esrock in state court, this claim cannot be foreclosed as a matter of law. See id. 22 (“[A]ny ambiguity in state law must be resolved in favor of the [Plaintiff].”); Zuccolotto, 2016 WL 23 10981515, at *3 (“Bock may eventually be overruled, clarified, or limited to its particular 24 circumstances. But, until then, the uncertainty surrounding the proper scope of Bock indicates that 25 Plaintiff’s claim is not foreclosed by settled principles of California law and a state court must 26 determine whether it has merit.”). Since Defendants here have not carried their “heavy burden” of 27 establishing that Plaintiff cannot possibly state a claim against Ms. Esrock for negligent 1 ii. Reliance and Damages Pleading 2 Defendants further argue that Plaintiff fails to sufficiently plead reliance and damages, two 3 of the elements that are required to state a claim for negligent misrepresentation under California 4 law. Opp. at 11. Plaintiff alleges that Ms. Esrock (1) conveyed that $107,746 was authorized in 5 repair costs,2 (2) informed Plaintiff that she needed to find a contractor who would work within 6 the Safeco estimate, and (3) refused to approve repairs that exceeded Safeco’s estimate. See 7 Compl. at 21–23. As a result, Plaintiff states that she has been unable to hire a contractor willing 8 to work within Safeco’s allocated budget and that she has been “deprived of full indemnification 9 for the loss.” Id. at 23 . The Court’s fraudulent joinder analysis does not ask whether Plaintiff will 10 succeed on the merits of her claims or whether she would survive a motion to dismiss under 11 Federal Rule of Civil Procedure 12(b)(6). Instead, the Court simply must determine whether there 12 is any possibility that Plaintiff can state a claim. While Ms. Volzhenina has not pled these 13 negligent misrepresentation elements in great detail, she has pled sufficient facts to raise at least a 14 possibility that she will be able to state a claim to the satisfaction of the state court.3 See Kirk, [15] 2024 WL 2304566 , at *3 (“Esrock is fraudulently joined for purposes of diversity jurisdiction only 16 if Plaintiff’s claims against her are ‘wholly insubstantial and frivolous,’ such that there is no 17 possibility that Plaintiff could prevail.”) (internal citation omitted). 18 Moreover, even assuming, without deciding, that Plaintiff fails to state a claim against 19 Esrock, it does not follow that it would be impossible for Plaintiff to adequately plead a negligent 20 misrepresentation claim if given leave to amend. “Substantial case law supports the proposition 21 that if a plaintiff could amend a complaint to cure any deficiencies, the removing party’s high 22 burden of proving fraudulent joinder is not met.” Brown v. Beazley USA Servs., Inc., No. 24-CV23 09035-SI, 2025 WL 436716 , at *4 (N.D. Cal. Feb. 7, 2025). Here, Defendants have not 24 established that Plaintiff’s pleading deficiencies cannot “possibly be cured by granting the plaintiff [26] 2 This figure was later adjusted to $112,653.15. Compl. at 21. 3 As a pro se plaintiff, Ms. Volzhenina’s pleadings are liberally construed. See United States v. [27] Qazi, 975 F.3d 989 , 992–93 (9th Cir. 2020) (“It is an entrenched principle that pro se filings 1 leave to amend.” Grancare, 889 F.3d at 550 . Defendants assert, for example, that Plaintiff 2 || “cannot show any damages, or ‘resulting injury,’ that arose from Esrock’s alleged 3 || misrepresentations.” Opp. at 12. But Plaintiff could presumably amend her complaint to include 4 || more specific details regarding the expenses that she has incurred through Defendants’ alleged 5 unwillingness to adequately cover the costs of the property damage and alleged refusal to 6 || reimburse Plaintiff for certain emergency repairs. 7 Accordingly, the Court finds that Defendants have failed to meet their “heavy burden” of 8 establishing fraudulent joinder. See Hunter, 582 F.3d at 1046 . Because there is not complete 9 || diversity of citizenship, the Court lacks subject-matter jurisdiction, and thus GRANTS the motion 10 || toremand. Dkt. No. 15. 11 || Iv. CONCLUSION 12 The Court GRANTS Plaintiff?s motion to remand, Dkt. No. 15, and REMANDS the case 13 to the Superior Court of Contra Costa County. Defendant Esrock’s motion to dismiss, Dkt. No. 5, 14 || is TERMINATED AS MOOT. The Clerk is directed to remand the case and close the file. a 16 IT IS SO ORDERED. 2 17 |) Dated: 5/15/2025 18 7 Moupurrod 4 Md). HAYWOOD S. GILLIAM, JR. 19 United States District Judge