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Target Construction, Inc. v. Travelers Property Casualty Co. of America

United States District Court, D. Nevada

October 9, 2014

TARGET CONSTRUCTION, INC., Plaintiff(s),
v.
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, et al., Defendant(s)

ORDER

JAMES C. MAHAN, District Judge.

Presently before the court is plaintiff Target Construction, Inc.'s ("Target") motion to remand to state court.[1] (Doc. #10). Defendants Travelers Property Casualty Company of America ("Travelers"), Edward James Wheeler ("Wheeler"), and Daniel Hunt ("Hunt") responded (doc. #12) and plaintiff replied (doc. #13).

Also before the court is defendant Travelers' motion for settlement conference. (Doc. # 18). Plaintiff responded. (Doc. #19). Defendant Travelers did not file a reply and the deadline for filing has passed.

I. Background

Plaintiff initiated the case in the Eighth Judicial District Court for Clark County, Nevada. ( See id. ). Against defendants Wheeler and Hunt, plaintiff brought claims for conversion and negligence. ( See id. ). Against defendant Travelers plaintiff brought claims for breach of contract, contractual and tortious breach of the implied covenant of good faith and fair dealing, and for unfair claims practices under Nev. Rev. Stat. chapter 686A. ( See id. ).

This case arises from Wheeler and Hunt's alleged vandalism of property owned by plaintiff and insured by Travelers. ( See docs. ##1-1, 10). Plaintiff filed a timely insurance claim with Travelers concerning the loss. ( See doc #1-1). Plaintiff alleges that Travelers did not respond in a timely fashion to the insurance claim, which adversely affected plaintiff's business operations. ( See id. ). Wheeler and Hunt were criminally charged and prosecuted for their role in damaging the property. ( See id. ).

Plaintiff is a Nevada entity authorized to do business in Nevada. ( See doc. #1-1). Travelers is an insurance company organized and existing under the laws of Connecticut, and licensed to do business in Nevada. ( See doc. #1). Wheeler and Hunt are both citizens of Nevada. ( See id. ).

Plaintiff served Travelers with a copy of the complaint on May 27, 2014. ( See doc. #1). Travelers removed this action on June 20, 2014 on the basis of 28 U.S.C. § 1441 diversity jurisdiction. (Doc. #1). Wheeler and Hunt were not served at the time of removal, but were subsequently served on August 19, 2014. ( See docs. ##14, 15). "Whenever federal jurisdiction in a removal case depends upon complete diversity, the existence of diversity is determined from the fact of citizenship of the parties named and not from the fact of service." Clarence E. Morris, Inc. v. Vitek, 412 F.2d 1174, 1176 (9th Cir 1969); cf Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1266, n.4 (9th Cir. 1992) (because the party seeking removal in Vitek had no control over who was served, the danger of manipulation present in Cripps did not exist in Vitek ). Defendants Wheeler and Hunt were listed parties on the original complaint. Defendant Travelers, the party seeking removal, did not have control over serving Wheeler and Hunt. Therefore, plaintiff's delayed service does not remove Wheeler and Hunt from the diversity jurisdiction calculus.

The parties dispute whether Travelers properly removed this action to federal court. ( See docs. ##10, 12, 13). Travelers argues that the citizenships of Wheeler and Hunt should be disregarded because (1) they are not necessary and indispensable parties, and (2) they are procedurally misjoined. ( See doc. #1). Travelers further asks the court to sever and remand plaintiff's claims against Wheeler and Hunt, and to retain jurisdiction over the claims against them. ( See id. ).

Because whether this court has subject matter jurisdiction will determine whether the court may schedule a settlement conference between the parties, the court will first assess plaintiff's motion to remand.

II. Legal Standard

Removal to federal court based on diversity jurisdiction is proper if "none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b). The party seeking to invoke federal jurisdiction bears the burden of establishing jurisdiction. Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990). Removal statutes are construed restrictively, and any doubts about removability are resolved in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

Remand to state court is proper if the district court lacks subject matter jurisdiction over the asserted claims. 28 U.S.C. § 1447(c). Federal district courts have diversity jurisdiction over suits for more than $75, 000 where the citizenship of each plaintiff is different from that of each defendant. 28 U.S.C. § 1332(a). Although an action may be removed to federal court only where there is complete diversity of citizenship, 28 U.S.C. §§ 1332(a), 1441(b), "one exception to the requirement for complete diversity is ...


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