The opinion
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
KRISTINA BAIN GOLEM, CV 21-6947 DSF (RAOx)
Plaintiff,
Order GRANTING Motion to
v. Remand (Dkt. 14)
STANDARD INSURANCE
COMPANY, et al.,
Defendant.
Plaintiff Kristina Bain Golem moves to remand this action to Los
Angeles Superior Court. Dkt. 14. Defendant Standard Insurance
Company opposes. Dkt. 15. The Court deems this matter appropriate
for decision without oral argument. See Fed. R. Civ. P. 78; Local Rule
7-15. For the reasons stated below, Golem’s motion to remand is
GRANTED.1
I. BACKGROUND
Golem is an individual residing in the State of California. Dkt. 1,
Ex. 1 (Compl.) ¶ 1. Standard is an Oregon corporation with its
principal place of business in Portland, Oregon. Id. ¶ 2. The City of
Los Angeles is located in the County of Los Angeles, California. Id. ¶ 3.
Standard issued a group accidental death and dismemberment
policy (the Policy) to the City, covering City employees who elected and
paid for the coverage. Id. ¶ 5. Employees who were covered by the
Policy were provided with a certificate listing the terms and conditions
1 The unopposed requests for judicial notice are granted.
of the Policy. Id. ¶ 6. Golem’s late husband, Adam Golem (the
Decedent), was covered by the Policy, which provided him with
$500,000 in accidental death and dismemberment insurance. Id. ¶¶ 5,
7-8. The Policy issued to the Decedent provided in part that Standard
would pay benefits if he or his dependent “have an accident” resulting
in a loss while insured under the Policy. Id. ¶ 8. The Policy defined
loss as “loss of life, hand, foot, sight, speech, hearing in both ears,
thumb and index finger of the same hand, coma, and Uniplegia,
Quadriplegia, Hemiplegia, or Paraplegia” that is (1) “caused solely and
directly by an accident”; (2) “[o]ccurs independently of all other causes”;
and (3) [o]ccurs within 365 days after the accident.” Id. The Policy
excluded coverage if the accident or loss was caused by “[s]ickness or
pregnancy existing at the time of the accident or exposure” or “[h]eart
attack or stroke.” Id.
The Decedent died on November 25, 2020 while snorkeling in
Hawaii. Id. ¶ 12. The autopsy report concluded that he died “as a
result of an accident, drowning, and that a cardiac arrhythmia ‘may
have’ contributed to the accidental death.” Id. Golem made a claim
under the Policy, but on May 11, 2021, Standard issued a letter to
Golem denying coverage because “Mr. Golem’s medical conditions
contributed to his death.” Id. ¶¶ 13-14.
Golem brought this action in Los Angeles Superior Court on July
27, 2021, bringing claims against Standard for breach of contract and
breach of the implied covenant of good faith and fair dealing and
against the City for negligence and breach of fiduciary duty. Id. ¶¶ 18-
52. On August 27, 2021, Standard removed this action from Los
Angeles Superior Court to this Court on the basis of diversity
jurisdiction. Dkt. 1 ¶ 5. Standard removed this action without joinder
from the City on the grounds that the City had not yet been served and
is a sham defendant. Id. ¶¶ 3-4. On October 27, 2021, Golem served
the City. Dkt. 19.
II. LEGAL STANDARD
A. Removal
“Federal courts are courts of limited jurisdiction” and “possess
only that power authorized by [the] Constitution and statute.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
Generally, a case may be removed on the basis of diversity of
citizenship if the amount in controversy exceeds $75,000 and the
plaintiff and defendant are citizens of different states. 28 U.S.C.
§ 1332(a). But cases may not be removed on the basis of diversity of
citizenship “if any 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)(2).
“The defendant bears the burden of establishing that removal is
proper.” Provincial Gov’t of Marinduque v. Placer Dome, Inc., 582 F.3d
1083, 1087 (9th Cir. 2009). Generally, doubts as to removability are
resolved in favor of remanding the case. See Shamrock Oil & Gas Corp.
v. Sheets, 313 U.S. 100, 108-109 (1941); Gaus v. Miles, Inc., 980 F.2d
564, 566 (9th Cir. 1992).
B. Fraudulent Joinder
A fraudulently joined defendant is ignored when determining if
removal was proper. Morris v. Princess Cruises, Inc., 236 F.3d 1061,
1067 (9th Cir. 2001). A defendant is fraudulently joined 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.” McCabe v.
Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).
“[T]he test for fraudulent joinder and for failure to state a claim
under Rule 12(b)(6) are not equivalent.” Grancare, LLC v. Thrower,
889 F.3d 543, 549 (9th Cir. 2018). In evaluating a claim of fraudulent
joinder, “a federal court must find that a defendant was properly joined
and remand the case to state court if there is a ‘possibility that a state
court would find that the complaint states a cause of action against any
of the resident defendants.’” Id. (quoting Hunter v. Philip Morris USA,
582 F.3d 1039, 1044 (9th Cir. 2009)). In this inquiry, “the district court
must consider . . . whether a deficiency in the complaint can possibly be
cured by granting the plaintiff leave to amend.” Id. at 550.
III. DISCUSSION
Golem contends removal was improper because there is no
diversity jurisdiction on the grounds that the City was not fraudulently
joined. Mot. at 1. Standard argues the City “is a fraudulently-joined
‘sham’ defendant because Plaintiff has no potential for recovery against
the City in this lawsuit.” Opp’n at 1. Specifically, Standard argues (1)
Golem prematurely filed this action in violation of the Government
Claims Act; (2) the City is immune from liability; (3) Golem cannot
state a claim against the City; and (4) removal was proper because the
City had not yet been served at the time of removal, and Golem still
has not served the City. Id.
“[F]raudulent joinder claims can be resolved by piercing the
pleadings and considering summary judgment-type evidence such as
affidavits and deposition testimony.” Cavallini v. State Farm Mut.
Auto Ins. Co., 44 F.3d 256, 263 (5th Cir. 1995) (internal quotation
marks and citations omitted); see Morris, 236 F.3d at 1068.
A. Liability Under Government Claims Act
Standard argues Golem cannot establish liability against the City
because she failed to comply with the Government Claims Act and
because the City and its employees are immune from liability under the
Act. Opp’n at 5, 7.
1. Premature Filing of Lawsuit
Under the Government Claims Act, a plaintiff must present a
claim for money or damages before pursuing a lawsuit against a local
public entity. Cal. Gov’t. Code §§ 900.4, 905. The claim must be timely
presented and must be made within six months for a tort claim and not
later than one year after the accrual of the cause of action. Id. § 911.2.
The failure to do so bars the plaintiff from bringing suit against the
entity. Id. § 945.4. Additionally, a plaintiff may not bring a lawsuit
against the entity “until a written claim therefor has been presented to
the public entity and has been acted upon by the board, or has been
deemed to have been rejected by the board.” Id.
“Where compliance with the [Government] Claims Act is
required, the plaintiff must allege compliance or circumstances
excusing compliance, or the complaint is subject to general demurrer.”
Mangold v. Cal. Pub. Utilities Comm’n, 67 F.3d 1470, 1477 (9th Cir.
1995) (emphasis added); see also State of Cal. v. Super. Ct., 32 Cal. 4th
1234, 1239 (2004) (“[F]ailure to allege facts demonstrating or excusing
compliance with the claim presentation requirement subjects a claim
against a public entity to a demurrer for failure to state a cause of
action.”).
Standard argues Golem has failed to meet the requirements of
the Act because “Plaintiff failed to file a claim with the City that was
rejected before filing suit against the City.” Mot. at 6. Golem alleges in
the Complaint that she “has timely filed a government tort claim
against the City and is awaiting the expected rejection of that claim.”
Compl. ¶ 52. The City rejected Golem’s claim on August 30, 2021, Dkt.
18 (Ex. 4), after Golem filed suit in Los Angeles Superior Court. These
facts suggest Golem has not complied with the presentation
requirement of the Act. However, there remains a possibility that
Golem could prevail after amending her complaint to allege facts that
constitute compliance with the presentation requirement, such as that
her claim was deemed to have been rejected by the board, or
circumstances excusing compliance. See Cal. Gov’t. Code § 954.2.
The parties dispute the applicability of the ruling of the
California Court of Appeal in Lowry v. Port San Luis Harbor Dist., 56
Cal. App. 5th 211 (2020), review denied (Jan. 27, 2021), in which the
Court of Appeal held that the plaintiffs’ filing of a lawsuit against a
public entity violated the Government Claims Act “because he filed a
complaint before his claim was rejected.” Id. at 219. While the failure
in Lowry was fatal to the plaintiff’s suit, the procedural posture of the
instant action does not mandate the same result. The applicable
standard here is whether there is a possibility Golem can establish
liability – and the Court finds there are facts that if true, Golem could
assert to establish she satisfied the presentation requirement.
2. Vicarious Liability
“A public entity is liable for injury proximately caused by an act
or omission of an employee of the public entity within the scope of his
employment if the act or omission would, apart from this section, have
given rise to a cause of action against that employee or his personal
representative.” Cal. Gov’t Code § 815.2(a). However, “a public entity
is not liable for an injury resulting from an act or omission of an
employee of the public entity where the employee is immune from
liability.” Id. § 815.2(b).
“[A] public employee is not liable for an injury resulting from his
act or omission where the act or omission was the result of the exercise
of the discretion vested in him, whether or not such discretion be
abused.” Cal. Gov’t Code § 820.2. “[I]nstead of interpreting
‘discretionary’ literally, the focus should be on the policy considerations
underlying the governmental entity’s claim of immunity.” Steinle v.
City & Cnty. of San Fran., 919 F.3d 1154, 1160-61 (9th Cir. 2019).
Specifically, discretionary functions are those that involve “basic policy
decisions which have been expressly committed to coordinate branches
of government.” Id. at 1061 (quoting Caldwell v. Montoya, 10 Cal. 4th
972, 981 (1995)). “On the other hand, there is no basis for immunizing
lower level decisions that merely implement a basic policy already
formulated.” Barner v. Leeds, 24 Cal. 4th 676, 685 (2000).
Golem cites the minutes of the July 15, 2021 Joint Labor-
Management Benefits Committee meeting, which she states “identifies
specific committee members responsible for the decision to renew the
accidental death and dismemberment policy issued by Standard to the
City.” Mot. at 17; Dkt. 14-2, Ex. 3 at 3. The Court finds this is
sufficient to establish the decision to renew was a “lower level decision”
that does not immunize the decisionmaker because it was simply a
decision to renew the Policy. See Leeds, 24 Cal. 4th at 685. These facts
suffice to raise the possibility that the state court could find the
employees responsible for the decision to renew the Policy were not
immune from liability, and as a result, that the City is vicariously
liable for their actions. To the extent Golem fails to allege these facts
in her Complaint, including which City employees were responsible for
the decision to renew the Policy, the Court finds this can be cured by
amendment.
Standard also appears to argue Golem has not identified a
statute under which the City is liable in tort. Opp’n at 7. However, in
the Complaint, Golem alleges she has filed a “government tort claim
against the City,” Compl. ¶¶ 44, 52, and the Court finds this is
allegation is sufficient to establish that Golem has alleged a specific
statute, the Government Claims Act, under which the City is liable.
B. Possibility of Prevailing in State Court
If Standard can establish there is no possibility a state court
could find Golem can prevail on her negligence and breach of fiduciary
duty claims against the City, then remand is not appropriate.
To establish negligence under California law, a plaintiff must
prove (1) a legal duty to use due care, (2) a breach of such legal duty,
and (3) the breach is the proximate or legal cause of the resulting
injury. Beacon Residential Cmty. Assn. v. Skidmore, Owings & Merrill
LLP, 59 Cal. 4th 568, 573 (2014). To establish a claim for breach of
fiduciary duty, Golem must prove (1) the existence of a fiduciary duty,
(2) breach of that duty, and (3) damage proximately caused by the
breach. IIG Wireless, Inc. v. Yi, 22 Cal. App. 5th 630, 646 (2018).
Standard argues Golem cannot establish the duty and causation
requirements for either claim. Opp’n at 12, 16-17. The Court
disagrees.
In support of its arguments that the City had a duty of care,
Golem cites Madden v. Kaiser Foundation Hospitals, 17 Cal. 3d 699,
705 (1976) for the proposition that employers owe a duty of care to their
employees in negotiating and procuring group health insurance. Mot.
at 7-8. In Madden, the California Supreme Court held the Board of
Administration of the State Employees Retirement System was given
authority by state statute to “negotiate contracts for group medical
plans for state employees” and that “[i]n negotiating such agreements
and amendments the board acts as the agent or representative of the
employees.” Madden, 17 Cal. 3d at 705. “An agency relationship is a
fiduciary one, obliging the agent to act in the interest of the principal.”
Engalla v. Permanente Med. Grp., Inc., 15 Cal. 4th 951, 977 (1997), as
modified (July 30, 1997).
Golem alleges the City negotiated the Policy with Standard “for
the benefit of [the City’s] employees.” Compl. ¶ 34. Golem further
alleges the City had a fiduciary duty to its employees because of its (1)
“undertaking to make life insurance available for its employees”; (2)
“negotiation with and selection of Standard as the insurer to provide
various life insurance products”; and (3) “promotion of those products
on behalf of Standard.” Id. ¶ 40. Because Golem has alleged that the
City negotiated with Standard on behalf of its employees and procured
insurance through Standard, she has alleged facts that establish the
possibility a state court could find the City had a fiduciary duty.
Standard also argues Golem cannot establish causation because
she “cannot plead facts to support that the City’s alleged conduct was a
substantial factor in causing Standard’s denial of the benefit claim.”
Opp’n at 15. In particular, Standard argues Golem does not allege the
City was involved with Standard’s decision not to provide benefits, and
Golem would not have been covered under the Policy in any event. Id.
However, Golem makes several allegations that support a finding of
causation. First, Golem alleges “[t]he City violated its duty of
reasonable care by using Standard as the insurer” for the Policy “and
by promoting that coverage to its employees for their peace of mind
despite knowledge that Standard was ignoring California law when
deciding claims to the detriment of the employee’s beneficiaries.”
Compl. ¶ 41. Further, Golem alleges “the City knew or should have
known that Standard would not follow California law’s proximate cause
test for an ‘accident’ when a pre-existing illness may have contributed
to a death” and that despite this knowledge, the City? failed to
negotiate this issue with Standard, terminate the Policy and seek
insurance from a different insurer, or amend the Policy. Id. Golem
argues these acts or omissions by the City resulted in Standard’s denial
of her claim, Golem’s loss of benefits under the Policy, and Golem’s
physical and mental suffering. Id. {| 42-43. The Court finds these
allegations, if true, would establish proximate cause.
Because Standard has not met its burden of establishing there is
no possibility Golem can prevail on her claims against the City, the
Court finds remand is appropriate.
IV. CONCLUSION
Golem’s motion to remand is GRANTED. The case is
REMANDED to the Superior Court of California, County of Los
Angeles.
IT IS SO ORDERED.
Date: November 15, 2021 PSOXMQ- Ap: , 3 Ca-c/ph§
Dale 8. Fischer
United States District Judge
2 In paragraph 41 of the Complaint, Golem alleges “Standard never raised or
sought to negotiate these issues as part of the group policy’s annual renewal.”
While this sentence on its face refers to Standard, the Court concludes this is
a clerical error and that Golem intended to refer to the City.