ALEXANDER v. MID-CENTURY INSURANCE COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

HOLDEN T. ALEXANDER,

Plaintiff, Civil Action No. 2:21-cv-392

V. Hon. William S. Stickman IV

MID-CENTURY INSURANCE COMPANY,

a wholly owned subsidiary of FARMERS

INSURANCE and GILLIAN BRESSI,

Defendants.

MEMORANDUM OPINION

Plaintiff, Holden T. Alexander (“Alexander”), sued Defendants, Mid-Century Insurance

Company (“Mid-Century”) (an insurance company) and Gillian Bressi (“Bressi”) (an insurance

adjuster), in the Court of Common Pleas of Washington County, Pennsylvania, alleging that they

breached an insurance agreement and that they did so in bad faith under 18 Pa. C.S. § 8371. (ECF

No. 1-1, pp. 11-16). Defendants removed the action to this Court, arguing that it has diversity

jurisdiction over the case because Bressi, a resident of Pennsylvania, was fraudulently joined to

defeat diversity jurisdiction. (ECF No. 1, pp. 2-4). Defendants filed a partial Motion to Dismiss

(ECF No. 3), requesting that the Court dismiss the claims against Bressi on the ground that

Alexander can maintain neither a breach of contract claim nor a statutory bad faith claim against

her under Pennsylvania law. (ECF No. 3, p. 2). For the reasons that follow, the Court will grant

Defendants’ Motion and dismiss all claims against Bressi.

I. BACKGROUND

Alexander lives in Washington County, Pennsylvania. (ECF No. 1-1, 1). He was driving

his motorcycle on State Route 136 in Somerset Township, Pennsylvania. At that time, an

unidentified pick-up truck crossed the center line into Alexander’s lane, causing Alexander to

swerve off of the road to avoid a head-on collision. (ECF No. 1-1, #7 4-8). As aresult, Alexander

was hospitalized with numerous injuries. (ECF No. 1-1, § 10). Alexander demanded that Harley-

Davidson Insurance (“Harley Davidson’) tender $25,000 of first party benefits under his insurance

policy. Harley Davidson did so ten days later. (ECF No. 1-1, 9 15-20).

Mid-Century is organized under California law, and has its principal place of business in

Los Angeles County, California. (ECF No. 1, 45). Alexander’s parents maintain an automobile

insurance policy that was issued by Farmers Insurance (“Farmers”), which wholly owns Mid-

Century. Alexander alleges that because he resides with his parents, he was an insured under their

policy with Farmers. That policy provides $100,000 in potential benefits for each vehicle, and it

also allows those benefits to be aggregated or stacked for a total policy limit of $400,000. (ECF

No. 1-1, J] 23-27). Alexander submitted a request for benefits under the policy and provided

documentation in support of his request. (ECF No. 1-1, 30-31). Mid-Century, however, has

not accepted or denied Alexander’s request, or made any offers to resolve his claims. (ECF No.

1-1, 34).

Alexander alleges that Mid-Century and Bressi, “[d]espite ample time and reason to do so,

... have failed to objectively and fairly evaluate [his] claims in a prompt, reasonable, and/or timely

manner.” (ECF No. 1-1, { 39). Bressi is the individual or representative “most responsible for . .

. Alexander’s claim.” (ECF No. 1-1, 43). Bressi lives in Chester County, Pennsylvania. (ECF

No. 1-1, 93). Alexander contends that Mid-Century and Bressi breached the underlying insurance

policy by, inter alia, failing to reasonably investigate the claim, requesting unnecessary

information, making intrusive demands, unreasonably delaying the process, and failing to

reasonably tender offers of settlement. (ECF No. 1-1, 41-52). As a result, Alexander requests

that the Court “enter a judgment in his favor . . . in an amount in excess of $50,000, plus interest

and costs.” (ECF No. 1-1, 955). Alexander also contends that Mid-Century and Bressi acted in

bad faith under § 8371 for numerous reasons set forth in the Complaint. See (ECF No. 1-1, § 57).

Alexander requests “compensatory and punitive damages, together with interest, attorney’s fees,

and such other relief as the [C]ourt deems appropriate.” (ECF No. 1-1, § 61).

II. STANDARDS OF REVIEW

A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)

A motion to dismiss filed under Federal Rule of Civil Procedure 12(b)(6) tests the legal

sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 Gd Cir. 1993). A plaintiff

must allege sufficient facts that, if accepted as true, state a claim for relief plausible on its face.

See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009). A court must accept all well-pleaded factual allegations as true and view them

in the light most favorable to a plaintiff. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 Gd

Cir. 2009). Although this Court must accept the allegations in the Complaint as true, it is “not

compelled to accept unsupported conclusions and unwarranted inferences, or a legal conclusion

couched as a factual allegation.” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citations

omitted).

The “plausibility” standard required for a complaint to survive a motion to dismiss is not

akin to a “probability” requirement but asks for more than sheer “possibility.” Iqbal, 556 U.S. at

678 (citing Twombly, 550 U.S. at 556). In other words; the complaint’s factual allegations must

be enough to raise a right to relief above the speculative level, on the assumption that all the

allegations are true even if doubtful in fact. Twombly, 550 U.S. at 555. Facial plausibility is

present when a plaintiff pleads factual content that allows the court to draw the reasonable

inference that a defendant is liable for the misconduct alleged. Igbal, 556 U.S. at 678. Even if the

complaint’s well-pleaded facts lead to a plausible inference, that inference alone will not entitle a

plaintiff to relief. 7d at 682. The complaint must support the inference with facts to plausibly

justify that inferential leap. Jd. :

Generally, a court may not consider an extraneous document when reviewing a motion to

dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). If parties

present matters outside the pleadings and the court does not exclude them, the motion must be

converted to a motion for summary judgment. FED. R. Civ. P. 12(d). When reviewing the

sufficiency of a complaint, however, a court may consider attachments to it without converting the

motion into one for summary judgment if they are integral to the allegations in the complaint and

are authentic. See In re Burlington, 114 F.3d at 1426 (holding that a court may consider a

“document integral to or explicitly relied upon in the complaint”). See also Pension Ben. Guar.

Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (holding that a court may

consider an “undisputedly authentic document that a defendant attaches as an exhibit to a motion

to dismiss if the plaintiffs claims are based on the document’’).

B. Subject Matter Jurisdiction and Fraudulent Joinder

“Under 28 U.S.C. § 1441 (a), a civil action filed in a state court may be properly removed

if the federal court would have had original jurisdiction over the action.” Mattei v. Lib. Mut. Ins.

Corp. No. 18-4643, 2019 WL 78957, at *2 (E.D. Pa. Jan. 2, 2019). Federal district courts “have

original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value

of $75,000, exclusive of interest and costs, and is between . . . citizens of different states.” 28

U.S.C. § 1332(a)(1). “The removal statute is strictly construed[,] and all doubts are to be resolved

in favor of remand.” Mattei, 2019 WL 78957, at *2 (citing Johnson v. SmithKline Beecham Corp.,

724 F.3d 337, 346 (3d Cir. 2013)).

“Section 1332 requires complete diversity, meaning that ‘every plaintiff must be of diverse

state citizenship from every defendant.’” Jd. (quoting In re Briscoe, 448 F.3d 201, 215 (3d Cir.

2006)) (citation omitted). “A corporate defendant is a citizen of its state of incorporation and the

state where it has its principal place of business, which is normally where the corporation is

headquartered.” Jd. (citing Hertz Corp. v. Friend, 559 U.S. 77, 93 (2010)).

“An exception to the complete diversity rule exists in cases where a non-diverse defendant

has been fraudulently joined.” Jd “The doctrine of fraudulent joinder permits a defendant to

remove an action notwithstanding a lack of complete diversity, ‘if [the diverse defendant] can

establish that the non-diverse defendant was “fraudulently” named or joined solely to defeat

diversity jurisdiction.’” Jd. (quoting Oritz v. Cequent Performance Prod., No. 16-6593, 2017 WL

1277643, at *2 (E.D. Pa. Apr. 3, 2017)) (cleaned up). “Ifanon-diverse defendant was fraudulently

joined, then th[e] Court may disregard the citizenship of the non-diverse defendant to determine

diversity of citizenship.” Jd. (citing Briscoe, 448 F.3d at 216). “Alternatively, if the Court

determines that joinder was not fraudulent, the Court must remand the case for lack of subject

matter jurisdiction.” Jd. (citing Briscoe, 448 F.3d at 216).

“Joinder is fraudulent “where there is no reasonable basis in fact or colorable ground

supporting the claim against the joined defendant, or no real intention in good faith to prosecute

the action against the defendant or seek a joint judgment.’” Jd (quoting Boyer v. Snap-On Tools

Corp., 913 F.2d 108, 111 Gd Cir. 1990)). “In other words, joinder is fraudulent where a plaintiff s

claim against a defendant is ‘wholly insubstantial or frivolous.’” Jd. (quoting Boyer, 913 F.2d at

113). “The removing party bears the ‘heavy’ burden of demonstrating fraudulent joinder.” Jd.

(citing Boyer, 913 F.2d at 111) (citation omitted). “This ‘heavy burden is imposed to effectuate

the strong presumption against removal jurisdiction.’” Jd. (quoting Reto v. Lib. Mut. Ins., No. 18-

2483, 2018 WL 3752988, at *2 (E.D. Pa. Aug. 8, 2018)) (citation omitted). When making this

determination, the Court must refrain from making a decision premised on the merits, claims or

defenses, but it may, however, “look beyond the pleadings to identify any indicia of fraudulent

joinder.” Jd. (citing Briscoe, 913 F.2d at 219).

As pled, the presence of Bressi in this action would defeat subject matter jurisdiction and |

preclude the Court from examining the substance of her motion to dismiss. But the Defendants

have argued that she was fraudulently joined for the sole purpose of defeating diversity jurisdiction

and that the law is clear and free from doubt that she cannot be sued, as a matter of law. The Court

must, therefore, examine the substance of Bressi’s Motion to determine whether the claims against

her are viable. Because they are not, she will be dismissed from this action and the Court may

continue to exercise diversity jurisdiction over Mid-Century.

I. ANALYSIS

Defendants request that the Court dismiss Bressi from this action on the ground that

because Bressi is an insurance adjuster employed by Mid-Century, Alexander can pursue neither

a breach of contract action nor a statutory bad faith action under Pennsylvania law. (ECF No. 3,

p- 2). Defendants therefore contend that the Court has diversity jurisdiction to adjudicate the

remaining claims against Mid-Century because the parties reside in different states and the

amount-in-controversy exceeds $75,000. (ECF No. 1, 7 11-13). Alexander counters that the

Court should not dismiss Bressi from this action because Pennsylvania law allows an insured to

bring suit against an insurance adjuster for both a breach of contract and statutory bad faith under

a “participation theory.” (ECF No. 7, p. 4).

The cases cited by Alexander in support of his contention that the so-called “participation

theory” allows him to bring breach of contract and statutory bad faith claims against an insurance

adjuster are unpersuasive because none dealt with either of those claims as applied to insurance

adjusters. See Kapton v. Ohio Cas. Ins. Co., Inc., No. 14-69, 2014 WL 1572474, at *2 (W.D. Pa.

Apr. 17, 2014) (alleging violations: of Pennsylvania Unfair Trade Practices and Consumer

Protection Law); Sannuti v. Starwood Hotels & Resorts Worldwide, Inc., No. 14-587, 2014 WL

1515650, at *1 (E.D. Pa. Apr. 16, 2014) (alleging negligence, negligent infliction of emotional

distress, wrongful death, and a survival action); Hennessy v. Allstate Ins. Co., No. 13-6594, 2014

WL 1479127, at *3 (E.D. Pa. Apr. 14, 2014) (alleging unfair trade and negligence actions); Ozanne

v. State Farm Mut. Auto. Ins. Co., No. 11-327, 2011 WL 1743683, at *2 (W.D. Pa. May 5, 2011)

(alleging violation of Pennsylvania Unfair Trade Practices and Consumer Protection Law); Grossi

v. Travelers Ins. Co., No. 9-1427, 2010 WL 483797, at *1 (W.D. Pa. Feb. 5, 2010) (alleging

violation of Pennsylvania Unfair Trade Practices and Consumer Protection Law).

The Supreme Court of Pennsylvania has squarely held that an insured may not maintain a

breach of contract action against an insurance adjuster without allegations of a separate contractual

relationship between those individuals. Hudock v. Donegal Mut. Ins. Co., 264 A.2d 668, 672 (Pa.

1970). (‘The basic defect in these [breach of contract] allegations [against adjusters], as noted

below, is the failure to establish a contractual relationship between the adjusters and the insured

appellants. Without such a relationship, it is impossible for the adjusters to be liable for breach of

contract to the insureds.”). The Pennsylvania Superior Court has confirmed that under 42 Pa. C.S.

§ 8371, “a statutory action for bad faith can only be brought against the insurer.” Brown v. Everett

Cash Mutual Ins. Co., 157 A.3d 958, 968 (Pa. Super. 2017).

Alexander does not allege that a separate agreement exists between him and Bressi. The

policy underlying his breach of contract claim is unquestionably only between his parents and

Mid-Century. (ECF No. 1-1, p. 17). Nor has it been, nor can it be, alleged that Bressi is the

insurer. Accordingly, Alexander is prohibited under Pennsylvania law from bringing either a

breach of contract claim or statutory bad faith claim against Bressi. The Court will grant

Defendants’ motion to dismiss the claims against Bressi in this matter.

IV. CONCLUSION

For the reasons set forth above, the Court will grant Defendants’ partial Motion to Dismiss

(ECF No. 3). Alexander’s claims against Bressi will be dismissed with prejudice.

BY THE COURT:

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WILLIAM S.STICKMANIV

UNITED STATES DISTRICT JUDGE

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Dated