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Johnson v. Auto-Owners Insurance Co.

United States District Court, D. Arizona

August 5, 2016

Roger L. Johnson and Audrey Lynne Rounding, husband and wife, Plaintiffs,
v.
Owners Insurance Company, a foreign corporation; First Alarm Investigations, LLC, an Arizona limited liability company; Bruce Wolke and Jane Doe Wolke, husband and wife; John and Jane Does 1-X, fictitious individuals; and ABC Corporations 1-X, fictitious entities, Defendants.

          ORDER

          Neil V. Wake Senior United States District Judge

         An insurance company hired an investigator to assess a home’s fire damage and then offered the homeowners a repair estimate. The homeowners, dissatisfied with the estimate and the handling of their claim, sued in state court. They sued the insurance company for breach of contract and bad faith, and they sued the investigator for negligence, misrepresentation, and aiding and abetting the insurance company’s misconduct.

         The homeowners and the investigator are Arizona citizens, but the insurance company is not. The insurance company removed based on diversity jurisdiction, claiming the investigator was fraudulently joined. The homeowners move to remand. The investigator moves to dismiss the homeowners’ claims under Rule 12(b)(6).

         Before the Court are the homeowners’ motion to remand (Doc. 18), the investigator’s motion to dismiss (Doc. 35), and all accompanying briefs. For the reasons that follow, the motion to remand will be granted, precluding this Court from ruling on the motion to dismiss. On remand, the Superior Court may rule on the motion to dismiss.

         I. BACKGROUND

         A. Allegations underlying the homeowners’ claims

         The Amended Complaint alleges as follows. (Doc. 10.) Roger Johnson and Audrey Rounding (“the Johnsons”) own a home in Phoenix, Arizona. (Id., ¶ 13.) The home was insured through a policy issued by Owners Insurance Company (“Owners”). (Id., ¶¶ 2, 14.)

         In July 2014, the home suffered extensive fire damage. (Id., ¶ 15.) The Johnsons promptly reported the damage to Owners. (Id., ¶ 16.) Owners hired Bruce Wolke, a certified fire investigator, to assess the home for smoke damage and environmental risk. (Id., ¶¶ 4, 6-7.) The assessment involved swabbing surfaces in the home with a cloth to collect dust samples and then taking those samples to a lab, where a chemist would analyze the samples for traces of soot. (Id., ¶ 42; Doc. 1-1 at 26-28.)

         At Owners’ instruction, Wolke swabbed only clean surfaces, which were less likely to contain soot. (Doc. 10, ¶ 41.) Wolke also pressed his swab cloth only lightly across surfaces, to avoid collecting soot. (Id., ¶ 42.) While collecting samples, Wolke told the Johnsons that he saw no smoke damage and that the home was safe, even though he knew or should have known otherwise. (Id., ¶ 72; Doc. 42-1 at 2.) Lab analysis of Wolke’s samples revealed only minimal amounts of soot. (Doc. 1-1 at 28.)

         Owners knew that Wolke’s samples were not representative, and they knew that the home actually contained substantial amounts of soot that could be hazardous to the Johnsons’ health. (Doc. 10 at ¶¶ 21-22, 46-48.) However, Owners gave the Johnsons a low-ball repair estimate, which ignored the soot damage. (Id., ¶ 20.) The Johnsons hired their own adjusters, who pointed out errors in Owners’ estimate including the omission of soot damage. (Id., ¶¶ 37-38; Doc. 42-1 at 3.) Owners refused to reconsider its position and instead attempted to delay payment. (Id., ¶¶ 35-36.)

         B. Procedural history of this case

         The Johnsons sued Owners, Wolke, and Wolke’s company (First Alarm Investigations, LLC) in state court. (Doc. 1-1 at 2-14.) The complaint contained five counts. Three of the counts-breach of contract, bad faith, and punitive damages-were asserted only against Owners. (Id. at 9, 13.) The other two counts-entitled “Negligence” and “Intentional / Negligent Misrepresentation”-were asserted against all defendants. (Id. at 11.)

         Owners removed to this Court on the basis of diversity jurisdiction, claiming the Johnsons are Arizona citizens and Owners is a Michigan citizen. (Doc. 1, ¶¶ 4-5.) Owners also claimed that Wolke and his company were fraudulently joined in this action, so their citizenship need not be considered for diversity purposes. (Id., ¶ 6.)

         After removal, the Johnsons amended their complaint. (Doc. 10.) The Amended Complaint offers more detailed allegations regarding Wolke’s contractual relationship with Owners and his role in assessing the Johnsons’ home. (Id., ¶¶ 4-7, 43-45.) The Amended Complaint clarifies that the negligence and misrepresentation counts are asserted only against Wolke and his company, and it adds another count against Wolke and his company entitled “Aiding and Abetting Tortious Conduct.” (Id. at 11-15.)

         On the basis of their Amended Complaint, the Johnsons move to remand. (Doc. 18.) They contend that Wolke and his company[1] are Arizona citizens against whom they have asserted viable claims, so diversity of citizenship does not exist.

         In response, Owners and Wolke (collectively “Defendants”) insist that the Johnsons have not stated viable claims against Wolke. (Docs. 30, 34.) Owners further argues that inadequacies and inconsistencies in the Amended Complaint indicate the reason the Johnsons sued Wolke was to destroy diversity. (Doc. 34 at 9-14.)

         In addition to opposing remand, Wolke moves to dismiss the Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). (Doc. 35.)

         II. ...


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