United States District Court, D. Arizona
Douglas L. Rayes United States District Judge.
initiated this action in Maricopa County Superior Court.
Fairly read, his complaint challenges the termination of his
worker's compensation benefits and asserts a claim for
breach of the covenant of good faith and fair dealing.
Defendant timely removed, asserting federal jurisdiction
based on the diverse citizenship of the parties. At issue are
Plaintiff's motions to remand (Docs. 8, 12) and
Defendant's motion to dismiss (Doc. 10), which are fully
briefed (Docs. 13, 14, 15). Defendant's request for oral
argument is denied because the issues are adequately briefed
and oral argument will not be useful. See Fed. R.
Civ. P. 78(b); LRCiv. 7.2(f); Lake at Las Vegas Investors
Grp., Inc. v. Pac. Malibu Dev., 933 F.2d 724, 729 (9th
Cir. 1991). For the following reasons, Plaintiff's
motions to remand are denied and Defendant's motion to
dismiss is granted.
Motions to Remand
correctly notes that, pursuant to 28 U.S.C. § 1445(c),
actions arising under a state's worker's compensation
laws are not removable. His motion to remand will be denied,
however, for two reasons.
although Plaintiff's claim that he is entitled to
worker's compensation benefits arises under Arizona's
worker's compensation laws, for purposes of 28 U.S.C.
§ 1445(c) his bad faith claim does not. See Hayes v.
Continental Ins. Co., 872 P.2d 668, 274-75 (Ariz. 1994)
(recognizing difference between common law bad faith claims
and bad faith actions arising under worker's compensation
laws); Bowling v. Westport Ins. Corp., No.
CV-15-00199-TUC-RM (EJM), 2015 WL 13203369, at *2-5 (D. Ariz.
Oct. 19, 2015) (recommending that district court deny a
motion to remand under 28 U.S.C. § 1445(c) because the
tort of bad faith arises under Arizona common law, not
Arizona's worker's compensation laws); see also
Ehler v. St. Paul Fire and Marine Ins. Co., 66 F.3d 771,
772-73 (5th Cir. 1995) (holding that bad faith claim was not
subject to remand because it arose out of Texas common law,
not Texas worker's compensation laws). Accordingly, the
Court may properly exercise jurisdiction over Plaintiff's
bad faith claim because complete diversity exists, the amount
in controversy exceeds $75, 000, and the bad faith claim does
not arise out of Arizona's worker's compensation
the Court may dismiss rather than remand a claim if it is
certain the state court would simply dismiss the action.
Polo v. Innoventions Int'l, 833 F.3d 1193, 1197
(9th Cir. 2016). Remand of Plaintiff's claim that he is
entitled to worker's compensation benefits would be
futile because, under Arizona law, “[t]he sole and
exclusive jurisdiction to determine all issues of law and
fact relating to a claimant's entitlement to compensation
benefits is vested in the Industrial Commission.”
Sandoval v. Salt River Project Agric. Improvement &
Power Dist., 571 P.2d 706, 710 (Ariz.Ct.App. 1977).
Remand therefore would serve no useful purpose because it is
clear that the Maricopa County Superior Court would likewise
dismiss Plaintiff's claim to worker's compensation
benefits for lack of jurisdiction.
Motion to Dismiss
noted above, to the extent Plaintiff's complaint seeks a
determination that he is entitled to worker's
compensation benefits, that claim must be dismissed because
the Industrial Commission of Arizona has exclusive authority
over such claims. Plaintiff's remaining clam for breach
of the covenant of good faith and fair dealing must be
dismissed because Plaintiff has not brought the claim against
the right entity.
law recognizes an implied duty of good faith and fair dealing
in every insurance contract. Rawlings v. Apodaca,
726 P.2d 565, 569 (Ariz. 1986). The duty arises by virtue of
the contractual relationship, but the breach of the duty
sounds in tort. Walter v. F.J. Simmons and Others,
818 P.2d 214, 236 (Ariz.Ct.App. 1991). “[A]lthough an
insurer may delegate the performance of its duty of
good faith to a non-servant, it remains liable for the
actions taken by this delegate because the duty of
good faith itself is non-delegable.” Id. at
December 6, 2018 Notice of Claim Status indicates that his
worker's compensation carrier is New Hampshire Insurance
Company (“NHIC”). (Doc. 10 at 13.) Nonetheless,
Plaintiff has not brought any claims against NHIC. Instead,
he has brought a bad faith claim against Defendant, which is
NHIC's third-party claims administrator. Although the
manner in which Defendant administered Plaintiff's claim
may be imputed to NHIC for purposes of a bad faith claim
against NHIC, Defendant cannot be directly liable
for breaching the covenant of good faith and fair dealing
because it is not a party to the insurance contract from
which that covenant derives. See Meineke v. GAB Business
Servs., Inc., 991 P.2d 267, 270 (Ariz.Ct.App. 2000)
(explaining that the actions of an adjuster who mishandled a
claim may be imputed to the insurer, but the adjuster does
not owe a separate duty to the insured); Walter, 818
P.2d at 222 (noting that, although independent adjuster was
dismissed from bad faith claim because it owed no contractual
duty to the insured, the insured could maintain a claim
against the insurer); Jacobs v. Am. Family Mut. Ins.
Co., No. CV-13-01404-PHX-SBS, 2013 WL 11785112, at *1-3
(D. Ariz. Aug. 29, 2013) (dismissing breach of the covenant
of good faith and fair dealing claim against an independent
insurance adjuster because the adjuster was not a party to
the insurance contract). For these reasons, IT IS
ORDERED that Plaintiffs motions to remand (Docs. 8,
12) are DENIED and Defendant's motion to
dismiss (Doc. 10) is GRANTED. The Clerk of
the Court shall enter judgment accordingly and terminate this
 Notably, Plaintiff chose not to
address Defendant's argument that, as a stranger to the
insurance contract, it cannot be liable for breaching the
covenant of good faith or fair dealing, which the Court may
construe as ...