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Michael P. O'neill v. Citimortgage

November 19, 2012


The opinion of the court was delivered by: Hon. Joseph H. Rodriguez


This matter was originally filed in the Superior Court of New Jersey, Burlington County. Co-Defendant CitiMortgage ("CMI") removed the action to this Court pursuant to 28 U.S.C. §§ 1441 and 1446.

Presently before the Court is the Motion to Remand of Plaintiff Michael O'Neill ("Plaintiff") filed on April 13, 2012 [Dkt. No. 9] , 2012, based on lack of federal subject matter jurisdiction pursuant to 28 U.S.C. § 1447(c). Plaintiff claims that diversity jurisdiction pursuant to 28 U.S.C. § 1332 is lacking because Defendant Mortgage Access Corporation d/b/a Weichert Financial Services ("Weichert") is not diverse from Plaintiff. Also before the Court is Defendant Weichert's Cross Motion [11] to Dismiss for Fraudulent Joinder.*fn1 The Court has considered the written submissions of the parties and will determine the motion without oral argument. See L. Civ. R. 78. For the reasons stated below, Defe ndant Weichert's Motion to Dismiss for Fraudulent Joinder will be denied and Plaintiff's Motion to Remand will be granted and the matter will be remanded to the state court.

I. Factual Background

Plaintiff alleges that Defendants CMI and Weichert are liable for failing to pay the homeowner's insurance premium of Plaintiff's assignor, Melissa Gilfillan ("Gilfillan").

On December 22, 2005, Plaintiff was involved in an automobile accident caused by an intoxicated minor. Compl. at ¶ ¶ 8-9. On November 27, 2007, Plaintiff filed suit against the driver for damages arising out of the accident. Id. at ¶ 11. After evidence came to light that the minor had been provided alcohol at Gilfillan's home, Plaintiff amended the Complaint to assert claims against Gilfillan. Id. at ¶ 12.

At the time of the accident, Gilfillan believed she had a homeowner's insurance policy with liability coverage from First Trenton Indemnity/Travelers of New Jersey. Gilfillan claims that she did not discover that her policy had been canceled until she was denied coverage after she notified her insurance carrier of Plaintiff's lawsuit. Id. at ¶ 23.

Before trial began, Plaintiff and Gilfillan negotiated a settlement which included Gilfillan assigning to Plaintiff any claim she had against any entity responsible for her lack of insurance coverage. Id. at ¶ 15. Based on that assignment, Plaintiff now claims that CMI and Weichert are liable for nonpayment of Gilfillan's homeowner's insurance premiums because Weichert was Plaintiff's mortgagee when Gilfillan's policy was canceled. Plaintiff also asserts claims against Weichert and CMI for breach of contract, negligence and violation of N.J.S.A. § 17:16F-18.

To support his claims, Plaintiff points to Gilfillan's insurance records which list Weichert as Gilfillan's mortgagee for the 2004-2005 policy period, including the "Renewal Declaration" sent to Weichert on November 1, 2004 and the "Notice of Cancellation of Homeowner's Policy" sent on September 26, 2005 to support its negligence claim. Rimol Cert., Ex. D, pp. HILB 17-19. Plaintiff alleges that Weichert was negligent by not passing on the notices it received to Gilfillan.

Weichert claims that Gilfillan applied for a mortgage with them but states that Gilfillan withdrew her application before a mortgage was issued. Dec. Of Rosemary Lucarelli, Ex. A. Weichert alleges that the property records support its claim by showing that it was never the mortgagee or holder of Gilfillan's mortgage and that Gilfillan cannot unilaterally create a contractual relationship with them by listing them as her mortgagee on her homeowner's insurance policy. Weichert argues that it was fraudulently joined to this action because a contractual relationship was never established and Plaintiff's claims lack any colorable basis. Both CMI and Weichert also argue that Plaintiff's claims should be barred by the statute of limitations.

II. Standard of Review

The Court must first determine whether it has jurisdiction over this matter. Jurisdiction lies only if Defendant Weichert is fraudulently joined to this action. If Weichert is not fraudulently joined, then diversity jurisdiction is lacking pursuant to 28 U.S.C. § 1332 and the case must be remanded to the New Jersey Superior Court, Burlington County Vicinage.

A. Fraudulent Joinder

Joinder is fraudulent if "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." Briscoe, 448 F.3d at 216 (citing Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 32 (3d Cir. 1985)); see also Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111-112 (3d Cir. 1990) (Joinder is fraudulent if the "action against the individual defendants is defective as a matter of law."). "If there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that joinder was ...

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