United States District Court, D. Massachusetts
SURABIAN REALTY CO., INC. and MAJA HOSPITALITY CORPORATION Plaintiffs
CUNA MUTUAL GROUP and CUMIS INSURANCE SOCIETY, INC. Defendants and DAVID L'ECUYER Rule 19 Party
MEMORANDUM OF DECISION AND ORDER ON ASSENTED TO
MOTION TO DISMISS RULE 19 PARTY DEFENDANT
Timothy S. Hillman United States District Judge
Surabian Realty Co. and Maja Hospitality
(“Plaintiffs”) assert a single claim against CUNA
Mutual Group and CUMIS Insurance Society
(“Defendants”) and David A. L'Ecuyer
(“Rule 19 Party” or “Mr.
L'Ecuyer”) for unfair settlement practices pursuant
to Mass. Gen. L. c.176D and Mass. Gen. L. c.93A. This Order
addresses Defendants' and Rule 19 Party's Assented to
Motion to Dismiss Rule 19 Party Defendant (Docket No. 4). For
the reasons set forth below, the motion is
and Factual Background
2, 2016, the plaintiffs, Surabian Realty Co., Inc.
(“Surabian”) and Maja Hospitality Corporation
(“Maja”) (collectively, “Plaintiffs”)
filed a Complaint and Demand for Jury Trial (the
“Complaint”) in Worcester Superior Court (Docket
No. 16-85CV00638). In the Complaint, Plaintiffs name the
following defendants: 1) “CUNA Mutual Group”; 2)
CUMIS Insurance Society, Inc.; and 3) David A. L'Ecuyer
as a Rule 19 defendant. According to Plaintiffs, Mr.
L'Ecuyer is a necessary party under Massachusetts Rule of
Civil Procedure 19(a) because this case, “upon
adjudication, may have a preclusive effect on certain rights,
duties, and obligations between him and the
Defendants.” The case arises from a judgment previously
obtained against Mr. L'Ecuyer for negligent
misrepresentation in Worcester Superior Court on or about May
13, 2015. That judgment is currently on appeal before the
Massachusetts Appeals Court.
allege that Defendants failed to offer a timely and
reasonable settlement offer for the judgment against Mr.
L'Ecuyer. Plaintiffs further allege that liability
against Mr. L'Ecuyer is reasonably clear (notwithstanding
the pending appeal), that Defendants deliberately offered a
low and unfair settlement amount in order to force an unfair
and unreasonably low settlement, and have caused the action
to be appealed without adequate grounds to do so. On April
11, 2016, Plaintiffs submitted to CUMIS a “written
demand for relief” pursuant to Mass. Gen. L. c. 93A,
Sections 2 and 9 that outlined the basis for Plaintiffs'
beliefs that CUMIS had violated Mass. Gen. L. c. 176D. In
response to Plaintiffs demand for relief, on or about April
21, 2016 CUMIS refused to discuss any settlement of the
judgment against Mr. L'Ecuyer and offered a settlement on
behalf of all Defendants at a level that was less than
favorable to the Plaintiffs. Furthermore, CUMIS stated in its
response that it was representing Mr. L'Ecuyer in the
Worcester Superior Court case under a reservation of rights.
On May 2, 2016, Plaintiff filed the Complaint for a single
count for violation of Mass. Gen. L. c 176D and 93A against
Defendants and added Mr. L'Ecuyer as a Rule 19 party.
Defendants filed a notice of removal on June 13, 2016.
plaintiff may not impede a defendant's right of removal
by fraudulently joining a non-diverse defendant who has no
real connection to the case. See Universal Truck &
Equip. Co. v. Southworth-Milton, Inc., 765 F.3d 103, 108
(1st Cir. 2014); Mills v. Allegiance
Healthcare Corp., 178 F.Supp.2d 1, 4 (D.Mass. 2001).
“The linchpin of the fraudulent joinder analysis is
whether the joinder of the non-diverse party has a reasonable
basis in law and fact.” Mills, 178 F.Supp.2d
at 4. Defendants, as the party seeking removal, bear the
burden of demonstrating by clear and convincing evidence
“either that there has been outright fraud committed in
the plaintiff's pleadings, or that there is no
possibility, based on the pleadings, that the plaintiff can
state a cause of action against the non-diverse defendant in
state court.” Id. at 5 (adopting the Second
Circuit test articulated in Whitaker v. Am. Telecasting,
Inc., 261 F.3d 196, 207 (2nd Cir. 2001) and
quoting Whitaker ); see In re New Eng. Mut. Life
Ins. Co. Sales Practices Litigation, 324 F.Supp.2d 288,
298 (D.Mass. 2004) (recognizing use of Whitaker test
by judges in this district); see also Universal
Truck, 765 F.3d at 108 (observing that “the First
Circuit has not addressed the question” and that
“it is generally recognized that, under the doctrine of
fraudulent joinder, removal is not defeated by the joinder of
a non-diverse defendant where there is no reasonable
possibility that the state's highest court would find
that the complaint states a cause of action upon which relief
may be granted against the non-diverse defendant”).
assessing a claim of fraudulent joinder, the Court is not
bound by the allegations in the complaint, and may consider
affidavits and other materials that bear on the question of
whether there is a reasonable basis for joinder of a
defendant. Mills, 178 F.Supp.2d at 6; see also
Badon v. RJR Nabisco Inc., 236 F.3d 282, 285 n.3
(5th Cir. 2000) (considering “undisputed
summary judgment type evidence” when determining
whether any reasonable possibility of recovery under state
law existed); Antony v. Duty Free Americas, Inc.,
705 F.Supp.2d 112, 115 (D.Mass. 2010) (“[T]he
fraudulent joinder doctrine provides an exception to the
general rule prohibiting courts from considering evidence
extrinsic to the facts in the complaint.” (citing
Mills, 178 F.Supp.2d at 6)). In determining whether
a plaintiff has the possibility of recovery against a
defendant, the court is to resolve all disputed issues of
fact and ambiguities of law in favor of the non-removing
party. Fabiano Shoe Co., Inc. v. Black Diamond Equipment,
Ltd., 41 F.Supp.2d 70, 71-72 (D.Mass. 1999).
primary argument is that Mr. L'Ecuyer was joined as a
party solely to defeat diversity jurisdiction. Defendants
further contend that, because Mr. L'Ecuyer is not in the
business of insurance, those claims under Massachusetts law
regarding insurance settlements must fail. Here, Plaintiffs
also allege facts that involve the duties and obligations of
Mr. L'Ecuyer, CUMIS's reservation of rights with
regard to his entitlement to coverage, and whether Plaintiffs
are entitled to either the jury award or a settlement in
their favor. Accordingly, since the Plaintiffs'
allegations show that joinder of Mr. L'Ecuyer has a
reasonable basis in law and fact, Mills, 178
F.Supp.2d at 6, and Mr. L'Ecuyer has “a real
connection to the case, ” Universal Truck, 765
F.3d at 108, the joinder of Mr. L'Ecuyer is not
argue, in the alternative, that Mr. L'Ecuyer suggests
that the Court should not be bound by the way the parties are
formally aligned in the pleadings and instead must realign
the Mr. L'Ecuyer with Plaintiffs so that the parties with
the same “ultimate interests” in the outcome are
on the same side. Landmark Bank v. Machera, 736
F.Supp. 375, 378 (D.Mass. 1990). This realignment would also
result in complete diversity of the parties. To determine
whether realignment of parties is proper, the Court must
determine the primary and controlling matter in dispute, and
then whether an actual collision of interests remains.
U.S.I. Properties Corp. v. M.D. Construction Co.,
Inc., 860 F.2d 1, 4 (1st Cir. 1988),
citing Indianapolis v. Chase National Bank, 314 U.S.
63, 72, 62 S.Ct. 15, 18-19 (1941).
support for this argument is fundamentally flawed. Defendants
contend that if CUMIS committed unfair business practices in
the state court action by not satisfying the judgment against
Mr. L'Ecuyer, his interests must therefore be aligned
with the Plaintiffs. That both Mr. L'Ecuyer as the
insured and Plaintiffs have interests adverse to CUMIS does
not assume then that they share ultimate interests.
Plaintiffs' interest is to obtain a prompt and reasonable
settlement against CUMIS. Mr. L'Ecuyer's interests,
presumably, are to maximize his coverage in ...