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BACA v. ACE AMERICAN INSURANCE COMPANY et al

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Case Number: 
1:15-cv-00151 Search Pacer
ACE Group party(s): 
Opposing Party: 
Jennifer Baca
Court Type: 
Federal
US District Court: 
District of New Mexico
Date Filed: 
Feb 20 2015

NOTICE OF REMOVAL

Defendant GENEX Services, L.L.C. (“GENEX”), by and through its counsel of record,
Peifer, Hanson & Mullins, P.A. (Charles R. Peifer and Lauren Keefe), and pursuant to Sections
1331, 1441, and 1446 of Title 28 of the United States Code, hereby removes this case to the
United States District Court for the District of New Mexico. As grounds therefore, GENEX
states as follows:
1. On January 22, 2015, Plaintiff filed a Complaint for Breach of Contract,
Violations of Statutory and Common Law, Bad Faith, and Breach of Unfair Trade Practices Act
against Defendants Ace American Insurance Co. (“Ace”), Gallagher Bassett Services, Inc.
(“Gallagher Basset”), and Michael Richey in the First Judicial District Court of New Mexico,
Santa Fe.
2. On January 27, 2015, Plaintiff filed an Amended Complaint for Breach of
Contract, Violations of Statutory and Common Law, Bad Faith, and Breach of Unfair Trade
Practices Act naming GENEX as a Defendant.
3. GENEX was served on February 5, 2015. This Notice of Removal is therefore
being filed within 30 days after service on GENEX and is timely filed under 28 U.S.C. §
1446(b).
4. Pursuant to 28 U.S.C. § 1446(a), copies of the Amended Complaint all process,
pleadings, and orders served on GENEX are attached to this Notice as Exhibit 1.
5. GENEX has consulted with Ace, Gallagher Bassett and Richey and each consents
to removal. Their written consents are attached hereto as Exhibits 2 and 3.
6. “Any civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed by the defendant or the defendants, to
the district court of the United States for the district and division embracing the place where such
action is pending.” 28 U.S.C, § 1441(a). Federal courts have original jurisdiction over matters in
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).
This case may be removed to this Court because the amount in controversy between Plaintiff and
Defendants exceeds $75,000, exclusive of interest and costs, and because the parties who have
not been fraudulently joined to defeat this Court’s jurisdiction, are citizens of different states.
Amount in Controversy
7. Plaintiffs counsel has stipulated that the amount in controversy exceeds $75,000.
See Email fiom MJ. Keefe to Greg Como (Ex. 4). This stipulation “is sufficient to support
diversity jurisdiction.” McPhail v. Deere & Co., 529 F.3d 947, 957 (10th Cir. 2008).
Citizenship of the Parties
8. Plaintiff is a resident and citizen of New Mexico. See Amended Complaint K 1.
9. Plaintiff admits that Ace and Gallagher Bassett and GENEX are each foreign
corporations and that GENEX is a foreign limited liability company. See Amended Complaint
IN 2-3, 5. In fact, Defendant Ace is a Pennsylvania corporation with its principal place of
business in Philadelphia, Pennsylvania. For puiposes of diversity jurisdiction, therefore, Ace is a
citizen of Pennsylvania. Defendant Gallagher Bassett is a Delaware corporation with its
principal place of business in Itasca, Illinois. For puiposes of diversity jurisdiction, therefore,
Gallagher Bassett is a citizen of Delaware or Illinois. Defendant GENEX is a Pennsylvania
limited liability company with its principal place of business in Wayne, Pennsylvania. For
pui poses of diversity jurisdiction, therefore, GENEX is a citizen of Pennsylvania.
10. Defendant Richey is a resident and citizen o f New Mexico.
11. Thus, based on the face of the Amended Complaint, there is complete diversity
between Plaintiff and all Defendants except Mr. Richey.
Fraudulent Joinder o f Mr. Richey
12. The doctrine of fraudulent joinder prohibits a plaintiff from defeating diversity
jurisdiction by joining defendants against whom they have no viable claim or cause of action.
See Montano v. Allstate Indent., 2000 U.S. App. LEXIS 6852, *4 (10th Cir, 2000); Couch v.
Astec Indus., 71 F. Supp.2d 1145, 1147 (D.N.M. 1999). Pursuant to this doctrine, the citizenship
o f a defendant should be disregarded, for the purpose of determining whether there is diversity of
citizenship, when the plaintiff has no viable cause of action against the fraudulently joined
defendant. See id.
13. Here, the doctrine of fraudulent joinder is applicable because Plaintiff has no
viable cause of action against Mr. Richey. Plaintiff has asserted one claim against Mr. Richey: a
claim for negligent misrepresentation. See Amended Complaint 147-67. The claim is based
on the allegation that Mr. Richey told Plaintiff that he would “make sure she received the
medical benefits needed to battle her injuries” and “help her to obtain the medical benefits that
she needed.” 1 See Amended Complaint 153, 155. Plaintiff also alleges that Richey told her
that Ace and/or Gallagher Bassett would pay for a psychiatric evaluation that she attended. See
id, 1 159. These allegations, however, do not establish a claim for negligent representation, for
at least three separate reasons.
14. First, Plaintiff has no viable claim against Mr. Richey because she does not and
cannot allege that he was supplying information to her for guidance in a business transaction.
New Mexico only recognizes negligent misrepresentation as established through the Restatement of
Toils (Second) § 552. See Stotlar v. Hester, 92 N.M. 26,29, 582 P.2d 403, 405 (Ct. App. 1978)
(explaining that the Restatement sets forth “the limitations on the tort” of negligent misrepresentation
as recognized in New Mexico); Committee Commentary to UJI13-1632 (“New Mexico has adopted
the tort of negligent misrepresentation as defined in Section 552 of the Restatement (Second) o f Torts
( 1977)”).2 Section 552 provides that:
one who, in the course of his business, profession or employment, or in any other
transaction in which he has a pecuniary interest, supplies false information for the
guidance of others in their business transactions is subject to liability for pecuniary
loss caused to them by then-justifiable reliance upon the information, if he fails to
1 Mr. Richey denies this allegation.
2 See also Garcia v. Rodey, Dickason, Sloan, Akin & Robb, P.A., 1988-NMSC-014, U 16, 106 N.M. 757 (recognizing
lliat the Section 552 establishes the limits o f the tort o f negligent misrepresentation in New Mexico); First Interstate
Bankv. Foutz, 1988-NMSC-087,1| 8, 107 N.M, 749 (“New Mexico follows the tort o f negligent misrepresentation
as set forth in the Restatement... .”); McElhannon v. Ford, 2003-NMCA-091, ^ 10,134 N.M. 124 (“New Mexico
law on negligent misrepresentation follows Section 552 of the Restatement (Second) of Torts (1977)”); Western
States Mechanical Contractors v. Sandia Corp., 1990-NMCA-094, 15,110 N.M. 676 {“Restatement (Second) of
Torts, Section 552 (1977), defines negligent misrepresentation in New Mexico.”); accordEckhardt v. Charter
Hosp., 1998-NMCA-017,1|55,124 N.M. 549; Gouveia v. Citicorp Person-to-Person Fin. Ctr., 1984-NMCA-079, H
11,101 N.M. 572; State ex rel. Nichols v. Safeco Ins. Co., 1983-NMCA-112, H 6 n.l, 100 N.M. 440; Amato v.
Rathbun Realty, 1982-NMCA-095, H 10, 98 N.M. 231; Holland v. Lawless, 1 9 8 1 -NM C A -0 0 4 ,13-14, 95 N.M.
490; Neff v. Bud Lewis Co., 1976-NMCA-029, 19-20, 89 N.M. 145; Maxey v. Quintana, 1972-NMCA-069, ]| 17,
84 N.M. 38.
exercise reasonable care or competence in obtaining or communicating the
information.
The tort applies only “to persons and entities in the business of selling information which their
customers might rely upon in taking some additional action.” Hi-Grcide Cleaners, Inc. v.
American Permac, Inc., 561 F. Supp. 643, 644 (N.D. 111. 1982).3 Plaintiff does not claim that
Mr. Richey was selling information to her or was in the business of providing information to
others regarding the scope of insurance coverage. Nor does she claim that he provided
information to her for use in a future business transaction. Because Plaintiff does not and cannot
allege facts to establish any of these essential elements of the tort of negligent misrepresentation
as recognized in New Mexico, she has no viable claim for negligent misrepresentation against
Mi\ Richey.
15. Second, Plaintiff has no viable claim for negligent misrepresentation because she
does not allege that she relied on Mr. Richey’s alleged representations for any purpose. To assert
a claim for negligent misrepresentation, a plaintiff must allege that he or she relied on the
defendant’s statement. See UJI 13-1632 NMRA (“A party is liable for damages caused by his
negligent misrepresentation. A material misrepresentation is an undue statement which a party
intends the other party to rely on and upon which the other party did in fact rely.”) (emphasis
added). More specifically, as noted above, the plaintiff must allege that he or she relied on the
defendant’s statement in a separate business transaction. See Restatement § 552. Here, Plaintiff
3 See also Palco Linings, Inc. v. Pa vex, Inc., 755 F. Supp. 1269, 1274 (M.D. Pa. 1990) (“The Restatement, and the
cases following it, limit tort liability to those in the business o f selling information on which its customers rely upon
in taking additional action.”); Bilt-Rite Contractors, Inc. v. The Architectural Studio, 866 A.2d 270, 286 (Pa. 2005)
(‘The tort is narrowly tailored, as it applies only to those businesses which provide services and/or information that
they know will be relied upon in their business endeavors . . . . ”); Conway v. Pacific Univ., 924 P.2d 818,243 (Ore.
1996) (tort applies to “someone in the business o f supplying information for a fee.”). New Mexico, for example, has
permitted claims for negligent misrepresentation against real estate brokers or appraisers who provide false
information about the value o f property. See, e.g., Stotlar, 92 N.M. at 27, 30. The tort has also been applied to
“attorneys, abstractors of title, surveyors, inspectors of goods, operators o f ticker services, and banks dealing with
non-depositors’ checks,” among others. Palco Linings, 755 F. Supp. at 1274.
does not allege that she relied on Mr. Richey’s statements for use in a future business transaction.
She does not, for example, claim that he provided information that she relied upon in deciding
whether to purchase any insurance or to make a claim for coverage. To the contrary, Plaintiff
alleges that she had already obtained the coverage in question long before her interactions with
Mr. Richey, and had already made a claim for coverage when Mr. Richey made his alleged
representations. See Amended Complaint HD 9,14-16, 19. Indeed, Plaintiff does not allege that
she took any action in reliance on Mr. Richey’s alleged statements. She does not, for example,
allege that she failed to take any steps necessary to obtain coverage as a result of Mr. Richey’s
alleged assurances. To the contrary, the Amended Complaint shows that Plaintiff continuously
pursued her claim for coverage before, during, and after the time Mr. Richey was assigned to her
fde. See Amended Complaint 8-88. Because Plaintiff does not allege that she took any action
in reliance on Mr. Richey’s alleged representations, she has no viable claim for negligent
misrepresentation against him.
16. Third, Plaintiff has no viable claim against Mr. Richey because she either cannot
attribute her claimed damages to his alleged statements or cannot recover those damages from
Mr. Richey through a claim for negligent misrepresentation. A party asserting a cause of action
for negligent misrepresentation can only recover the pecuniary damages caused by the alleged
representation. See UJI 13-1632 (“A party is liable for damages caused by his negligent and
material misrepresentation.”); Restatement § 552 (a party who has made a negligent
misrepresentation is liable for the pecuniary loss caused to someone who justifiably relied on the
representation); see also Alberts v. Schultz, 1999-NMSC-015,126 N.M. 807, 975 P.2d 1279 (a
plaintiff has no viable tort claim without proof that defendant’s actions caused injury). Plaintiff
claims that she suffered the following damages:
a. Loss of permanent disability income benefits;
b. Loss of disability benefits from the second certificate;
c. Loss of medical benefits;
d. Emotional distress damages, and other compensatory damages;
e. Compensatory damages for losing the opportunity to aggressively treat her
injuries;
f. Bad faith damages for violation of statutory and common law;
g. Unfair practices act damages including treble damages;
h. Punitive damages as a result of the gross negligent, wanton, reckless and
willful conduct of Ace and [Gallagher Bassett];
i. Pre-trial and post-trial interest as allowed by law; and
j. Attorney fees as allowed under §§ 39-2-1, 57-12-10 and 59A-16-30
N.M.S.A. 1978.
Amended Complaint 209. None of these damages are attributable to Mi'. Richey’s alleged
conduct. In regard to her claim for the benefits available under her certificates. Plaintiff fails to
explain how Mr. Richey’s statements caused her to lose any of these benefits. Indeed, Plaintiff
does not, and could not, allege that Mr, Richey was in a position to decide the scope of her
benefits under the certificates issued by Ace. To the contrary, she acknowledges that the
decisions regarding her coverage were made by Ace and/or Gallagher Bassett. See, e.g..
Amended Complaint'll 61-62. As to her claim for emotional distress damages, they are not
recoverable under a claim for negligent misrepresentation. See Fontz, 1988-NMSC-087, 8
(adopting Restatement of Torts (Second) § 552B (1977), which provides that “the damages
recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for
the pecuniary loss to him of which the misrepresentation is a legal cause ... .”) (emphasis
added).4 * 7 Because Plaintiff has not identified any damages that she incurred as a result of Mr.
Richey’s alleged statements, Plaintiff has no viable tort claim against Mr. Richey.
4 As to the other listed items of damages, items f and g are damages that could only be recovered based on the
claims asserted against Ace and Gallagher Bassett. See Amended Complaint ]f]j 111 -42 and 143-46. Plaintiff
acknowledges that she is seeking item h (punitive damages) only against Ace and Gallagher Bassett. And finally,
item i would only apply if Plaintiff were entitled to recover compensatory damages from Mr. Richey, which as
explained above she is not.
17. Because Plaintiff has no viable claim against Mr. Richey, Mr. Richey has been
fraudulently joined, and his citizenship should not be considered in determining whether the
Court has jurisdiction over this matter.
18. GENEX’s removal of this action is not to be construed as a waiver of any
defenses that it has to the Complaint or that any other party may have in this action.
WHEREFORE, Defendant GENEX Services, L.L.C. respectfully notifies this Court that
pursuant to 28 U.S.C. §§ 1331, 1441 and 1446, he has removed the above action from the First
Judicial District Court, Santa Fe, New Mexico to this Court.

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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