The opinion of the court was delivered by: Michael A. Telesca United States District Judge
Plaintiffs Louis E. Thyroff ("Thyroff" or "plaintiff") and Valerie Thyroff brought this action against the above-named defendants in New York State Supreme Court alleging that defendant Nationwide Mutual Insurance Company ("Nationwide") engaged in malicious prosecution against Thyroff by initiating a federal counter-claim action against him. Plaintiffs also alleged that defendants Sharon Eastman ("Eastman"), Randy Ferraro ("Ferraro"), and Duane Weldon ("Weldon"), all former co-employees of the plaintiff, engaged in a conspiracy with Nationwide to engage in malicious prosecution.
On November 15, 2005, defendants removed this action to this court on grounds that individual defendants Eastman, Ferraro, and Weldon were fraudulently joined as defendants in order to avoid diversity jurisdiction. The individual defendants contended that the plaintiffs could not, as a matter of law, state any claim against them, and therefore they were joined as defendants solely for the purpose of defeating diversity jurisdiction.
On December 5, 2005, plaintiffs simultaneously filed an Amended Complaint and a motion for remand of the case to state court. On December 16, 2005, defendants filed a motion to dismiss the Amended Complaint on grounds that plaintiffs had failed to state a cause of action against any of the defendants.
For the reasons set forth below, I grant the plaintiffs' motion for remand, and deny as moot defendants' motion for summary judgment.
Plaintiff Louis Thyroff is a former insurance agent who sold various Nationwide Insurance policies to his customers. On September 19, 2000, and without notice, Nationwide terminated its relationship with Thyroff. In doing so, Nationwide took control of computer equipment leased to Thyroff by Nationwide--which equipment included several of Thyroff's personal data files and software programs.
On October 2, 2000, Thyroff filed a federal action in this court (the "original action") claiming, among other things, that Nationwide breached a contract with him pursuant to which he was allowed to be a Nationwide Insurance Agent. Thyroff also alleged a state-law tort claim against Nationwide for the defendant's alleged conversion of his electronic data, and several other tort claims. By Decision and Order dated October 26, 2004, this court dismissed Thyroff's breach of contract claim, and that Order was affirmed by the Second Circuit Court of Appeals on August 21, 2006. With respect to Thyroff's conversion claim, the Second Circuit held that the question of whether or not a conversion claim could be maintained based on the alleged conversion of electronic property was an undecided issue of New York State law, and therefore the court certified that question to the New York State Court of Appeals. The Second Circuit has retained jurisdiction over the matter pending a response form the New York State Court of Appeals.
In response to Thyroff's original action, Nationwide filed a counterclaim against Thyroff, alleging that Thyroff interfered with its business by soliciting Nationwide customers to cancel their insurance policies with Nationwide and instead purchase policies from Thyroff offered by competing insurance carriers. Nationwide also alleged that Thyroff disclosed confidential business information to third parties. Nationwide brought counterclaims for breach of contract, breach of fiduciary duty, and interference with business relations. All of Nationwide's claims were subsequently dismissed by the court.
Following the dismissal of Nationwide's claims against him, Thyroff filed the instant case in State Court contending that claims raised against him by Nationwide in its federal counterclaim action were wholly without merit, and constituted a malicious civil prosecution against him. As stated above, the defendants then removed the instant action from New York State Supreme Court to this court on grounds that the individually named defendants had been fraudulently named as defendants solely for the purpose of defeating federal diversity jurisdiction.
Where a defendant alleges that a plaintiff has fraudulently joined defendants for the purpose of defeating diversity jurisdiction, the defendant, absent clear fraud, "must demonstrate, by clear and convincing evidence . . . that there is no possibility, based on the pleadings, that a plaintiff can state a cause of action against the non-diverse defendant in state court." Pampillona v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2nd Cir. 1998). In determining whether or not a plaintiff can state a cause of action against the non-diverse party, "courts are not to weigh the merits of a plaintiff's claim beyond determining whether it is an arguable [claim] under state law." Deming v. Nationwide Mutual Ins. Co., 2004 WL 332741 (D. Conn. 2004).
In the instant case, the plaintiffs claim that the non-diverse defendants participated in a conspiracy with Nationwide to commit malicious prosecution. Without passing on the merits of the plaintiffs' claims, I find that such a claim may state a cause of action against the individual defendants, and therefore, the ...