The opinion of the court was delivered by: Glasser, United States Senior District Judge
On July 28, 2009, John McGee ("McGee") commenced an action against State Farm Mutual Automobile Insurance Company ("State Farm") in the Supreme Court of the State of New York, Queens County, alleging that State Farm improperly denied payments to physicians who treated its insureds. On August 18, 2009, State Farm removed the action to this Court on the basis of diversity.*fn1 On August 31, 2009, McGee amended his complaint by adding additional defendants, all of whom are citizens of New York and whose joinder would destroy diversity.*fn2
He alleged that the additional defendants conspired with State Farm to unlawfully deny to physicians who treated its insureds payment for their services. McGee then moved this Court for an order that would remand the action to the state court, which is the motion pending before the Court. State Farm has since filed in this Court a motion to dismiss McGee's complaint pursuant to Federal Rules of Civil Procedure 8, 9, and 12, the determination of which has been deferred awaiting the Court's ruling on the motion to remand, which State Farm opposes.
McGee has asserted two independent grounds for denying this Court's jurisdiction. First, he contends that State Farm should be considered a New York citizen pursuant to the special treatment of insurers for diversity purposes provided by 28 U.S.C. § 1332. Second, he contends that, even if State Farm is a diverse defendant, because of the joinder of New York citizen defendants in his amended complaint, complete diversity does not exist, and this Court lacks jurisdiction. These arguments will be addressed in turn.
1. Direct Action Exception
McGee first argues that diversity jurisdiction does not exist, relying on 28 U.S.C. § 1332 which defines the citizenship of a corporation for purposes of diversity jurisdiction as follows:
[A] corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business, except that in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business.
He thus asserts that because his claims against State Farm are bottomed upon insurance policies held by insureds who are citizens of New York, State Farm should be regarded as a New York citizen for purposes of diversity. His assertion is without merit.
The Second Circuit has made it clear that a "direct action" under § 1332(c)(1) is one in which the "the insurer stands in the shoes of its legally responsible insured", in an action attempting to establish the insured's liability. Rosa v. Allstate Ins. Co., 981 F.2d 669, 675 (2d Cir. 1992). "[T]he proviso does not affect suits against the insurer based on its independent wrongs." Id. "Courts have uniformly defined the term 'direct action' as used in this section as those cases in which a party suffering injuries or damage for which another is legally responsible is entitled to bring suit against the other's liability insurer without joining the insured or first obtaining a judgment against him." Id. (quoting Beckham v. Safeco Ins. Co. of Am., 691 F.2d 898, 901--02 (9th Cir. 1982)).
In this case, McGee's claims against State Farm are based on State Farm's own alleged misconduct rather than upon its liability for the wrongdoing of its insureds. Thus, this is not a "direct action" as that term is used in 28 U.S.C. § 1332, and State Farm will not be deemed a citizen of New York for purposes of this lawsuit.
2. Joinder of Non-Diverse Parties
McGee's second ground for remand being predicated on the joinder of non-diverse defendants in the amended complaint, the threshold question is whether the Court can disallow the joinder and thus preserve diversity and its jurisdiction. 28 U.S.C § 1447(e), establishes the standard for joinder of non-diverse parties after removal, providing that "[i]f after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court." The decision whether to allow joinder in such a case is a matter of the Court's discretion. See Moncion v. Infra-Metals Corp., No. 01 Civ. 11389(RLE), 2002 WL ...