The district court refused to remand plaintiff's claim for business losses due to COVID-19 shut down orders. Mark's Engine Co. No. 28 Restaurant, LLC v. Traveler's Indem. Co. of Conn., 2020 US. District. LEXIS 132841 (C.D. Calif. July 27, 2020).
Plaintiff restaurant sued Traveler's in state court. Los Angele Mayor Eric Garcetti was also named as a defendant for his part in issuing the shut down orders. An Executive Order issued on March 15, 2020 directed all non-essential businesses to close. Plaintiff argued that this triggered its coverage because plaintiff was forced to close by order of Civil Authority. Further, the denial of coverage would not have occurred absent the mayor's order, the propriety of which was an significant issue that allegedly had to be resolved.
Travelers removed the state proceeding to federal court. Travelers argued removal was proper because the only non-diverse defendant, the mayor, was fraudulently joined. Plaintiff moved to remand, contending the mayor was not fraudulently joined.
The court found that Travelers met its burden to show that the mayor was fraudulently joined. The cased turned on a contract between plaintiff and Travelers, and the mayor was not a party to the contract. Because the mayor, the only non-diverse defendant, was fraudulently joined, complete diversity of citizenship among the parties was present. The motion for remand was denied.
