United States District Court, D. New Mexico
M. Dominguez, Dominguez Law Firm, LLC, Albuquerque, New
Mexico, for Plaintiff.
R. Guebert and Elizabeth M. Piazza, Guebert Bruckner P.C.,
Albuquerque, New Mexico, for Defendant State Farm Mutual
Automobile Insurance Co.
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S
SECOND MOTION TO REMAND
MATTER comes before the court on Plaintiff Erin Foy's
Second Motion to Remand to the Second Judicial District Court
of New Mexico filed April 4, 2018 (ECF No. 37). Upon
consideration thereof, the Motion is not well taken and
should be denied, Defendant Richard Moore should be dropped
as a party, and the claims against Mr. Moore should be
dismissed without prejudice.
filed this action against her employer and against Defendant
State Farm Mutual Automobile Insurance Co., her
employer's insurer, alleging that they failed to provide
her with uninsured/underinsured motorist coverage for an
automobile accident that occurred during the scope of her
employment. Compl. 1-3, 6, ECF No. 1-2. Ms. Foy resides in
New Mexico, her employer is incorporated and has its
principal place of business in New Mexico, and State Farm is
incorporated and has its principal place of business in
Illinois. Id. at 1; Notice of Removal 2, ECF No. 1.
Ms. Foy initially filed in New Mexico state court, see
Foy v. Union Dev. Corp., No. D-202-CV-201706083 (N.M.
Dist. Ct. filed Aug. 22, 2017), then State Farm removed to
this court as allowed by 28 U.S.C. §§ 1332, 1441.
Notice of Removal 1.
filed a motion to remand the action to state court,
contending that the court lacked diversity jurisdiction
because she and her employer are both New Mexico citizens.
Pl.'s Mot. to Remand 1, ECF No. 7. The court denied her
motion, finding that Ms. Foy's employer had been
fraudulently joined to defeat diversity and dismissing the
claims against her employer without prejudice. Mem. Op. &
Order Den. Pl.'s Mot. to Remand 2-4, ECF No. 19.
Subsequently, Ms. Foy sought leave to amend her complaint to
add Mr. Moore, a New Mexico resident, as a defendant.
Pl.'s Mot. to Amend Compl. 1-2, ECF No. 28; Ex. 1, at 2,
ECF No. 28-1. State Farm opposed the amendment on the grounds
that it violated the magistrate judge's discovery order
and would prejudice State Farm by creating unnecessary work.
Resp. in Opp'n to Pl.'s Mot. to Amend Compl. 2-4, ECF
No. 30. Neither party raised the jurisdictional consequences
of adding Mr. Moore as a defendant. Recognizing that leave to
amend should be freely given, the court issued an Order
Granting Leave to Amend filed March 27, 2018 (ECF No. 34).
after amending her complaint, Ms. Foy filed another motion to
remand the action to state court, arguing that the court
lacks diversity jurisdiction because she and Mr. Moore are
both New Mexico citizens. Pl.'s Second Mot. to Remand 1.
She notes that 28 U.S.C. § 1447(e) provides, “If
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, ” and she
contends that, having granted leave to amend her complaint to
add Mr. Moore as a defendant, the court must now remand the
action to state court.
circuits have held that “when a district court is
unaware that joinder will destroy diversity, it may
reconsider its prior decision permitting leave to amend a
complaint.” Schur v. L.A. Weight Loss Ctrs.,
Inc., 577 F.3d 752, 761 (7th Cir. 2009); accord
Bailey v. Bayer CropScience L.P., 563 F.3d 302, 307 (8th
Cir. 2009). It is unclear whether the Tenth Circuit would
similarly allow reconsideration where, as here, neither party
raised the jurisdictional issue prior to amendment. But it is
unnecessary to decide this issue because there is a ready
Rule of Civil Procedure 21 provides, “On motion or on
its own, the court may at any time, on just terms, add or
drop a party.” Indeed, “it is well settled that
Rule 21 invests district courts with authority to allow a
dispensable nondiverse party to be dropped at any
time.” Newman-Green, Inc. v. Alfonzo-Larrain,
490 U.S. 826, 832 (1989). Accordingly, district courts have
discretion to dismiss claims against dispensable nondiverse
defendants rather than remand the action to state court.
Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484,
1489 (10th Cir. 1991). The question, then, is whether Mr.
Moore is dispensable, “for if [his] interests are
severable and a decree without prejudice to [his] rights may
be made, the jurisdiction of the court should be retained and
the suit dismissed as to [him].” Grupo Dataflux v.
Atlas Glob. Grp., L.P., 541 U.S. 567, 572 (2004)
(quoting Horn v. Lockhart, 84 U.S. 570, 579 (1873)).
19(a) provides that a person is a required party if,
“in that person's absence, the court cannot accord
complete relief among existing parties” or if
“that person claims an interest relating to the subject
of the action” and disposing of the action without him
or her would “impair or impede the person's ability
to protect the interest” or would “leave an
existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent
obligations.” In her amended complaint, Ms. Foy alleges
that she purchased the uninsured/underinsured motorist policy
from Mr. Moore and that he “failed to reasonably inform
[her] in regard to the coverage options, premiums, and
generally the underinsured motorist coverage at the point of
sale.” First Am. Compl. 3, ECF No. 36. Ms. Foy also
alleges that State Farm and Mr. Moore “willfully,
recklessly, and without regard for the rights of [Ms. Foy]
breached the duty of good faith and fair dealing owed to
her” by committing various acts, id. at 10,
and that this conduct “constitutes both unfair
practices and unconscionable practices, ” id.
at 11. Additionally, she alleges that State Farm and Mr.
Moore “knowingly or without exercising due diligence
failed to deliver the quality of services for which [they]
Ms. Foy alleges that State Farm and Mr. Moore are joint
tortfeasors in her causes of action for unfair insurance
practices and unfair trade practices. And joint tortfeasors
are permissive, rather than necessary, parties. Temple v.
Synthes Corp., 498 U.S. 5, 7 (1990); see
Fed.R.Civ.P. 19(a) advisory committee's note to 1966
amendment. As a result, complete relief can be recovered from
State Farm in Mr. Moore's absence, and Mr. Moore is not a
determined that Mr. Moore is a dispensable party, the court
must now decide whether to exercise its discretion to dismiss
the claims against him rather than remand the action to state
court. Other circuits have held that whether post-removal
joinder of a nondiverse party is appropriate depends on
“(1) the plaintiff's motive for seeking joinder,
particularly whether the purpose is to defeat federal
jurisdiction; (2) the timeliness of the request to amend; (3)
whether the plaintiff will be significantly injured if
joinder is not allowed; and (4) any other relevant equitable
considerations.” Schur, 577 F.3d at 759.
Ms. Foy's primary motive for joining Mr. Moore appears to
be to defeat federal jurisdiction. Ms. Foy sought leave to
amend her complaint approximately two months after the court
denied her first motion to remand. In her motion to amend her
complaint, Ms. Foy explained that “[i]t has since been
discovered that Richard Moore is the State Farm Insurance
Agent Contractor that sold Plaintiff and Build NM the
underinsured motorist policy alleged to be defective in this
matter.” Pl.'s Mot. to Amend Compl. 1-2. But there
is no indication that this was a recent discovery. Ms. Foy
had listed Mr. Moore as a witness in the parties' Joint
Status Report and Provisional Discovery Plan filed February
1, 2018 (ECF No. 25, at 6), and she concedes that
“[l]ittle to no discovery has taken place, ”
Pl.'s Reply in Supp. of Mot. to Amend Compl. 3, ECF No.
32. As Ms. Foy allegedly purchased the policy from Mr. Moore
in 2012, see First Am. Compl. 2, there is no reason
why he was not included in the initial complaint, and his
addition only after the court denied Ms. Foy's first
motion to remand strongly suggests that she added him for the
sole purpose of destroying diversity.
Foy's motion to amend her complaint was timely (it came
before the March 1, 2018, deadline to amend pleadings or join
additional parties, see Joint Status Report &
Provisional Disc. Plan 2), which weighs in her favor. But she
would not be significantly injured if joinder is not allowed,
because Ms. Foy could pursue whatever claims she has against
Mr. Moore in state court instead. As for the relevant
equitable considerations, the court must balance two
competing interests: “On one hand, there is the danger
of parallel federal/state proceedings with the inherent
dangers of inconsistent results and the waste of judicial
resources. On the other side, the diverse defendant has an
interest in retaining the federal forum.” Hensgens
v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987).
On balance, the court is persuaded that State Farm's
interest in retaining the federal forum outweighs the
considerations favoring remand.
Farm contends that Mr. Moore's addition as a party does
not divest the court of jurisdiction, citing the
“time-of-filing” rule. Resp. in Opp'n to
Pl.'s Second Mot. to Remand 2, ECF No. 40. But that rule
applies when a litigant changes citizenship (say, by moving
to another state) during the pendency of a lawsuit. See
Iowa Tribe of Kan. & Neb. v. Salazar, 607 F.3d 1225,
1233 (10th Cir. 2010). It does not apply here, where there
has been “a change in the parties to the action”
rather than “a change in the citizenship of a
continuing party.” Grupo Dataflux, 541 U.S. at
575. Because ...