Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Haynes v. Peters

United States District Court, D. New Mexico

April 15, 2019

LOREN HAYNES, and DANI HAYNES, Plaintiffs,
v.
MARK PETERS, and HSBC MORTGAGE SERVICES, INC., Defendants.

          Autumn Bergh Samuel C. Wolf Jones Snead Wertheim & Clifford, P.A. Santa Fe, New Mexico Attorneys for the Plaintiffs

          Melanie B. Stambaugh Rodey Dickason Sloan Akin & Robb, P.A. Albuquerque, New Mexico Attorneys for the Defendants Mark Peters and MD Peters Appraisals, Inc.

          Elizabeth M. Drantell Rose L Brand & Associates, P.C. Albuquerque, New Mexico Attorneys for the Defendant HSBC Mortgage Services, Inc.

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on: (i) the Plaintiffs' Motion to Remand, filed November 9, 2018 (Doc. 10)(“MTR”); and (ii) the Defendants MD Peters Appraisals, Inc. (“Peters Appraisals”) and Mark Peters' Motion to Dismiss First Amended Complaint for Damages, filed November 21, 2018 (Doc. 16)(“MTD”). The Court held a hearing on January 10, 2019. See Clerk's Minutes at 1, filed January 10, 2019 (Doc. 26). The primary issue is whether the Court should remand to the County of Santa Fe, First Judicial District Court, State of New Mexico Plaintiffs Loren Haynes and Dani Haynes' suit, when the Haynes -- New Mexico citizens -- filed their First Amended Complaint for Damages, filed October 31, 2018 (Doc. 6)(“Amended Complaint”), which added, as a Defendant, Defendant MD Peters Appraisals, Inc. (“Peters Appraisals”)[1] -- also a New Mexico citizen -- twenty-one days after Defendant Mark Peters filed the Notice of Removal, filed October 10, 2018 (Doc. 1), in which he alleges the Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332, and before Peters filed the Defendant Mark Peters' Answer to Complaint for Damages, filed October 31, 2018 (Doc. 7)(“Answer”). The Court concludes that, because adding Peters Appraisals as a Defendant destroys the complete diversity of citizenship between the parties, the Court will remand the case to New Mexico state court. Accordingly, the Court will grant the MTR and deny the MTD.

         FACTUAL BACKGROUND

         The Court takes its facts from the Complaint for Damages, filed in state court August 24, 2018, filed in federal court October 10, 2018 (Doc. 1-1)(“Complaint”). The Court provides these facts for background. It does not adopt them as the truth, and it recognizes that these facts are largely the Haynes version of events.

         This matter arises from an allegedly inaccurate appraisal that Peters performed for the Haynes on their property at 55 Camino Don Patron, Santa Fe, New Mexico, 87506 (“Santa Fe Property”). See Complaint ¶ 8, at 2; id. ¶¶ 10, 14-23, at 3. The Haynes planned to use the Santa Fe Property as collateral for a loan from Defendant HSBC Mortgage Services, Inc. (“HSBC Mortgage”), and Peters' appraisal caused HSBC Mortgage to deny the Haynes' desired loan. See Complaint ¶¶ 7-8, at 2; id. ¶ 25, at 4. The Haynes intended to use the loan to fund renovations on a property in the State of California. See Complaint ¶ 7, at 2.

         PROCEDURAL BACKGROUND

         In the Complaint, the Haynes allege that: (i) Peters acted negligently when he provided the allegedly inaccurate appraisal; (ii) Peters and HSBC Mortgage intentionally or negligently interfered with contractual relations when they prevented the Haynes from fulfilling their obligations for renovations on their California property; (iii) Peters' appraisal comprised a fraudulent or negligent misrepresentation to the Haynes and HSBC Mortgage; and (iv) Peters and HSBC Mortgage acted negligently when they refused to correct Peters' appraisal. See Complaint ¶¶ 31-55, at 5-7. Peters removed the case to the United States District Court for the District of New Mexico on October 10, 2018. See Notice of Removal at 5. Peters removed the case under diversity jurisdiction, noting that: (i) the Haynes “are citizens of Santa Fe County, New Mexico, ” Notice of Removal ¶ 3, at 2 (citing Complaint ¶ 1, at 1); (ii) HSBC “is a foreign for-profit corporation, ” without “consumer financial services in the United States, ” Removal ¶ 5, at 2 (citing Complaint ¶ 3, at 1; HSBC Notice, filed October 10, 2018 (Doc. 1-1)); and (iii) Peters is a citizen of California, having “resided in the State of California since October 2017, and is domiciled there, ” Notice of Removal ¶ 6, at 2 (citing generally Declaration of Mark Peters (executed October 10, 2018), filed October 10, 2018 (Doc. 1-1)). The amount in controversy exceeds $75, 000.00. See Notice of Removal ¶¶ 8-10, at 3-4. On October 31, 2018, the Haynes filed the Amended Complaint, adding Peters Appraisals as a Defendant, and inserting its name into the Complaint's allegations and claims against Peters. See Amended Complaint at 1; id. ¶¶ 33-57, at 5-7. No. scheduling order has been filed in this case.

         1. The MTR.

         In the MTR, the Haynes request that the Court remand the case to New Mexico state court, because they added Peters Appraisals to the Amended Complaint. See MTR at 2. The Haynes explain that Peters Appraisals “is an active domestic for-profit New Mexico corporation with its registered agent at 29 Sobradora Drive, Santa Fe, New Mexico, 87508, ” and that, while performing appraisals, Peters used Peters Appraisals. MTR at 2, 5. The Haynes contend that, because they and Peters Appraisals are Santa Fe County residents, complete diversity no longer exists between the plaintiffs and the defendants. See MTR at 2. According to the Haynes, the Court should, therefore, remand, because 28 U.S.C. § 1332(a) requires complete diversity. See MTR at 2-3.

         The Haynes note that they filed their Amended Complaint before twenty-one days after Peters filed an answer and that the amendment relates back to the Complaint. See MTR at 4 (citing Fed.R.Civ.P. 15(a), (c)). The Haynes explain that Peters “uses or used [Peters Appraisals] in connection with his appraisal work, ” and, so, when the Haynes served Peters the Complaint, Peters should have known that the Haynes should have sued Peters Appraisals. MTR at 4 (citing Fed.R.Civ.P. 15(c)). The Haynes add that, even if they did not timely file the Amended Complaint, the Court should permit the amendment. See MTR at 5 (citing 28 U.S.C. § 1447(e)).

         2. The MTR Response and MTD.

         Peters and Peters Appraisals (“the Peters Defendants”) respond in the Defendants Peters Appraisals and Mark Peters' Response to Plaintiffs' Motion to Remand, filed November 21, 2018 (Doc. 15)(“MTR Response”). The Peters Defendants contend that the Court should deny the MTR, because the Haynes seek to “divest . . . this Court of subject matter jurisdiction.” MTR Response at 1. The Peters Defendants ask that the Court analyze the Amended Complaint as if the Amended Complaint were a proposed amendment, and they cite Pacely v. Lockett, No. CIV 12:0152 MCA/SMV, 2013 WL 12136690, at *3 (D.N.M. March 30, 2013)(Armijo, J.), for the proposition that, when an amended complaint would destroy diversity, a plaintiff in a removal case can file such a complaint only with the court's leave. See MTR Response at 5.

         The Peters Defendants argue that, in deciding whether to permit the Haynes to join Peters Appraisals, the Court should apply “the discretionary Rule 20 [of the Federal Rules of Civil Procedure] analysis” that the Court employed in Hernandez v. Chevron United States of America, Inc., No. CIV 17-1083 JB/GBW, 2018 WL 4188458, at *30 (D.N.M. Aug. 30, 2018)(Browning, J.)(“Hernandez”): “(1) ‘whether the amendment will result in undue prejudice,' (2) ‘whether the request was unduly and inexplicably delayed,' and (3) ‘whether [the request] was offered in good faith.'” MTR Response at 4-5 (quoting Hernandez, 2018 WL 4188458, at *30). The Peters Defendants contend that, in Hernandez, the Court permitted joinder of a non-diverse defendant, because the plaintiff did not know that the party “was a viable defendant until shortly before it filed its motion to amend.” MTR Response at 6. The Peters Defendants differentiate their situation from the facts in Hernandez. See MTR Response at 6. The Peters Defendants indicate that, unlike in Hernandez, if the Court remanded this case, they would “los[e] their chosen federal forum, ” and, according to the Peters Defendants, they have already filed motions to dismiss “relying upon federal pleading standards.” MTR Response at 7. The Peters Defendants question the Haynes' motivation for adding Peters Appraisals, because: (i) the Haynes sent Peters Appraisals a demand letter “over three years ago”; (ii) the Haynes did not name Peters Appraisals in the Complaint; (iii) the Haynes did not add Peters Appraisals between filing the Complaint and receiving the Notice of Removal; and (iv) the Haynes added Peters Appraisals only after Peters removed the case. MTR Response at 7. The Peters Defendants conclude that the Haynes added Peters Appraisals only to defeat the Court's federal jurisdiction. See MTR Response at 7.

         In a footnote, the Peters Defendants ask that the Court consider the MTD interdependent with the MTR Response. See MTR Response at 6 n.1. In the MTD, the Peters Defendants ask that the Court dismiss the Amended Complaint and then consider permitting the Haynes to join Peters Appraisals. See MTD at 5. According to the Peters Defendants, if the Court then permits the joinder, the Court can remand the suit. See MTD at 5. The Peters Defendants argue that the Haynes should have asked for leave to amend the Complaint, because, in the Amended Complaint, they join another defendant, whose presence destroys the Court's diversity jurisdiction. See MTD at 1, 3 (citing Pfeiffer v. Hartford Fire Ins., 929 F.2d 1484, 1488 (10th Cir. 1991); Pacely v. Lockett, 2013 WL 12136690, at *3). The Peters Defendants argue that the requirement for leave from the court exists, because allowing amendment without leave would deprive “the Court of its statutory right to exercise discretion about whether joinder of the non-diverse defendant is proper in the first instance.” MTD at 4.

         3. The MTR Reply and the MTD Response.

         The Haynes reiterate their arguments from the MTR and additionally contend that diversity jurisdiction's purpose, which is “to protect out-of-state defendants from local prejudice in state courts, ” supports their MTR, because, at all times during the alleged events giving rise to this action, Peters was a New Mexico citizen and Peters Appraisals continues to be incorporated in New Mexico, see Plaintiffs' Reply to Defendants MD Peters Appraisals Inc. and Mark Peters' Response to Plaintiffs' Motion to Remand at 2, filed December 10, 2018 (Doc. 19)(“MTR Reply”)(internal quotation marks omitted)(quoting Winningham v. N. Am. Res. Corp., 809 F.Supp. 546, 551 (S.D. Ohio 1992)(Spiegel, J.). Accordingly, in the Haynes' view, remand would not prejudice Peters. See MTR Reply at 2.

         The Haynes disagree that tension exists between rule 15(a) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1447(e), because § 1447(e) “does not mandate that Plaintiffs seek leave of the Court to join a defendant just because the case has been removed when Plaintiffs are within the timeframe allowing amendment as a matter of course under Rule 15(a).” MTR Reply at 3. According to the Haynes, “[u]ltimately, Defendants' position comes down to a minor procedural question, easily resolved: the Amended Complaint should be permitted, either as a matter of right or because there is no good reason not to permit Plaintiffs to amend their complaint.” MTR Reply at 4. The Haynes argue that, in Pacely v. Lockett, even though the filing time for the plaintiff's amendments raised suspicions, the Honorable M. Christina Armijo, then-Chief United States District Judge for the United States District Court for the District of New Mexico, upheld the plaintiff's amended complaint, because the plaintiff might “‘suffer significant injury if his claim [against the joined defendant] is not allowed to proceed and there is a risk of parallel state and federal actions that will be avoided if the amended complaint is allowed, and the case is remanded back to state court.'” MTR Reply at 4 (alteration in MTR Reply)(quoting Pacely v. Lockett, 2013 WL 12136690, at *3). The Haynes contend that, similarly, here, they timely filed their Amended Complaint, and they have a valid claim against Peters Appraisals. See MTR Reply at 5. The Haynes contend that, if they need to seek the Court's leave to amend, the Court should grant that leave, because the “time frame” in which they filed the Amended Complaint -- within rule 15(a)'s allotted time -- “does not show undue delay, bad faith, dilatory motive, or undue prejudice to Defendants.” MTR Reply at 3.

         In the Plaintiffs' Response to Defendants Peters Appraisals, Inc. and Mark Peters' Motion to Dismiss First Amended Complaint for Damages, filed December 10, 2018 (Doc. 20)(“MTD Response”), the Haynes incorporate their MTR Reply. See MTD Response at 1. The Haynes repeat their arguments from the MTR Reply -- that they timely filed the Amended Complaint and that the Amended Complaint does not prejudice the Peters Defendants. See MTD Response at 2-3.

         4. MTD Reply.

         The Peters Defendants replied to the MTD Response. See Defendants MD Peters Appraisals, Inc. and Mark Peters' Reply in Support of Motion to Dismiss First Amended Complaint for Damages, filed December 19, 2018 (Doc. 22)(“MTD Reply”). The Peters Defendants emphasize that the “question at issue . . . is whether Plaintiffs may avail themselves of Rule 15(a) in light of that rule's conflict with 28 U.S.C. § 1447(e).” MTD Reply at 1. The Peters Defendants contend that the Haynes cite no authority for their contentions that they need not seek leave to join Peters Appraisal. See MTD Reply at 1. The Peters Defendants again ask that, as the Court did in Hernandez, the Court consider the factors from rule 20 of the Federal Rules of Civil Procedure. See MTD Reply at 2. The Peters Defendants note that the Haynes do not contend that they will suffer prejudice from litigating in federal court. See MTD Reply at 2. The Peters Defendants further stress that the Haynes do not explain the suspicious timeframe in which they filed the Amended Complaint. See MTD Reply at 3.

         5. The Hearing.

         At the hearing, the Haynes began by noting the parties' agreements that Peters Appraisals is a “proper party and proper defendant, ” Draft Transcript of Hearing at 3:11-12 (taken January 10, 2019)(Wolf)(“Tr.”), [2] and that the Haynes filed the Amended Complaint within rule 15(a)'s timeframe, see Tr. at 3:15-20 (Wolf). The Haynes summarize that the parties debate two issues: (i) whether the Haynes could, under rule 15(a), join Peters Appraisals as a Defendant, see Tr. at 4:6-7 (Wolf); and (ii) whether the Haynes “should be barred from adding that defendant, ” Tr. at 4:10-11 (Wolf). On the first issue, the Haynes dispute the Peters Defendants' description that, if the Court tolerates the Amended Complaint as an amended complaint, the Court loses jurisdiction to decide the second issue. See Tr. at 4:17-21 (Wolf). The Haynes argue that the Court can decide the MTR, “considering the same factors that would have been address[ed] had we [sought] leave to amend the complaint and join the defendant.” Tr. at 4:25-5:2 (Wolf). According to the Haynes, in making this determination, the Court should apply the rule 20(a) factors, as it did in Hernandez. See Tr. at 5:8:12 (Wolf). The Court asked the Haynes to recap Hernandez' facts, and the Haynes confirmed for the Court that, in that case, the plaintiff “sought leave to add a defendant.” Tr. at 5:16 (Court). See id. at 5:13-19 (Court, Wolf). According to the Haynes, in Hernandez, the Court analyzed whether to bar the amendment. See Tr. at 5:21-24 (Wolf). Although the Haynes conceded that “some courts have seen . . . a tension between rule 15(a) [and] 1447[(e)], ” Tr. at 6:2-3 (Wolf), the Haynes requested that, regardless the procedure for amendment, the Court “determine whether or not the addition . . . of MD Peters Appraisals” and remand are “proper, ” Tr. at 6:10-12 (Wolf). According to the Haynes, even when a party amends under rule 15(a), the Court “gets to make the decision as to whether or not that amendment and the joinder . . . is proper.” Tr. at 7:3-7 (Wolf).

         Turning to the second issue, the Court asked the Haynes about Peters' relationship to MD Peters Appraisals. See Tr. at 7:8-10 (Court). The Haynes identified Peters as “the principal of that corporate entity.” Tr. at 7:11-12 (Wolf). The Court then inquired why the Haynes joined MD Peters Appraisals, and the Haynes explained that they anticipated that: (i) Peters might cite Peters Appraisals to downplay his personal liability; (ii) HSBC Mortgage might contend that it contracted with Peters Appraisals and not with Peters; and (iii) an insurance policy might cover Peters Appraisals rather than Peters. See Tr. at 8:24-9:24 (Wolf). The Haynes confirmed for the Court that Peters Appraisals might be liable for Peters' -- it's agent's -- actions or that Peters Appraisals might face liability under other theories. See Tr. at 9:25-10:11 (Court, Wolf). The Haynes summarized the rule 20(a) factors that counsel permitting joinder: (i) the Haynes timely filed the Amended Complaint; (ii) joinder threatens no prejudice for the Peters Defendants, as the Haynes gave both Peters and Peters Appraisals notice of the suit, and neither party has commenced discovery; (iii) denying joinder would prejudice the Haynes, because Peters might avoid personal liability; and (iv) the Haynes do not act in bad faith, because they join a corporate entity against which they have valid claims. See Tr. at 10:23-13:12 (Wolf). The Haynes repeated their contention that, here, removal's purposes are not served, because Peters Appraisals is a New Mexico entity, and, at the time of the disputed events, Peters was also a New Mexico citizen. See Tr. at 14:10-19 (Wolf).

         After HSBC Mortgage took no position on the MTR, the Court turned to the Peters Defendants. See Tr. at 14:21-25 (Court, Dranttel). The Peters Defendants averred that, traditionally, in professional malpractice and similar suits, a plaintiff could not sue an entity -- like Peters Appraisals -- without suing the agent -- like Peters, but that a plaintiff could sue an agent without suing an entity. See Tr. at 15:6-16 (Stambaugh). The Peters Defendants, however, conceded that often plaintiffs sue both the entity and the agent, and that the Peters ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.