Opinion
4:20-CV-3148
2022-02-22
Vaneza RAMOS, Plaintiff, v. FARMERS INSURANCE (NWL) and Michael Powers, Defendants.
Thomas O. Campbell, Thomas Campbell Law Office, Omaha, NE, for Plaintiff. A. Victor Rawl, Jr., Gordon, Rees Law Firm, Charleston, SC, Asim Desai, Pro Hac Vice, Margaret Drugan, Pro Hac Vice, Gordon, Reese Law Firm, Los Angeles, CA, Mandy M. Gruhlkey, Gruhlkey Law Firm, Papillion, NE, for Defendant Farmers Insurance. Jennifer D. Tricker, Nicholas F. Miller, Baird, Holm Law Firm, Omaha, NE, for Defendant Michael Powers.
Thomas O. Campbell, Thomas Campbell Law Office, Omaha, NE, for Plaintiff.
A. Victor Rawl, Jr., Gordon, Rees Law Firm, Charleston, SC, Asim Desai, Pro Hac Vice, Margaret Drugan, Pro Hac Vice, Gordon, Reese Law Firm, Los Angeles, CA, Mandy M. Gruhlkey, Gruhlkey Law Firm, Papillion, NE, for Defendant Farmers Insurance.
Jennifer D. Tricker, Nicholas F. Miller, Baird, Holm Law Firm, Omaha, NE, for Defendant Michael Powers.
ORDER
John M. Gerrard, United States District Judge
This matter is before the Court on the Magistrate Judge's Findings and Recommendation (filing 45) recommending that defendant Michael Powers’ motion to dismiss (filing 39) be granted. There has been no objection to the findings and recommendation.
128 U.S.C. § 636(b)(1) provides for de novo review only when a party objected to the magistrate's findings or recommendations. See Peretz v. United States, 501 U.S. 923, 939, 111 S.Ct. 2661, 115 L.Ed.2d 808 (1991). The failure to file an objection eliminates not only the need for de novo review, but any review by the Court. Thomas v. Arn, 474 U.S. 140, 149-51, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985) ; United States v. Wise, 588 F.3d 531, 537 n.5 (8th Cir. 2009), see Daley v. Marriott Int'l, Inc., 415 F.3d 889, 893 (8th Cir. 2005). Accordingly, the Court will adopt the findings and recommendation.
IT IS ORDERED:
1. The Magistrate Judge's findings and recommendation (filing 45) are adopted.
2. Defendant Michael Powers’ motion to dismiss (filing 39) is granted.
3. Michael Powers is terminated as a party.
4. Filing 29 and Filing 30 are stricken.
5. Filing 1-1 is the plaintiff's operative pleading in this case.
FINDINGS AND RECOMMENDATION
Cheryl R. Zwart, United States Magistrate Judge
This matter comes before the court on Defendant Michael Powers’ Motion to Dismiss (Filing No. 39). Plaintiff's amended complaint, filed in December 2021 added Powers, a nondiverse party. Powers seeks dismissal of the claims against him under Fed. R. Civ. P. 12(b)(1) and 28 U.S.C. § 1447(e) for lack of subject matter jurisdiction. For the reasons set forth below, Powers’ motion to dismiss should be granted and the amended complaint should be stricken.
BACKGROUND
This case was removed to this forum from the District Court of Douglas County, Nebraska on December 3, 2020. (Filing No. 1). Plaintiff Vaneza Ramos, a citizen of Omaha, Nebraska, alleges a breach of contract claim against Farmer's Insurance for nonpayment of a death benefit allegedly owed to her under her husband's life insurance policy.
Prior to removal, Michael Powers ("Powers") was served with a state court summons ; however Powers was not listed as a defendant in the caption of the operative pleading or otherwise referenced in the complaint. When this case was still pending in state court, Powers filed a motion to dismiss (or in the alternative, a motion to make a more definite statement). The case was removed before Plaintiff responded to Powers’ motion. The undersigned determined that based on the face of the complaint, Powers was not a party to this action. (See Filing No. 5).
He disputes that he was properly served when the action was pending in state court. (Filing No. 1-1 at CM/ECF p. 32 ¶ 4).
A final progression order was entered on February 8, 2021, setting the deadline to file motions to amend the pleadings for April 9, 2021. The progression order was amended on November 9, 2021, but it did not extend the motion to amend deadline, which had expired. (Filing No. 26). On December 14, 2021, Plaintiff filed an unopposed motion for leave to file an Amended Complaint pursuant to Fed. R. Civ. P. 15(a)(2), and the proposed amended complaint added Michael Powers as a defendant. Plaintiff alleged that through depositions conducted on November 11, 2021, and documents accessed by Plaintiff's counsel on September 29, 2021, "it appears Michael Powers was personally and significantly involved in completing the insurance application which is the subject of this action." (Filing No. 28) Plaintiff's motion to amend was granted and the amended complaint was filed on December 15, 2021. (Filing Nos. 29, 30).
On January 5, 2022, counsel for Defendant Powers filed a waiver of service and entered an appearance on Powers’ behalf. Powers also filed a motion to dismiss the claims against him under Fed. R. Civ. P. 12(b)(1) and 28 U.S.C. § 1447(e) for lack of subject matter jurisdiction.
ANALYSIS
Diversity jurisdiction under 28 U.S.C. § 1332 requires an amount in controversy greater than $75,000 and complete diversity of citizenship among the litigants. 28 U.S.C. § 1332(a). See In re Prempro Prod. Liab. Litig., 591 F.3d 613, 619–20 (8th Cir. 2010). "Complete diversity of citizenship exists where no defendant holds citizenship in the same state where any plaintiff holds citizenship." Id. citing OnePoint Solutions, LLC v. Borchert, 486 F.3d 342, 346 (8th Cir. 2007)
Plaintiff and Powers agree that the addition of Powers as a Defendant in the amended complaint destroys subject matter jurisdiction as there is no longer complete diversity of the parties. (See Filing No. 40, Filing No. 42.) However, the parties disagree as to the appropriate next step. Powers argues the court should deny joinder under 28 U.S.C. § 1447(e) and dismiss Powers and the claims against him under Rule 12(b)(1). Plaintiff argues this court has the option to either deny the joinder of Powers or allow the joinder and remand this matter to state court.
I. Authority to Reconsider Joinder
The Eighth Circuit has held that a trial court has "discretionary authority to reconsider and reverse its previous joinder decision" where a plaintiff fails to inform the court that one or more of the new defendants will destroy diversity. Bailey v. Bayer CropScience L.P., 563 F.3d 302, 307 (8th Cir. 2009) citing Le Duc v. Bujake, 777 F.Supp. 10, 11–12 (E.D. Mo. 1991) (finding that when the addition of a non-diverse defendant was not brought to the attention of the court or recognized by the parties, the filing of the amended complaint should be considered a nullity and the court given the opportunity to reconsider whether justice requires that a plaintiff be permitted to join an additional defendant).
When requesting to join Powers, Ramos’ proposed amended complaint indicated that Powers and Ramos were both citizens of Nebraska and therefore nondiverse, but he did not draw the court's attention to the jurisdictional impact of adding Powers as a party. The undersigned granted Ramos’ motion to amend her complaint and permitted her to name Powers without realizing such joinder destroyed the court's diversity jurisdiction. Thus, the undersigned will now reconsider whether joinder is appropriate under the circumstances.
II. Joinder
Section 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."
Joinder would be required if the plaintiff satisfied Fed. R. Civ. P. 19 by showing that the new party is necessary and indispensable to a full resolution of the case. However, there is no argument that Powers is a necessary or indispensable party under Fed. R. Civ. P. 19(a) or (b). Plaintiff argues only that joinder is an option under Fed. R. Civ. P. 20(a)(2) because the amended complaint asserts claims "with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and [a] question of law or fact common to all defendants will arise in [this] action." (Filing No. 42 at CM/ECF p. 2).
Under Rule 21, "the court may at any time, on just terms, add or drop a party." The Supreme Court has explained, "Rule 21 invests district courts with authority to allow a dispensable nondiverse party to be dropped at any time, even after judgment has been rendered." Bailey v. Bayer CropScience L.P., 563 F.3d 302, 308 (8th Cir. 2009), citing Newman–Green, Inc. v. Alfonzo–Larrain, 490 U.S. 826, 832, 109 S.Ct. 2218, 104 L.Ed.2d 893, (1989).
The district court, when faced with an amended pleading naming a new nondiverse defendant in a removed case, should scrutinize that amendment more closely than an ordinary amendment. Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend "should be freely given when justice so requires," and Rule 20 permits joinder of proper parties. In this situation, justice requires that the district court consider a number of factors to balance the defendant's interests in maintaining the federal forum with the competing interests of not having parallel lawsuits.
Bailey, 563 F.3d at 302, citing Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987) ) (creating a balancing test which has been adopted by courts in various jurisdictions). The Court is required to consider: 1) the extent to which the joinder of the nondiverse party is sought to defeat federal jurisdiction; 2) whether the plaintiff has been dilatory in asking for amendment; and, 3) whether the plaintiff will be significantly injured if amendment is not allowed." Le Duc, 777 F.Supp. at 12 (citing Hensgens, 833 F.2d at 1182 ). These factors must be weighed against the defendant's strong interest in maintaining a federal forum. Hensgens, 833 F.2d at 1182.
While Ramos did move to add a nondiverse party without notifying the court that the additional party would destroy diversity, there is no direct evidence that plaintiff attempted to add Powers in an attempt to defeat diversity. But there is evidence that Plaintiff was dilatory in seeking this amendment. Ramos knew all of the involved parties before filing the action in state court. Ramos originally filed the action against Defendant Farmers Insurance, yet attempted to serve Powers, who was not a named party. After this case was removed, on January 8, 2021, the undersigned clarified that Powers was not yet named as a party to the action. Rather than move to add him at that time. Ramos waited over eleven months (until December 14, 2021)—to name Powers as a defendant, and his motion was filed 8 months after the expiration of the deadline for filing motions to amend.
Plaintiff has not asserted or provided any evidence that the court cannot afford complete relief between Plaintiff and Farmers Insurance in the absence of Powers, and Plaintiff provided no argument in support of remand versus dismissal. There is no indication or argument that Plaintiff would be significantly injured by denial of Powers’ joinder and dismissal of the claims against him in federal court. Ramos would not be foreclosed from filing and litigating her negligence claims against Powers in state court.
Accordingly,
IT IS HEREBY RECOMMENDED to the Honorable John M. Gerrard, United States District Judge, pursuant to 28 U.S.C. § 636(b), that the court's order granting leave to add Powers as a defendant, (Filing No. 29, text order), be stricken, making Filing No. 1-1 at CM/ECF pp. 4-7 the operative pleading and dismissing Michael Powers as a named defendant in this case.
The parties are notified that failing to file an objection to this recommendation as provided in the local rules of this court may be held to be a waiver of any right to appeal the court's adoption of the recommendation.