Opinion
Civil Action No. 04-177-DLB.
May 24, 2005
MEMORANDUM ORDER
This is an action for personal injuries and property damage arising out of a single car accident. According to their complaint, Plaintiffs' car careened out of control on Highway 1088, near a natural gas well operated by Defendant Kentucky West Virginia Gas Company. Plaintiffs allege that Defendants allowed mud, oil, and debris to accumulate on the highway, which created a dangerous condition that was a substantial factor in causing their accident.
This matter is presently before the Court upon Plaintiff Bonnie Smith's Motion for Leave to File an Amended Complaint to join her husband as a party defendant. (Doc. #61). In conjunction with the motion, Smith has also filed a Motion to Re-align the Parties and to Remand. (Doc. #62). Defendants filed responses (Docs. #67-69), to which Plaintiff replied (Doc. #70), and Defendants filed a surreply with leave of the Court. (Doc. #74). The motions being fully briefed, they are now ripe for adjudication.
For the reasons that follow, the Court DENIES Plaintiff's motion for leave to amend (Doc. #61), but will permit Plaintiff Bonnie Smith to assert a cross-claim against her husband and co-plaintiff, Arvel Smith. Plaintiff's motion to realign the parties and to remand (Doc. #62) is also DENIED.
I. FACTUAL AND PROCEDURAL BACKGROUND
On the morning of March 26, 2003, Plaintiffs were driving on Highway 1088 (Lotts Creek) in Knott County, Kentucky. Arvel Smith was driving his wife, Bonnie, to her place of employment in Hazard. The Smith's son, Ronnie, was also a passenger in the backseat of the vehicle. According to Plaintiffs' complaint, Arvel lost control of the vehicle (a 1994 Saturn) as a result of debris on the road, causing it to crash into a ditch and embankment. Shortly after the accident, emergency medical technician (EMT) Teresa Mullins arrived onscene and stopped to render aid. After she exited her vehicle, Mullins slipped and lost her balance in the same vicinity where Plaintiffs' car careened out of control. According to Arvel Smith, Mullins yelled to a bystander that there was a slippery substance on the road, which apparently caused the accident. Plaintiffs suffered personal injuries, as well as damage to their vehicle, for which they now seek compensation.Defendant Equitable Production is a subsidiary of Equitable Resources, a natural gas supplier that distributes to customers in Pennsylvania, West Virginia, and Kentucky. Equitable Production operates approximately 9,000 miles of pipeline in the Appalachian region. Defendant Kentucky West Virginia Gas is a division of Equitable Resources and owns a pipeline in the vicinity of the accident scene (No. W-6449). In early March 2003, approximately two weeks before Plaintiffs' accident, Kentucky West Virginia Gas replaced a 3,163-foot section of pipeline No. W-6449. As part of the replacement project, Defendant Arvilla Pipeline Construction Company ("Arvilla") was hired to construct a new road crossing under Highway 1088. This was done by boring under the surface of the highway. According to Kentucky West Virginia Gas' President and General Manager, Jefferson Burke, Plaintiffs' accident occurred approximately 275 feet away from the construction site. Plaintiffs allege that as a result of the construction, oil, mud, and other debris accumulated on the roadway, creating a dangerous condition that proximately caused their accident.
Following the deposition of Plaintiff Arvel Smith on December 15, 2004, his wife and co-plaintiff, Bonnie Smith, retained new counsel and moved to file an amended complaint adding a count that charged Arvel Smith with negligently operating the vehicle and thereby contributing to the accident. In support, Bonnie relies on Arvel's testimony that he traveled Highway 1088 regularly, and was aware of the presence of mud and straw on the stretch of roadway where Defendants were working. In conjunction with her motion to file an amended complaint, Bonnie Smith also moved to re-align the parties, specifically to name Arvel Smith as a party defendant. According to Bonnie's motion, re-alignment would destroy complete diversity (the Smiths, both residents of Kentucky, would be opposing parties), therefore, she also moved to remand the case to Knott Circuit Court based on lack of subject matter jurisdiction.
There was also testimony that on the morning of the accident it was raining, and Arvel failed to apply the brakes as he approached a curve in the road.
II. ANALYSIS
The question before the Court is whether an injured passenger who seeks to assert a claim against a non-diverse driver should be permitted to do so by way of a cross-claim under Federal Rule 13(g), or an amendment to the pleadings joining the driver as a party defendant. In support of her motions, Bonnie Smith argues that she was most seriously injured in the accident, and her claims constitute the "primary dispute," which governs alignment of the parties. In response, Defendants Kentucky West Virginia Gas and Equitable Production allege that the proper procedural mechanism for Smith to assert a claim against her husband is a Rule 13(g) cross-claim. In addition, Defendants allege that Bonnie Smith's primary purpose in seeking to amend her complaint is to defeat diversity jurisdiction and thereby require remand to Knott Circuit Court.
Federal Rule of Civil Procedure 13(g), which governs cross-claims against coparties, states:
A pleading may state as a cross-claim any claim by one party against a coparty arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to any property that is the subject matter of the original action. Such cross-claim may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant.
Fed.R.Civ.P. 13(g). Several courts have utilized Rule 13(g) as a means by which an injured passenger can assert a claim against a co-plaintiff host driver, especially where amending the complaint to join the driver as a party defendant would destroy complete diversity. For example, in Ryan v. Schneider Nat'l Carriers, Inc., 263 F.3d 816 (8th Cir. 2001), the plaintiffs were the driver and passengers of a recreational vehicle (RV) that rearended a Missouri Department of Transportation (MDOT) truck. The collision occurred when a tractor-trailer (semi) that was between the RV and MDOT truck veered out of the lane to avoid the slow-moving MDOT vehicle, and the RV ran into it. Id. at 818. The plaintiffs sued the owner of the semi and its driver for failing to warn of the impending MDOT vehicle. Id. Following removal, the plaintiffs amended their complaint to add a negligence claim against the MDOT truck driver as well. Id. The passenger-plaintiffs subsequently requested leave to file a second amended complaint to add their own driver as a defendant. Id. The owner of the semi opposed their motion, claiming that since the driver of the RV was still a named plaintiff, his co-plaintiffs' claims against him were more properly designated cross-claims. Id. The district court agreed and granted the passenger-plaintiffs limited leave to amend to add cross-claims against the host driver. Ryan, 263 F.3d at 818.
On appeal, the Eighth Circuit concluded that "[t]he district court correctly allowed the plaintiffs to amend their complaint to assert their claims against [their driver] as crossclaims against a co-plaintiff rather than as claims against a defendant." Id. at 819. The court then analyzed the propriety of amendment in light of the following factors: 1) whether the purpose of the amendment was to defeat federal jurisdiction, 2) whether the plaintiff was dilatory in seeking leave to amend, 3) whether the plaintiff will be prejudiced if amendment is refused, and 4) any other equitable factors. Id. The court found that the plaintiffs' primary reason for joining their driver as a party defendant was to destroy diversity jurisdiction. Id. More importantly, however, the court stated "allowing the plaintiffs to assert a cross-claim against [their driver] gave them the same protection they sought by asserting a claim against him as a defendant . . . and the addition of the cross-claim did not defeat diversity jurisdiction." Id. at 819-20.
A review of the record herein reveals that Plaintiff Bonnie Smith has diligently tried to have this matter remanded to state court. First, it was the alleged fraudulent joinder of Smith Oil Field Services, Inc., and now she has filed another motion for leave to amend. And despite her contention that she sought to amend immediately after her husband's deposition (i.e., when the conflict of interest became apparent), Smith's motion is untimely per the Court's scheduling order. (Doc. #4). Moreover, the case has been pending for over one year, and some discovery has already been completed.
Although there is no Sixth Circuit precedent directly on point, the Court concludes that the Eighth Circuit's opinion in Ryan provides adequate support for allowing Bonnie Smith to amend her complaint only to assert a cross-claim against her husband, which would not destroy diversity jurisdiction. While Bonnie Smith certainly has an interest in protecting herself in the event Arvel Smith is found liable for comparative fault, that interest will be adequately safeguarded by allowing her to file a cross-claim against her husband pursuant to Rule 13(g). Ryan, 263 F.3d at 819. Other cases have reached a similar result. See Butler v. Rigsby, No. 96-2453, 1997 WL 655928 at *1 (E.D. La. Oct. 20, 1997) (allowing plaintiffs to file cross-claim against nondiverse co-plaintiff in automobile accident); Harrison v. M.S. Carriers, Inc., No. 98-3177, 1999 WL 195539 at *2 (E.D. La. Apr. 7, 1999) (affirming magistrate judge's ruling denying plaintiff's amendment to pleadings that sought to add co-plaintiff in automobile accident as a defendant and finding that cross-claim was proper method of asserting claim); Williams v. Carmean, No. 99-1095, 1999 WL 717645 at *1 (E.D. La. Sept. 3, 1999). As the Butler court stated, "the addition of [a] cross-claim[s] does not defeat diversity jurisdiction. It is well established that supplemental jurisdiction extends to cross-claims properly asserted under Rule 13(g). . . ." Butler, supra at *1, citing Travelers Ins. Co. v. First Nat'l Bank, 675 F.2d 633, 638 (5th Cir. 1982). A nondiverse cross-claim is supplemental in nature if it arises out of the same "core of operative facts" as does the diverse claim, and bears a "logical relationship" to that claim. Travelers, 675 F.2d at 638, citing Owen Equipment Erec. Co. v. Kroger, 437 U.S. 365 (1978). Bonnie Smith's claim against her husband clearly meets this test.
Applying the Ryan factors to the facts herein, the Court concludes that allowing Bonnie Smith to proceed against Arvel Smith on a cross-claim affords her the protection she desires, while at the same time maintaining the Court's subject matter jurisdiction. Thus, she will suffer no injury. And because complete diversity still exists, the Court will retain jurisdiction over the case. Plaintiff Bonnie Smith's motion to remand must be denied.
To the extent Plaintiff Bonnie Smith states in her reply brief that some of the Plaintiffs may be willing to stipulate to damages below $75,000 (Doc. #70, fn. 4), such post-removal offers to stipulate to damages less than the jurisdictional threshold are not controlling. See Rogers v. Wal-Mart, 230 F.3d 868, 871 (6th Cir. 2000).
WHEREFORE, for the reasons stated herein, IT IS ORDERED as follows:
(1) Plaintiff's motion for leave to file an amended complaint to join Arvel Smith as a party defendant (Doc. # 61) be, and is hereby denied;
(2) Plaintiff's motion to realign the parties and remand (Doc. # 62) be, and is hereby denied;
(3) Plaintiff Bonnie Smith may file a cross-claim against Arvel Smith within 15 days of the entry of this Order.