Gayle v. Acceptance Insurance Agency of Tennessee
ORDER GRANTING Plf's 10 Motion to Amend Complaint as set out, & because the amendment destroys federal jurisdiction, the case is here by REMANDED to the Circuit Court of Dallas County, Alabama, as set out. Signed by Judge Callie V. S. Granade on 12/3/2014. (tot)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
AGENCY OF TENNESSEE,
) CIVIL ACTION NO. 14-466-CG-B
This matter is before the court on Plaintiff’s motion to amend the complaint
(Doc. 10), Defendant’s response in opposition (Doc. 12), and Plaintiff’s reply (Doc.
13). For the reasons explained below, the court finds that Plaintiff’s motion to
amend should be granted and that because the amendment will destroy the
complete diversity of the parties, the case should be remanded to the Circuit Court
of Dallas County, Alabama.
This case was originally filed on September 17, 2014, in the Circuit Court of
Dallas County, Alabama. (Doc. 1). Defendant removed the action to this court on
October 7, 2014, alleging that complete diversity of citizenship exists. (Doc. 1). This
case involves an automobile accident that occurred on February 7, 2014. The
complaint alleges that an individual named Crystal Sheppard was at fault in the
accident and that Sheppard was not covered by insurance at the time of the
accident. (Doc. 1, p. 8). The original complaint named only Plaintiff’s insurer,
Acceptance Insurance Agency of Tennessee as a defendant. Ms. Sheppard was not
named as a party. Plaintiff was allegedly insured by an automobile policy issued
by the Defendant that included uninsured motorist benefits. (Doc. 1, p. 8). The
complaint asserts that Defendant failed to properly investigate Plaintiff’s claim and
has breached their duty of good faith. The complaint asserts claims labeled as “bad
faith,” “negligence” and “wantonness.”1 (Doc. 1, pp. 10-11).
Plaintiff now moves to amend her complaint to add Ms. Sheppard as a
defendant. Plaintiff states that she did not name Sheppard as a party initially
because Defendant had acknowledged in correspondence that the loss occurred
outside the policy effective dates of Ms. Sheppard’s insurance. (Doc. 10, ¶ 6; Doc. 102). Defendant had reportedly agreed to the resolution of Plaintiff’s property damage
claim, but Plaintiff’s bodily injury claim remained unresolved. (Doc. 10, ¶ 4).
However, in its Answer to the complaint, Defendant contests all liability and denies
that Sheppard’s negligence, willfulness and/or wantonness caused or contributed to
cause Plaintiff’s alleged injuries or damages. (Doc. 4., p. 6). Defendant also asserts
in its Answer that Sheppard is not an uninsured/underinsured motorist and that
Plaintiff is not entitled to uninsured/underinsured motorist benefits. (Doc. 4, p. 6).
Federal Rule of Civil Procedure 15(a) provides that leave to amend pleadings
“shall be freely given when justice so requires.” See Fed. R. Civ. P. 15(a). The
Eleventh Circuit recognized that Rule 15(a) “severely restricts” a district court’s
discretion to deny leave to amend. Sibley v. Lando, 437 F.3d 1067, 1073 (11th Cir.
The “negligence” and “wantonness” claims actually appear to be claims for breach
of contract based on the alleged negligence and wantonness of Sheppard.
2005). “Unless a substantial reason exists to deny leave to amend, the discretion of
the District Court is not broad enough to permit denial.” Florida Evergreen Foliage
v. E.I. DuPont De Nemours and Co., 470 F.3d 1036, 1041 (11th Cir. 2006) (citation
omitted). That said, leave to amend can be properly denied under circumstances of
“undue delay, bad faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously allowed, undue prejudice to
the opposing party by virtue of allowance of the amendment, [or] futility of
amendment.” Equity Lifestyle Properties, Inc. v. Florida Mowing and Landscape
Service, Inc., 556 F.3d 1232, 1241 (11th Cir. 2009) (citation omitted).
Defendant asserts that the amendment should not be allowed because
Plaintiff’s sole purpose for joinder of Sheppard is to effectuate remand. The
addition of Sheppard as a party would destroy the complete diversity of the parties
and necessitate remand. Defendant argues that Plaintiff was aware of Sheppard
prior to filing suit and made the tactical decision not to include her.
This court has previously set out the standard for allowing an amendment
that destroys diversity as follows:2
Defendant contends that the amendment should not be allowed under language it
quotes from a footnote in Manrique v. Fagan, 2009 WL 700999 (S.D. Fla. March 16,
Ordinarily, of course, diversity jurisdiction is gauged only based upon the state
of the record at the time the action is brought, and if removed at the time the
petition for removal is filed. See, e.g., Grupo Dataflux v. Atlas Global Group,
L.P., 541 U.S. 567, 571, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004). This wellrecognized “time of filing rule” has only exception: a defect in the diversity of
all party defendants may be cured by the later dismissal of the party that
destroyed diversity. Id. at 572–73 (citing Horn v. Lockhart, 17 Wall., 570, 579,
[T]he decision to grant or deny a post-removal motion to amend a
complaint which would destroy the subject matter jurisdiction of the
federal court is discretionary. See, e.g., Mayes v. Rapoport, 198 F.3d
457, 462 (4th Cir.1999) (“Under Section 1447(e), the actual decision on
whether or not to permit joinder of a [non-diverse] defendant ... is
committed to the sound discretion of the district court”); Town of
Gordon v. Great American Ins. Co ., 331 F.Supp.2d 1357, 1359
(M.D.Ala.2004) (recognizing discretion in § 1447(e) context); Carter v.
Dover Corp., Rotary Lift Div., 753 F.Supp. 577, 579 (E.D.Pa.1991)
(“Virtually every court to address the joinder question since the
enactment of § 1447(e) views the statute as ... providing for a flexible,
broad discretionary approach”). Such discretion does not imply that §
1447(e) amendments should be granted as a matter of course. To the
contrary, “[t]he 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.” Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th
21 L.Ed. 657 (1873); Newman–Green, Inc. v. Alfonzo–Larrain, 490 U.S. 826,
832, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989)). That jurisdictional defect may be
cured even on appeal through the dismissal of a dispensable non-diverse party.
Newman–Green, 490 U.S. at 837. It is thus undisputed in this case that, even
though diversity may not have arisen at the time of the filing of the complaint
naming a non-diverse defendant, or at the time the petition for removal was
filed, that defect was curable through the dismissal of that non-diverse
defendant, J.F. Sales. Once that defendant was dismissed by the Court, it is
clear that the Michigan plaintiff was in diversity with the Florida defendant.
Ibid. at *4, n 4. Though the Manrique case discusses diversity jurisdiction in a
removed case, it does not apply to the issues before the court here. Manrique does
not involve a proposed amendment that would destroy diversity and makes no
pronouncements regarding such issues. In Manrique, unlike the instant case, the
case was removed based on federal question jurisdiction. The Manrique court
determined that it had diversity jurisdiction upon the dismissal of the non-diverse
defendant and that it could proceed under its diversity jurisdiction and provide a
jury trial. In the instant case, complete diversity existed among the parties at the
time of removal and there is no dispute that diversity will be destroyed and this
court will lack jurisdiction if the court grants the Plaintiff’s pending motion to
Cir.1987); see also Dasma Investments, LLC v. Realty Associates Fund
III, L.P ., 459 F.Supp.2d 1294, 1299–1300 (S.D.Fla.2006) (explaining
that a plaintiff “is not automatically entitled to add non-diverse
defendants following removal to destroy diversity”).
Before allowing a post-removal amendment which would destroy
subject matter jurisdiction, a court must consider the following factors:
(1) the extent to which the purpose of the amendment is to defeat
federal jurisdiction, (2) whether the plaintiff has been dilatory in
asking for the amendment, (3) whether the plaintiff will be
significantly injured if the amendment is not allowed, and (4) any
other factors bearing on the equities. Hensgens, 833 F.2d at 1182;
accord: Jones v. Rent –A–Center East, Inc., 356 F.Supp.2d 1273, 1275
(M.D.Ala.2005); Smith v. White Consol. Indus., Inc., 229 F.Supp.2d
1275, 1279–80 (N.D.Ala.2002); Bevels v. American States Ins. Co., 100
F.Supp.2d 1309, 1313 (M.D.Ala.2000); Jarriel v. General Motors Corp.,
835 F.Supp. 639, 641 (N.D.Ga.1993). This framework is designed to
facilitate the balancing of the defendant's interest in maintaining a
federal forum with the competing interest disfavoring parallel lawsuits
in federal and state courts. Id.; see also Hughes v. Promark Lift, Inc.,
751 F.Supp. 985, 987 (S.D.Fla.1990) (“In determining whether joinder
pursuant to § 1447(e) is appropriate, the district court is required to
balance the equities involved.”).
Holiday Isle, LLC v. Clarion Mortg. Capital, Inc., 2008 WL 1756369 at *2 (S.D. Ala.
Apr. 11, 2008).
In the instant case, an analysis of the circumstances under the above four
factors leads this court to find that the amendment should be allowed. First,
Plaintiff proposes to add Sheppard because the claims against Defendant depend
upon a determination that Sheppard was at fault and was uninsured at the time of
the accident. While defeating federal jurisdiction may be an additional motive, it
does not appear to be the sole or even the main purpose for the amendment.
Second, Plaintiff did not move to add Sheppard earlier because Plaintiff believed
that there was no real dispute over who was at fault or whether Sheppard was
insured at the time of the accident. Given that correspondence from Defendant
indicated that Sheppard was not insured at the time of the accident and that
Defendant had reportedly agreed to pay some uninsured benefits to Plaintiff, it was
reasonable for Plaintiff to not attempt to join Sheppard until Defendant raised
those issues. Plaintiff moved to amend less than two weeks after Defendant filed its
Answer. Thus, the court finds Plaintiff was not dilatory in asking for the
amendment. Third, because Defendant contests all liability and denies that
Sheppard is an uninsured/underinsured motorist, Plaintiff may be significantly
injured if she is not allowed to amend her complaint to add Sheppard. Lastly, the
court is aware of no other factors bearing on the equities. Thus, all of the factors
support allowance of the amendment.
There being no substantial reason to deny leave to amend, the court must
allow the amendment. Accordingly, Plaintiffs’ motion to amend the complaint (Doc.
10), is GRANTED and because the amendment destroys federal jurisdiction, the
case is hereby REMANDED to the Circuit Court of Dallas County, Alabama.
DONE and ORDERED this 3rd day of December, 2014.
/s/ Callie V. S. Granade
UNITED STATES DISTRICT JUDGE
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