Adams v. BMW of North America, LLC et al
Filing
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ORDER Denying Plaintiff's 14 Motion for Leave to Amend; Denying Plaintiff's 15 Motion to Remand. Signed by Judge Michael M. Anello on 8/31/2017. (ag)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
Case No.: 17CV0068-MMA (KSC)
GEORGE ADAMS,
ORDER DENYING PLAINTIFF’S
MOTION FOR LEAVE TO AMEND;
Plaintiff,
v.
[Doc. No. 14]
BMW OF NORTH AMERICA, LLC,
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DENYING PLAINTIFF’S MOTION
TO REMAND
Defendant.
[Doc. No. 15]
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On January 12, 2017, Defendant removed this action to this Court from the
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Superior Court of California, County of San Diego. Now, Plaintiff moves for leave to
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amend the pleadings, and moves to remand this case to state court. See Doc. Nos. 14, 15.
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The Court found the matters suitable for determination on the papers and without oral
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argument pursuant to Civil Local Rule 7.1(d)(1). For the following reasons, the Court
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DENIES Plaintiff’s motion for leave to amend, and DENIES Plaintiff’s motion to
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remand. See Doc. Nos. 14, 15.
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BACKGROUND
On December 5, 2016, Plaintiff George Adams filed this action against Defendant
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BMW of North America, LLC alleging causes of action for violation of California’s
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Song-Beverly Consumer Warranty Act, California Commercial Code section 2313 et seq.
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See Doc. No. 1. Plaintiff served Defendant on December 16, 2016. Specifically,
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Plaintiff’s Complaint alleges causes of action for breach of the implied warranty of
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merchantability and breach of express warranty under the Act. Plaintiff’s claims arise out
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of his purchase of a 2014 BMW Pathfinder vehicle (“the subject vehicle”), which
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Plaintiff alleges had “defects, malfunctions, misadjustments and/or nonconformities.”
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See Compl., Doc. No. 1-2, ¶ 11.
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After answering the Complaint on January 10, 2017, Defendant removed this
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action to this Court on January 12, 2017. In removing the action, Defendant invoked
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diversity jurisdiction pursuant to Title 28 of the United States Code, sections 1332(a) and
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1441(a). See Doc. No. 1.
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Since this case was removed, the Parties have participated in an Early Neutral
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Evaluation and a Case Management Conference with the assigned magistrate judge, and
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have submitted a joint discovery plan. Further, on June 9, 2017, the assigned magistrate
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judge issued the Scheduling Order regulating discovery and other pre-trial proceedings in
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this action. Among other things, the Scheduling Order dictates that any motion to join
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parties or amend the pleadings must be filed on or before July 7, 2017. On July 6, 2017,
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Plaintiff filed the instant motion to amend the pleadings and motion to remand. See Doc.
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Nos. 14, 15.
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LEGAL STANDARD
Federal courts are courts of limited jurisdiction. Lowdermilk v. U.S. Bank Nat’l
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Ass’n, 479 F.3d 994, 997 (9th Cir. 2007). Federal courts possess only that power
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authorized by the Constitution or a statute. See Bender v. Williamsport Area Sch. Dist.,
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475 U.S. 534, 541 (1986). Pursuant to Title 28 of the United States Code, section
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1332(a)(1), a federal district court has jurisdiction over “all actions where the matter in
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controversy exceeds the sum or value of $75,000, exclusive of interest and costs,” and the
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dispute is between citizens of different states. 28 U.S.C. § 1332(a)(1). The Supreme
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Court has interpreted § 1332 to require “complete diversity of citizenship,” meaning each
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plaintiff must be diverse from each defendant. Caterpillar Inc. v. Lewis, 519 U.S. 61, 67-
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68 (1996). Title 28 of the United States Code, section 1441(a), provides for removal of a
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civil action from state to federal court if the case could have originated in federal court.
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If a matter is removable solely on the basis of diversity jurisdiction pursuant to § 1332,
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the action may not be removed if any properly joined and served defendant is a citizen of
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the forum state. See 28 U.S.C. § 1441(b)(2). If, after proper removal, subject matter
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jurisdiction is destroyed, a plaintiff may file a motion to remand or the court may raise
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the jurisdictional issue sua sponte. See Steel Co. v. Citizens for a Better Env’t, 523 U.S.
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83, 93–94 (1998); see Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir.
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1990); Sabag v. FCA US, LLC, No. 216CV06639CASRAOX, 2016 WL 6581154, at *7
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(C.D. Cal. Nov. 7, 2016).
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DISCUSSION
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Plaintiff moves for leave to amend the pleadings in order to add a non-diverse
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defendant. See Doc. No. 14. Plaintiff also moves to remand this action to state court on
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the grounds that joinder of the non-diverse defendant destroys the Court’s jurisdiction
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over this action. See Doc. No. 15. Because both motions depend on the propriety of
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Plaintiff’s request to add a diversity-destroying defendant, the Court begins by addressing
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Plaintiff’s motion for leave to amend.
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A.
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Plaintiff seeks leave to amend in order to add as a defendant GMG Motors, Inc.
Motion for Leave to Amend
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d/b/a BMW of San Diego (“GMG Motors”). Plaintiff wishes to assert a state law claim
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of negligence against GMG Motors for allegedly negligent repair of the subject vehicle.
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Plaintiff argues that joinder of GMG Motors would be proper under Federal Rule of Civil
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Procedure 20, and that pursuant to Federal Rule of Civil Procedure 15, the Court should
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grant leave to amend with “extreme liberality.” See Doc. No. 14.
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However, as Defendant correctly points out, Rule 15 does not apply where a
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plaintiff seeks to add a non-diverse defendant, as is the case here.1 District courts in
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It is undisputed that GMG Motors is a citizen of California for jurisdictional purposes. Plaintiff’s
motion to remand states that GMG Motors is a California corporation with its principal place of business
in California. See 28 U.S.C. § 1332(c)(1) (stating “a corporation shall be deemed to be a citizen of any
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California agree that where a party “seeks to join additional defendants whose joinder
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would destroy subject matter jurisdiction,” courts must consider whether to exercise their
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discretion to allow joinder under 28 U.S.C. § 1447(e), rather than under the more liberal
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Rule 15(a) standard. See, e.g., San Jose Neurospine v. Cigna Health & Life Ins. Co., No.
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16-CV-05061-LHK, 2016 WL 7242139, at *6–7 (N.D. Cal. Dec. 15, 2016); Clinco v.
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Roberts, 41 F. Supp. 2d 1080, 1087 (C.D. Cal. 1999). Specifically, section 1447(e) states
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that “[i]f after removal the plaintiff seeks to join additional defendants whose joinder
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would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder
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and remand the action to the State court.” See 28 U.S.C. § 1447(e). District courts in
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California generally consider six factors in determining the “propriety and fairness” of
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permitting joinder:
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(1) [W]hether the party sought to be joined is needed for just
adjudication and would be joined under Federal Rule of Civil
Procedure 19(a); (2) whether the statute of limitations would
preclude an original action against the new defendant[] in state
court; (3) whether there has been unexplained delay in
requesting joinder; (4) whether joinder is intended solely to
defeat federal jurisdiction; (5) whether the claims against the
new defendant appear valid; and (6) whether denial of joinder
will prejudice the plaintiff.
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See, e.g., Lara v. Bandit Indus., Inc., No. 2:12-CV-02459-MCE-AC, 2013 WL 1155523,
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at *1–2 (E.D. Cal. Mar. 19, 2013) (quoting IBC Aviation Serv., Inc. v. Compania
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Mexicana de Aviacion, S.A. de C.V., 125 F. Supp. 2d 1008, 1011 (N.D. Cal. 2000));
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Medina v. Oanda Corp., No. 5:16-CV-02170-EJD, 2017 WL 1159572, at *3 (N.D. Cal.
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Mar. 29, 2017). However, many courts only analyze the first five of the above factors.
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See Clinco, 41 F. Supp. 2d at 1082. Further, other courts have considered additional
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factors such as whether joinder will result in prejudice to any of the parties, “the
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State by which it has been incorporated and of the State where it has its principal place of business”);
Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005).
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closeness of the relationship between the new and the old parties,” the effect that joinder
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would have on the district court’s jurisdiction, and whether the new party had notice of
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the pendency of the instant action. See Murphy v. Am. Gen. Life Ins. Co., 74 F. Supp. 3d
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1267, 1278 (C.D. Cal. 2015). Courts “look at the factors as a whole.” See IBC Aviation
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Servs., Inc., 125 F. Supp. 2d at 1013. “Any of the factors might prove decisive, and none
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is an absolutely necessary condition for joinder.” Yang v. Swissport USA, Inc., No. C 09–
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03823 SI, 2010 WL 2680800, at *3 (N.D. Cal. July 6, 2010).
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In Defendant’s opposition brief, Defendant addresses all of the factors listed above.
In Plaintiff’s reply brief, he only addresses whether GMG Motors is needed for just
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adjudication, the timeliness of his motion, and the validity of his negligence claim. As
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such, the Court analyzes as many of the factors as possible, and as thoroughly as possible,
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based on the record and briefing before it.
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Whether GMG Motors is a Necessary Party
“Federal Rule of Civil Procedure 19 requires joinder of persons whose absence
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would preclude the grant of complete relief, or whose absence would impede their ability
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to protect their interests or would subject any of the parties to the danger of inconsistent
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obligations.” IBC Aviation Servs., Inc., 125 F. Supp. 2d at 1011 (citing Fed. R. Civ. P.
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19(a)). However, “amendment under § 1447(e) is a less restrictive standard than for
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joinder under [Rule] 19.” Id. Where the non-diverse defendants are “only tangentially
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related to the cause of action or would not prevent complete relief,” courts do not permit
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joinder. Id. at 1012. However, where failure to join those defendants would result in
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“separate and redundant actions,” joinder is proper. Id. at 1011.
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Here, Plaintiff does not argue that the Court cannot “accord complete relief among
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existing parties” if it does not allow joinder of GMG Motors. See Fed. R. Civ. P.
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19(a)(1)(A). Plaintiff also does not argue that GMG Motors somehow “claims an interest
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relating to the subject of th[is] action” and that adjudicating the action without it would
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impede its ability to protect that interest or result in the risk of inconsistent obligations.
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See Fed. R. Civ. P. 19(a)(1)(B). Thus, there is no indication in the record that GMG
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Motors constitutes an indispensable party under Rule 19.
Plaintiff argues that both his breach of warranty claims as well as his proffered
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negligence claim require a “determination of the nature, source and extent of the
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technical difficulties Plaintiff experienced with the Vehicle.” See Doc. No. 14. That
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being said, Plaintiff’s breach of express warranty claim is essentially a breach of contract
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claim, and Plaintiff’s breach of the implied warranty of merchantability claim pertains to
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whether the car was fit for its intended purpose. See Keegan v. Am. Honda Motor Co.,
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838 F. Supp. 2d 929, 945 (C.D. Cal. 2012). Yet, Plaintiff does not argue that GMG
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Motors sold Plaintiff the vehicle or made any warranties regarding its fitness. Plaintiff’s
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proffered claim for negligence depends only on whether GMG Motors acted negligently
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in attempting to repair the vehicle. While facts pertaining to repairs may be relevant in
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demonstrating that the subject vehicle was defective at the time of sale or that Defendant
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breached an express warranty, Plaintiff’s proffered cause of action against GMG Motors
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is no more than tangentially related to Plaintiff’s warranty causes of action.
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Similarly, Plaintiff avers that “if it is determined that GMG Motors, Inc.’s
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negligence is the cause of some or all of Plaintiff’s damages, it will have an impact on
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Plaintiff’s claims against” Defendant as well as Defendant’s defenses. Further, Plaintiff
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complains that he will be forced to pursue recovery in two different forums if he is not
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allowed to amend to add GMG Motors, which “could result in inconsistent verdicts.” See
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Doc. No. 14. For the same reasons as stated above, the Court is unpersuaded that there is
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substantial overlap, legally or factually, between Plaintiff’s warranty claims and
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Plaintiff’s negligence claim, which is limited to GMG Motors’ conduct in repairing the
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vehicle.
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On the whole, the Court finds this factor weighs slightly against permitting joinder.
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Whether a Separate Action Against GMG Motors Would be TimeBarred
Plaintiff does not argue that the statute of limitations would prevent Plaintiff from
commencing a separate action against GMG Motors in state court. See Clinco, 41 F.
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Supp. 2d at 1083 (stating that because the plaintiff did not argue the claim would be time-
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barred, this “factor [did] not support amendment”). Thus, this factor is neutral.
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3.
Whether There Has Been Unexplained Delay
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Regarding this factor, some courts have focused on whether plaintiffs adequately
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explain any delay in seeking amendment, whereas others have focused on the length of
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the delay, and many have considered both. See, e.g., IBC Aviation Servs., Inc., 125 F.
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Supp. 2d at 1012 (considering only the length of the delay); Yang, 2010 WL 2680800, at
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*4 (relying mainly on the plaintiffs’ “reasonable explanation for the delay in seeking to
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amend”); Wolff-Bolton, 2017 WL 2887857, at *5 (considering both). One district court
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has stated that, to evaluate timeliness, “courts must consider whether the ‘moving party
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knew or should have known the facts and theories raised by the amendment in the
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original pleading.’” See Murphy, 74 F. Supp. 3d at 1284 (quoting Jackson v. Bank of
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Haw., 902 F.2d 1385, 1388 (9th Cir. 1990)). Based on the foregoing, the Court finds it
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prudent to consider both the length of the delay and whether Plaintiff adequately explains
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why he did not include a negligence claim against Defendant GMG Motors initially.
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Plaintiff filed the instant motion for leave to amend nearly seven months after
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commencing this action. While Plaintiff complied with the applicable Scheduling Order
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deadline in filing the motion, “courts must do more than determine whether a motion was
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‘filed within the period of time allotted by the district court in a Rule 16 scheduling
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order’” to determine the motion’s timeliness. See Murphy, 74 F. Supp. 3d at 1284
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(quoting AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir.
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2006)). Even under Rule 15, which “should be interpreted with ‘extreme liberality,’” the
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Ninth Circuit has “held that held that an eight month delay between the time of obtaining
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a relevant fact and seeking a leave to amend is unreasonable.” See Jackson v. Bank of
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Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (quoting United States v. Webb, 655 F.2d
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977, 979 (9th Cir. 1981)); AmerisourceBergen Corp., 465 F.3d at 953; cf. IBC Aviation
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Servs., Inc., 125 F. Supp. 2d at 1012 (stating that the plaintiff acted in a timely fashion
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where it sought amendment around one month after removal and two months after the
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filing of the complaint). Plaintiff contends he acted promptly in requesting leave to
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amend “[f]ollowing discovery of this new claim,” but Plaintiff does not state when he
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discovered facts giving rise to the claim nor the timing of any events that led to his
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discovery. See Doc. No. 14. Accordingly, the Court cannot determine the amount of
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time that has elapsed since he obtained relevant facts giving rise to his proffered cause of
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action against GMG Motors.
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Moreover, Plaintiff does not describe what information he purportedly learned
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during his investigations that prompted him to file the instant motion for leave to amend.
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Plaintiff states that his “investigations have led to the discovery of Plaintiff’s proposed
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cause of action,” but does not describe how. See Doc. No. 14. Plaintiff does not argue
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that he did not know the identity of GMG Motors or that it had performed repairs on the
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vehicle. Defendant avers that Plaintiff has been in possession of “all repair orders since
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before filing this lawsuit,” and Plaintiff does not dispute that assertion. See Doc. Nos. 16,
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18. Accordingly, Plaintiff, as the moving party, fails to demonstrate that he has
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discovered any new facts underlying his proffered negligence claim since the
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commencement of this action. See San Jose Neurospine, 2016 WL 7242139, at *11
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(stating that where new factual allegations were not unknown to the plaintiff at the time
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the plaintiff filed the original complaint, one can “justifiably suspect . . . amendment . . .
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was caused by the removal rather than an evolution of” the plaintiff’s case); Jackson, 902
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F.2d at 1388 (“Although appellants argue that the evidence . . . [was] not ‘fully flushed
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out’ until [later], they cite no facts or theories gleaned from the additional discovery
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period to support this contention.”).
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For the foregoing reasons, the Court finds this factor weighs against permitting
joinder.
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Whether Plaintiff Solely Intends to Defeat Federal Jurisdiction
“The Ninth Circuit has instructed that, because ‘motive in seeking joinder’ is a
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relevant factor in determining whether amendment is appropriate, ‘a trial court should
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look with particular care at such motive in removal cases, when the presence of a new
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defendant will defeat the court’s diversity jurisdiction.” See San Jose Neurospine, 2016
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WL 7242139, at *10 (quoting Desert Empire Bank v. Ins. Co of N. Am., 623 F.2d 1371,
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1376 (9th Cir. 1980)). However, courts refrain from “imput[ing] an improper motive to
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[the plaintiff] simply because [the plaintiff] seeks to add a non-diverse defendant post-
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removal.” See IBC Aviation Servs., Inc., 125 F. Supp. 2d at 1012. “Suspicion of
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diversity destroying amendments is not as important now that § 1447(e) gives courts
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more flexibility in dealing with the addition of such defendants.” Id. Thus, absent any
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indication that Plaintiff has an improper motive, the Court does not infer one based solely
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on Plaintiff’s request for leave to add a diversity-destroying defendant.
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“[I]n evaluating motive, courts have considered whether the plaintiff was ‘aware of
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the removal’” and that “the basis for removal was diversity jurisdiction” at the time the
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plaintiff amended the pleadings to add a non-diverse defendant. See San Jose
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Neurospine, 2016 WL 7242139, at *10. Further, “courts have inferred an improper
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motive where the plaintiff’s proposed amended complaint contains only minor or
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insignificant changes to the original complaint.” See San Jose Neurospine, 2016 WL
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7242139, at *10 (quoting Forward-Rossi v. Jaguar Land Rover N. Am., LLC, 2016 WL
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3396925, at *4 (C.D. Cal. June 13, 2016)).
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Here, Plaintiff argues he did not file his motion in bad faith, while Defendant
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argues Plaintiff’s motion is obviously intended to defeat diversity jurisdiction. It is true
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that Plaintiff was aware of Defendant’s removal based on diversity jurisdiction when
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Plaintiff filed his motion for leave to amend, and that Plaintiff’s proposed amended
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complaint contains only minor alterations. Further, the Court notes that it is somewhat
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suspicious that Plaintiff is unable to describe what purported discoveries prompted this
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motion, as addressed above. However, the Court does not find these facts to be highly
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salient of an improper motive and thus, the Court finds this factor only weighs slightly
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against permitting joinder.
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5.
Whether Plaintiff’s Negligence Claim Appears Valid
In considering this factor, courts “‘need only determine whether the claim seems
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valid,’ which is not the same as the standard in either a motion to dismiss or a motion for
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summary judgment.” See Meggs v. NBC Universal Media, LLC, No.
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217CV03769ODWRAOX, 2017 WL 2974916, at *8 (C.D. Cal. July 12, 2017) (quoting
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Freeman v. Cardinal Health Pharm. Servs., LLC, No. 14-cv-01994-JAM, 2015 WL
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2006183, at *3 (E.D. Cal. 2015)). Plaintiff provides little in the way of factual support
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for his proposed negligence claim, except to say that Plaintiff took the subject vehicle to
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GMG Motors for repairs “on numerous occasions” and that GMG Motors “breached its
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duty to use ordinary care and skill by failing to properly store, prepare, and repair” the
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vehicle “in accordance with industry standards.” See Doc. No. 14-1. Defendant argues
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the proposed amended complaint fails to state a claim for negligence, even taking the
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factual allegations as true. While Defendant may be correct, whether Plaintiff states a
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claim pursuant to federal pleading standards is a separate inquiry than whether Plaintiff’s
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claim appears valid.
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Second, Defendant argues the economic loss rule bars Plaintiff’s claim because
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Plaintiff does not plead that GMG Motors caused any harm to his person or property, and
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Plaintiff had a contractual relationship with GMG Motors. The economic loss rule
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dictates that a plaintiff may not recover in tort “purely economic losses,” meaning
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“damages that are solely monetary, as opposed to damages involving physical harm to
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person or property.” See UMG Recordings, Inc. v. Glob. Eagle Entm’t, Inc., 117 F. Supp.
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3d 1092, 1103 (C.D. Cal. 2015) (quoting NuCal Foods, Inc. v. Quality Egg LLC, 918 F.
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Supp. 2d 1023, 1028 (E.D. Cal. 2013)). The purpose of the economic loss rule is “to
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maintain a distinction between damage remedies for breach of contract and for tort.” Id.
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In other words, the rule “bars tort claims based on contract breaches,” such as where a
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plaintiff seeks relief for economic loss caused by what amounts to the “negligent
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performance of a contract.” Id. Plaintiff does not respond to Defendant’s argument
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regarding the economic loss rule. While Defendant might be correct, the record is
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insufficient for the Court to determine whether the economic loss rule bars Plaintiff’s
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proffered claim.
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In sum, considering Plaintiff’s bare factual allegations paired with the potential
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application of the economic loss rule, which Plaintiff does not address, the Court finds
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this factor neutral.
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6.
Potential Prejudice
Plaintiff argues he would be prejudiced if his motion to amend is denied because
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he will be “significantly injured” if he is not allowed to “have his claims heard in one
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forum.” See Doc. No. 14. But, Plaintiff fails to describe how he would be “significantly
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injured” aside from the obvious inconveniences of litigating two cases. Also, as
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discussed above, Plaintiff does not adequately explain why he did not assert a claim for
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negligence against GMG Motors in his original Complaint nor why he waited nearly six
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months into litigation in federal court to request leave to amend. Further, the Ninth
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Circuit has upheld a district court’s conclusion that a plaintiff did not suffer undue
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prejudice where the plaintiff could proceed separately against an absent party in state
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court. See Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998). Plaintiff
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does not argue that he could not proceed separately against GMG Motors in state court.
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Also, although Plaintiff argues Defendant would not suffer any prejudice if joinder
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is allowed, joinder would expand this litigation as well as destroy this Court’s jurisdiction
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and require remand. As mentioned, the Parties have already participated in an Early
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Neutral Evaluation and a Case Management Conference with the assigned magistrate
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judge, have submitted a joint discovery plan, and the assigned magistrate judge has
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issued the Scheduling Order regulating discovery and other pre-trial proceedings in this
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action. Pursuant to the Scheduling Order, fact discovery is to be completed within the
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next ten weeks. However, Plaintiff states that the parties have not yet taken any
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depositions, and Defendant has not yet inspected the subject vehicle. Accordingly, this
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case is relatively young.
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On another note, Defendant argues that Plaintiff’s contract with GMG Motors
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includes an arbitration clause, and thus, Plaintiff will likely be forced to litigate in two
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forums regardless of whether the Court allows joinder. Plaintiff does not address
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Defendant’s argument. While the Court does not accept Defendant’s argument as true,
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particularly where it is based on evidence outside of the pleadings, the Court takes into
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account the risk that Plaintiff would be required to arbitrate claims against GMG Motors.
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In considering the above, the Court finds this factor weighs slightly against
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permitting joinder, particularly because Plaintiff does not argue that he would be barred
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from litigating his negligence claim in state court nor describe in any detail why he would
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suffer prejudice if he did so.
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7.
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Any remaining factors that the Court could consider—such as the relationship
Other Factors
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between GMG Motors and Defendant, whether GMG has notice of this action, and how
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joinder would affect the Court’s jurisdiction—would require the Court to make premature
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factual determinations based on argument or would be redundant. Accordingly, the Court
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declines to do so.
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8.
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In sum, the majority of factors weigh against permitting joinder. The Court finds it
Summary
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particularly salient that Plaintiff is unable to provide the Court with even one fact that he
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discovered after the commencement of this action which prompted him to request leave
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to amend the pleadings to add a negligence claim against GMG Motors. That, in
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combination with the fact that the parties had litigated this case for nearly six months in
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federal court prior to Plaintiff’s request, counsels against permitting joinder.
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Accordingly, the Court DENIES Plaintiff’s motion for leave to amend to add a
non-diverse defendant. See Doc. No. 14.
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B.
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Because the Court does not allow joinder of GMG Motors, the Court retains
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jurisdiction over this action based on diversity jurisdiction. See 28 U.S.C. §§ 1332, 1441.
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Thus, the Court DENIES Plaintiff’s motion to remand. See Doc. No. 15.
Motion to Remand
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CONCLUSION
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For the foregoing reasons, the Court DENIES Plaintiff’s motion for leave to
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amend and Plaintiff’s motion to remand. See Doc. Nos. 14, 15.
IT IS SO ORDERED.
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Dated: August 31, 2017
_____________________________
Hon. Michael M. Anello
United States District Judge
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