Landry et al v. Circle K Stores, Inc. et al

Filing 16

ORDER AND REASONS denying 9 Motion for Leave to File Amended Complaint. Signed by Judge Sarah S. Vance on 7/19/2017. (cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SHERRY LANDRY AND
ROLAND WATSON
VERSUS

CIVIL ACTION
NO. 16-15705

CIRCLE K STORES, INC, ET AL.

SECTION “R” (5)

ORDER AND REASONS
Before the Court is plaintiffs’ motion to amend their complaint.1 For
the following reasons, the Court denies the motion.

I.

BACKGROUND
This case arises out of a single-vehicle automobile accident that

allegedly occurred on August 20, 2015.2 Plaintiffs Sherry Landry and Roland
Watson allege that they were leaving a Circle K gas station when their vehicle
ran over an unsecured gas manhole cover, causing the vehicle’s tire to fall

1
2

R. Doc. 9.
R. Doc. 1-2 at 4-5.

into the manhole.3 This accident allegedly caused severe injuries to the
plaintiffs and damage to the vehicle.4
On August 16, 2016, plaintiffs filed a petition for damages in Louisiana
state court against defendants Circle K Stores, Inc. (“Circle K”), Shell Oil
Products Company, LLC (“Shell Oil”), and Affirmative Casualty Insurance
Company.5 The Affirmative Casualty Insurance Company, a non-diverse
defendant, was under a permanent order of liquidation at the time of
plaintiffs’ petition.6 Under the terms of the liquidation order, all insurance
policies issued by the Affirmative Casualty Insurance Company were
cancelled as of May 11, 2016.7
On October 19, 2016, Shell Oil removed the lawsuit to this Court on
the basis of diversity of citizenship.8 Plaintiffs are Louisiana domiciliaries9
and defendants Circle K and Shell Oil are not Louisiana citizens.10 Shell Oil
argued in its notice of removal that defendant Affirmative Casualty
Insurance Company, a Louisiana company, should be treated as fraudulently

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4
5
6
7
8
9
10

Id.
Id. at 5.
Id. at 3-4.
R. Doc. 1-4.
Id. at 1.
R. Doc. 1.
R. Doc. 1-2 at 3.
R. Doc. 1 at 3.
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joined because the company was in liquidation proceedings.11 Plaintiffs did
not file a motion to remand. On March 30, 2017, the Court ordered plaintiffs
to show cause why the Affirmative Casualty Insurance Company should not
be dismissed for failure to prosecute.12
Two weeks after the Court’s order, plaintiffs filed this motion for leave
to file an amended complaint.13 Plaintiffs’ proposed amended complaint
would add the Louisiana Insurance Guaranty Association (LIGA) as a
defendant in this matter and substitute LIGA for the Affirmative Casualty
Insurance Company.14 The Court ordered the parties to submit memoranda
of law addressing LIGA’s citizenship for diversity purposes, the effect of
joining LIGA on the Court’s subject matter jurisdiction, and whether the
Court should permit joinder.15 Defendants Shell Oil and Circle K each filed
memoranda opposing the joinder of LIGA.16

11
12
13
14
15
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Id. at 4-5.
R. Doc. 8.
R. Doc. 9.
R. Doc. 9-1 at 1-2.
R. Doc. 10 at 2.
R. Doc. 12; R. Doc. 13.
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II.

DISCUSSION
All parties agree that LIGA is a Louisiana citizen and that joining LIGA

as a defendant would destroy the Court’s diversity jurisdiction.17 The Fifth
Circuit has held that “LIGA has the citizenship for diversity purposes of each
of its constituent member insurers.” Temple Drilling Co. v. Louisiana Ins.
Guar. Ass’n, 946 F.2d 390, 394 (5th Cir. 1991). It is undisputed that LIGA
has member insurers who are citizens of Louisiana.18
When an amended complaint would destroy diversity jurisdiction, the
Court may either deny joinder of the non-diverse party or permit joinder and
remand the matter to state court. 28 U.S.C. § 1447(e). Plaintiffs contend that
LIGA should be joined because it “stand[s] in the shoes of the insolvent
Affirmative Casualty Insurance Company and [is] a necessary party to these
proceedings.”19 Plaintiffs, however, provide no explanation or support for
the conclusion that LIGA is a necessary party. Defendants argue that joinder
should be denied because the purpose of plaintiffs’ amendment is to defeat
federal diversity jurisdiction.20

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20

R. Doc. 11 at 2; R. Doc. 12 at 4; R. Doc. 13 at 3.
R. Doc. 11 at 2; R. Doc. 12 at 4; R. Doc. 13 at 2.
R. Doc. 9-2.
R. Doc. 12 at 6; R. Doc. 13 at 4.
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The Court will “freely give leave [to amend] when justice so requires.”
Fed. R. Civ. P. 15(a). Leave to amend, however, “is by no means automatic.”
Halbert v. City of Sherman, 33 F.3d 526, 529 (5th Cir. 1994). When an
amended pleading would destroy diversity jurisdiction, the Court will
“scrutinize that amendment more closely than an ordinary amendment” and
“consider the extent to which the purpose of the amendment is to defeat
federal jurisdiction, whether plaintiff has been dilatory in asking for
amendment, whether plaintiff will be significantly injured if amendment is
not allowed, and any other factors bearing on the equities.” Hensgens v.
Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987).
After consideration of these factors, the Court finds that joinder must
be denied. Plaintiffs do not offer a convincing explanation for why joining
LIGA serves any purpose other than to defeat federal jurisdiction. Plaintiffs’
original petition alleges that the Affirmative Casualty Insurance Company
provided plaintiffs with a policy of uninsured and underinsured motorist
liability coverage and that this policy covers the damages requested in the
petition.21 Shell Oil argues that plaintiffs likely do not have a claim under
their uninsured motorist policy because such policies typically cover only

21

See R. Doc. 1-2 at 4, 7.
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damages that arise out of the use of an uninsured motor vehicle.22 Plaintiffs
do not offer any facts in their original petition or subsequent pleadings to
support the conclusion that their single-car accident qualified for coverage
under their uninsured/underinsured motorist policy. The Court therefore
finds that plaintiffs have not shown a valid reason to join LIGA in this action.
See Moore v. Manns, 732 F.3d 454, 457 (5th Cir. 2013) (agreeing that
amendment served only to destroy diversity jurisdiction where plaintiff
offered no evidence of proposed defendant’s liability).
Additionally, plaintiffs’ amendment is dilatory.

This matter was

removed on October 19, 2016.23 The notice of removal made clear that the
Affirmative Casualty Insurance Company was in liquidation proceedings.24
Yet plaintiffs did not move for leave to amend until April 13, 2017.25 Plaintiffs
provide no explanation for their delay and instead assert that “[f]rom day
one of this case, LIGA is the proper party defendant in place of the insolvent
Affirmative Casualty Insurance Company.”26 The Court finds that plaintiffs
were dilatory in waiting almost six months after removal to amend their
complaint. See Villareal v. Wells Fargo Bank, N.A., 814 F.3d 763, 768 (5th

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23
24
25
26

R. Doc. 12 at 9.
R. Doc. 1.
Id. at 4.
R. Doc. 9.
R. Doc. 11 at 3-4.
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Cir. 2016) (affirming denial of leave to amend, where district court found that
plaintiff was dilatory in attempting to join defendant over two months after
filing original complaint).
Finally, there is no indication that plaintiffs will be injured if joinder is
denied. Even if plaintiffs had a valid claim against the Affirmative Casualty
Insurance Company and could recover damages on that claim from LIGA,
LIGA’s presence is not necessary to provide plaintiffs with complete relief.
Plaintiffs’ petition for damages alleges that all defendants are jointly liable,
and plaintiffs do not argue that they will be unable to recover from the
current defendants.27 Circle K represents to the Court that it possesses
liability insurance to cover plaintiffs’ damages in this matter, and Shell Oil
likewise represents that there is virtually no possibility that uninsured
motorist coverage would be implicated given its presence, along with Circle
K, as a defendant in this action.28 The Court finds that denying leave to
amend will not injure plaintiffs, and no other equitable factors favor
permitting joinder of LIGA.

27
28

R. Doc. 1-2 at 7.
R. Doc. 13 at 7; R. Doc. 12 at 9.
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III. CONCLUSION
For the foregoing reasons, the Court DENIES plaintiffs’ motion for
leave to amend.

19th
New Orleans, Louisiana, this _____ day of July, 2017.

_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

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