Foy v. Union Development Corporation et al
Filing
46
MEMORANDUM OPINION AND ORDER by Circuit Judge Paul Kelly, Jr. denying 37 Plaintiff's Second Motion to Remand, dropping defendant Richard Moore as a party, and dismissing plaintiff's claims against him without prejudice. (rt)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
ERIN FOY,
Plaintiff,
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE CO.,
and RICHARD MOORE,
No. 1:17-cv-00992-PJK-SCY
Defendants.
MEMORANDUM OPINION AND ORDER
DENYING PLAINTIFF’S SECOND MOTION TO REMAND
THIS MATTER comes before the court on Plaintiff Erin Foy’s Second Motion to
Remand to the Second Judicial District Court of New Mexico filed April 4, 2018 (ECF
No. 37). Upon consideration thereof, the Motion is not well taken and should be denied,
Defendant Richard Moore should be dropped as a party, and the claims against Mr.
Moore should be dismissed without prejudice.
Ms. Foy filed this action against her employer and against Defendant State Farm
Mutual Automobile Insurance Co., her employer’s insurer, alleging that they failed to
provide her with uninsured/underinsured motorist coverage for an automobile accident
that occurred during the scope of her employment. Compl. 1–3, 6, ECF No. 1-2. Ms.
Foy resides in New Mexico, her employer is incorporated and has its principal place of
business in New Mexico, and State Farm is incorporated and has its principal place of
business in Illinois. Id. at 1; Notice of Removal 2, ECF No. 1. Ms. Foy initially filed in
New Mexico state court, see Foy v. Union Dev. Corp., No. D-202-CV-201706083 (N.M.
Dist. Ct. filed Aug. 22, 2017), then State Farm removed to this court as allowed by 28
U.S.C. §§ 1332, 1441. Notice of Removal 1.
Ms. Foy filed a motion to remand the action to state court, contending that the
court lacked diversity jurisdiction because she and her employer are both New Mexico
citizens. Pl.’s Mot. to Remand 1, ECF No. 7. The court denied her motion, finding that
Ms. Foy’s employer had been fraudulently joined to defeat diversity and dismissing the
claims against her employer without prejudice. Mem. Op. & Order Den. Pl.’s Mot. to
Remand 2–4, ECF No. 19. Subsequently, Ms. Foy sought leave to amend her complaint
to add Mr. Moore, a New Mexico resident, as a defendant. Pl.’s Mot. to Amend Compl.
1–2, ECF No. 28; Ex. 1, at 2, ECF No. 28-1. State Farm opposed the amendment on the
grounds that it violated the magistrate judge’s discovery order and would prejudice State
Farm by creating unnecessary work. Resp. in Opp’n to Pl.’s Mot. to Amend Compl. 2–4,
ECF No. 30. Neither party raised the jurisdictional consequences of adding Mr. Moore
as a defendant. Recognizing that leave to amend should be freely given, the court issued
an Order Granting Leave to Amend filed March 27, 2018 (ECF No. 34).
Shortly after amending her complaint, Ms. Foy filed another motion to remand the
action to state court, arguing that the court lacks diversity jurisdiction because she and
-2-
Mr. Moore are both New Mexico citizens. Pl.’s Second Mot. to Remand 1. She notes
that 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,” and she contends
that, having granted leave to amend her complaint to add Mr. Moore as a defendant, the
court must now remand the action to state court.
Other circuits have held that “when a district court is unaware that joinder will
destroy diversity, it may reconsider its prior decision permitting leave to amend a
complaint.” Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 761 (7th Cir. 2009);
accord Bailey v. Bayer CropScience L.P., 563 F.3d 302, 307 (8th Cir. 2009). It is unclear
whether the Tenth Circuit would similarly allow reconsideration where, as here, neither
party raised the jurisdictional issue prior to amendment. But it is unnecessary to decide
this issue because there is a ready alternative.
Federal Rule of Civil Procedure 21 provides, “On motion or on its own, the court
may at any time, on just terms, add or drop a party.” Indeed, “it is well settled that Rule
21 invests district courts with authority to allow a dispensable nondiverse party to be
dropped at any time.” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832
(1989). Accordingly, district courts have discretion to dismiss claims against dispensable
nondiverse defendants rather than remand the action to state court. Pfeiffer v. Hartford
Fire Ins. Co., 929 F.2d 1484, 1489 (10th Cir. 1991). The question, then, is whether Mr.
Moore is dispensable, “for if [his] interests are severable and a decree without prejudice
-3-
to [his] rights may be made, the jurisdiction of the court should be retained and the suit
dismissed as to [him].” Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 572
(2004) (quoting Horn v. Lockhart, 84 U.S. 570, 579 (1873)).
Rule 19(a) provides that a person is a required party if, “in that person’s absence,
the court cannot accord complete relief among existing parties” or if “that person claims
an interest relating to the subject of the action” and disposing of the action without him or
her would “impair or impede the person’s ability to protect the interest” or would “leave
an existing party subject to a substantial risk of incurring double, multiple, or otherwise
inconsistent obligations.” In her amended complaint, Ms. Foy alleges that she purchased
the uninsured/underinsured motorist policy from Mr. Moore and that he “failed to
reasonably inform [her] in regard to the coverage options, premiums, and generally the
underinsured motorist coverage at the point of sale.” First Am. Compl. 3, ECF No. 36.
Ms. Foy also alleges that State Farm and Mr. Moore “willfully, recklessly, and without
regard for the rights of [Ms. Foy] breached the duty of good faith and fair dealing owed
to her” by committing various acts, id. at 10, and that this conduct “constitutes both
unfair practices and unconscionable practices,” id. at 11. Additionally, she alleges that
State Farm and Mr. Moore “knowingly or without exercising due diligence failed to
deliver the quality of services for which [they] contracted.” Id.
Essentially, Ms. Foy alleges that State Farm and Mr. Moore are joint tortfeasors in
her causes of action for unfair insurance practices and unfair trade practices. And joint
tortfeasors are permissive, rather than necessary, parties. Temple v. Synthes Corp., 498
-4-
U.S. 5, 7 (1990); see Fed. R. Civ. P. 19(a) advisory committee’s note to 1966
amendment. As a result, complete relief can be recovered from State Farm in Mr.
Moore’s absence, and Mr. Moore is not a required party.
Having determined that Mr. Moore is a dispensable party, the court must now
decide whether to exercise its discretion to dismiss the claims against him rather than
remand the action to state court. Other circuits have held that whether post-removal
joinder of a nondiverse party is appropriate depends on “(1) the plaintiff’s motive for
seeking joinder, particularly whether the purpose is to defeat federal jurisdiction; (2) the
timeliness of the request to amend; (3) whether the plaintiff will be significantly injured if
joinder is not allowed; and (4) any other relevant equitable considerations.” Schur, 577
F.3d at 759.
Here, Ms. Foy’s primary motive for joining Mr. Moore appears to be to defeat
federal jurisdiction. Ms. Foy sought leave to amend her complaint approximately two
months after the court denied her first motion to remand. In her motion to amend her
complaint, Ms. Foy explained that “[i]t has since been discovered that Richard Moore is
the State Farm Insurance Agent Contractor that sold Plaintiff and Build NM the
underinsured motorist policy alleged to be defective in this matter.” Pl.’s Mot. to Amend
Compl. 1–2. But there is no indication that this was a recent discovery. Ms. Foy had
listed Mr. Moore as a witness in the parties’ Joint Status Report and Provisional
Discovery Plan filed February 1, 2018 (ECF No. 25, at 6), and she concedes that “[l]ittle
to no discovery has taken place,” Pl.’s Reply in Supp. of Mot. to Amend Compl. 3, ECF
-5-
No. 32. As Ms. Foy allegedly purchased the policy from Mr. Moore in 2012, see First
Am. Compl. 2, there is no reason why he was not included in the initial complaint, and
his addition only after the court denied Ms. Foy’s first motion to remand strongly
suggests that she added him for the sole purpose of destroying diversity.
Ms. Foy’s motion to amend her complaint was timely (it came before the March 1,
2018, deadline to amend pleadings or join additional parties, see Joint Status Report &
Provisional Disc. Plan 2), which weighs in her favor. But she would not be significantly
injured if joinder is not allowed, because Ms. Foy could pursue whatever claims she has
against Mr. Moore in state court instead. As for the relevant equitable considerations, the
court must balance two competing interests: “On one hand, there is the danger of parallel
federal/state proceedings with the inherent dangers of inconsistent results and the waste
of judicial resources. On the other side, the diverse defendant has an interest in retaining
the federal forum.” Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987). On
balance, the court is persuaded that State Farm’s interest in retaining the federal forum
outweighs the considerations favoring remand.
State Farm contends that Mr. Moore’s addition as a party does not divest the court
of jurisdiction, citing the “time-of-filing” rule. Resp. in Opp’n to Pl.’s Second Mot. to
Remand 2, ECF No. 40. But that rule applies when a litigant changes citizenship (say, by
moving to another state) during the pendency of a lawsuit. See Iowa Tribe of Kan. &
Neb. v. Salazar, 607 F.3d 1225, 1233 (10th Cir. 2010). It does not apply here, where
there has been “a change in the parties to the action” rather than “a change in the
-6-
citizenship of a continuing party.” Grupo Dataflux, 541 U.S. at 575. Because Mr.
Moore’s addition would destroy complete diversity between the adverse parties, the court
cannot exercise jurisdiction over the action if he remains a defendant.
NOW, THEREFORE, IT IS ORDERED, ADJUDGED, and DECREED that
(1) Ms. Foy’s Second Motion to Remand to the Second Judicial District Court of
New Mexico filed April 4, 2018 (ECF No. 37), is denied;
(2) Mr. Moore is dropped as a party; and
(3) Ms. Foy’s claims against Mr. Moore are dismissed without prejudice.
DATED this 7th day of May, 2018, at Santa Fe, New Mexico.
UNITED STATES CIRCUIT JUDGE
Sitting by Designation
Counsel:
Paul M. Dominguez, Dominguez Law Firm, LLC, Albuquerque, New Mexico, for
Plaintiff.
Terry R. Guebert and Elizabeth M. Piazza, Guebert Bruckner P.C., Albuquerque, New
Mexico, for Defendant State Farm Mutual Automobile Insurance Co.
-7-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?