Kunkel v. CUNA Mutual Insurance Society
Filing
20
OPINION AND ORDER denied re 10 MOTION to Amend/Correct Complaint and Add A Party filed by Patricia A. Kunkel. Signed by Magistrate Judge Norah McCann King on 10/18/11. (rew)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
PATRICIA A. KUNKEL, individually,
and as Executor of The Estate of
Frederick L. Kunkel a/ka Fred Kunkel,
Plaintiff,
vs.
Civil Action 2:11-CV-492
Judge Graham
Magistrate Judge King
CUNA MUTUAL INSURANCE
SOCIETY,
Defendant.
OPINION AND ORDER
This matter is before the Court on plaintiff’s motion for leave to
amend the complaint to add Hopewell Federal Credit Union (“Hopewell”) as
a defendant.
Plaintiffs’ Motion for Leave to Amend their Complaint and
Add the Hopewell Federal Credit Union as a Party Defendant, Doc. No. 10
(“Motion to Amend”).
I.
BACKGROUND
Plaintiff, a resident of Ohio, filed the original complaint in the
Court of Common Pleas in Licking County, Ohio.
Insurance Contract and Bad Faith, Doc. No. 3.
Complaint for Breach of
The Complaint named as the
only defendant CUNA Mutual Insurance Society, identified as a resident
of Iowa, and alleged that defendant issued an insurance policy to
plaintiff and her husband but denied her claim for benefits in bad faith.
The Complaint asserts claims of breach of contract and bad faith.
¶¶ 1, 6, 8.
Id.
Although the Complaint identified Hopewell as defendant’s
agent “[a]t all times relevant to the allegations,” plaintiff did not
advance claims against Hopewell or allege that it was Hopewell that
issued the policy.
Id.
On June 7, 2011, defendant filed a notice of
removal premised on diversity jurisdiction.
Defendant’s Notice of
Removal of Cause, Doc. No. 1.
Plaintiff later filed the instant Motion to Amend, a two-page
document that includes no legal citations.
Doc. No. 10.
The proposed
amended complaint, which would again assert a breach of contract claim
and a bad faith claim, would join Hopewell as a defendant and would add
one minor allegation:
The breach of contract claim now alleges that the
certificate of insurance “was never to delivered to the borrowers as
required by Ohio law.”
Amended Complaint for Breach of Insurance
Contract and Bad Faith, Doc. No. 10-1, ¶ 6 (“Amended Complaint”).
In her
supporting memoranda, plaintiff argues without elaboration that Hopewell
is a necessary party on the basis of Hopewell’s alleged agency and the
alleged failure to deliver the certificate of insurance.
Motion to
Amend, p.2; see also Plaintiffs’ Response to Defendant’s Opposition to
Plaintiffs’ Motion to Amend, Doc. No. 17, p.1.
In response, defendant argues that plaintiff is attempting by her
motion to destroy diversity jurisdiction by adding a non-diverse party.
Defendant’s Opposition to Plaintiff’s Motion to Amend and Correct, Doc.
No. 13 (“Opposition to Motion to Amend”).
Defendant argues that denial
of the Motion to Amend is appropriate under 28 U.S.C. § 1447(e) because
Hopewell is a non-diverse party and because the allegations concerning
Hopewell are irrelevant to the claims for relief.
Id.
Defendant also
argues against joinder under fraudulent joinder principles.
Id.
Plaintiff does not dispute that Hopewell is a non-diverse party.
II.
DISCUSSION
Pursuant to 28 U.S.C. § 1447, the Court “may deny” a request to add
an additional defendant if the request follows removal from state court
and “would destroy subject matter jurisdiction.”
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28 U.S.C. § 1447(e).
Although the Sixth Circuit has not addressed the standard that governs
the application of 28 U.S.C. § 1447(e), it is clear from the language of
the statute and its application by other courts that denial of leave to
amend
in
order
discretionary.
to
join
an
additional
party
under
the
statute
is
J. Lewis Cooper Co. v. Diageo N. Am., Inc., 370 F. Supp.
2d 613, 618 (E.D. Mich. 2005); Mayes v. Rapoport, 198 F.3d 457, 462 (4th
Cir. 1999).
Here, because plaintiff does not dispute that Hopewell is
a non-diverse party, there is no question that its addition would destroy
subject matter jurisdiction.
The only remaining question is whether
denial is an appropriate exercise of the Court’s discretion.
In exercising the Court’s discretion under 28 U.S.C. § 1447(e),
courts have considered “the diverse defendant’s interest in selecting a
federal forum . . . together with four other factors: (1) the extent to
which the purpose of the amendment is to defeat jurisdiction; (2) whether
the plaintiff was dilatory in seeking the amendment; (3) whether the
plaintiff will be injured significantly if the amendment is not allowed;
and (4) any other factors bearing on the equities.”
J. Lewis Cooper, 370
F. Supp. 2d at 618 (internal quotation marks omitted).
Here, plaintiff does nothing to demonstrate the legal basis for
Hopewell’s
addition
or
to
refute
defendant’s
contention
that
the
allegations concerning Hopewell are irrelevant to the breach of contract
and bad faith claims.1 Plaintiff does not allege that Hopewell is a party
to the contract of insurance that was allegedly breached and so cannot
establish the breach of any contract between plaintiff and Hopewell. See
Pavlovich v. Nat’l City Bank, 435 F.3d 560, 565 (6th Cir. 2006) (“To
1
Plaintiff does not identify the state law that she believes applies,
but because she also does not refute defendant’s application of Ohio law to
her claims, see Opposition to Motion to Amend, Doc. No. 13, p.3, the Court
assumes that, for purposes of this motion, Ohio law applies to plaintiff’s
claims.
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establish a breach of contract, a plaintiff must show that a contract
existed,
the
plaintiff
performed,
the
defendant
breached,
and
the
plaintiff suffered damages.”) (citing Wauseon Plaza Ltd. P’ship v.
Wauseon Hardware Co., 807 N.E.2d 953, 957 (Ohio Ct. App. 2004)).
The
bare allegation that Hopewell acted as defendant’s agent is not enough
to advance a cause of action for breach of contract against Hopewell
based on the contract between plaintiff and defendant.
See James G.
Smith & Assocs., Inc. v. Everett, 439 N.E.2d 932, 935 (Ohio Ct. App.
1981) (“An agent who acts for a disclosed principal and who acts within
the scope of his authority and in the name of the principal is ordinarily
not liable on the contracts he makes.”); Restatement (3d) Of Agency §
6.01 (2006) (“When an agent acting with actual or apparent authority
makes a contract on behalf of a disclosed principal . . . the agent is
not a party to the contract unless the agent and third party agree
otherwise.”).
In addition, plaintiff does not allege that any of
Hopewell’s actions amount to an independent breach of contract.
Amended
Complaint, Doc. No. 10-1, ¶¶ 1, 5 (alleging only that Hopewell was
involved in selling the insurance policy and submitting plaintiff’s claim
to defendant).
Although plaintiff alleges without citation that the
certificate of insurance “was never delivered to the borrowers as
required by Ohio law,” Amended Complaint, Doc. No. 10-1, ¶ 6, that
allegation is irrelevant to the claims pursued by plaintiff.
She does
not allege that the duty to deliver the certificate of insurance is a
contractual duty, nor has she advanced claims based on that alleged
statutory duty.
It is therefore clear that plaintiff has no breach of
contract claim against Hopewell.
Similarly, plaintiff does not accuse Hopewell of any bad faith
conduct, nor does she allege that Hopewell had any part in defendant’s
refusal of the claim. In short, plaintiff does not advance a bad faith
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claim against Hopewell.
Cf. Amended Complaint, Doc. No. 10-1, ¶ 8
(alleging that “Defendant, CUNA Mutual Insurance Society, in bad faith
refused
to
make
payment
under
the
policy
without
reasonable
justification.”); see Zoppo v. Homestead Ins. Co., 644 N.E.2d 397,
syllabus ¶ 1 (Ohio 1994) (“An insurer fails to exercise good faith in the
processing of a claim of its insured where its refusal to pay the claim
is
not
predicated
upon
circumstances
that
furnish
reasonable
claims
purportedly
justification therefor.”).
The
fact
that
plaintiff
cannot
prevail
on
asserted against Hopewell suggests that the purpose of the requested
amendment is to defeat this Court’s jurisdiction. Cf. Siedlik v. Stanley
Works, Inc., 205 F. Supp. 2d 762, 765 (E.D. Mich. 2002) (noting that the
consideration of “the extent to which the purpose of the amendment is to
defeat
jurisdiction
.
.
.
favors
Plaintiffs
because,
for
reasons
discussed above, Plaintiffs have stated a legitimate claim against [the
proposed defendant]”) (emphasis added).
In addition, the similarity of
the original Complaint and the tendered Amended Complaint strongly
suggests that plaintiff was dilatory in seeking to add a defendant.
Plaintiff identified Hopewell as defendant’s agent in the original
Complaint and thus could have joined Hopewell as a defendant at that
time.
See Wells v. Certainteed Corp., 950 F. Supp. 200, 201 (E.D. Mich.
1997) (“Plaintiff has asserted no reason why [the proposed defendant] was
not named as a defendant in the original action.”).
For all these reasons, this Court concludes that its discretion
under 28 U.S.C. § 1447(e) is better exercised in denying plaintiff’s
Motion to Amend.
WHEREUPON plaintiff’s Motion to Amend, Doc. No. 10, is DENIED.
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s/Norah McCann King
Norah McCann King
United States Magistrate Judge
October 18, 2011
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