Skeens v. Mutual of Omaha Insurance Company
Filing
25
MEMORANDUM OPINION AND ORDER granting plaintiff Sandra Skeens' 8 MOTION to amend her complaint, insofar as it adds claims and parties that do not defeat jurisdiction; denying joinder of the Kanawha County Board of Education; directing plaintiff to submit a revised amended complaint for filing, consistent with this order, by 4/26/2013. Signed by Judge John T. Copenhaver, Jr. on 4/12/2013. (cc: attys) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
SANDRA SKEENS,
Plaintiff,
v.
Civil Action No. 2:12-cv-5049
MUTUAL OF OMAHA INSURANCE CO.,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is the motion by plaintiff Sandra Skeens for
leave to amend her complaint, filed November 15, 2012.
Mutual
of Omaha Insurance Company (“Mutual of Omaha”) responded in
opposition on December 7, 2012.
The court grants the motion to
the extent set forth herein.
I. Background
This action arises from Mutual of Omaha‟s denial of
Skeens‟ claim for Long Term Disability (“LTD”) benefits.
Skeens
is a resident of Charleston, West Virginia and prior to her
disability was an employee of the Kanawha County School System.
Compl. ¶ 5.
Mutual of Omaha is a Nebraska corporation with its
principal place of business in Omaha, Nebraska.
Not. Removal
¶ 1.
Through her employer, Skeens held a Mutual of Omaha
Long Term Disability Insurance Policy.
Compl. ¶ 5.
became disabled on or around March 8, 2011.
Skeens
Id. ¶ 6.
At some
time thereafter Skeens made a claim for LTD benefits, and Mutual
of Omaha denied her claim on January 13, 2012.
Compl. Ex. A.1
Proposed Amend.
On April 24, 2012, the Social Security
Administration issued an order declaring that Skeens was
completely disabled.
Compl. ¶ 9.
Skeens initiated this action on or about August 13,
2012 in the Circuit Court of Kanawha County, West Virginia.
She
states in her two-count complaint that Mutual of Omaha
improperly elevated its interests above hers and failed to
adequately evaluate her claims.
Id. ¶¶ 8, 10.
Count I alleges
that Mutual of Omaha breached her insurance contract and its
duty of good faith and fair dealing.
Count II sets forth six
violations of the West Virginia Unfair Trade Practices Act
(“UTPA”) relating to Mutual of Omaha‟s alleged failure to
1
The original complaint does not include the date of denial.
2
promptly and fairly handle Skeens‟ claim.
See W. Va. Code § 33-
11-4(9).
On September 4, 2012 the defendant removed to federal
district court, invoking the court‟s diversity jurisdiction.
See 28 U.S.C. § 1332.
The parties held a Rule 26(f) scheduling
conference, and on October 18, 2012 the court entered a
scheduling order.
The scheduling order set a December 15, 2012
deadline for Skeen to request amendment or joinder.
She filed
the pending motion to amend on that deadline.
Skeens‟ proposed amended complaint represents a
significant expansion of the original complaint.
She adds two
previously unnamed parties: the United of Omaha Life Insurance
Company (“United of Omaha”) and the Kanawha County Board of
Education (“Board” or “Board of Education”).
She also adds two
new claims, set out in Counts II and IV, bringing the total to
four.
As numbered in the proposed amended complaint, these
include Count I, breach of contract; Count II, common law bad
faith; Count III, violations of the UTPA;2 and Count IV,
constructive fraud and/or negligent misrepresentation.
2
The proposed amended complaint drops three UTPA violations from
the original complaint and adds a new one, reducing the total
from six to four.
3
II. The Governing Standard
Federal Rule of Civil Procedure 15(a)(2) provides that
a party who can no longer amend a pleading as of right can still
amend by obtaining “the opposing party‟s written consent or the
court‟s leave.”
Fed. R. Civ. P. 15(a)(2).
“The court should
freely give leave when justice so requires.”
Id. (emphasis
added).
Under the Rule 15 analysis, “[t]he law is well settled
„that leave to amend a pleading should be denied only when the
amendment would be prejudicial to the opposing party, there has
been bad faith on the part of the moving party, or the amendment
would be futile.‟”
Edwards v. City of Goldsboro, 178 F.3d 231,
242 (4th Cir. 1999) (quoting Johnson v. Oroweat Foods Co., 785
F.2d 503, 509 (4th Cir. 1986)).
The existence of prejudice to
an opponent “is reason sufficient to deny amendment,” and the
“absence of prejudice, though not alone determinative, will
normally warrant granting leave to amend.”
Davis v. Piper
Aircraft Corp., 615 F.2d 606, 613 (4th Cir. 1980).
There is no
prejudice where a defendant “was from the outset made fully
aware of the events giving rise to the action.”
Id.
Amendment
is futile if “the proposed amended complaint fails to satisfy
the requirements of the federal rules,” such as Rule 12(b)(6).
United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525
4
F.3d 370, 376 (4th Cir. 2008) (quoting United States ex rel.
Fowler v. Caremark RX, LLC, 496 F.3d 730, 740 (7th Cir. 2007)).
Notwithstanding the permissive standard for amendment
under Rule 15(a)(2), a court has the authority to reject joinder
when a plaintiff seeks to add a non-diverse defendant in a
diversity case following removal.
See Mayes v. Rapoport, 198
F.3d 457, 462 n.11 (4th Cir. 1999).
“Careful scrutiny of
attempts at post-removal, non-diverse joinder protects the
diverse defendant‟s „interest in keeping the action in federal
court.‟”
Id. at 463 (quoting Coley v. Dragon Ltd., 138 F.R.D.
460, 465 (E.D. Va. 1990)).
The analysis begins with 28 U.S.C.
§ 1447(e), which sets forth “two options.”
Id. at 461.
The
options are as follows:
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.
28 U.S.C. § 1447(e).
“These are the only two options for a
district court faced with a post-removal attempt to join a
nondiverse defendant; the statute does not allow a district
court to retain jurisdiction once it permits a nondiverse
defendant to be joined in the case.”
(footnote omitted).
5
Mayes, 198 F.3d at 462
The choice between the two options is “committed to
the sound discretion of the district court.”
Id.
In making the
decision, the court is “entitled to consider all relevant
factors” including,
[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 amendment,
[3] whether the plaintiff will be significantly
injured if amendment is not allowed, and [4] any other
factors bearing on the equities.
Id. at 462 (citation and internal quotation marks omitted).
A
showing of fraudulent joinder is “yet another element” for a
court to consider in its “„flexible, broad discretionary
approach.‟”
Id. at 463 (quoting Gum v. Gen. Elec. Co., 5 F.
Supp. 2d 412, 415 n. 8 (S.D. W. Va. 1998)).
Fraudulent joinder
doctrine “does not directly apply after removal because the
district court already possesses jurisdiction.”
Id.
However,
“if the defendants can carry the heavy burden of proving
fraudulent joinder, that fact should be a factor -- and perhaps
the dispositive factor -- that the court considers in deciding
whether a plaintiff may join a nondiverse defendant.”
Id.
III. Discussion
In her brief motion to amend, Skeens cites only Rule
15.
She states that the amendment does not prejudice the
existing defendant because the case was removed less than two
6
months prior to the filing of the motion, and the motion was
filed within the timeframe set by the court‟s scheduling order.
She adds that the amendment is necessary to allow her to “pursue
additional claims” against the original and added defendants.
The court agrees that the amendment satisfies Rule 15‟s liberal
“freely give leave” standard.
The § 1447(e) analysis, however, is more exacting and
is the focus of Mutual of Omaha‟s opposition and Skeens‟ reply.
The court will address each of the four prongs of the analysis
found in Mayes.
The first prong of Mayes, which considers whether the
primary purpose of the amendment is to defeat jurisdiction,
weighs in favor of denying the motion to remand.
Skeens was
aware of the Board of Education‟s role in handling her
disability claim when she filed her state court complaint.
She
stated in the original complaint that she was employed by, and
held the disability insurance policy through, the Board of
Education.
Compl. ¶ 5.
Also, Mutual of Omaha represents, and
Skeens does not contest, that the parties have conducted no
written discovery or depositions that could have uncovered
previously unavailable information.
See Gum, 5 F. Supp. 2d at
415 (finding that the primary purpose was to defeat jurisdiction
where the “amendments were filed soon after the case was removed
7
and before significant discovery occurred”).
Skeens‟ decision
not to name the Board of Education as a party at the outset
indicates that the primary purpose of the amendment is to defeat
jurisdiction.
O‟Connor v. Auto. Ins. Co. of Hartford Conn., 846
F. Supp. 39 (E.D. Tex. 1994) (treating a request for joinder
with “much suspicion” where the plaintiff acknowledged the
party‟s role in its state court complaint “yet failed to sue
that party in state court”).
Skeens has offered no persuasive explanations to the
contrary.
She states that “first and foremost,” she has joined
the Board of Education because an “ERISA disability complaint
was used as a model, and in it we normally sue the plan
sponsor.”
Pl.‟s Reply 3.
This does not address why the plan
sponsor could not have been added four months earlier with the
original filing, and at any rate, the parties agree that the
present case is not governed by ERISA.
Skeens adds that the
amended complaint was modeled after the “eerily similar case” of
Toni Penix, which also involved a disability policy that was
sold by Mutual of Omaha to the Board.
Id. at 4.
That may be
so, but it does not explain why Skeens only now seeks amendment.
And while, as she points out, the defendants in Penix did not
assert fraudulent joinder as to the Board of Education, that
case did not concern a post-removal amendment to join a
8
nondiverse defendant.
The weakness of Skeens‟ alternate
explanations suggests that her primary reason for seeking to
join the Board at this time, rather than with the original
complaint, is to defeat jurisdiction.
The doubtful viability of Skeens‟ claims against the
Board further indicate that the amendment‟s purpose is to defeat
jurisdiction.
As Mutual of Omaha emphasizes, Skeens has not
alleged or demonstrated any contractual relationship between
herself and the Board or any role of the Board in handling or
paying her claims.
Def.‟s Opp‟n 7.
Only in Count IV does
Skeens allege any wrongdoing by the Board of Education.
There
she states that the Board, along with Mutual of Omaha, United of
Omaha, and Does 16 through 20, “made one or more representations
to Plaintiff, Sandra Skeens, that her LTD benefits were subject
to the ERISA statute.”
Prop. Amend. Compl. ¶ 44.
While she
does attach a denial letter from Mutual of Omaha stating that
she has the right to bring a civil suit “[i]f [her] plan is
governed by [ERISA],” she alleges no particular acts or
omissions by the Board respecting ERISA.
Id. Ex. A.
The
proposed amended complaint alleges no facts from which the court
could conclude that the purpose of the Board‟s joinder is to
pursue a legitimate claim rather than to defeat jurisdiction.
9
Mayes‟ second prong, regarding dilatoriness, also
supports denial of the motion to amend.
As explained above,
Skeens has offered no persuasive reason for naming the Board as
a defendant now rather than in the original complaint or in the
four months from that date until her filing of the present
motion.
Gum, 5 F. Supp. 2d at 415 (finding the plaintiff to be
dilatory where he “was aware of the facts underlying the
proposed allegations, such that he could have included them ab
initio” (footnote omitted)).
The court disagrees with Skeens‟ contention that,
because she complied with the scheduling order deadline for
amendment and joinder, the motion can “in no way . . . be seen
as dilatory.”
Pl.‟s Reply 5.
The purpose of a scheduling order
is to facilitate case management.
It has little bearing on the
Mayes inquiry into dilatoriness, which serves to protect the
defendant‟s interest in choosing a forum.
See 198 F.3d at 463.
Compliance with a scheduling order does not cure a plaintiff‟s
failure to explain why a defendant was not joined at the outset.
As for the third prong of Mayes, Skeens has failed to
demonstrate that any significant injury will result if the Board
is not joined.
Her only allegation against the Board is also
asserted against Mutual of Omaha and United of Omaha, as well as
five Does.
Prop. Amend. Compl. ¶ 44.
10
It appears likely that
Skeens can be afforded complete relief from other defendants.
See O‟Connor, 846 F. Supp. at 41 (finding no serious prejudice
where there is “absolutely nothing to indicate” that existing
defendants “would be unable to satisfy a future judgment” and
the plaintiff does not “urge that [the defendant he seeks to
join] is the sole cause of his injury”).
Additionally, Skeens
will retain, if need be, the ability to test her claims against
the Board in state court.
See Gum, 5 F. Supp. 2d at 415
(“Although this results in the potential for parallel
state/federal proceedings, the mere goals of judicial efficiency
and comity do not alone govern the Court‟s exercise of
discretion.”).
Skeens‟ other arguments regarding prejudice have no
merit.
She claims, without adequate explanation, that she “will
be unable to explore what the Board of Education promised her in
providing her with disability benefits” if the Board of
Education is not joined.
Pl.‟s Reply 5.
She states that this
is relevant to her Count IV claims of negligent
misrepresentation, but her proposed amended complaint does not
specify the time, place, or maker of any alleged
misrepresentation by the Board of Education.
In any event, full
recovery appears to be otherwise available in this action, and a
claim against the Board of Education can be brought in state
11
court.
She also argues that without the Board as a named
defendant it will be more difficult for her to get copies of the
relevant employee handbook and other documents.
Even if true,
this inconvenience would not amount to a significant injury.
Mayes‟ final prong instructs courts to consider any
other factors bearing on the equities.
An additional factor
weighing in favor of denial is “the interest of Defendants in
retaining a federal forum.”
Gum, 5 F. Supp. 2d at 415.
“„The
removal statutes are predicated on giving the diverse defendants
a choice of a state or federal forum.‟”
Id. (quoting Hensgen v.
Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987)).
While a
court may also consider a defendant‟s showing of fraudulent
joinder, Mayes, 198 F.3d at 463, the absence of fraudulent
joinder does not require acceptance of an amendment that would
result in remand.
While fraudulent joinder standing alone would
warrant removal, a removing defendant does not need to prove it
in the context of a post-removal amendment.
The balance of the equities, as guided by the four
prongs of Mayes, requires that the court deny Skeens‟ joinder of
the Board of Education, while allowing an otherwise permissible
amendment.
12
IV.
It is, accordingly, ORDERED that Skeens‟ motion to
amend be, and it hereby is, granted insofar as it adds claims
and parties that do not defeat jurisdiction.
Joinder of the
Kanawha County Board of Education is denied.
Skeens is directed to submit a revised amended
complaint for filing, consistent with this order, no later than
April 26, 2013.
The Clerk is directed to forward copies of this
written opinion and order to all counsel of record.
ENTER:
April 12, 2013
John T. Copenhaver, Jr.
United States District Judge
13
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?