Opinion
1:22-CV-942-DII
05-17-2023
JULIA DE LA FUENTE, Plaintiff, v. KINDERCARE EDUCATION LLC, et al., Defendants.
TO THE HONORABLE UNITED STATES DISTRICT JUDGE:
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE UNITED STATESMAGISTRATE JUDGE
Before the court are Plaintiff Julia De La Fuente's Opposed Motion for Leave to File Amended Complaint (Dkt. #4), Plaintiff's Opposed Motion to Remand (Dkt. #5), and all related briefing. After reviewing the pleadings, the relevant case law, as well as the entire case file, and determining that a hearing is not necessary, the undersigned issues the following Report and Recommendation to the District Court.
The motion was referred by then-presiding United States District Judge Lee Yeakel to the undersigned for a Report and Recommendation as to the merits pursuant to 28 U.S.C. § 636(b)(1)(B), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Dkt. #9.
I. Background
Plaintiff De La Fuente brought suit in Texas state court against Defendants KinderCare Education LLC, KinderCare Corporation, KinderCare Education at Work LLC, and KinderCare Learning Centers LLC (together “KinderCare Defendants”). Dkt. #1-4 at 1. This litigation arose from a trip and fall incident, which is alleged to have occurred at a KinderCare premises in Austin, Texas. Id. at 3. De La Fuente alleges she suffered injuries on the premises and that KindCare Defendants failed to exercise ordinary care by not adequately warning of the condition that led to De La Fuente's injuries or making the condition reasonably safe. Id. at 4. De La Fuente alleges vicarious liability and premises liability. Id. at 4-5.
KinderCare Defendants removed under the court's diversity jurisdiction. Dkt. #1.
De La Fuente seeks to add additional non-diverse defendants, Dkt. #4, and to remand the action based on a lack of diversity jurisdiction. Dkt. #5.
KinderCare Defendants oppose both motions. Dkt. #8.
II. Motion to Amend
A case may be removed to federal court if the action is one over which the federal court possesses subject matter jurisdiction. 28 U.S.C. § 1441(a). When considering a motion to remand, “[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); accord DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006).
“A federal court must affirmatively ascertain subject-matter jurisdiction before adjudicating a suit.” Bank of La. v. FDIC, 919 F.3d 916, 922 (5th Cir. 2019). Generally, a federal court has jurisdiction over a case in two circumstances. The first, known as federal question jurisdiction, exists if a case “arises under the Constitution, treaties or laws of the United States.” 28 U.S.C. § 1331; see Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988). The second circumstance in which a federal court has jurisdiction is often termed diversity jurisdiction. See generally 28 U.S.C. § 1332 (setting out the elements required for jurisdiction based on “diversity of citizenship”). “Diversity jurisdiction under 28 U.S.C. § 1332 only exists where the parties are citizens of different states and the amount in controversy exceeds $ 75,000.” White v. FCI USA, Inc., 319 F.3d 672, 674-75 (5th Cir. 2003).
Removal is appropriate “only if none of the parties properly joined and served as defendants is a citizen of the state in which the action was brought.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (citing 28 U.S.C. § 1441(b)(2)). To remove a case based on diversity, the defendant must show that all the prerequisites of diversity jurisdiction contained in § 1332 are satisfied, including the requirement of “complete” diversity of citizenship. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572 (5th Cir. 2004), cert. denied, 544 U.S. 992 (2005). The parties' citizenship is based on the facts at the time of removal. Louisiana v. Am. Nat. Prop. Cas. Co., 746 F.3d 633, 636 (5th Cir. 2014).
Here, there is no dispute regarding the amount in controversy, which De La Fuente alleges to be in excess of $250,000. Dkt. #1-4 at 3.
There is also no dispute regarding the citizenship of the original parties and the parties De La Fuente seeks to add. For the purposes of the diversity analysis, De La Fuente is a citizen of Texas. Dkt. #1-4 at 1; see Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564, 571 (5th Cir. 2011 (“Evidence of a persona's place of residence . . . is prima facie proof of [] domicile.”). KinderCare Learning Centers LLC, KinderCare Education LLC, KinderCare Education and Work LLC are citizens of Delaware and Oregon. Dkt. #1 at 2-3; see Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir. 2008) (the citizenship of a limited liability company is determined by the citizenship of each member of the company). KinderCare Corporation was a Texas corporation but there is no relationship between it and the other Defendants.
De La Fuente disputes whether KinderCare Defendants have “proved” their citizenship. Dkt. #5 at 2; see infra at 8-10 (resolving De La Fuente's purported evidentiary issue).
The court takes judicial notice that KinderCare Corporation forfeited its tax status in 1999 and that the year 2023 is more than three years after 1999. See Dkt. #1-9 at 3. Accordingly, KinderCare Corporation was improperly joined to this lawsuit. TEX. TAX CODE § 171.252(a) (the effect of forfeiture denies the right to sue or defend in a Texas court); TEX. BUS. ORGS. CODE § 11.356(a)(1) (terminated entity survives for the purpose of prosecuting or defending a lawsuit for three years after tax status forfeiture).
Thus, as a preliminary matter, removal was proper.
However, a court's diversity jurisdiction may be defeated by the addition of a non-diverse defendant. See Doleac ex rel. Doleac v. Michalson, 264 F.3d 470, 477 (5th Cir. 2001). Because joinder of a non-diverse defendant defeats a court's diversity jurisdiction, the court has discretion to permit or deny such a joinder. See 28 U.S.C. § 1447(e) (“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.”); Schindler v. Charles Schwab & Co., 2005 WL 1155862, at *2 (E.D. La. May 12, 2005) (finding a plaintiff must seek leave to amend if joining a non-diverse party even if the plaintiff has not yet used its one free amendment and is seeking to amend within the time allowed by FRCP 15(a)(1)).
The Fifth Circuit has instructed district courts to exercise discretion when considering a proposed amendment which adds a non-diverse defendant and deprives the court of jurisdiction. See Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987). The court should scrutinize the proposed amendment more closely than it would consider an ordinary amendment under Rule 15, which requires a court to “freely give leave to amend when justice so requires.” Id.; FED. R. CIV. P. 15(a)(2). Under Hensgens, some of the factors a court should consider are: (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 the amendment; (3) whether the plaintiff will be significantly injured if amendment is not allowed; and (4) any other factor bearing on the equities. Hensgens, 833 F.2d at 1182. If the court permits amendment, then it must remand the case to state court. Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667, 679 (5th Cir. 2013).
Here, De La Fuente seeks to amend her petition post-removal to join two additional defendants, Spencer Perez and Rebecca Simpson, both of whom are citizens of Texas. See Dkt. #4 at 2. Because the proposed defendants are Texas citizens, their joinder would defeat diversity and require remand. Id. Whether De La Fuente should be permitted to make this amendment must therefore be analyzed under the Hensgens factors.
In considering the first Hensgens factor, courts consider whether the plaintiff knew or should have known the identity of the non-diverse defendant when she filed her original state court petition. See Rouf v. Cricket Commc'ns, Inc., 2013 WL 6079255, at *2 (S.D. Tex. Nov. 19, 2013) (denying a motion to amend after finding that plaintiffs knew about the proposed non-diverse defendants when suit was filed). Further, if the plaintiff moves to amend their petition to add a non-diverse defendant after the notice of removal has been filed, some courts have considered this evidence tending to show a purpose to destroy diversity jurisdiction. Gallegos v. Safeco Ins. Co. of Ind., 2009 WL 4730570, *4 (S.D. Tex. Dec. 7, 2009) (filing a motion for leave to amend and for remand less than a month after removal evidenced the amendment's principal purpose was defeating jurisdiction); see also Karr v. Brice Bldg. Co., 2009 WL 1458043, *4 (E.D. La. 2009). The first Hensgens factor has been described as the “most important” factor of the four. Flores v. Arch Ins. Co., 2015 WL 4430866, at *2 (W.D. Tex. July 17, 2015) (citing Adey/Vandling, 2012 WL 534838, at *4).
Here, the first factor weighs heavily against amendment. Perez was the manager on duty at the time of the incident, and De La Fuente's motions asserts he spoke with her after she fell. Dkt. #4 at 2. Simpson “was the center director at South Congress KinderCare” and “was present at the time of the incident and spoke with [De La Fuente] after she fell.” Id. De La Fuente states that the proposed-Defendants' names were not known to her when she filed her petition in state court “because Plaintiff is only the grandmother of a child who went to the daycare, she is not the mother.” Id. De La Fuente also reports that Perez did not provide her with his name at the time of the incident. Id. She admits that-apparently within weeks of filing her original petition in state court-“[t]hrough further investigation, the names and identities of Defendant Perez and Defendant Simpson became known.” Id.
The Motion's paragraph discussing Rebecca Simpson's role is unclear and reads: “He was present at the time of the incident and spoke with Plaintiff after she fell. Defendant Perez refused to help Plaintiff following her fall.” Dkt. #4 at 2 (emphasis added). Based on context and the placement of these sentences in the document, in a paragraph about Simpson and following a paragraph about Perez, the undersigned proceeded as if “he” and “Perez” are typos and De La Fuente intended to refer to Simpson.
Despite her knowledge of Perez's and Simpson's involvement in the incident, De La Fuente initially chose not to join them as parties. Further, the claims that she now attempts to assert against Perez and Simpson were available at the time of the state court petition. Indeed, she alleges the same two causes of action against all Defendants: vicarious liability and premises liability. Dkt. #1-4 at 4-5; Dkt. #4-1 at 5. Thus, nothing in the proposed amendment provides any new facts or legal bases unavailable to De La Fuente at the time of their state court petition. Indeed, she does not elaborate as to why the identities were not and could not be known through investigation prior to the filing of the state court petition even as “further investigation” revealed within weeks of filing the state court petition the names De La Fuente now seeks to add. See id. Accordingly, the first factor weighs against allowing the joinder of Perez and Simpson.
For the second factor, courts consider the “procedural posture of the case, particularly whether trial or pre-trial dates were scheduled, or any significant activity beyond the pleading stage has occurred.” Murphy v. Sterline Jewelers Inc., 2018 WL 7297905, at *7 (W.D. Tex. Feb. 13, 2018) (quoting Anzures v. Prologis Texas, LLC, 886 F.Supp.2d 555, 565 (W.D. Tex. 2012)). Courts will also consider how much time has passed between the plaintiff's motion to amend and the filing of the original petition and notice of removal. Murphy, 2018 WL 7297905, at *7. Generally, a plaintiff is not dilatory where no significant activity beyond the pleading stage has occurred. Boyce v. CitiMortgage, Inc., 992 F.Supp.2d 709 (W.D. Tex. 2014). However, “the analysis is different when the proposed amendment is to add a non-diverse defendant shortly after removal based on federal diversity jurisdiction.” Gallegos, 2009 WL 4730570, *4 (citing Irigoyen v. State Farm Lloyds, 2004 WL 398553 (S.D. Tex. Aug. 1, 2016)). “A delay of two months after the filing of the original complaint or almost thirty days after the notice of removal has been found dilatory,” particularly when, at the time of filing, a plaintiff knew of the potential defendant's role in the case. Irigoyen, 2004 WL 398553, at *4. That is precisely the circumstances De La Fuente presents here.
De La Fuente's motion to add Perez and Simpson was filed less than a month after KinderCare Defendants removed the case to federal court, which took place roughly one month after the suit was first filed in state court. See Dkts. #1, #1-3 & #4. When it appears that a plaintiff's true motive in seeking to add a defendant is to defeat jurisdiction, the speed with which the amendment is requested is not the focus. See Adey/Vandling, Ltd. v. Am. First Ins. Co., 2012 WL 534838, at *4 (W.D. Tex. Feb. 17, 2012). Instead, the timing of the amendment being made shortly after removal suggests that De La Fuente was dilatory in not joining Perez and Simpson in the first instance. Though this factor is not strong, it still supports denying leave to amend.
The third Hensgens factor considers whether a plaintiff will be significantly injured if amendment is not allowed. For this factor, courts ask “whether a plaintiff can be afforded complete relief in the absence of the amendment.” Loewe v. Singh, 2010 WL 3359525, at *2 (S.D. Tex. Aug. 23, 2010). Courts addressing this issue often consider whether the named defendant would be unable to satisfy a future judgment. Gallegos, 2009 WL 4730570, at *5; O'Connor v. Auto. Ins. Co. of Hartford Conn., 846 F.Supp. 39, 41 (E.D. Tex. 1994). Conversely, courts also look to plaintiff's likely recovery from the proposed non-diverse defendant. Gallegos, 2009 WL 4730570, at *5; Irigoyen, 2004 WL 398553, at *5. Also relevant is “whether the plaintiff will be forced to litigate their action against the non-diverse defendants in a different court system, on a different timetable, subject to different procedural rules and conflicting results, and under the weight of additional financial burden.” Adey/Vandling, Ltd., 2012 WL 534838, at *4.
Here, denying De La Fuente's leave to add Perez and Simpson could force her to file a separate suit against them, something that would qualify as harm to De La Fuente. However, the addition of Perez and Simpson is not necessary-De La Fuente can adequately recover for any alleged liability of Perez and Simpson from KinderCare Defendants under the doctrine of respondeat superior.
Finally, the court considers any other factors bearing on the equities. One factor noted by the parties is KinderCare Defendants' interest in maintaining a federal forum. Dkt. #8 at 9. Courts often consider this interest, although this fact is “likely to be present in every case that seeks to add a non-diverse defendant.” City of Kerrville v. C&C Groundwater Serv. LLC, 2012 WL 12864944, at *3 (W.D. Tex. July 20, 2012). Permitting amendment would destroy federal jurisdiction, depriving KinderCare Defendants “of a properly invoked federal forum.” See, Murphy, 2018 WL 7297905, at *7 For her part, De La Fuente does not identify any additional equitable factors which have not already been addressed by the court.
De La Fuente did not submit a reply brief.
Reviewing the Hensgens factors as a whole, they suggest that the court should exercise its discretion by denying De La Fuente's request to amend to add Perez and Simpson. De La Fuente knew of Perez and Simpson (though maybe not their names) and their potential liability at the time she filed suit, yet she waited until after removal to seek to add them. De La Fuente will not be prejudiced if she is denied leave to join Perez and Simpson since she can seek recovery from KinderCare Defendants for their actions under the respondeat superior doctrine. The other equities urge in favor of denying leave.
III. Motion to Remand
De La Fuente argues that this action should be remanded for lack of subject matter jurisdiction because this court will not have jurisdiction based on the diversity of the parties if Perez and Simpson are joined. Dkt. #3 at 1, 3-5. Defendant responds with an argument that Perez and Simpson should not be joined and thus the diversity of citizenship and amount in controversy permit the court to continue exercising jurisdiction.
De La Fuente also argues that the removing party has the burden of “proving diversity of citizenship” and that KinderCare Defendants have “not carried [their] burden.” Dkt. #5 at 2. De La Fuente misapprehends the law and the case which she cites. “The burden of pleading diversity of citizenship is upon the party invoking federal jurisdiction, and if jurisdiction is properly challenged, that party also bears the burden of proof.” Guerrero v. State Farm Mut. Auto. Ins. Co., 181 F.3d 97, 97 (5th Cir. 1999) (emphasis added) (citing Ray v. Bird & Son & Asset Realization Co., 519 F.2d 1081, 1082 (5th Cir. 1975)). Here, KinderCare Defendants properly pleaded their citizenship, but De La Fuente did not properly challenge the court's jurisdiction.
In Guerrero, the plaintiff properly challenged the court's jurisdiction by presenting evidence of the defendant's non-diverse citizenship. Guerrero, 181 F.3d at 97. But unlike in Guerrero, where the plaintiff “entered into evidence” documents tending to show the defendant's citizenship, id., De La Fuente has merely alleged that KinderCare Defendants have not supported their citizenship with evidence. Dkt. #5 at 3. But De La Fuente is also incorrect on this assertion. KinderCare Defendants submitted affidavit testimony proving their non-Texas citizenship, and an affidavit may adequately support a finding of diversity of citizenship. See, e.g., Beneplace, Inc. v. Pitney Bowes, Inc., No. A-15-CV-65-LY-ML, 2016 WL 11582929, at *6 (W.D. Tex. June 30, 2016) (“A court may consider information contained in an affidavit filed subsequent to the notice of removal to determine whether there is an adequate basis for removal.” (quotation omitted)), report and recommendation adopted, 2016 WL 11582930 (W.D. Tex. July 29, 2016).
Because all properly joined parties are diverse and the amount in controversy exceeds $75,000, remand is not required. Furthermore, De La Fuente's challenge to KinderCare Defendants' citizenship is improper and inaccurately states that KinderCare Defendants did not provide evidence of their citizenship. Accordingly, the undersigned will not recommend remand.
IV. Conclusion
This court concludes that amendment to add non-diverse parties is improper based on the Hensgens factors. Thus, because De La Fuente and all properly joined KinderCare Defendants are citizens of different states, diversity exists; and because the amount in controversy exceeds $75,000 this court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Furthermore, KinderCare Defendants properly invoked this federal forum. Accordingly, remand is not required.
V. Recommendations
The undersigned RECOMMENDS that the District Court DENY Plaintiff's Opposed Motion for Leave to File Amended Complaint (#4) and DENY Plaintiff's Opposed Motion to Remand (Dkt. #5).
In light of this Report and Recommendation, the referral to the magistrate should be ended.
VI. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).