Opinion
03-CV-0153A(F).
June 3, 2004
COLLINS MAXWELL, LLP, Attorneys for Plaintiffs, SHAWN WILFRED CAREY, of Counsel, Buffalo, New York.
WEBSTER SZANYI, LLP, Attorneys for The Andersons, Inc., CHARLES E. GRANEY, of Counsel, Buffalo, New York.
ANSPACH, SERRAINO, MEEKS NUNN, LLP, Attorneys for CSX Transportation, Inc., J. ROY NUNN, of Counsel, Buffalo, New York.
SLIWA LANE, Attorneys for Transco Railway Products, Inc., STANLEY J. SLIWA, of Counsel, Buffalo, New York.
DECISION and ORDER
JURISDICTION
This action was referred to the undersigned by Honorable Richard J. Arcara on May 16, 2003 for all pretrial matters. The matter is presently before the court on motions filed by Plaintiffs on May 2, 2003 to amend the Complaint and to remand (Doc. No. 21), by Defendant CSX Transportation Inc. on July 10, 2003 for judgment on the pleadings (Doc. No. 26), by Defendant The Andersons, Inc. on July 11, 2003 for judgment on the pleadings (Doc. No. 30), and by Defendant Transco Railway Products, Inc. on September 26, 2003 for an order precluding Plaintiffs from presenting certain evidence at trial or, alternatively, to compel discovery (Doc. No. 37).
In accordance with prior holdings, the court has addressed the motion to remand as a non-dispositive motion. See Mahl Brothers Oil Co, Inc. v. St. Paul Fire Marine Ins. Co., 307 F. Supp.2d 474 (W.D.N.Y. 2004); Acme Elec. Corp. v. Sigma Instruments, Inc., 121 F.R.D. 26 (W .D.N .Y. 1988).
BACKGROUND and FACTS
The fact statement is taken from the pleadings and motion papers filed in this action.
On February 24, 2003, Defendants removed the action to this court on the basis of diversity jurisdiction. Answers to the Complaint were filed by The Andersons on February 28, 2003 (Doc. No. 2), Transco on March 11, 2003 (Doc. No. 7), and CSX on April 3, 2003 (Doc. No. 18). Each of the Defendants included in its respective answer crossclaims seeking contribution and indemnification from co-Defendants. Answers to The Andersons' crossclaims were filed by Transco on March 17, 2003 (Doc. No. 12), and by CSX on March 20, 2003 (Doc. No. 15). CSX filed an answer to Transco's crossclaims on March 20, 2003 (Doc. No. 16). Answers to CSX's crossclaims were filed by Transco on April 8, 2003 (Doc. No. 20) and by The Andersons on April 9, 2003 (Doc. No. 19).
Defendant Transco's crossclaims against Defendant The Andersons have not been answered.
On May 2, 2003, Plaintiffs filed a motion (Doc. No. 21) to amend the Complaint, seeking to add as a defendant Brooklyn Sugar Company ("Brooklyn Sugar"), and to remand the Amended Complaint as Brooklyn Sugar's addition as a defendant would destroy diversity jurisdiction. Attached to the motion were supporting papers, including a Brief in Support of Plaintiffs' Motion to Amend the Complaint and Remand to State Court ("Plaintiffs' Memorandum"), a copy of the Proposed Amended Complaint ("Proposed Amended Complaint"), and exhibits. On July 10, 2003, CSX filed a crossmotion (Doc. No. 26) for judgment on the pleadings, supported by the attached Attorney Affidavit of J. Roy Nunn, Esq. ("Nunn Affidavit"), and a Memorandum In Support of Defendant CSX's Crossmotion for Judgment on the Pleadings and in Opposition to Plaintiffs' Motion for Leave to Add Alleged Nondiverse Party and to Remand (Doc. No. 27) ("CSX's Memorandum"). On July 11, 2003, Transco filed the Affidavit in Opposition to Motion to Amend of Stanley J. Sliwa, Esq. (Doc. No. 28) ("Sliwa Affidavit"), and Defendant Transco Railway Products, Inc.'s Memorandum of Law in Opposition to Plaintiffs' Motion to Amend Their Complaint and to Remand the Action to State Court (Doc. No. 29) ("Transco's Memorandum"), and The Andersons filed a crossmotion (Doc. No. 30) for judgment on the pleadings, supported by the attached Declaration of Charles E. Graney, Esq. ("Graney Declaration"), and a Memorandum of Law (Doc. No. 31) ("The Andersons' Memorandum").
On August 8, 2003, Plaintiffs filed, in further support of the motion to amend and in opposition to the motions for judgment on the pleadings, the Attorney Affidavit of Shawn W. Carey, Esq. (Doc. No. 33) ("Carey Affidavit"), and a Memorandum of Law in Further Support of Plaintiffs' Motion to Amend and Remand and in Opposition to Defendants' Motions to Dismiss (Doc. No. 34) ("Plaintiffs' Reply"). On August 22, 2003, CSX filed a Reply Memorandum in Support of Defendant CSX's Crossmotion for Judgment on the Pleadings (Doc. No. 35) ("CSX's Reply"). On August 25, 2003, The Andersons filed the Reply Declaration of Charles E. Graney, Esq., in Support of the Andersons Inc.'s Crossmotion Dismissing Plaintiffs' First Cause of Action (Doc. No. 36) ("Graney Reply Declaration"). On September 26, 2003, Transco filed a motion (Doc. No. 37), seeking an order prohibiting Plaintiffs from presenting as evidence at trial any information Plaintiffs failed to disclose pursuant to Fed.R.Civ.P. 26(a)(1) or, alternatively, an order pursuant to Fed.R.Civ.P. 37(a)(2)(A) compelling the disclosure of such evidence or, as a further alternative, compelling Plaintiffs to provide answers to interrogatories. The motion is supported by the attached affidavit of Stanley J. Sliwa, Esq. ("Second Sliwa Affidavit").
Oral argument was deemed unnecessary.
Based on the following, Plaintiffs' motion to amend the Complaint (Doc. No. 21) is GRANTED and Defendant Transco's motion (Doc. No. 37), is DENIED insofar as it seeks an order compelling discovery. As the proposed amendment to the Complaint will destroy diversity jurisdiction, the case is to be remanded to state court upon the filing of the amended Complaint. The remaining motions for judgment on the pleadings (Doc. Nos. 26 and 30), are DISMISSED as moot, and Defendant Transco's motion (Doc. No. 37), insofar as it seeks an order precluding Plaintiffs from presenting certain evidence at trial, is DISMISSED as moot.
DISCUSSION
Fed.R.Civ.P. 15 provides that leave to amend a pleading "shall be freely granted when justice so requires." An amended complaint may be filed pursuant to Fed.R.Civ.P. 15(a) where the new allegations do not unduly prejudice an opponent, are not the result of undue delay or bad faith, and are not futile. Foman v. Davis, 371 U.S. 178, 181 (1962). Absent a showing that significant additional discovery burdens will be incurred or that the trial of the matter will be significantly delayed, amendment should be permitted. Block v. First Blood Associates, 988 F.2d 344, 350 (2d Cir. 1993). Where, however, an amendment is futile, "it is not an abuse of discretion to deny leave to amend" to the moving party. Ruffolo v. Oppenheimer Co., 987 F.2d 129, 131 (2d Cir. 1993). A determination that a proposed claim is futile is made under the same standards that govern a motion to dismiss under Rule 12(b)(6). A.V. By Versace, Inc. v. Gianni Versace, S.p.A., 160 F. Supp.2d 657, 666 (S.D.N.Y. 2001). An amendment is futile "if the proposed amended complaint would be subject to 'immediate dismissal' for failure to state a claim or on some other ground." Jones v. New York Div. of Military Naval Affairs, 166 F.3d 45, 55 (2d Cir. 1999).
Here, Plaintiffs have moved to amend the Complaint to add Brooklyn Sugar as a Defendant asserting that Brooklyn Sugar negligently damaged railcar BAEX 198, therefore setting into motion the chain of events whereby Coniglio was injured. Plaintiffs' Memorandum at 1-3. According to Plaintiffs, the allegedly negligent actions of Brooklyn Sugar and its employees in damaging railcar BAEX 198 "were a substantial factor in causing [Coniglio's] injury" such that Brooklyn Sugar is a necessary party to this action. Id. at 3. Plaintiffs further maintain that Brooklyn Sugar is a New York corporation and, as such, the addition of Brooklyn Sugar as a Defendant will destroy diversity jurisdiction and require that the action be remanded to state court. Id. at 4-5.
Defendants oppose the addition of Brooklyn Sugar as a defendant because it is unlikely Plaintiffs will prevail against Brooklyn Sugar because even assuming, arguendo, that Brooklyn Sugar did negligently damage the subject railcar, such negligence was not the legal or proximate cause of Coniglio's injuries. Nunn Affidavit ¶ 7; CSX's Memorandum at 6-12; Sliwa Affidavit ¶¶ 20-24; Transco's Memorandum at 2-7; Graney Declaration ¶ 9; Graney Reply Declaration ¶¶ 7-13; The Andersons' Memorandum at 2-5. Defendants further maintain that Plaintiffs seek to add Brooklyn Sugar as a Defendant as a tactical maneuver to destroy diversity jurisdiction and cause the case to be remanded to New York Supreme Court. Sliwa Affidavit ¶¶ 25-26; Transco's Memorandum at 11-15; Graney Declaration ¶ 7; The Andersons' Memroandum at 11-14. Defendants also maintains that the record is devoid of any evidence tending to establish that railcar BAEX 198 was not damaged when it left the General Mills plant on Buffalo on August 15, 2002, and that it was, in fact, damaged while being unloaded by Brooklyn Sugar and, as such, Plaintiffs' proposed claim against Brooklyn Sugar is futile. Nunn Affidavit ¶ 8; Sliwa Affidavit ¶¶ 14-18; Transco's Memorandum at 7-11; Graney Declaration ¶ 7; The Andersons' Memorandum at 10.
Plaintiffs argue in further support of the motion to amend that the proposed claim against Brooklyn Sugar is not predicated merely on the allegation that Brooklyn Sugar negligently damaged railcar BAEX 198, thereby setting into motion the chain of events whereby Coniglio was injured but, rather, that Brooklyn Sugar, after damaging the railcar, placed railcar BAEX 198 back in service by shipping it to General Mills in Buffalo with the railcar's doors closed, thereby concealing the damage, and also placing the railcar among a group of four other railcars, including railcar BAEX 256. Carey Affidavit ¶¶ 10-13; Plaintiffs' Reply at 2-3. Plaintiffs maintain that it is unlikely Brooklyn Sugar was unaware of the damage to BAEZ 198 as to tear a hole in the steel floor of the railcar required a significant impact. Carey Affidavit ¶ 12. General Mills, upon accepting the delivery of railcar BAEX 198, assumed responsibility for repairing the damage to the railcar, including removing the railcar from between the other three railcars on the flour warehouse loading track and placing BAEX 198 on another track where the railcar would remain out of service pending repair. Carey Affidavit ¶¶ 14-15; Plaintiff's Reply at 2. Moreover, because General Mills was unaware of the damage to railcar BAEX 198 until after General Mills had loaded flour into railcar BAEX 256, an urgent situation was created whereby General Mills had to quickly repair BAEX 198 or remove it to another track as it blocked BAEX 256 from being shipped. Carey Affidavit ¶¶ 16-18. Accordingly, Plaintiffs maintain that "[b]ut for the damage, exacerbated by its concealment, the Plaintiff [Coniglio] would not have been engaged in the movement of the car which injured him." Plaintiffs' Reply at 2.
Removal of a case from state court to federal court is permitted where there is complete diversity between all plaintiffs and defendants. Cushing v. Moore, 970 F.2d 1103, 1106 (2d Cir. 1992). That requirement is satisfied in the instant case. Specifically, Plaintiffs are citizens of New York and each of the Defendant corporations is "deemed to be a citizen of any State by which is has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332(c). Further, Defendant The Andersons, was incorporated and maintains its principal place of business in Ohio, Defendant CSX is a Virginia Corporation maintaining its principal place of business in Florida, and Defendant Transco is a Delaware corporation maintaining its principal place of business in Illinois. Therefore, complete diversity between Plaintiffs and the three Defendants to the original Complaint exists. Brooklyn Sugar, however, was incorporated and maintains its principal place of business in New York. Accordingly, the addition of Brooklyn Sugar as a Defendant would destroy diversity jurisdiction in this action. Significantly, it is well established that if the district court permits joinder of a nondiverse party, diversity jurisdiction is destroyed, and the case must be remanded to state court. 28 U.S.C. § 1447(c) ("If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.") (underlining added); 28 U.S.C. § 1332(a)(1) (district courts have personal jurisdiction in all civil actions were amount in controversy exceeds $75,000 and is between "citizens of different states.") (underlining added); Cushing v. Moore, 970 F.2d 1103, 1106 (2d Cir. 1992) (complete diversity is required between all plaintiffs and defendants).
As diversity jurisdiction in this court will be destroyed by adding Brooklyn Sugar, a New York company, as a defendant, and as there is no other basis for jurisdiction over the matter in this court, Brooklyn Sugar's addition as a Defendant will necessitate remanding the case. Nevertheless, absent a showing showing that a plaintiff seeks to amend a complaint to add a nondiverse defendant solely to effectuate a remand from federal court to state court by destroying diversity, the amendment may be permitted even though diversity jurisdiction is thereby destroyed. Shaw v. Mumford, 526 F. Supp. 1209, 1213-14 (S.D.N.Y. 1981). See also 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."). See STEVEN BAICKER-McGEE, WILLIAM M. JANSSEN JOHN B. CORR, FEDERAL CIVIL RULES HANDBOOK § 2.17a at 101 (2004). In addition to Rule 15's provision that leave to amend "be freely granted when justice so requires," where a plaintiff seeks to amend a Complaint that has been removed to District Court, and where the proposed amendment includes the addition of a party that will destroy diversity jurisdiction, closer scrutiny of the proposed amendment is necessary. Hensgens v. Deere Company, 833 F.2d 1179, 1182 (5th Cir. 1987). Although the Second Circuit has not addressed this issue, district courts within the Second Circuit have used the Hensgens analysis in applying 28 U.S.C. § 1447(e), which was enacted in 1988. See Frelund v. Nationwide Mutual Fire Insurance Company, 2000 WL 1773473, * 4 (W.D.N.Y. Nov. 30, 2000); Wyatt v. National R.R. Passenger Corp., 881 F. Supp. 919, 923 (S.D.N.Y. 1995); DiNardi v. Ethicon, Inc., 145 F.R.D. 294, 297 (N.D.N.Y. 1993); and Gursky v. Northwestern Mutual Life Ins. Co., 139 F.R.D. 279, 282 (E.D.N.Y. 1991). In deciding whether to allow a plaintiff to amend a complaint to add a nondiverse party, resulting in remand, the court considers four factors, including (1) whether the plaintiff delayed in moving to amend; (2) the resulting prejudice to defendants from joinder; (3) the likelihood of multiple litigation; and (4) plaintiff's motivation in moving to amend. Gursky, supra, at 282 (citing cases).
In the instant case, Defendants proffer no argument with respect to the first three factors; rather, Defendants oppose the addition of Brooklyn Sugar as a Defendant on the basis that the proposed claims against Brooklyn Sugar are futile and Plaintiffs' motivation for such addition is solely to destroy diversity jurisdiction and force a remand to state court. There is no merit to Defendants' argument in opposition to Plaintiffs' motion to amend the Complaint to add Brooklyn Sugar as a Defendant because it is possible to find that Brooklyn Sugar's alleged negligence in unloading railcar BAEX 198, thereby damaging said railcar, set in motion the chain of events by which Coniglio was injured.
Under New York law, "[t]he threshold question in any negligence action is: does the defendant owe a legally recognized duty of care to plaintiff?" Hamilton v. Beretta U.S.A. Corp., 750 N.E.2d 1055, 1060 (N.Y. 2001). "[T]he existence of a duty is a 'legal, policy-laden declaration reserved for judges.'" In re September 11 Litigation, 280 F. Supp.2d 279, (S.D.N.Y. 2003) (quoting Palka v. Servicemaster Mgmt. Servs. Corp., 634 N.E.2d 189, 192 (N.Y. 1994)). To establish the existence of a legal duty, "[t]he injured party must show that a defendant owed not merely a general duty to society but a specific duty to the particular claimant, for 'without a duty running directly to the injured person there can be no liability in damages, however careless the conduct or foreseeable the harm.'" In re September 11 Litigation, supra (quoting Lauer v. City of New York, 733 N.E.2d 184, 187 (N.Y. 2000)). So-called "balancing factors" traditionally used by courts to "'fix the duty point . . . includ[e] the reasonable expectations of parties and society generally, the proliferation of claims, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation, and public policies affecting the expansion or limitation of new channels of liability.'" In re September 11 Litigation, supra at (quoting Palka, supra, at 193). In the instant case, the applicable balancing factors, established by New York caselaw, fix a duty running between Brooklyn Sugar and Plaintiffs assuming, arguendo, the facts at trial demonstrate that Brooklyn Sugar negligently or intentionally returned the railcar to General Mills in Buffalo with the damage concealed, regardless of whether Brooklyn Sugar caused the damage.
In particular, Brooklyn Sugar was the last entity to have control over railcar BAEX 198 and, therefore, controlled the manner in which the railcar was returned to General Mills in Buffalo. Significantly, Brooklyn Sugar could have left the railcar's doors open such that the damage to the railcar would have been apparent to co-Defendants, allowing for the railcar to be taken out of service and placed on a separate track before any of the other railcars were loaded with flour and thereby rendered heavier and more difficult to move without worker intervention. The sheer bulky size and mobility of railcars also renders them dangerous and weighs in favor of finding a duty running between persons routinely handling railcars or who are anticipated to come into contact with railcars. The court takes judicial notice that railroad crossings are marked not only with a stop sign, but with a bar that lowers across and blocks the road when a train is approaching so as to ensure that travelers do not mistakenly cross the tracks in the path of an oncoming train. It is also conceivable that Brooklyn Sugar could have alerted General Mills of the damage to railcar BAEX 198 prior to returning the railcar. Such advance notice of the damage would have enabled General Mills to move the railcar to a separate track as soon as it was returned to Buffalo and may have also resulted in Transco having adequate personnel and equipment available to make the necessary repairs without enlisting the help of General Mills employees, such as Coniglio. Accordingly, the balancing factors demonstrate that Brooklyn Sugar owed a legal duty to anyone involved in the repair of railcar BAEX 198.
Once the court determines that the defendant owed a legal duty to the plaintiff, the finder of fact must determine whether the actions complained of were within the scope or foreseeability of such legal duty, although the court may dismiss cases whether the risks are, as a matter of law, unforeseeable. In re September 11 Litigation, supra, at 295 (citing Sanchez v. State of New York, 784 N.E.2d 675, 678 (N.Y. 2002)). The scope of a duty "depends on the relationship to plaintiffs, whether plaintiffs were within a zone of foreseeable harm, and whether the harm was within the class of reasonably foreseeable hazards that the duty exists to prevent." In re September 11 Litigation, supra, at 295 (citing DiPonzio v. Riordan, 679 N.E.2d 616, 618 (N.Y. 1997)). To be considered foreseeable, however, "the precise manner in which the harm was inflicted need not be perfectly predicted, but 'no liability will result when the occurrence is not one that is normally associated with such hazards.'" Id. (citing and quoting DiPonzio, supra, at 619). The nature of the duty owed and the injury sustained must be closely examined to determine if the injury was within a class of foreseeable risks. Id.
Here, construing the factual allegations proposed as against Brooklyn Sugar in the light most favorable to Plaintiffs, as required on a motion to amend, Mroz v. City of Tonawanda, 999 F.SUpp. 436, 466 (W.D.N.Y. 1998); the court finds that the injuries sustained by Plaintiffs are within the class normally associated with the hazards posed by defective railcars. Specifically, Plaintiffs' description, if true, of how railcar BEAX 198 was returned to General Mills in Buffalo with the damage concealed and in the midst of several other cars demonstrates an increased likelihood that the circumstances in which the damage to the railcar was discovered and the manner in which the repair of said railcar was undertaken would result in injury.
Finally, even where a legal duty exists and the defendant's actions are within the scope of such duty, a supervening cause will sever the link between the defendant's negligence and the plaintiff's damages. In re September 11 Litigation, supra, at 301. In the instant case, Defendants point to no indisputable supervening cause completely severing any link between Brooklyn Sugar's alleged negligence and Plaintiffs' injuries.
Accordingly, the court finds, for the purposes of Plaintiffs' motion, that Brooklyn Sugar owed a legal duty to Plaintiffs, that it is not inconceivable that a finder of fact could find Plaintiffs' injuries were foreseeable as a result of Brooklyn Sugar's alleged breach of the legal duty owed to Plaintiffs, and that the record does not at this time establish a supervening cause completely severing the causal connection between Brooklyn Sugar's alleged negligence and Plaintiffs' injuries. As such, there is no merit to Defendants' arguments that Plaintiffs' proposed claims against Brooklyn Sugar, whom Plaintiffs seek to add as a Defendant, are futile. Because Defendants rely only on the asserted futility of Plaintiffs' proposed claim against Brooklyn Sugar, a contention rejected by the court, Defendants fail to demonstrate Plaintiffs' motion to amend is solely motivated by a desire to destroy diversity jurisdiction. Gursky, supra, at 282.
The court is also without jurisdiction to address Transco's alternative request that, in the event Plaintiffs' motion to amend the Complaint is granted and the case is remanded to state court, the court issue an order directing Plaintiffs, who have already been deposed, to also answer interrogatories which Transco has already served yet Plaintiffs have refused to answer. Second Sliwa Affidavit ¶¶ 11-25. Transco maintains that because it has deposed Plaintiffs, if the case is remanded to state court, Transco will not be permitted to obtain from Plaintiffs answers to interrogatories. Id. Transco's request is based on New York Civil Practice Law and Rules § 3130 which provides that "[i]n the case of an action to recover damages for personal injury . . . predicated solely on a cause or causes of action for negligence, a party shall not be permitted to serve interrogatories on and conduct a deposition of the same person . . . without leave of court." N.Y. Civ. Prac. L. R. § 3130.2. (McKinney 1991). Transco, however, references no legal authority supporting the idea that a federal court may issue orders governing the procedural aspects of an action in state court, and the court's research reveals none. Transco also fails to explain how it will be prejudiced if § 3130 governs its discovery of Plaintiffs. Accordingly, upon remand, Transco must seek an order from New York Supreme Court, Erie County, directing Plaintiffs to answer interrogatories despite already having been deposed. Transco's motion, insofar as it seeks an order compelling discovery, is DENIED.
As the court is granting Plaintiffs' motion to amend the Complaint, and as the filing and serving of the Amended Complaint will add Brooklyn Sugar as a Defendant to this action, thereby destroying diversity jurisdiction and require remanding the action to New York Supreme Court, Erie County, the remaining motions, including the motions for judgment on the pleadings filed by The Andersons and CSX, and Transco's motion for an order precluding Plaintiffs from proffering certain evidence at trial, are DISMISSED as moot.
CONCLUSION
Based on the foregoing, Plaintiffs' motion to amend the Complaint (Doc. No. 21) is GRANTED, and Defendant Transco's motion (Doc. No. 37), insofar as it seeks an order compelling discovery, is DENIED. As the proposed amendment to the Complaint will destroy diversity jurisdiction, the Clerk of the Court is directed to remand the matter to New York Supreme Court, Erie County, upon the filing of the amended Complaint and completion of service. The remaining motions for judgment on the pleadings (Doc. Nos. 26 and 30), are DISMISSED, without prejudice, as moot, and Defendant Transco's motion (Doc. No. 37), insofar as it seeks an order precluding Plaintiffs from presenting certain evidence at trial, is DISMISSED, without prejudice, as moot.SO ORDERED.