Summary
allowing joinder of a non-diverse party in somewhat similar circumstances
Summary of this case from Joseph v. Fluor CorporationOpinion
Civil Action No. 03-3271 Section "R" (2).
June 10, 2004
ORDER AND REASONS
Plaintiff Carlo J. Deliberto, a Louisiana citizen, originally filed this suit for damages in the Civil District Court for the Parish of Orleans, State of Louisiana. He sought damages for personal injuries allegedly suffered when loaded laundry carts rolled off a hydraulic lift and fell on him. The lift was part of the loading dock in the garage at the Wyndham Hotel.
Deliberto filed suit on December 23, 2002 against Wyndham Canal Place, Inc., later properly identified as Wyndham International, Inc. ("Wyndham"), the alleged owner/operator of the garage, loading dock and hydraulic lift; and Asher Cleaners and Laundry, Inc. ("Asher"), the alleged owner of the laundry carts. Wyndham is a Delaware corporation with its principal place of business in Texas and Asher is a Louisiana company. Plaintiff later discovered that Gulf Coast Laundry Services of Mississippi, LLC ("Gulf Coast"), a Mississippi company, rather than Asher, owned the laundry carts. Plaintiff dismissed Asher and added Gulf Coast as a defendant in the state court proceeding. Defendants then removed the action to this court on November 20, 2003, based on diversity of citizenship jurisdiction.
Plaintiff has filed a motion to amend his complaint. Record Doc. No. 10. The amendment seeks to add as a defendant The Garage at Canal Place, LLC ("The Garage"), a Louisiana limited liability company, which is allegedly the actual owner of the garage, loading dock and hydraulic lift. Deliberto asserts that he was not in a position to identify The Garage as the correct defendant until very recently, when counsel for Wyndham for the first time disclosed the identity of the actual owner of the garage, loading dock and hydraulic lift.
Gulf Coast filed a timely opposition memorandum. Record Doc. No. 11. Wyndham does not oppose the motion. The parties concede that permitting the amendment to name The Garage as a defendant would destroy this court's diversity jurisdiction. Gulf Coast argues that the motion should be denied because Deliberto has been dilatory in asserting his motion to amend and the original defendants will be prejudiced by the delay that will inevitably accompany the addition of a new defendant.
Having considered the complaint, the record, the applicable law and the submissions of the parties, and for the following reasons, IT IS ORDERED that plaintiff's motion to amend the complaint is GRANTED.
Federal Rule of Civil Procedure 15(a) provides that leave to amend pleadings "shall be freely given when justice so requires." The policy of the Federal Rules of Civil Procedure is liberal in favor of permitting amendment of pleadings, and the trial court's discretion is not broad enough to permit denial of leave to amend "unless there is a substantial reason" to do so. Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594, 598 (5th Cir. 1981). Thus, leave to amend "shall be freely given when justice so requires," Fed.R.Civ.P. 15(a), but "is by no means automatic." Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993) (quotation omitted). Relevant factors to consider include "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment." Id. The party seeking to amend bears the burden of showing that delay in bringing the amendment was due to oversight, inadvertence or excusable neglect. Parish v. Frazier, 195 F.3d 761, 763 (5th Cir. 1999).
In addition, where — as here — the court has entered a scheduling order setting a deadline for the amendment of pleadings, Record Doc. No. 6, the schedule "shall not be modified except upon a showing of good cause." Fed.R.Civ.P. 16(b). "Rule 16(b) governs amendment of pleadings after a scheduling order deadline has expired. Only upon the movant's demonstration of good cause to modify the scheduling order will the more liberal standard of Rule 15(a) apply to the district court's decision to grant or deny leave." SW Enters., L.L.C. v. South Trust Bank of Ala., NA, 315 F.3d 533, 536 (5th Cir. 2003). "In determining good cause, we consider four factors: `(1) the explanation for the failure to timely move for leave to amend; (2) the importance of the amendment; (3) potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure such prejudice.'" Southwestern Bell Tel. Co. v. City of El Paso, 346 F.3d 541, 546 (5th Cir. 2003) (citing Fed.R.Civ.P. 16(b); quoting S W Enters., 315 F.3d at 535).
However, when an amendment to add a party would destroy diversity jurisdiction, the court must apply the factors enunciated by the Fifth Circuit in Hensgens v. Deere Co., 833 F.2d 1179, 1182 (5th Cir. 1987), and approved in Tillman v. CSX Transp., Inc. 929 F.2d 1023, 1029 n. 11 (5th Cir. 1991), to determine whether the amendment should be permitted. Those factors are: "the extent to which the purpose of the amendment is to defeat federal jurisdiction, whether plaintiff has been dilatory in asking for amendment, whether plaintiff will be significantly injured if amendment is not allowed, and any other factors bearing on the equities." Hensgens, 833 F.2d at 1182. In large part, the Hensgens factors overlap the Rule 16 "good cause" factors.
I first note that the language of 28 U.S.C. § 1447(e), which addresses proposed amendments to add a non-diverse defendant after removal, is entirely permissive. I may — but am certainly not required to — deny plaintiff's proposed amendment. Rather, Section 1447(e) vests broad discretion in the trial court by expressly providing the following choice: "the court may deny joinder, or permit joinder and remand the action to the State court." (Emphasis added). Exercise of this discretion depends upon application of the Hensgens factors. I find that application of the Hensgens factors in this case establishes that the motion to amend should be permitted.
The first Hensgens factor is the extent to which joinder of the non-diverse party is sought to defeat federal jurisdiction. Plaintiff clearly intended, from the outset of this lawsuit and prior to removal of this litigation from state court, to name the actual owner of the garage, loading dock and hydraulic lift as a defendant. Deliberto asserts that only his lack of knowledge of the actual owner's identity and the very recent discovery of the proper defendant prevented him from naming The Garage as a defendant when he originally filed his petition or earlier in the pendency of this action.
It makes legal and practical sense that the entity that is specifically responsible for the garage, loading dock and hydraulic lift be a defendant in this action. Moreover, procedural and discovery advantages are available to plaintiff if The Garage is a party defendant rather than a mere non-party witness. There is no suggestion that plaintiff's joinder of The Garage as a defendant is fraudulent or that plaintiff has no cause of action against The Garage. Under these circumstances, I cannot find that plaintiff's principal motivation in adding The Garage as a defendant is to defeat federal jurisdiction. Thus, this factor weighs in favor of permitting the amendment.
The second Hensgens factor is whether plaintiff has been dilatory in asking for the amendment. Deliberto states that he assumed that the Wyndham owned the garage, loading dock and hydraulic lift and that counsel for Wyndham first revealed the true identity of the owner during depositions about one week before plaintiff filed the instant motion.
Gulf Coast suggests that plaintiff has been dilatory in seeking to amend his petition for two reasons. First, defendant contends that "Wyndham, by virtue of its answer to the plaintiff's petition and responses to his discovery, advised him over a year ago that it neither owned nor maintained the lift." Record Doc. No. 11, Gulf Coast's opposition memorandum, at p. 4. Second, Gulf Coast argues that plaintiff was dilatory because the deadline for filing amended pleadings, pursuant to the court's scheduling order, was February 17, 2004. Record Doc. No. 6.
Gulf Coast bases its first argument that plaintiff was dilatory on Wyndham's denial of certain allegations in plaintiff's original petition. Paragraph 17 of plaintiff's petition states in pertinent part that "Wyndham is also liable for Plaintiff's injuries as: (A) Wyndham had garde of the loading dock and hydraulic lift having a vice or defect." Record Doc. No. 1, Petition, attached to Notice of Removal. In its answer, Wyndham responded, "The allegations contained in Paragraph 17 (A-F) of the Petition for Damages are denied." Record Doc. No. 1, Wyndham's Answer, attached to Notice of Removal.
Wyndham's broad denial of all six allegations listed in Paragraph 17 could reasonably be read in ways other than as an affirmative showing by Wyndham that it did not own the loading dock and hydraulic lift. Wyndham's statement could be taken as a generic denial of all claims; a denial as to Wyndham's liability, but not to its garde over the loading dock and hydraulic lift; or a denial that the loading dock and hydraulic lift have a vice or defect, but not to Wyndham's garde over them. In sum, Gulf Coast's argument that the denial amounts to a plain declaration that Wyndham does not own the loading dock and hydraulic lift is unconvincing.
Gulf Coast also points to two responses by Wyndham to plaintiff's interrogatories and request for production of documents in which Wyndham states that it "does not perform maintenance on [the] lift" and "Wyndham has no maintenance records on [sic] the lift as it does not perform maintenance work on the lift." Defendant's Exh. B, Answer to Interrogatory No. 6; Response to Request for Production of Documents No. 3. Gulf Coast submitted to the court only its responses, but not the interrogatory and document requests themselves, so I am left to wonder what the discovery requests specifically asked. Nonetheless, the responses could be read to state that Wyndham contracts with outside, rather than in-house, mechanics to perform maintenance on the lift and therefore has no records of the maintenance performed. Wyndham did not affirmatively state in either instance that it does not own the lift. Thus, Wyndham's responses to these discovery requests are ambiguous on this point and would not necessarily lead plaintiff to conclude that Wyndham is not the owner of the garage, loading dock and hydraulic lift.
Gulf Coast also argues that plaintiff has been dilatory because the court-ordered deadline for filing amendments to pleadings has passed and plaintiff's motion may be denied solely because it was filed after the deadline had passed.
I find that Deliberto's assumption that Wyndham was owner of the garage was reasonable and that plaintiff filed the motion promptly after learning in recent days that The Garage is the actual owner of the garage, loading dock and hydraulic lift that are central to his claims. Under these circumstances, good cause exists under Rule 16 for permitting the amendment after the deadline, and I find that plaintiff has not been dilatory in seeking the amendment. Thus, the second Hensgens factor weighs in favor of permitting the amendment.
The third Hensgens factor is whether the plaintiff would be significantly injured if the requested amendment is not allowed. Gulf Coast concedes that "inasmuch as the Louisiana law applicable to this matter requires that The Garage's fault be quantified, . . . the plaintiff may be injured if the amendment is not allowed." Record Doc. No. 11, Gulf Coast's opposition memorandum, at p. 4. In addition, considerations of cost, judicial efficiency and possible inconsistency of results militate in favor of not requiring plaintiff to prosecute two separate claims in two forums when both arise from the same set of facts and circumstances. Thus, this factor weighs heavily in favor of permitting the amendment.
The final Hensgens consideration is any other factor bearing on the equities. Defendant submits that the trial date will be lost and that much, if not all, of the significant discovery already performed will have to be revisited if this amendment is granted. This case has not previously been continued in this court and has been pending here less than seven months. Whatever delay in trial that might occur as a result of the amendment will not be inordinate.
Also, according to plaintiff's memorandum, "[o]nly two fact witnesses have been deposed" and "[n]o doctors' depositions have been scheduled and defendants are still gathering medical records." Record Doc. No. 10, at p. 5. Thus, discovery has not been completed. Furthermore, any discovery that was already undertaken would be useful in any further proceedings.
For all of the reasons discussed above, I find that the equities favor permitting plaintiff's amendment in this case to add The Garage.
Accordingly, because the Hensgens factors weigh in favor of permitting the amendment and because plaintiff has shown good cause to permit the amendment after the expiration of the court-ordered deadline, plaintiff's motion to amend is GRANTED. Whether the case should now be remanded from this court to the state court from which it was removed, as provided in 28 U.S.C. § 1447(e), is a matter solely within the province of the presiding district judge.