Summary
holding that amendment sought five months after petition was not dilatory
Summary of this case from Romero v. Hartford Cas. Ins. Co.Opinion
Civil Action No. 02-2904
November 20, 2002
MINUTE ENTRY
Plaintiffs Evon Vincent and Dorothea Hayes, on behalf of their deceased father, originally filed this suit for damages in the Civil District Court for the Parish of Orleans ("CDC"). They sought damages arising from their father's death, allegedly caused by defendants' negligent care while he was housed in a nursing home plaintiffs allege was owned and operated by defendants.
Suit was filed in CDC on June 5, 2002, against East Haven Limited Partnership, the alleged owner/operator of the nursing home. While the suit was still pending in CDC, plaintiffs filed a First Supplemental and Amending Petition to name LaSal Bank National Association, which allegedly assumed operating the nursing home as its licensed provider on December 20, 2002, as an additional defendant. LaSalle Bank removed the action to this court on September 20, 2002, based on (a) diversity jurisdiction under 28 U.S.C. § 1332 and (b) the banking association jurisdictional statute, 28 U.S.C. § 1348. Record Doc. No. 1 (Notice of Removal ¶ I).
Plaintiffs have now filed a motion to amend their complaint. Record Doc. No. 6. At the request of plaintiffs, oral argument was conducted on this date. Participating were Darryl Phillips, representing plaintiffs, and Aven Bruser, representing defendant. The amendment seeks to name as an additional defendant Health Care Capital of Louisiana, Inc., a Louisiana corporation, which plaintiffs allege was general partner of defendant East Haven at the time East Haven owned and operated the nursing home. Plaintiffs allege that they seek to name the new defendant because defendant East Haven "may be having financial difficulties," and plaintiffs seek to add East Haven's solvent general partner which may be liable for East Haven's negligence occurring while it owned and operated the nursing home.
Defendant filed opposition and supplemental opposition memoranda. It contends that the amendment should not be permitted because LaSalle Bank, not East Haven, owned and operated the nursing home during the only time period relevant to plaintiffs' claims and therefore plaintiffs cannot assert a claim against the proposed new defendant. La Salle Bank also argues that the amendment should not be granted because it fails to state a claim against the new defendant on various factual and legal grounds and because the amendment would destroy this court's diversity jurisdiction and is merely an attempt to buttress plaintiffs' pending motion to remand this case to state court.
Neither party briefed the applicable legal standard. First, 28 U.S.C. § 1447 (e) provides: "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." Second, Federal Rule of Civil Procedure 15(a), provides that leave to amend pleadings "shall be freely given when justice so requires." The policy of Rule 15 is to permit liberal amendment of pleadings in the absence of substantial prejudice to defendants that cannot be cured by other means. Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594, 597 (5th Cir. 1981). However, when an amendment would destroy subject matter 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.), cert. denied, 112 S.Ct. 176 (1991), to determine if the amendment should be permitted.
Initially, I note that Section 1447(e) applies only if "joinder would destroy subject matter jurisdiction." In this case, I find that the proposed amendment would destroy subject matter jurisdiction because diversity of citizenship is the only legitimate basis for federal subject matter jurisdiction asserted in the removal petition, and plaintiffs and the proposed new defendant are non-diverse Louisiana citizens. Although defendant also alleged in their removal petition that 28 U.S.C. § 1348 is an additional jurisdictional basis in this court, that statute is clearly inapplicable. Section 1348 provides: "The district courts shall have original jurisdiction of any civil action commenced by the United States, or by direction of any officer thereof, against any national banking association, any civil action to windup the affairs of any such association, and any (3) action by a banking association established in the district for which the court is held, under chapter 2 of Title 12, to enjoin the Comptroller of the Currency, or any receiver acting under his direction, as provided by such chapter." The instant case fits none of these categories, and if there is some basis for federal jurisdiction other than diversity it has not been alleged.
Thus, Section 1447(e) applies. Its language is entirely permissive. The court may — but is certainly not required to — deny plaintiffs' 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 granted.
The first Hensgens factor is the extent to which joinder of the non-diverse party is sought to defeat federal jurisdiction. I cannot conclude on this record that defeating federal jurisdiction is a substantial motivation for the amendment. Plaintiffs assert that they seek to name the new defendant because East Haven may be insolvent and its seeks a solvent defendant with responsibility for the negligence they allege occurred before LaSalle Bank became the owner/operator of the nursing home. In addition, East Haven remains a defendant. Its citizenship is in question. East Haven may well be a Louisiana citizen for diversity purposes. Thus, lack of subject matter will be an issue, regardless whether the amendment is permitted. Defendant's argument that plaintiffs' claims are limited to the year 2002, when it not East Haven operated the nursing home, or to the nursing home's owner/operator just prior to the bank's takeover of operations, is an unduly narrow view of plaintiffs' petition. In fact, the acts of negligence alleged by plaintiffs extend back to before LaSalle Bank or its immediate predecessor took over operation of the nursing home, to acts and omissions allegedly committed by East Haven, for which its general partner, the new defendant, may be legally responsible. La. Civ. Code arts. 2817, 2837, 2844. Thus, defendant's suggestion that plaintiffs' joinder of the general partner as a defendant is fraudulent or that plaintiffs have no cause of action against the new defendant has not been established on this record. Under these circumstances, I cannot find that plaintiffs' principal motivation in adding the new defendant is to defeat federal jurisdiction. Thus, this factor weighs in favor of permitting the amendment.
The second Hensgens factor is whether plaintiffs have been dilatory in asking for the amendment. The record establishes that plaintiffs have not delayed unduly in seeking the amendment. The case was filed only about five months ago. No Rule 16 scheduling order or deadline for filing amendments has been established. This factor also militates in favor of permitting the amendment.
The third Hensgens factor is whether the plaintiffs would be significantly injured if the requested amendment is not allowed. Plaintiffs may well have a claim against the new defendant, the general partner of an allegedly insolvent Louisiana partnership in commendam which plaintiffs allege owned and operated the nursing home during the time that some of the alleged acts of negligence occurred. It is unclear whether peremption or prescription would now bar assertion by plaintiffs of a new action in state court if the present amendment is denied and the action proceeds in its present form in this court. La. Rev. Stat. § 9:5628. In addition, considerations of cost and efficiency militate in favor of not requiring plaintiffs to prosecute two separate claims in two forums when both arise from the same set of facts and circumstances. Thus, plaintiffs run a substantial risk of injury if they are not permitted to add as a defendant a party who may have liability at least for part of the alleged damages. This factor weighs in favor of permitting the amendment.
The final Hensgens consideration is any other factor bearing on the equities. No particular equities enter into this particular evaluation. Defendant argues that plaintiffs have no claim against the new defendant, but this argument rests on certain facts that have not yet been established. Plaintiffs' allegations against the proposed new defendant appear sufficient to state a claim as a matter of pleading. The case has not been set for trial, and no discovery has occurred. No delay in trial might occur as a result of the amendment. For all of the reasons discussed above, I find that the equities favor permitting plaintiffs' amendment.
Accordingly, because on balance the Hensgens factors weigh in favor of permitting the amendment, plaintiffs' 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. A motion to remand is already pending before him.