Andreasen v. Progressive Express Ins. Co., CASE NO. 17–20190–CIV–LENARD/GOODMAN

• Decision Date: 25 August 2017
• Docket Number: CASE NO. 17–20190–CIV–LENARD/GOODMAN
• Citation: 276 F.Supp.3d 1317
• Parties: John ANDREASEN, Plaintiff, v. PROGRESSIVE EXPRESS INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Florida

276 F.Supp.3d 1317

John ANDREASEN, Plaintiff,

v.PROGRESSIVE EXPRESS INSURANCE COMPANY, Defendant.

CASE NO. 17–20190–CIV–LENARD/GOODMAN

United States District Court, S.D. Florida.

Signed August 25, 2017

David Allen Hagen, Law Office of David A. Hagen, P.A., Roy D. Wasson, Wasson & Associates Chartered, Miami, FL, for Plaintiff.

Stuart Jeffrey Freeman, Brasfield, Freeman, Goldis & Cash, P.A., St. Petersburg, FL, Martin David Berg, Miami, FL, for Defendant.

ORDER ADOPTING OMNIBUS REPORT AND RECOMMENDATIONS CONCERNING MOTIONS TO REMAND, DROP A PARTY, AND TO REALIGN THE PARTIES (D.E. 78), DENYING PLAINTIFF'S MOTION TO REMAND (D.E. 15), DENYING AS MOOT DEFENDANT'S MOTION TO DROP PARTY (D.E. 37), DENYING AS MOOT DEFENDANT'S MOTION TO REALIGN PARTIES (D.E. 54), AND DENYING AS MOOT DEFENDANT'S MOTION TO DISMISS CROSSCLAIM (D.E. 59)

JOAN A. LENARD, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court on the Omnibus Report and Recommendations Concerning Motions to Remand, Drop a Party, and to Realign the Parties, ("Report," D.E. 78), issued by Magistrate Judge Jonathan Goodman on July 18, 2017. Plaintiff John Andreasen filed Objections on July 31, 2017, ("Objections," D.E. 80), to which Defendant Progressive Express Insurance Company ("Progressive") filed a Response on August 3, 2017, ("Response," D.E. 82). Upon review of the Report, Objections, Response, and the record, the Court finds as follows.

I. Background

In 2008, Plaintiff was working for Fulton Company Inc. ("Fulton") and driving a company car when he sustained injuries in an automobile accident caused by Carlos Hernandez, an uninsured motorist who died as a result of the accident. (See Am. Compl. ¶¶ 5, 11, 13.) Progressive, which insured Fulton's fleet of three automobiles under Commercial Auto Liability Insurance Policy Number 01716746–5 (the "Policy"), paid Plaintiff's claim in the amount of the Policy's $500,000 non-stacked Uninsured/Underinsured Motorist ("UM/UIM") coverage limits. (Id. ¶¶ 19–20.)

On December 20, 2016, Plaintiff instituted this lawsuit, filing a six-count complaint in state court against Progressive and Annette Hernandez ("Hernandez"), as the Personal Representative of the Estate of Carlos Hernandez. (D.E. 1–1 at 5.) The original complaint alleges a single count of negligence against Hernandez and the following claims against Progressive: (1) breach of uninsured motorist coverage contract; (2) declaratory judgment—policy construction; (3) reformation of policy; (4) bad faith handling of an insurance claim; and (5) coverage by estoppel. (See id. at 5–21.) Plaintiff claims that Progressive must stack coverage for all three vehicles listed under the Policy and, therefore, he is entitled to additional coverage.¹

On January 17, 2017, Progressive—a foreign corporation with its principal place of business in Ohio, (see id. at 6 ¶ 4)—removed the case to this Court pursuant to 28 U.S.C. §§ 1332 and 1441 on the basis of diversity jurisdiction. (D.E. 1.) Although the original Complaint alleges that Hernandez is a resident of Florida, (D.E. 1–1 at 5 ¶ 2), Progressive's Notice of Removal indicates that Hernandez had not yet been served with process and, in any event, Plaintiff fraudulently joined Hernandez. (D.E. 1 at 7 ¶ 4.) Also on January 17, 2017, Progressive filed a Motion to Dismiss the Complaint for Failure to State a Claim. (D.E. 6.)

On January 31, 2017, Plaintiff filed an Amended Complaint as a matter of right under Federal Rule of Civil Procedure 15(a)(1)(B), asserting the following: (1) Count I: Breach of Insured Motorist Coverage Contract as to Progressive; (2) Count II: Declaratory Judgment Action—Policy Construction; (3) Count III: Reformation of Policy; (4) Count IV: Bad Faith Handling of an Insurance Claim; and (5) Coverage by Estoppel. (D.E. 13.) The Amended Complaint names Progressive and, for the first time, Fulton, as the party Defendants; Hernandez is not named in the Amended Complaint. (See id. ) The Amended Complaint alleges that Fulton is a Florida Corporation. (Id. ¶ 5.)

On February 1, 2017, Plaintiff filed a Motion to Remand, arguing that the addition of Fulton to the case destroyed diversity. (D.E. 15.) Progressive responded to the Motion to Remand, arguing that Fulton's addition constitutes fraudulent joinder and that Fulton is not a necessary party. (D.E. 19.)

On March 3, 2017, Progressive filed a Motion to Drop Party, arguing that the Court should drop Fulton as a party under Federal Rule of Civil Procedure 21.² (D.E. 37.) Plaintiff responded to the Motion to Drop Party, arguing that Rule 21 does not provide a mechanism for a co-defendant to request the dropping of another defendant. (D.E. 43.)

On April 7, 2017, Fulton filed an Answer to Plaintiff's Amended Complaint and a Crossclaim against Progressive. (D.E. 53.)

On April 10, 2017, Progressive filed a Motion to Realign the Parties, arguing that Fulton's Answer to Plaintiff's Amended Complaint and Crossclaim against Progressive illustrate that Plaintiff and Fulton share the same interests in this case and, therefore, should be aligned together. (D.E. 54.) Plaintiff responded to the Motion to Realign Parties, arguing that although Plaintiff and Fulton "may have a ‘common enemy’ and are seeking the same relief against Defendant Progressive, that does not change the adversarial position between [Plaintiff] and Fulton and transforms [sic] Fulton into a co-plaintiff." (D.E. 58 at 4.)

On April 25, 2017, Progressive filed a Motion to Dismiss Fulton's Crossclaim for failure to state a claim upon which relief can be granted. (D.E. 59.)

On May 15, 2017, the Court referred to Judge Goodman (1) Plaintiff's Motion to Remand, (2) Progressive's Motion to Drop Party, and (3) Progressive's Motion to Realign Parties (as well as some related matters). (D.E. 66.)

II. Report and Recommendations

On July 18, 2017, Judge Goodman issued his Omnibus Report and Recommendations. (D.E. 78.) At the outset, Judge Goodman found that Plaintiff added Fulton as a non-diverse Defendant to destroy this Court's subject-matter jurisdiction over this case. (Id. at 2.) However, he found that the fraudulent joinder doctrine did not apply to the joinder of a non-diverse party after removal. (Id. at 6 (citing Pacheco de Perez v. AT & T Co., 139 F.3d 1368, 1380 (11th Cir. 1998) ("The determination of whether a resident defendant has been fraudulently joined must be based upon the plaintiff's pleadings at the time of removal[.]"); Ibis Villas at Miami Gardens Condo. Ass'n, Inc. v. Aspen Specialty Ins. Co., 799 F.Supp.2d 1333, 1337 n.1 (S.D. Fla. 2011) ("The fraudulent joinder doctrine ... is not the applicable standard on the joinder of a nondiverse defendant after removal.").) Thus, the issue underlying the Parties' motions is whether a plaintiff is able to join a non-diverse party after removal without the Court's involvement. ( Id. )

The heart of the issue is the interplay between 28 U.S.C. § 1447(e) and Federal Rule of Civil Procedure 15(a)(1). (Id. at 7.) Section 1447(e) provides that "[i]f 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." Judge Goodman explained that Section 1447(e) is designed "to avoid a plaintiff's gamesmanship of divesting the court of subject-matter jurisdiction by giving the Court discretion to deny joinder if the added defendant would destroy diversity." (Report at 7.)

However, Rule 15(a)(1)(B) appears to provide a loophole where plaintiffs can avoid judicial approval of non-diverse party joinder and force remand. That Rule permits a plaintiff to amend his pleading once as a matter of course—that is, without leave of the Court—within 21 days after the defendant serves a responsive pleading under Rule 12(b), (e), or (f). Here, Plaintiff added Fulton as a party defendant pursuant to Rule 15(a)(1)(B) and, in doing so, added a non-diverse defendant without first giving the Court an opportunity to approve or deny joinder at the time the amendment was made. "Thus," as Judge Goodman opined, "we are left with a situation where the fraudulent joinder doctrine and § 1447(e) do not apply and Rule 15(a)(1) opens the door for plaintiffs post-removal to divest the court of subject-matter jurisdiction by adding a non-diverse defendant as a matter of course. This result is untenable. " (Report at 7–8.)

Judge Goodman noted that the Eleventh Circuit "has not decided whether Rule 15(a) permits plaintiffs to add non-diverse parties as a matter of course after removal," but considered "the persuasive authority of other jurisdictions that conclude that it does not." (Id. at 8 (citing Mayes v. Rapoport, 198 F.3d 457, 462 n.11 (4th Cir. 1999) ("[A] district court has the authority to reject a post-removal joinder that implicates 28 U.S.C. § 1447(e), even if the joinder was without leave of court.") (internal citations omitted); Manera v. Michelin N. Am., Inc., No. 6:15-CV-721-ORL-22TBS, 2015 WL 12850564, at *1–2 (M.D. Fla. July 2, 2015) (applying Section "1447(e) when determining whether to permit a post-removal joinder, regardless of the liberal joinder rules[.]"); Ascension Enters. Inc. v. Allied Signal, Inc., 969 F.Supp. 359, 360 (M.D. La. 1997) ("[A] party may not employ Rule 15(a) to interpose an amendment that would deprive the district court of jurisdiction over a removed action. Thus, § 1447(e) trumps Rule 15(a).") (internal quotation marks omitted); Lyster v. First Nationwide Bank Fin. Corp., 829 F.Supp. 1163, 1165 (N.D. Cal. 1993) ("[T]he first amended complaint may not be used to defeat the removal of plaintiff's case to federal court."). Thus, Judge Goodman found that the Court must apply Section 1447(e) to determine whether to deny joinder or, alternatively, permit joinder and remand to state court. (Id. at 9.)

In analyzing the considerations relevant to this inquiry, see Small v. Ford Motor Co., 923 F.Supp.2d 1354, 1357 (S.D. Fla. 2013) (citing ...