Castle v. Laurel Creek Co., Inc., Civ. A. No. 3:94-0162.

• Decision Date: 12 April 1994
• Docket Number: Civ. A. No. 3:94-0162.
• Citation: 848 F. Supp. 62
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Michael C. CASTLE and Big South Mining & Construction Co., Inc., a Kentucky Corporation, Plaintiffs, v. LAUREL CREEK CO., INC., a Delaware Corporation, et al., Defendants.

848 F. Supp. 62

Michael C. CASTLE and Big South Mining & Construction Co., Inc., a Kentucky Corporation, Plaintiffs, v. LAUREL CREEK CO., INC., a Delaware Corporation, et al., Defendants.

Civ. A. No. 3:94-0162.

United States District Court, S.D. West Virginia, Huntington Division.

April 12, 1994.

H. Truman Chafin, Williamson, WV, Paula L. Wilson and Marvin W. Masters, Masters & Taylor, Charleston, WV, for plaintiffs.

Richard J. Bolen, Huddleston, Bolen, Beatty, Porter & Copen, Huntington, WV, Robert G. Jones, Arch Mineral Corp., St. Louis, MO, for defendants.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending are the Defendants' motion to amend their notice of removal to this court and the Plaintiffs' motion to remand. For the reasons discussed below, the Court DENIES the Defendant's motion and GRANTS the Plaintiffs' motion.

I.

The plaintiffs filed their complaint against these defendants in the Circuit Court of Mingo County, West Virginia, on December 23, 1993. The complaint accused the defendants of, inter alia, breach of contract, breach of fiduciary duty of good faith and fair dealing, fraudulent misrepresentation, and negligence. These accusations were made pursuant to a contract mining agreement or agreements between the defendants and plaintiffs.

The plaintiffs are residents of Kentucky. The complaint includes allegations against three corporate defendants: Laurel Creek Co., Inc., Agipcoal America, Inc., and Agipcoal Holding USA, Inc. All three corporate defendants are alleged to be organized under the laws of Delaware and to be performing work in West Virginia. The complaint also includes allegations against two individual defendants, Gene Campbell, a resident of Kentucky, and Joseph Gergely, a resident of West Virginia. It is the allegations against the individual defendants that concern the instant motions to amend and remand.

II.

The defendants seek leave of the Court to amend their notice of removal filed on February 24, 1994. In the notice defendants asserted this Court has jurisdiction pursuant to 28 U.S.C. § 1332. The notice agrees with the complaint that defendant Campbell was a resident of Kentucky and defendant Gergely was a resident of West Virginia.

Paragraph eleven (11) of the notice of removal states: "defendant Gene Campbell has been fraudulently joined as a defendant in this action for the sole and only purpose of defeating diversity jurisdiction in this Court, and, therefore, the citizenship of said defendant Gene Campbell must be disregarded for purposes of assessing diversity of citizenship jurisdiction." In their motion to amend the notice of removal, defendants seek to add defendant Gergely to paragraph eleven, contending Gergely was also fraudulently joined to the complaint, but was inadvertently omitted from the notice of removal, and that the omission was immaterial. Plaintiffs contend that although leave to amend may be freely granted within thirty days of defendant's receipt of the complaint, thereafter leave may only be permitted to set out allegations already made with greater specificity.

The statute granting authority to remove a case from state jurisdiction specifies the notice of removal shall be filed within thirty-days of the defendant's receipt of the initial pleading or service of summons in the action. 28 U.S.C. § 1446(b) (1991)¹. The thirty-day period may be modified by 28 U.S.C. § 1653, which authorizes that, "defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts."

Although courts in this Circuit have attempted to define under what circumstances a removal notice may be amended after the thirty day period has lapsed, there is a conflict in the standards applied. In Ginn v. Stegall, 132 F.R.D. 166, 167 (E.D.Va.1990) the district court held that amendments to removal petitions should be liberally allowed, stating:

"it is well-settled that amendment is liberally allowed to cure defective allegations of removal jurisdiction. See Kinney v. Columbia Savings & Loan Ass'n, 191 U.S. 78, 83, 24 S.Ct. 30, 32, 48 L.Ed. 103 (1903) (stating that amendment to show diversity of citizenship is proper where a removal petition contains `a technical defect and there are averments sufficient to show jurisdiction') and Southern Pacific Co. v. Stewart, 245 U.S. 359, 363, 38 S.Ct. 130, 131, 62 L.Ed. 345 (1917) (noting that `amendments have been permitted so as to make allegations of the removal petition more accurate and more certain when the amendment is intended to set forth in proper form the ground of removal already imperfectly stated').... the court is in accord with Professor Wright in viewing the cases denying amendment when one fails to allege diverse citizenship as `unnecessarily grudging.' C. Wright, A. Miller, E. Cooper, Federal Practice & Procedure § 3733 (1985)."

See Board of Ed. of Charles County, Maryland v. Travelers Indemnity Co., 486 F.Supp. 129, 130 (D.Md.1980); cf. Belasco v. W.K.P. Wilson & Sons, Inc., 833 F.2d 277, 282 (11th Cir.1987) (amendment will be permitted after the thirty-day period expires where the question is novel, complex and technical, and the ends of justice and judicial efficiency so require); Northern Illinois Gas Co. v. Airco Industrial Gases, 676 F.2d 270, 274 (7th Cir.1982) ("where the state court record reveals a jurisdictional fact, albeit imperfectly stated, which is essential to removal and which has been omitted from the four corners of the removal petition, an amendment of the removal petition is permissible to correct the defect").

On the other hand, in Barnhill v. Insurance Company of North America, 130 F.R.D. 46, 51 (D.S.C.1990) the court noted,

"the overwhelming majority of courts allow amendment after expiration of the statutory period for removal only for the purpose of setting forth more specifically each ground for removal which had been imperfectly set forth in the original petition, Thompson v. Gillen, 491 F.Supp. 24, 27 (E.D.Va.1980), Van Horn v. Western Electric Co., 424 F.Supp. 920, 924 (E.D.Mich.1977) (and cases cited therein), but deny leave to amend to supply missing allegations or to supply new allegations. Thompson, 491 F.Supp. at 27; Richmond, Fredericksburg and Potomac R. Co. v. Intermodal Services, Inc., 508 F.Supp. 804, 805 (E.D.Va.1981)." (emphasis in original).

Moreover, in Outdoor World Corporation v. Calvert, 618 F.Supp. 446, 448 (E.D.Va.1985) the court held,

"If a party wants removal he cannot delay. His petition must be filed within thirty days after receipt of the initial pleadings or the opportunity is lost. To permit the filing of amended petitions for removal after the expiration of thirty days for the purpose of supplying essential omitted allegations amounts to an unwarranted judicial extension of the thirty days set by Congress. Congress dealt with the question of amendment but in so doing limited the right to amend to defective pleadings, not omitted pleadings. 28 U.S.C. § 1653." (emphasis added).

In Bellone v. Roxbury Homes, Inc., 748 F.Supp. 434, 436 (W.D.Va.1990) the district court stated, "amendment of removal petitions after the deadlines prescribed by the relevant statutes have passed is limited to those instances involving only minor technical corrections as opposed to substantive revisions." Citing, Courtney v. Benedetto, 627 F.Supp. 523, 527 (M.D.La.1986) and Friedrich v. Whittaker Corp., 467 F.Supp. 1012, 1014 (S.D.Tex.1979). See P-Nut Carter's Fireworks, Inc. v. Carey, 685 F.Supp. 952, 953 (D.S.C.1988) (cure of a defective petition for removal must be made within thirty days to be timely); Cook v. Robinson, 612 F.Supp. 187, 190 (E.D.Va.1985); Hubbard v. Tripp, 611 F.Supp. 895, 896 (E.D.Va. 1985); Mason v. International Business Machines, Inc., 543 F.Supp. 444, 446 (M.D.N.C. 1982). See also Courtney v. Benedetto, supra 627 F.Supp. at 527 ("the untimely filing or amending of a petition for removal has been classified as a defect causing `improvident' removal within the purview of 28 U.S.C. § 1447(c) which provides, in pertinent part, that `if at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the district court shall remand the case, and may order the payment of just costs.' Royal v. State Farm Fire & Casualty Co., 685 F.2d 124 (5th Cir.1982)."); Moser v. Bostitch Div. of Textron, Inc., 609 F.Supp. 917, 919 (D.C.W.D.Pa. 1985) ("some courts have allowed a defendant to amend it removal petition after the thirty-day period has run if the petition is merely defective").

The Barnhill, supra, court also addressed the policy concerns that underpin the restrictive view of amendment after expiration of the thirty-day period, stating:

"a number of compelling policy considerations ... require this court to apply a very restrictive view of amendment — at least after the statutory period for removal found in § 1446(b) has expired. These considerations include:

(1) preventing federal court infringement upon rightful independence and sovereignty of state courts;

(2) ensuring that judgments obtained in a federal forum are not vacated on appeal due to improvident removal;

(3) reducing uncertainty as to the court's jurisdiction in the marginal cases, which a more liberal construction of the removal statute would promote;

(4) allowing amendment of the notice of removal under § 1653 after the thirty day time limit for removal specified in § 1446(b) would `substantially eviscerate' the specific time provision enacted by Congress;

(5) conceding that the traditional justification for diversity jurisdiction — state court hostility toward nonresident defendants—has been significantly reduced since the time diversity jurisdiction was created." Barnhill, supra 130 F.R.D. at 50-51. (citations omitted).

As an initial question, then, the Court must decide whether the standard applied to the motion for leave to amend is liberal, as in Ginn v. Stegall, supra, or restrictive, as in Bellone v....