Comer v. Schmitt, Civil Action 2:15-cv-2599
| Decision Date | 14 October 2015 |
| Docket Number | Civil Action 2:15-cv-2599 |
| Parties | MELISSA R. COMER, et al., Plaintiffs, v. MARNE C. SCHMITT, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
This matter is before the Court for consideration of Plaintiffs' Combined Motion for Leave to Amend First Amended Complaint and to Remand (ECF No. 18), Defendant's Memoranda in Opposition (ECF Nos. 21 & 22), and Plaintiffs' Reply (ECF No. 35). For the reasons that follow, Plaintiffs' Motion to Amend is DENIED. Furthermore, it is RECOMMENDED that Plaintiffs' Motion to Remand be DENIED.
Plaintiffs, citizens of Ohio, filed their original Complaint in the Licking County, Ohio, Court of Common Pleas on February 11, 2014 against Defendant Marne Schmitt, a citizen of Ohio, asserting negligent operation of a motor vehicle that caused an automobile accident involving Plaintiff Melissa R. Comer. (ECF No. 19 at 2.) Plaintiffs reached a settlement agreement with Defendant Schmitt on October 20, 2014. (ECF No. 20 at 4.)
On January 20, 2015 Plaintiffs filed their First Amended Complaint in state court, adding Defendant General Motors ("GM"), a Delaware limited liability company whose principal placeof business is in Michigan and whose members are created under Delaware law and have a principal place of business in Michigan. In the Amended Compalint, Plaintiffs asserted claims for product liability for certain alleged defects in the vehicle driven by Plaintiff at the time of the accident. (ECF No. 19 at 2.) Defendant GM filed its answer on March 3, 2015. (Id.) On May 14, 2015 Defendant Schmitt filed a motion to enforce her settlement with Plaintiffs. (ECF No. 12.) In her memorandum in support in that action, Defendant Schmitt asserted that Plaintiffs refused to consummate the settlement because they wanted to keep her in the case in order to forestall removal to this Court on diversity grounds. (ECF No. 12 at 2, 3.) Defendant GM confirmed the existence of the agreement between Plaintiffs and Defendant Schmitt on July 6, 2015, when it received a forwarded email originally sent from Plaintiffs' counsel to Defendant Schmitt's counsel. (ECF No. 21 at 5-6.) Four days later, on July 10, 2015, Defendant GM filed its Notice of Removal in this Court. (ECF No. 1.)
On August 5, 2015 Plaintiffs moved this Court for leave to amend their complaint in order to add Defendant Dave Gill Chevrolet ("Dave Gill"), an Ohio corporation whose principal place of business is in Ohio, asserting negligence and breach of warranty in selling the vehicle driven by Plaintiff at the time of the automobile accident. (ECF No. 18-1 at 11-15.) In the same motion, Plaintiffs moved the Court to remand this case to state court. (ECF No. 18 at 1.)
Generally, a civil case brought in a state court may be removed by a defendant to federal court if it could have been brought there originally. 28 U.S.C. § 1441(a); Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000). A federal court has original "diversity" jurisdiction where the suit is between citizens of different states and the amount in controversyexceeds $75,000.00, exclusive of costs and interests. 28 U.S.C. § 1332(a). Rogers, 239 F.3d at 871.
When an action is removed based on diversity, a federal court must determine whether complete diversity exists at the time of removal. Coyne v. American Tobacco Co., 183 F.3d 488, 492 (6th Cir. 1999). "Diversity jurisdiction attaches only when all parties on one side of the litigation are of a different citizenship from all parties on the other side of the litigation." Id. (quoting SHR Ltd. Partnership v. Braun, 888 F.2d 455, 456 (6th Cir. 1989)).
If the case initially is not removable under the above standards, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order, or other paper from which it may first be ascertained that the case is one which is or has become removable. 28 U.S.C. § 1446(b)(3). Removal based upon diversity jurisdiction may not be sought, however, more than one-year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action. 28 U.S.C. § 1446(c)(1).
The Sixth Circuit has not clearly defined the meaning of "bad faith" in the statute. Federal courts that have examined the statutory language, however, agree that the issue is whether the plaintiff engaged in intentional conduct to deny the defendant the chance to remove the case to federal court. See Hiser v. Seay, No. 5:14-CV-170, 2014 WL 6885433, at *4 (W.D. Ky. Dec. 5, 2014); Taylor v. King, No. 5:12-CV-1, 2012 WL 3257528 at *4 (W.D. Ky. Aug. 8, 2012); Ehrenreich v. Black, 994 F. Supp. 2d 284 (E.D. N.Y. 2014) ().
"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." 28 U.S.C. § 1447(e). "The general impetus for applying § 1447(e) is for the trial court to use its discretion and determine if allowing joinder would be fair and equitable." City of Cleveland v. Deutsche Bank Trust Co., 571 F. Supp. 2d 807, 823 (N.D. Ohio 2008). Although the Sixth Circuit has issued little guidance regarding § 1447(e), the cases generally agree that courts should consider the following factors: (1) the extent to which the purpose of the amendment is to defeat federal jurisdiction; (2) whether the plaintiff has been dilatory in seeking amendment; (3) whether the plaintiff will be significantly prejudiced if amendment is not allowed; and (4) any other equitable factors. See id. (collecting cases). Of the relevant factors, the first appears to be of paramount importance. Id. . The four factor analysis is designed to aid a court in determining whether a motion to amend has been filed for an improper purpose. J. Lewis Cooper, 370 F.Supp. 2d at 618.
Plaintiffs question whether the Court may exercise diversity jurisdiction over this case upon two grounds. Plaintiffs first argue that there has never been complete diversity of parties in this case. Plaintiffs second assert that Defendant GM, in waiting more than one year after the initial filing in state court, did not timely file its notice of removal.
Plaintiffs allege a lack of complete diversity both at the time of removal and in the current posture because Defendant Schmitt, an Ohio citizen, has been and continues to be a defendant. (ECF No. 20 at 4-7). Defendants counter that Schmitt, by virtue of her unconsummated settlement agreement with Plaintiffs, is merely a nominal party that the Court should not consider when determining whether complete diversity of parties obtains. (ECF No. 21 at 9.) Plaintiffs argue that Defendant Schmitt remains a real party in interest because the settlement agreement is "contingent" upon the disposition of all subrogated medical liens. (ECF No. 20 at 9.)
The Court is mindful that other courts in the Sixth Circuit have held that where a plaintiff agrees to a settlement with all non-diverse defendants, "[p]laintiff, by his voluntary act has definitely indicated his intention to discontinue the action as to the non-diverse defendant [and] indicated that he no longer desires to dictate the forum and the case then becomes removable under 28 U.S.C. § 1446(b)." Di Natale v. Subaru of America, 624 F. Supp. 340, 343 (E.D. Mich. 1985). Similarly, the Sixth Circuit has held that such nominal parties are not real parties ininterest and, therefore, may be disregarded in evaluating the propriety of exercising diversity jurisdiction. Maiden v. N. Am. Stainless, L.P., 125 F. App'x. 1, 3 (6th Cir. 2004).
Plaintiffs admit the existence of a settlement with Defendant Schmitt in their briefings. (ECF No. 20 at 10.) Plaintiffs, however, maintain that Defendant GM had knowledge of the settlement which put it on notice of the availability of removal prior to receiving the July 2015 email. (Id. ()) Plaintiffs, nevertheless, maintain that this Court should find the settlement wholly illusory for purposes of determining diversity. (ECF No. 20 at 7.)
The Undersigned concludes that Plaintiffs' subsequent actions, including the failure for nearly a year to settle subrogated claims related to Defendant Schmitt's settlement agreement valued at less than 10% of the settlement amount, suggest that Defendant Schmitt's continued presence in this action is unrelated to any real interest in the claim or controversy. Defendant Schmitt's motion to enforce settlement also includes communications between her counsel and Plaintiffs' counsel that tend to confirm she is no longer a real party in interest. (ECF No. 12.) For instance, counsel exchanged emails as early as October 24, 2014...
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