Jallad v. Madera
| Decision Date | 08 August 2019 |
| Docket Number | No. 18-2038,18-2038 |
| Parties | Sahar Jallad, Appellant v. Felix Madera; Progressive Advanced Insurance Company |
| Court | U.S. Court of Appeals — Third Circuit |
NOT PRECEDENTIAL
On Appeal from the United States District Court for the Eastern District of Pennsylvania
Before: HARDIMAN, SCIRICA and RENDELL, Circuit Judges
Howard A. Rosen - Argued
1500 John F. Kennedy Boulevard
Suite 1723
Two Penn Center Plaza
Philadelphia, PA 19102
Counsel for Appellant
Andrew P. Moore
Andrew Moore & Associates
1132 Old York Road
Abington, PA 19001
200 Wales Lance
Malvern, PA 19355
Devon E. Sereda
Hubshman Flood Bullock & Dorn
5165 Campus Drive
Suite 200
Plymouth Meeting, PA 19462
Counsel for Appellee Felix Madera
Kathleen P. Dapper
Robert E. Dapper, Jr.
Burns White
1001 Conshohocken State Road
100 Four Falls, Suite 515
West Conshohocken, PA 19428
Daniel J. Twilla
Burns White
48 26th Street
Pittsburgh, PA 15222
Karl L. Stefan
James W. Watson - Argued
Forry Ullman
150 South Warner Road
Walnut Hill Plaza, Suite 450
King of Prussia, PA 19406
Counsel for Appellee Progressive Advanced Insurance Company
Sahar Jallad challenges the District Court's denial of her motion for remand and subsequent dismissal of Felix Madera. She also challenges its denial of her motion for leave to amend her complaint, its denial of her request to admit doctor's notes and records into evidence at trial, and its response to a question submitted by the jury during its deliberations. For the reasons set forth below, we will affirm all but the District Court's dismissal of Madera. We will vacate that ruling and allow Jallad's case against Madera to proceed in federal court.
In an attempt to recover for injuries suffered in a car accident, Jallad sued Madera in Pennsylvania state court for negligence. She filed a separate lawsuit against Progressive in the same court, alleging breach of contract and bad faith in its handling of her insurance claim related to the accident. Progressive, an Ohio corporation with its principal place of business in Ohio, removed the action to federal court on the basis of diversity jurisdiction, since Jallad was a citizen of Massachusetts and the amount incontroversy exceeded $75,000. Jallad moved to join Madera and have the case remanded to state court, arguing that joinder of Madera, a citizen of Pennsylvania, would destroy diversity jurisdiction pursuant to 28 U.S.C. §1441(b)(2).2 In response, Progressive argued, among other things, that Jallad's negligence claim against Madera could not be properly joined with her insurance claims against Progressive under Pennsylvania law. The District Court summarily denied Jallad's motion for joinder and remand, explaining, in a footnote, that "Progressive had a legal right to remove this lawsuit originally" and, according to Stokes v. Loyal Order of Moose Lodge No. 696, 466 A.2d 1341 (Pa. 1983), "Plaintiff's negligence claims against Mr. Madera may not be joined in the bad faith claim against Progressive." Order, Jallad v. Progressive Ins. Co., No. 2:16-cv-02384-RK (E.D. Pa. July 13, 2016), ECF No. 11.
Instead of continuing her federal court action against Progressive and her state court action against Madera separately, Jallad voluntarily dismissed both and filed a single lawsuit against both defendants in state court, alleging the same causes of action against each. Progressive again removed the lawsuit to federal court and argued that, although Madera's presence as a forum defendant would prevent removal, his citizenship could be disregarded for jurisdictional purposes because he was fraudulently misjoined. Shortly after its removal to federal court, Progressive moved to sever Jallad's claimagainst Madera from the lawsuit, essentially repeating its arguments from its notice of removal.
Instead of responding to Progressive's motion to sever, Jallad filed a motion to remand, alleging that "Madera was and is a non-diverse defendant" and, therefore, diversity jurisdiction pursuant to 28 U.S.C. § 1332 did not exist.3 Plaintiff's Brief in Support of Her Motion to Remand at 1, Jallad v. Madera, No. 2:16-cv-04795-RK (E.D. Pa. Sept. 27, 2016), ECF No. 7-1. In her motion, she made no mention of 28 U.S.C. § 1441 or the forum defendant rule. Progressive opposed the motion by, in essence, rehashing its arguments from its notice of removal and motion to sever. Again citing to Stokes, it argued that Madera had been fraudulently misjoined and, therefore, his citizenship may be disregarded for jurisdictional purposes. Progressive also made no mention of 28 U.S.C. § 1441 or the forum defendant rule in its opposition.
The District Court agreed with Progressive, denied Jallad's motion to remand, and dismissed Madera from the action. It first noted that, although complete diversity between the parties existed, the forum defendant rule would normally block removal because Madera is a citizen of Pennsylvania. But the District Court recognized that the doctrine of fraudulent joinder allows removal of an action "despite the existence of forum-state or non-diverse defendants if those parties were 'fraudulently' named as defendants with the sole purpose of defeating federal jurisdiction." A. 10 (quoting Moore v. Johnson & Johnson, 907 F. Supp. 2d 646, 662 (E.D. Pa 2012)) (internal quotationmarks omitted). It also stated that a finding of fraudulent joinder allows a district court to disregard the citizenship of any fraudulently joined defendants for jurisdictional purposes and dismiss those defendants to retain jurisdiction over the remainder of the case.
Following a recitation of the principles of fraudulent joinder, the District Court proceeded to analyze the case at hand. The District Court focused its fraudulent joinder analysis on Stokes and concluded that "Stokes does not permit Jallad to bring this singular action against Madera based on a negligence claim regarding the causation of the motor vehicle accident and Progressive for breach of contract and bad faith pertaining to insurance coverage." A. 14. Thus, it found that "there is no reasonable basis in fact or colorable ground supporting Jallad's joining of the tort claim against Madera with the insurance claim against Progressive," held that Madera was fraudulently joined, and dismissed him from the suit. A. 15. Because Progressive, the remaining defendant, was diverse from both Jallad and the forum, the District Court denied Jallad's motion to remand and denied Progressive's motion to sever Madera as moot. Jallad appealed to this Court. We determined that the District Court's dismissal of Madera was not a final judgment and dismissed her appeal for lack of jurisdiction.
The action proceeded in federal court against Progressive. After the close of fact discovery and on Progressive's motion for summary judgment, the District Court dismissed Jallad's bad faith claim. Progressive then notified Jallad that it intended to file a motion in limine to preclude evidence at trial of her income loss and medical expenses, since she had not stated a claim for recovery of first party benefits. In response, Jallad moved for leave to amend her complaint four days before the start of trial. Progressiveopposed this motion, arguing undue delay and prejudice. The District Court agreed, denying Jallad's motion because "there was an unreasonable delay and . . . the amendment at this time would cause an unreasonable hardship on [the] defense, [since] they have conducted their discovery based upon [the] underinsured motorist claim." A. 33.
Jallad's breach of contract claim proceeded to a jury trial. During Jallad's case-in-chief, Dr. Lipton, her treating physician, testified via videotaped deposition to the dates he examined and treated Jallad, his diagnoses from those meetings, medical history provided by Jallad, his review of an MRI, and the fact that he provided out-of-work notes to her. Jallad's attorney attempted to admit some of his notes and records into evidence, arguing that the evidence was necessary because Dr. Lipton did not "go through each one" in his testimony. A. 461-62. Counsel for Progressive objected, arguing that the evidence was cumulative and that because "Dr. Lipton was a testimonial witness[,] . . . [n]othing [had] precluded counsel from asking about each and every report he wanted to go through." A. 462. The District Court sustained this objection and refused to admit the records and notes as evidence.
After the close of evidence, the case was submitted to the jury. During deliberations, the jury returned with a number of questions, one of which read, A. 584. Over objection from Jallad's counsel, the District Court responded, "[T]here is nothing in the record to answer thatquestion, and we can't add to the record at this point." A. 600. The jury ultimately returned a verdict for Progressive, and Jallad filed this timely appeal.
On appeal, Jallad raises four issues: (1) whether the District Court erred in denying her motion to remand and dismissing Madera from the lawsuit on the basis that he was fraudulently joined; (2) whether the District Court abused its discretion by denying her leave to file an amended complaint; (3) whether the District Court abused its discretion by denying the admission of Dr. Lipton's records and notes into evidence; and (4) whether the District Court abused its discretion in its response to the jury's question.
We first consider whether the District Court erred in denying Jallad's motion to remand and dismissing Madera from the suit. Jallad urges us to vacate the District Court's order because it did not apply the proper standard for fraudulent joinder or, in the alternative, because it misapplied Stokes. Both Madera and Progressive argue that Stokes...
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