United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
Rosenthal Chief United States District Judge.
October 2018, Ali Duhaly sued The Cincinnati Insurance
Company in Texas state court, alleging that Cincinnati was
liable for Duhaly's injuries from a car accident with
Broderick Williams. (Docket Entry No. 1-3). While Duhaly
alleged that Williams was negligent, he did not name Williams
as a defendant. (Id.). Cincinnati timely removed in
November 2018. (Docket Entry No. 1). Duhaly moves to amend to
add Williams as a defendant and to remand based on the
proposed amended complaint because Williams's presence
destroys the parties' diversity. (Docket Entry Nos. 17,
18, 20, 21). Cincinnati has responded, and Duhaly replied.
(Docket Entry Nos. 25, 29).
on the motions, response, and reply; the pleadings; the
record, the parties' arguments at the hearing; and the
applicable law, the court denies Duhaly's motions to
amend and remand. (Docket Entry Nos. 17, 18, 20, 21).
Rule of Civil Procedure 15(a) provides “the court
should freely give leave [to amend] when justice so
requires.” Fed.R.Civ.P. 15(a)(2). Leave is not
automatic but is within the district court's discretion.
Moore v. Manns, 732 F.3d 454 (5th Cir. 2013).
“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). When a party seeks to amend pleadings
to add a new, nondiverse party, the court should scrutinize
the amendment "more closely than an ordinary
amendment.” Moore, 732 F.3d at 456 (quoting
Hensgens v. Deere & Co., 833 F.2d 1179, 1182
(5th Cir. 1987)).
determine whether to permit joinder of a nondiverse party,
the district court must balance the equities using four
factors: (1) the extent to which the purpose of the amendment
is to defeat federal jurisdiction; (2) whether the plaintiff
has been dilatory in asking for the amendment; (3) whether
the plaintiff will be significantly injured if the amendment
is not allowed; and (4) any other equitable factors.
Hensgens, 833 F.2d at 1182; see also Priester v.
JP Morgan Chase Bank, N.A., 708 F.3d 667, 679 (5th Cir.
2013) (the Hensgens factors are the correct legal
standard for considering whether joining nondiverse parties
after removal should be allowed).
first factor weighs in favor of denying Duhaly's motion
for leave to amend. “When courts analyze the first
Hensgens factor, they consider whether the
plaintiffs knew or should have known the identity of the
nondiverse defendant when the state court complaint was
filed.” Priester v. Long Beach Mortg. Co., No.
4:10-cv-641, 2011 WL 6116481, at *2 (E.D. Tex. Dec. 8, 2011)
(quoting Tomlinson v. Allstate Indem. Co., No. Civ.
A. 06-0617, 2006 WL 1331541, at *3 (E.D. La. May 12, 2006);
Irigoyen v. State Farm Lloyds, No. 03-0324, 2004 WL
398553, at *3 (S.D. Tex. Jan. 5, 2004)), aff'd
708 F.3d 667, 679 (5th Cir. 2013). The record is clear that
Duhaly knew of Williams when he filed the state-court
petition. Razo v. Home Depot U.S.A., Inc., No.
4:14-cv-428-A, 2014 WL 3869382, at *3 (N.D. Tex. Aug. 6,
2014) (the first factor weighed against joinder when the
plaintiff was aware that an unknown employee had caused the
accident that harmed him, yet sued only the employer).
Duhaly's state-court petition mentioned Williams and
stated that Williams was negligent but did not name Williams
as a party. (Docket Entry No. 1-3 at 6-7). Duhaly's
explanation is that his prior counsel “perhaps was not
aware of the need” to have Williams as a defendant.
(Docket Entry No. 29 at 2). While Duhaly may have a valid
claim against Williams, Duhaly fails to point to case law
supporting that the change in counsel excuses the failure to
add a known party or point to newly discovered evidence that
might explain why he failed to add a known party.
second factor also weighs in favor of denying Duhaly's
motion for leave to amend. “Although courts generally
find that a plaintiff ‘is not dilatory in seeking to
amend a complaint when no trial or pretrial dates were
scheduled and no significant activity beyond the pleading
stage has occurred,' the analysis is different when the
proposed amendment is to add nondiverse defendants shortly
after removal based on federal diversity jurisdiction.”
Multi-Shot, LLC v. B&T Rentals, Inc., H-09-3283,
2010 WL 376373, at * 9 (S.D. Tex. Jan. 26, 2010) (citation
omitted) (quoting Smith v. Robin Am., Inc., No.
08-3565, 2009 WL 2485589, at *6 (S.D. Tex. Aug. 7, 2009)).
“In such a circumstance, ‘[a] delay of two months
after the filing of the original complaint or almost thirty
days after the notice of removal has been found
dilatory.'” Id. (quoting Irigoyen v.
State Farm Lloyds, No. 03-0324, 2004 WL 398553, at *4
(S.D. Tex. Jan. 5, 2004)).
filed his motion for leave to amend on April 8, 2019, nearly
six months after he filed his original petition and five
months after Cincinnati removed. (See Docket Entry
Nos. 1, 1-3, 17-18). Courts have found shorter periods
dilatory. Wells v. Chesapeake Energy Corp., No.
H-15-1856, 2016 WL 1182247, at *3 (S.D. Tex. Mar. 28, 2016)
(a three-month delay was dilatory); W&L Ventures,
Inc. v. East West Bank, No. H-13-00754, 2014 WL 1248151,
at *3 (S.D. Tex. Mar. 26, 2014) (a motion filed just over a
month after the petition was filed and three days after it
was removed was a neutral factor). The timing here is also
clearly dilatory in light of the scheduling and docket
control order the court entered at the parties' status
conference in March 2019, with counsels' agreement.
(Docket Entry No. 13). At that hearing, both parties agreed
that no new parties were required. (See Docket Entry
No. 22 at 7-8). Duhaly argues that his amended complaint will
not delay litigation because, when the motion was filed,
Cincinnati had “not sought any discovery . . . and
ha[d] not requested any depositions of Plaintiff's
witnesses.” (Docket Entry No. 18 at 2). However,
Cincinnati has sought discovery, and Duhaly has been deposed.
Duhaly also argues that his delay should be excused because
he has new counsel who appeared on the same day that the
motions to amend and remand were filed. (Docket Entry No. 29
at 2). He points to no cases suggesting that the change of
counsel six months after filing suit is a valid excuse for
delay. Based on the delay between the filing of the
state-court petition and the motion to amend, the second
factor weighs against granting Duhaly leave to amend his
third Hensgens factor also weighs against allowing
the amendment. “Courts analyzing the third
Hensgens factor look to (i) whether the already
named diverse defendant would be unable to satisfy a future
judgment, and (ii) whether the possibility of a separate
state court proceeding weighs against denying the proposed
amendment because of the inefficiency of parallel proceedings
or because such proceedings would place a financial burden on
the plaintiff.” Agyei Endurance Power Prods.,
198 F.Supp.3d 764, 777 (S.D. Tex. 2016). Cincinnati argues
that Duhaly will not be injured if joinder is denied, citing
Sterling v. Zurich American Insurance Co., No.
4:09-CV-510-A, 2009 WL 3415789 (N.D. Tex. Oct. 22, 2009), in
support. (Docket Entry No. 25 at 9). In Sterling, a
plaintiff sued an insurance company in state court and sought
to join additional parties and remand after the insurance
company removed to federal court. Id. at *1. The
district court noted that the plaintiff's state-court
petition discussed allegedly negligent actions of the
adjuster without naming the adjuster as a defendant and
adding that adjuster would destroy diversity of citizenship.
Id. When assessing the third Hensgens
factor, the court concluded that the record did not indicate
that the diverse defendants were unable to satisfy a judgment
without the adjuster; that the adjuster had a possible
limitations defense that would mitigate any prejudice of
denying the joinder motion; and the additional costs of a
parallel litigation in state court against the adjuster were
not significantly prejudicial. Id. at *2. Like in
Sterling, Cincinnati argues that “there is
nothing to indicate that Cincinnati would be unable to
satisfy any judgment favoring [Duhaly] without Mr.
Williams' help.” (Docket Entry No. 25 at 9).
According to Cincinnati, Williams may also have a
statute-of-limitations defense against Duhaly, which
“reduces the likelihood of prejudice or injury to
possibility of recovery against [nondiverse
defendants]” does not support a finding of significant
injury. Smith v. Robin Am., Inc., 2009 WL 2485589,
at *6 (S.D. Tex. Aug. 7, 2009); see also Andrews
Restoration, Inc. v. Nat'l Freight, Inc., 2015 WL
4629681, at *6 (Aug. 4, 2015). As Cincinnati points out, the
limitations defense Williams may have against Duhaly's
claim makes recovery against him unlikely, and nothing in the
record shows that Cincinnati would be financially unable to
fully satisfy a judgment without joining Williams. See
Martinez v. Holzknecht, 701 F.Supp.2d 886, 892 (S.D.
Tex. 2010) (no significant injury from denial of joinder
because the record did not show original defendant could not
satisfy a judgment); O'Connor v. Auto. Ins. Co. of
Hartford Conn., 846 F.Supp. 39, 41 (E.D. Tex. 1994) (no
joinder when the two original defendants could “satisfy
a future judgment” without joining the nondiverse
defendant). Duhaly admits that “the applicable statute
of limitations has run.” (Docket Entry No. 29 at 3). He
does not argue that he faces a significant financial burden
if he brings a separate case against Williams, but instead
argues that separate lawsuits would be prejudicial because
“Plaintiffs in personal injury lawsuits often fare
worse in federal court than they do in state court.”
(Id.). The third Hensgens factor weighs
against allowing the amendment.
final factor asks about other equitable factors, which
include whether granting leave to amend would deprive a
defendant of a properly invoked federal forum and whether
denying leave to amend would result in parallel state-court
proceedings. Gallegos v. Safeco Ins. Co., No.
H-09-2777, 2009 WL 4730570, at *5 (S.D. Tex. Dec. 7, 2009).
Cincinnati has properly invoked this federal forum.
Cincinnati also argues that Duhaly's counsel has
indicated that Duhaly's purpose for adding Williams as a
party is to secure remand. (Docket Entry No. 25 at 6).
According to Cincinnati, Duhaly offered to enter a nonsuit
without prejudice if the litigation could return to state
court, but Cincinnati refused. (Id.). Cincinnati
also attaches to its response a March 2019 demand to settle
the claim from Duhaly that stated that “if [the
parties] cannot reach a settlement in this matter, ”
Duhaly would “attempt to sue the underinsured driver,
Mr. Williams, in an attempt to remand this matter back to
State Court.” Duhaly argues only that the presence of
new counsel weighw in favor of allowing him to amend. (Docket
Entry No. 29 at 4). He has not replied to Cincinnati's
allegations that he seeks to amend purely to secure remand.
factors all weigh against granting Duhaly leave to amend.
Without amendment, there is no basis to remand. The motion
for leave to amend, (Docket Entry Nos. 17, 18), and the