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Nelson v. Complete Business Solutions Group, Inc.

United States District Court, W.D. Texas, Austin Division

August 9, 2019

STEPHEN NELSON, Individually and on Behalf of Corridor Medical Services, Inc., a/k/a Corridor Mobile Medical Services, Plaintiff,
v.
COMPLETE BUSINESS SOLUTIONS GROUP, INC., d/b/a PAR FUNDING, and TUCKER ALBIN & ASSOCIATES, INC., Defendants.

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          SUSAN HIGHTOWER UNITED STATES MAGISTRATE JUDGE

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

         Before the Court are Plaintiff's Motion to Remand (Dkt. No. 15) and Defendant's Response (Dkt. No. 16). Plaintiff did not file a Reply. The undersigned submits this Report and Recommendation to the District Judge pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules.

         I. BACKGROUND

         Plaintiff Stephen Nelson (“Nelson”) originally filed this case against Defendant Complete Business Solutions Group, Inc., d/b/a PAR Funding (“PAR”) in the 250th Judicial District Court of Travis County, Texas, on October 16, 2018. (Orig. Pet, Dkt. No. 1-4, at 1). Nelson is a Texas resident; PAR is a Pennsylvania debt collection company. (Id. at ¶¶ 9-10, 23). Nelson alleges that PAR and its agents have harassed, abused, threatened, and intimidated Nelson and his family in efforts to collect on a purported debt. (Id. ¶ 14). He asserts claims of trespass, violations of the Texas Debt Collection Act, intentional infliction of emotional distress, defamation, and intrusion. (Id. ¶¶ 18-34, 36-45, 47-49). He seeks a permanent injunction and damages. (Id. ¶¶ 35, 46, 50- 51).

         PAR removed to this Court on November 8, 2018. (Not. Removal, Dkt. No. 1). On November 29, 2018, without seeking leave of court, Nelson filed a First Amended Complaint (“FAC”) adding Tucker Albin & Associates, Inc. (“Tucker Albin”) as a defendant in this action and adding a claim of breach of contact against both PAR and Tucker Albin. (FAC, Dkt. No. 5). Tucker Albin is a Texas company. (Id. ¶ 12). Nelson then filed the instant motion to remand, arguing that Tucker Albin's addition to the case destroys the diversity of the parties. (Mot. Remand, Dkt. No. 15). In his motion, Nelson correctly notes that Tucker Albin has not yet appeared in this case. (Id. ¶ 8). However, the record in this case indicates that Nelson has not yet served Tucker Albin as required.[1]

         II. LEGAL STANDARD

         A defendant may remove any civil action from state court to a district court of the United States that has original jurisdiction. 28 U.S.C. § 1441. District courts have original jurisdiction over all civil actions that are between citizens of different states and involve an amount in controversy in excess of $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332(a). Diversity jurisdiction “requires complete diversity-if any plaintiff is a citizen of the same State as any defendant, then diversity jurisdiction does not exist.” Flagg v. Stryker Corp., 819 F.3d 132, 136 (5th Cir. 2016). “[T]he removal statute is strictly construed ‘and any doubt as to the propriety of removal should be resolved in favor of remand.'” Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008); see also Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (“Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand.”). The removing party bears the burden of showing that the removal was proper. Frank v. Bear Stearns & Co., 128 F.3d 919, 921-22 (5th Cir. 1997).

         Where subject matter jurisdiction relies on diversity, the addition of a non-diverse party will defeat federal jurisdiction. Hensgens v. Deere & Co., 833 F.2d 1179, 1181 (5th Cir. 1987) (citing Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978)). “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).

         III. DISCUSSION

         The parties do not dispute their respective citizenship. Nelson's sole argument in favor of remand is that the addition of Tucker Albin has destroyed the diversity of the parties. (Mot. Remand, Dkt. No. 15). PAR responds that because Nelson's First Amended Complaint added a non-diverse defendant and would divest this court of jurisdiction, Nelson was required to seek leave of court before filing it. (Resp., Dkt. No. 16, at 3-4). Because he did not, PAR contends that the Court should deny joinder of Tucker Albin and deny the motion to remand.

         As a general rule, when a party seeks leave to amend its pleading, a court “should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). But when a plaintiff seeks to join defendants after removal whose joinder would destroy subject matter jurisdiction, “the district court must apply a higher level of scrutiny than required under Fed.R.Civ.P. 15(a).” Allen v. Walmart Stores, L.L.C., 907 F.3d 170, 185 (5th Cir. 2018) (citing Hensgens, 833 F.2d at 1182). In that situation, at the district court's discretion, “the court may deny joinder, or permit joinder and remand the action to the State court.” 28 U.S.C. § 1447(e); see also Alanis v. Allstate Ins. Co., No. SA-17-CV-01060-OLG, 2018 WL 2245076, at *2 (W.D. Tex. Jan. 4, 2018).

         Nelson did not seek leave of court as required before filing an amended complaint that might divest the court of jurisdiction. Because of this, there are grounds to strike the First Amended Complaint without prejudice. See, e.g., Allen, 907 F.3d at 186 (affirming district court's denial of motion to remand and denial of motion to amend complaint, where plaintiff filed amended complaint joining non-diverse defendants without leave). Because this case has been pending for nearly a year, the original defendant briefed the question of proper joinder in its response to the motion to remand, and Nelson chose not to file a reply despite the opportunity to do so, this Court will exercise its discretion to construe the First Amended Complaint as a motion for leave to file a First Amended Complaint.

         A court considers four factors when exercising its discretion to allow joinder of a non-diverse party and thereby divest itself of jurisdiction: “(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 an amendment; (3) whether the plaintiff will be significantly injured if the amendment is not allowed; and (4) any other factors bearing on the ...


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