The Getaway 151, LLC v. ACE Property and Casualty Insurance Co.

Background

The Getaway 151, LLC sued ACE Property and Casualty Insurance Co. in New York state court over an insurance policy covering property at 679 Riverside Drive in New York, New York. The complaint alleged that ACE failed to reimburse The Getaway 151 for water damage after a city bus drove over the sidewalk above the property’s roof. ACE removed the action to federal court based on diversity jurisdiction, which generally allows a federal court to hear disputes between citizens of different states.

The Getaway 151 moved under Federal Rule of Civil Procedure 15(a)(2) for permission to amend its complaint to add INC Insurance Services as a defendant. It alleged that INC had been involved as either an insurance agent or broker and had represented that the policy covered structural damage. The Getaway 151 also argued that adding INC would destroy diversity jurisdiction because the opinion identifies both The Getaway 151 and INC as New York entities, requiring a remand to state court.

ACE stated that it took no position on whether the motion should be granted or denied. ACE separately argued, based on documents submitted by The Getaway 151, that INC was a broker rather than an agent of ACE. The court treated that issue as a factual dispute to be addressed through discovery, not as an issue controlling whether INC could be added at this stage.

Court’s analysis

The court applied Rules 15 and 21, which provide a liberal standard for adding parties. Because adding INC would eliminate federal subject-matter jurisdiction after removal, the court also applied 28 U.S.C. § 1447(e). Under that statute, the court could deny joinder or allow it and remand the case to state court.

First, the court concluded that joinder was proper under Rule 20. The claims against ACE and INC arose from the same insurance policy and related representations about that policy. The court identified common questions concerning the property damage, the scope of policy coverage, and statements made about the policy.

Second, the court weighed the relevant fairness factors:

- Delay: The Getaway 151 waited about five months after removal and filed the motion more than one month after the deadline in the case-management plan for adding parties. The court found that the delay was not fatal because ACE had not been prejudiced. - Prejudice: ACE did not oppose adding INC, did not claim that joinder would significantly expand discovery, and did not argue that it would have to abandon its litigation strategy. Because INC’s involvement concerned the same policy already at issue, the court expected limited additional fact-finding. - Multiple litigation: Denying joinder could have led The Getaway 151 to file a separate state-court action against INC, creating parallel litigation. - Motivation: The court found no reason to believe that The Getaway 151’s request to add INC was fraudulent or improper.

The court therefore found joinder permissible under Section 1447(e). It then concluded that adding INC destroyed diversity jurisdiction because the opinion identifies The Getaway 151 and INC as citizens of New York.

Ruling

The court granted the motion for leave to amend. It directed The Getaway 151 to file and serve an amended complaint consistent with the decision within 30 days. Immediately after the amended complaint was filed and served, the Clerk was directed to remand the case to the Supreme Court of New York, New York County.

The opinion does not state whether the amended complaint had already been filed or whether the remand had already occurred as of the opinion’s date.