Ghosh v. Bank of America, N.A.

Background

Asim Ghosh alleged that he was persuaded by an “IRS telephone scam” to wire more than $1.2 million to unknown persons. He filed a state-court action asserting financial elder abuse against Bank of America and ten unidentified defendants. Bank of America removed the case to federal court based on diversity of citizenship.

Ghosh sought permission to amend the complaint to add Joyce Gai and Jia Lu, two Bank of America branch managers with whom he interacted. He alleged that they were primarily responsible for approving and processing the wire transfers. The proposed amended complaint also added Parth Patel, whom law enforcement identified as one of the people who carried out the scam. Bank of America did not object to adding Patel because, according to the opinion, his presence would not destroy diversity.

Legal standard and analysis

Federal Rule of Civil Procedure 15 generally requires courts to freely allow amendments when justice requires. Under 28 U.S.C. § 1447(e), after removal, a court may deny the addition of defendants whose presence would destroy subject-matter jurisdiction, or allow the addition and remand the case to state court.

The court found that Gai and Lu were more than tangentially connected to the claims because Ghosh alleged that they were the individuals through whom Bank of America committed the wrongful acts. The court noted that the standard under § 1447(e) is less restrictive than the standard for required-party joinder under Rule 19.

The court considered factors including the need for the proposed defendants, potential statute-of-limitations problems, delay, any motive to defeat federal jurisdiction, the apparent validity of the claims, and prejudice to Ghosh. Although Ghosh’s desire to return to state court was at least part of his motivation, the court concluded that the overall balance favored allowing the amendment. It also found that requiring Ghosh to bring a separate state-court action against Gai and Lu would create substantial inefficiency and that he had acted with reasonable promptness after seeking to add them.

Bank of America argued that the claims would fail because neither it nor its employees had the required knowledge. The court did not resolve that merits argument, explaining that it involved interpretation and application of California statutory law.

The bank also argued that the Edge Act gave the federal court jurisdiction over the case because it involved international or foreign banking transactions. The court rejected that argument at the threshold because the notice of removal identified only diversity jurisdiction. Under Ninth Circuit precedent cited in the opinion, a notice of removal could not be amended after the thirty-day period to add a separate basis for federal jurisdiction.

Ruling

Judge Richard Seeborg granted the motion for leave to amend. The proposed first amended complaint was deemed filed, and the action was remanded to San Francisco Superior Court. The order addressed amendment and federal jurisdiction; it did not decide the merits of the financial-elder-abuse claims.