Pintor v. Liberty Insurance Corporation

Background

Plaintiffs filed suit in state court against Liberty Mutual Insurance Company, which insured their landlord, Dora Alacon-Villeda. Plaintiffs had obtained default judgments against Alacon-Villeda. Liberty removed the case to federal court based on diversity jurisdiction. The opinion states that plaintiffs are California residents and that Liberty is incorporated under Massachusetts law and has its principal place of business there.

Plaintiffs sought permission to add Marcos M. Villeda, a co-landlord and California resident, as a defendant. Adding him would destroy the parties’ diversity of citizenship. The court explained that, after removal, it could either deny joinder or permit joinder and send the case back to state court.

Court’s Analysis

The court evaluated the request under 28 U.S.C. § 1447(e), which gives a district court discretion over whether to allow a nondiverse defendant to be added after removal. Courts consider whether the proposed defendant is needed for a fair resolution, whether the statute of limitations would bar a new state-court case, whether the plaintiffs delayed, whether the purpose is to defeat federal jurisdiction, whether the claims appear valid, and whether denying joinder would harm the plaintiffs.

The court stated that plaintiffs argued only that the proposed joinder was not intended to defeat federal jurisdiction and did not otherwise address the factors or file a reply. The court found that Marcos M. Villeda was not a required party because it could grant plaintiffs complete relief against Liberty without him. Plaintiffs had obtained default judgments against Dora Alacon-Villeda, not Marcos M. Villeda, so the proposed claims against Marcos M. Villeda were only indirectly related to the claims against Liberty.

The court also found an unexplained delay. Plaintiffs knew of Marcos M. Villeda and his potential involvement in the fire underlying the insurance dispute. They had named both landlords in a June 2019 state-court case but dismissed Marcos M. Villeda before obtaining default judgments against Dora Alacon-Villeda. The court stated that plaintiffs’ counsel’s reported long-COVID memory problems did not explain the delay and concluded that the delay suggested the purpose of joinder was to defeat diversity jurisdiction.

Ruling

The court concluded that plaintiffs had not persuaded it to allow joinder. It denied their motion for leave to amend to name Marcos M. Villeda. The court ordered plaintiffs to file, by September 29, 2022, an updated version of their proposed first amended complaint naming only Liberty. The order also vacated the scheduled hearing and stated that it disposed of the motion at Docket No. 39. Judge Jacquelyn Corley issued the order.