Reasons To Not Delay In Seeking A Remand

As has been discussed many times on this Blog, insurance companies prefer to litigate in Federal Court rather than State or County courts.  When an insurance company removes a case to Federal court the insured needs to be prompt in seeking a remand to the State or County court from which is was removed.

This is illustrated in this 2023 opinion from the Northern District of Texas, Dallas Division.  The opinion is styled, Thomas Dettmer v. Safeco Insurance Company of Indiana.

Dettmer alleges hail damage to his property.  Safeco hired Madsky Managed Repair (Madsky) to inspect the property.  Safeco asserts the damages do not exceed the deductible in the policy.  Dettmer hired JT Roofing who asserts the damage exceeds $62,826.  In an effort to reconcile the vast disparity, Safeco hired ProNet to double check Madsky’s assessment.  ProNet’s engineer, Marc Camacho, inspected the property and concluded that the damage to the residence resulted from “intentional mechanical damaged performed … in an attempt to replicate storm damage.”

After Safeco removed the case to Federal Court, Dettmer moved to amend his State court petition to add ProNet, Madsky, and Camacho.  The addition of these defendants would result in defeating Federal jurisdiction and the case being remanded to the State Court.

A party may amend its pleading with the Court’s leave. As a general matter, a court should freely give leave when justice so requires and must possess a substantial reason to deny leave to amend. But courts have more discretion to deny leave to amend when, after removal, the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction.  In such cases, the courts are to consider four factors: (1) the extent to which the purpose of the amendment is to defeat federal jurisdiction, (2) whether plaintiff has been dilatory in asking for amendment, (3) whether plaintiff will be significantly injured if amendment is not allowed, and (4) any other factors bearing on the equities.

To determine whether the purpose of the amendment is to defeat federal jurisdiction, courts consider whether a plaintiff knew of the proposed defendant’s role or mentioned the proposed defendant in the original petition.  Dettmer mentioned Madsky in his state-court petition, so he knew of Madsky’s involvement in evaluating the damage to his property.  Concerning ProNet and Camacho, Dettmer possessed Camacho’s conclusions on November 10, 2020.  So Dettmer knew of ProNet’s and Camacho’s involvement with his claim years ago.  Accordingly, the purpose of the proposed amendment is to defeat federal jurisdiction.

A delay of thirty days after the notice of removal has been found dilatory.  Safeco removed the case on April 6, 2022.  But Dettmer waited more than four months—until August 16, 2022—to move for leave to amend.  That delay is dilatory.  Although Dettmer chalks up his tardiness to his desire to observe “the outcome of pre-discovery mediation,” that’s inapposite. Dettmer had sufficient information to include the non-diverse parties in his state-court petition, and there’s
no evidence mediation did anything to materially develop those facts.

To determine whether denial of leave to amend would significantly injure the plaintiff, courts consider the cost, judicial efficiency, and possible inconsistency of results that might result if the plaintiff is forced to try two related claims in different courts.  Here, Dettmer only seeks to add a solitary, generalized allegation against the non-diverse parties. But generalized allegations that only raise a scant possibility of recovery against nondiverse defendants cannot support a finding of significant injury.  Accordingly, the Court perceives no potential for significant injury by denying leave to amend.

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