Guijarro v. Enter. Holdings, Inc.

39 F.4th 309

Joanna GUIJARRO, Individually and next friend of J.C.G.; Monique Guijarro, Individually, Plaintiffs—Appellants,

v.ENTERPRISE HOLDINGS, INCORPORATED, doing business as Enterprise Rent-A-Car; EAN Holdings, L.L.C., doing business as Enterprise Rent-A-Car; George Macias, Individually, and as Employee and Agent of Enterprise Rent-A-Car; Isis Trevino; Lithia Dodge of Corpus Christi, L.P. ; Lithia of Corpus Christi, L.P. ; Lithia Chrysler Dodge Jeep Ram of Corpus Christi, Defendants—Appellees.

No. 21-40512

United States Court of Appeals, Fifth Circuit.

FILED July 5, 2022

Katie P. Klein, William Daniel Mount, Jr., Dale & Klein, L.L.P., McAllen, TX, for Plaintiffs—Appellants.

Danny Joe Vana, Stephen K. Luxton, Benjamin, Vana, Martinez & Cano, L.L.P., San Antonio, TX, Levon G. Hovnatanian, Robert Tresch Owen, Esq., Houston, TX, for Defendants—Appellees.

Before Richman, Chief Judge, and Costa and Ho, Circuit Judges.

Gregg Costa, Circuit Judge:

This car-accident case raises numerous issues about the appropriate forum and parties. Because the district court correctly ruled on those procedural questions and also got the merits right, we affirm.

I

Joanna Guijarro lives in Texas with her two children. In 2018, Joanna rented a Jeep SUV from her local Enterprise Rent-A-Car in Brownsville for a road trip. That Enterprise location is owned and operated by EAN Holdings. EAN is a Delaware limited liability company, whose sole member is a Missouri corporation called Enterprise Holdings.

The next day, the Guijarros were driving on Highway 59 in heavy rain, when Joanna decided to stop for gas. There was a sharp curve where the highway exit met the local road. As Joanna approached the curve, she lost control of the Jeep. The vehicle tumbled into a ditch, slammed into a concrete culvert, and came to rest facing down with the rear end in the air. All three family members were injured.

The Guijarros believed that a defect in the Jeep's braking system caused the accident. They sued Enterprise Holdings and EAN Holdings in Texas state court, alleging negligence, breach of contract, and violations of the Deceptive Trade Practices Act (DTPA). The Guijarros claimed that the defendants knew or should have known that the Jeep's brakes "were in a defective and/or unsafe condition" and failed to disclose or correct the problem.

The defendants removed the suit to federal court. The Guijarros twice tried to move the case back to state court. They first argued that the amount in controversy was insufficient. The court denied that motion, finding it apparent from the complaint that the amount in controversy exceeded $75,000. The Guijarros next asserted that their amended complaint defeated complete diversity because it added two Texas defendants—Lithia of Corpus Christi, Inc. (the Enterprise affiliate that serviced the Jeep) and Isis Trevino (the Enterprise agent who rented Joanna the Jeep). The court denied the second motion to remand and struck the amended complaint, concluding the Guijarros only sought to join these parties to escape federal court.

The district court next dismissed the claims against Enterprise Holdings. Because of a filing earlier in the case in which the Guijarros had agreed to dismiss that entity if the defendants agreed EAN Holdings was the proper defendant, the court held that the Guijarros were judicially estopped from suing Enterprise Holdings.

With only EAN Holdings left in the case, the court granted summary judgment on the ground that the Guijarros had failed to set forth competent evidence that the Jeep's brakes were defective. In the court's view, Texas law required the Guijarros to introduce expert opinions that identified a "specific defect" in the vehicle and "ruled out other possible causes" for the crash. See Nissan Motor Co. v. Armstrong , 145 S.W.3d 131, 137 (Tex. 2004). The Guijarros' evidence did not satisfy the expert requirement, as their only proof of a defect was Joanna's lay testimony "that she applied the brakes" and the car "would not stop."¹

II

A

We begin with the Guijarros' first motion to remand. The denial of a motion to remand receives de novo review. Borden v. Allstate Ins. Co. , 589 F.3d 168, 170 (5th Cir. 2009).

Federal courts have diversity jurisdiction over civil actions in which the amount in controversy exceeds $ 75,000 and the parties are citizens of different states. 28 U.S.C. § 1332. There is no dispute that the relevant parties² in the state-court petition are diverse—the Guijarros are domiciled in Texas, while the two Enterprise entities are citizens of Missouri.

See Harvey v. Grey Wolf Drilling Co. , 542 F.3d 1077, 1080 (5th Cir. 2008) (holding that the citizenship of a limited liability company is determined by the citizenship of its members). The only question is whether the suit involves the requisite amount in controversy. Because the Guijarros did not plead a sum certain for damages in state court, they argue there was no basis for the district court to find that their case was worth more than $ 75,000.

There is a framework for resolving disputes over the amount in controversy. If the plaintiff's state court petition specifies a dollar amount of damages, that amount controls if made in good faith. Allen v. R & H Oil & Gas Co. , 63 F.3d 1326, 1335 (5th Cir. 1995). If the petition is silent (as is often the case in state courts in our jurisdiction), the defendant must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000. Luckett v. Delta Airlines, Inc. , 171 F.3d 295, 298 (5th Cir. 1999). The defendant can meet that burden in one of two ways: (1) by establishing that it is "facially apparent" that the claims are likely to exceed $75,000, or (2) by setting forth the facts in controversy that support a finding of the requisite amount. Id.

It is facially apparent from the Guijarros' original petition that their claims were likely to exceed $75,000. The Guijarros sought recovery for injuries sustained during a serious highway accident, in which their rental case "struck a concrete culvert" and "came to rest facing down with the rear end in the air." Their alleged damages included: (1) medical expenses, (2) physical disfigurement, (3) physical pain and mental anguish, (4) loss of earning capacity, (5) punitive damages, (6) treble damages under the DTPA, and (7) attorney's fees. Common sense dictates that such damages would exceed $75,000 for at least one plaintiff, which is all that is needed as the federal court would then have supplemental jurisdiction over the claims of the others. See Exxon Mobil Corp. v. Allapattah Servs., Inc. , 545 U.S. 546, 549, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). Hospital bills for this kind of crash would likely start in the tens of thousands. Factoring in the other injuries alleged, multiplying for treble damages, and tacking on attorney's fees, the Guijarros' damages would easily exceed $75,000.³ See Gebbia v. Wal-Mart Stores, Inc. , 233 F.3d 880, 883 (5th Cir. 2000) ; Luckett , 171 F.3d at 298 (both finding jurisdiction proper because the injuries alleged were similarly numerous and severe). The court thus properly denied the Guijarros' first motion to remand.

B

The next question is whether the district court erred by denying the Guijarros' second motion to remand. The Guijarros argued that their amended complaint adding two Texas citizens, Lithia and Trevino, destroyed diversity. When a plaintiff seeks to add such defendants after removal, the court must either "deny joinder, or permit joinder and remand the action to the State court." 28 U.S.C. § 1447(e).

The Guijarros maintain the district court had no choice but to remand the case because it had already permitted joinder by granting their motion for leave to amend the complaint. The court did not see the grant of that routine motion as permission to join a nondiverse party.⁴ But even if the order granting leave had the unintended effect of joining Lithia and Trevino, it would not mean the court's hands were tied. A court may repair diversity by vacating a prior order joining nondiverse parties. See Borden v. Allstate Ins. Co. , 589 F.3d 168, 171–72 (5th Cir. 2009). If the order at issue led to any lapse in diversity, the district court confirmed it would have done just that.

The Guijarros argue alternatively that the court should have permitted them to join Lithia and Trevino. We review that decision only for abuse of discretion. Moore v. Manns , 732 F.3d 454, 456 (5th Cir. 2013). The district court "should freely give leave" to amend the pleadings "when justice so requires." FED R. CIV. P. 15(a)(2). But leave "is not automatic." Moore , 732 F.3d at 456. And a "higher level of scrutiny" applies to an amended pleading naming a new nondiverse defendant in a removed case. Allen v. Walmart Stores, L.L.C. , 907 F.3d 170, 185 (5th Cir. 2018). In that situation, the court should consider several factors, including "the extent to which the purpose of the amendment is to defeat federal jurisdiction."⁵ Hensgens v. Deere & Co. , 833 F.2d 1179, 1182 (5th Cir. 1987). The plaintiff's failure to state a plausible claim against a proposed defendant is evidence of the amendment's improper purpose and sufficient reason to deny leave to amend. See Allen , 907 F.3d at 186 ; Moore , 732 F.3d at 457.

The district court did not abuse its discretion in rejecting the Guijarros' amended complaint. After lengthy analysis, the court concluded there was no possibility the Guijarros could recover against either Lithia or Trevino. We agree with that conclusion. The Guijarros aimed to hold both parties liable for negligence—Trevino, as the customer agent responsible for the rental transaction, and Lithia, as the servicer that last inspected the vehicle. The negligence claim against Trevino could not succeed because it related solely to her acts and omissions as an Enterprise employee. Under Texas law, an employee must "owe[ ] an independent duty of reasonable care to the injured party apart...