Hunt v. The Siegel Grp. Nev.

LEE HUNT, as the personal representative of the wrongful death estate of SALLYANN ULIBARRI, and DIANE LOPEZ, as the legal guardian of G. ULIBARRI, a minor, Plaintiffs, v. THE SIEGEL GROUP NEVADA, INC., a Nevada corporation, 75 HOTEL CIRCLE HOLDINGS, LLC, d/b/a SIEGEL SUITES NEW MEXICO, LLC, a Nevada limited liability company, TAMMY KIMBALL, JOSEPH POUGES, and STEPHEN SIEGEL, Defendants.

CIVIL No. 22-00278 WJ-JFR

United States District Court, D. New Mexico

June 6, 2022

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS' MOTION TO REMAND

WILLIAM P. JOHNSON, CHIEF UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court upon Plaintiffs' Motion to Remand, filed April 28, 2022 (Doc 5).^[1] Having reviewed the parties' submissions and the applicable law, the Court finds that Plaintiffs' motion is meritorious; therefore, the above-captioned case is remanded back to state.

BACKGROUND

This is a wrongful death case. Siegel Suites Albuquerque (“Siegel Suites”) is a set of apartments located in Albuquerque, at 75 Hotel Circle, NE. In December 2018 Sallyann Ulibarri (“Sallyann”) checked in there for a four-week stay. According to the First Amended Complaint (“complaint, ” see Doc. 1-4) Defendants knew that Siegel Suites was a target for extensive criminal activity, and that local police regularly conducted searches for individuals with outstanding warrants who were staying there. In particular, Defendants were aware of domestic disturbances caused by Orlando Johnson (“Orlando”) against Sallyann that were occurring on the premises of Siegel Suites. Management at Siegel Suites allegedly noticed that Sallyann was consistently developing fresh bruising, cuts and associated injuries at the hands of Orlando and were also aware that he disturbed and disrupted other Siegel Suites tenants by making threatening gestures and language. Id., ¶¶30-35.

On January 6, 2019, Sallyann was beaten to the point of unconsciousness at the hands of Orlando on the premises of Siegel Suites Albuquerque, and died two days later. Plaintiffs assert that Defendants could have but did not, increase patrols of public areas or install additional security measures sufficient to reasonably ensure that potential criminal activity was intercepted and prevented. Doc. 1-2, ¶¶20-29. The complaint was filed on December 6, 2019 in the First Judicial District in Santa Fe, New Mexico complaint for wrongful death, loss of consortium and violations of the New Mexico Unfair Trade Practices Act. Doc. 1-4. It was removed by Defendant Siegel on April 14, 2022 on the grounds of diversity jurisdiction.

Plaintiffs allege that Defendants created a dangerous environment at Siegel Suites and failed to implement sufficient measures to reasonably protect the safety and wellbeing of tenants, including Sallyann. The First Amended Complaint (Doc. 1-4) contains three counts against all Defendants:

Count I: Negligent and reckless security resulting in severe injury and death;

Count II: Loss of Consortium; and

Count III: Violations of New Mexico's Unfair Trade Practices Act

I. Legal Standards

A. Removal Federal courts are courts of limited jurisdiction and must have a statutory basis for their jurisdiction.” Dutcher v. Matheson, 733 F.3d 980, 984 (10th Cir. 2013). To remove a case to federal court, the “defendant seeking removal must establish that federal court jurisdiction is proper by a preponderance of the evidence.” Aguayo v. AMCO Ins. Co., 59 F.Supp.3d 1225, 1250 (D.N.M. 2014).^[2] 28 U.S.C. § 1332(a)(1) provides that federal district courts have subject-matter jurisdiction over civil matters when the matter in controversy is between “citizens of different parties” and the amount in controversy exceeds $75, 000. To successfully remove a case based on §1332(a)(1), the defendant must establish by a preponderance of the evidence that complete diversity exists. Dutcher v. Matheson, 733 F.3d 980, 987 (10th Cir. 2013).

B. Fraudulent Joinder: “A defendant may remove a case to federal court based upon diversity jurisdiction in the absence of complete diversity if a plaintiff joins a nondiverse party fraudulently to defeat federal jurisdiction.” Aguayo, 59 F.Supp.3d at 1249. To establish that a non-diverse party was fraudulently joined, the defendant has the burden of demonstrating the “inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” Dutcher v. Matheson, 733 F.3d 980, 984 (10th Cir. 2013); Edison Ranch, Inc. v. Mosaic Potash Carlsbad, Inc., No. CIV 17-0790 JB/CG, 2018 WL 582578, at *10 (D.N.M. Jan. 26, 2018). “The ultimate question is whether there is arguably a reasonable basis for predicting that state law might impose liability on the facts involved. Daniel v. Loya, 304 F.R.D. 617, 628-29 (D.N.M. 2015).

The party asserting fraudulent joinder bears the burden of proof, Montano, 211 F.3d 1278 (10th Cir. 2000), and in evaluating a claim of fraudulent joinder, “all doubts are to be resolved against removal, ” Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982). In other words, the removing party “bears a heavy burden of proving fraudulent joinder, and all factual and legal issues must be resolved in favor of the plaintiff.” Dutcher, 733 F.3d at 988

C. Bad Faith Exception:

28 U.SC. §1446(b)(3) is an exception to the one-year time limit for removals. Under that provision, a case may not be removed on the basis of jurisdiction conferred by §1332 “more than one year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” 28 U.S.C. §1446(c)(1). A plaintiff's “bad faith” can manifest itself in either of the two requirements for diversity jurisdiction: (i) a plaintiff can name or retain nondiverse parties or forum citizen defendants to defeat complete diversity or the forum- defendant rule, respectively; or (ii) it can obfuscate the quantity of damages it seeks for the purpose of defeating the amount-in-controversy requirement.” Aguayo v. AMCO Ins. Co., 59 F.Supp.3d 1225, 1261 (D.N.M. 2014) (Browning, J.); McDaniel v. Loya, 304 F.R.D. 617, 636 (D.N.M. 2015) (Browning, J.). In McDaniel, the court suggested that “bad faith” can be indicated in several ways, such as: (1) whether the plaintiff pursued active litigation against the “removal spoiler” in state court; or (2) evidence that plaintiff, despite active litigation against the removal spoiler, would not have named the removal spoiler or would have dropped the spoiler before the one-year mark but for the plaintiff's desire to keep the case in state court. Aguayo, 59 F.Supp.3d at 1261 (D.N.M. 2014).^[3]

DISCUSSION

The current complaint identifies Joseph Pouges as a security guard at Siegel Suites Tammy Kimball as a General Manager and both as New Mexican residents. Doc. 1-4, ¶¶8-11. Kimball was named as a Defendant in the original complaint which was filed December 6, 2019. Doc. 1-2.^[4] Pouges was added as a party when the first amended complaint was filed on October 8, 2021. Doc. 1-4. Defendant Siegel was also added as a party at that time and on April 14, 2022, Siegel's attorney removed the state court case to federal court.

Plaintiffs contend that this Court lacks jurisdiction over the case because complete diversity is not present. Responses filed separately by Stephen Seigel (“Siegel”) and The Siegel Group both take the position that the case is removable to federal court because Defendants Kimball and Pouges have been fraudulently joined. They also argue that the addition of Kimball and Pouges as parties cannot support removal under the “bad faith” exception to removal under 28 U.S.C. §1446(c)(1). The “bad faith” exception allows a case to be removed to federal court outside of the one-year time period when a plaintiff has not actively litigated against a “removal spoiler” in state court.

I. Fraudulent Joinder

The complaint alleges that Sallyann was allegedly beaten to death on the premises of Siegel Suites and that Defendants' negligence and recklessness caused her death. Count I appears to assert a claim brought under premises liability, alleging that Defendants “had a duty to exercise ordinary care in keeping the premises of Sigel [sic] Suites Albuquerque reasonably safe for guests, which included adequate apportionment/approval of security related budgets given the high rates of criminality on Siegel Suites Albuquerque's premises.” Doc. 1-4, ¶43.

Defendants say they do not agree that this is a premises liability case, but rather it's a domestic violence case, and that they cannot be liable for any of Plaintiff's claims because they did not control the activity that occurred inside Sallyann's home, nor did they ratify such activity. See Doc. 9 at 3 (“This is not a case of premises liability, but one of domestic violence between Ms. Ulibarri and Mr. Johnson.”); see also Doc. 9 at 7 (citing Schmidt v. Int'l Playthings, LLC, 503 F.Supp.3d 1060 (D.N.M. 2020) (defendant store manager not liable under products liability theory for injury that occurred inside the home). Defendants' argument is off-focus: Plaintiffs do not allege that Defendants caused Sallyann's injuries and eventual death by battering Sallyann (the domestic violence element of the case), but rather that Defendants were derelict in their duties to keep the premises reasonably safe from harm that could foreseeably occur on the premises. Put another way, the complaint spotlights the alleged failure of Defendants to ensure that the Siegel Suites premises was reasonably safe so that third parties with criminal or dangerous intent-such as Orlando-would be dissuaded from coming around to the premises.

Defendants cloud the issues even further by suggesting that Plaintiffs' assertion of a...