Mendoza v. Home Depot, U.S., Inc.

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LUZ MENDOZA, Plaintiff, v. HOME DEPOT, U.S.A., INC. and TOBY YOCUM, Defendants.

Civ. No. 23-1014 MV/GJF

United States District Court, D. New Mexico

April 30, 2024

PROPOSED FINDINGS AND RECOMMENDED DISPOSITION

THE HONORABLE GREGORY J. FOURATT, UNITED STATES MAGISTRATE JUDGE

THIS MATTER is before the Court on Plaintiffs Motion to Remand and Memorandum in Support [ECF 7] (“Motion to Remand”) and Defendants' Motion for Leave to File Amended Answer [ECF 13] (“Motion to Amend Answer”). The Motions are fully briefed. See ECFs 7; 1215; 17. Fundamentally, the issue at the heart of these motions is whether Defendants can defeat remand by making a belated assertion that Plaintiff fraudulently joined a non-diverse department supervisor at Home Depot. Having considered the briefs and relevant law, and having held oral argument on the Motions on April 24, 2024 (“Hr'g”),^[1] the Court concludes that this case falls outside federal diversity jurisdiction and should be remanded to state court. Consequently, the Court recommends^[2] granting the Motion to Remand and denying as moot the Motion to Amend Answer.

I. BACKGROUND

Plaintiff filed her Complaint on August 8, 2023, in the Fifth Judicial District Court, Lea County, New Mexico, asserting claims against Defendant Toby Yocum for negligence and against Defendant Home Depot for premises liability, negligence, and respondeat superior. See ECF 1-2. Plaintiff's claims arise from an incident on March 28, 2021, in which she allegedly “tripped on material used to bind products sold at the [Hobbs, New Mexico] Home Depot” when she was “walking down an isle [sic] heading to check out.” Id. ¶¶ 9-10.

On November 16, 2023, Defendants removed the case to this Court asserting federal diversity jurisdiction.^[3] ECF 1 at 2. As to the citizenship of the respective parties, Defendants asserted that Plaintiff was a citizen of New Mexico, Defendant Home Depot was a citizen of Georgia,^[4] and “at the time of the filing of th[e] Notice of Removal [Defendant] Yocum is and was a citizen of Arizona.” ECF 1 ¶¶ 6-8. Plaintiff's Motion to Remand and Defendants' Motion to Amend Answer soon followed. See ECFs 7; 13. In their response to Plaintiff's Motion to Remand and their briefing on the Motion to Amend Answer, however, Defendants assert a different ground for federal diversity jurisdiction not previously mentioned in their Notice of Removal: that Defendant Yocum-a party they now characterize as a “non-diverse defendant”-was fraudulently joined as a defendant in this case. See, e.g., ECF 12 at 2 (“To address the Motion to Remand, this Court need only resolve one question: whether Plaintiff can defeat diversity jurisdiction by including a non-diverse Defendant that was not involved or even on the premises at the time of Plaintiff's accident.”); ECF 17 at 3 (seeking leave to file an amended answer that would allege Plaintiff fraudulently joined Defendant Yocum).

II. PARTIES' PRIMARY ARGUMENTS

A. Plaintiff's Contentions

In her Motion to Remand, Plaintiff argues that Defendants have failed to satisfy their burden to prove diversity jurisdiction because their Notice of Removal fails to demonstrate complete diversity by a preponderance of the evidence. ECF 7 at 3-6. In response to Defendants' attempt to assert fraudulent joinder as a basis for removal, Plaintiff insists that the Court may not retain jurisdiction on a ground not asserted in Defendants' Notice of Removal or Answer. ECF 14 at 2-3. Alternatively, if the Court considers Defendants' allegation of fraudulent joinder, Plaintiff maintains that Defendants cannot satisfy the “incredibly high” standard required to prove a fraudulent joinder claim. Id. at 5-8.

As for Defendants' Motion to Amend Answer, Plaintiff asserts that permitting Defendants to amend their Answer to assert fraudulent joinder would “not cure the procedural defect of failing to plead the same within [the] Notice of Removal.” ECF 15 at 1. In short, Plaintiff maintains that Defendants have waived this theory of diversity jurisdiction. Id. at 2-3. Moreover, Plaintiff contends that Defendants lack an adequate justification for the untimely assertion of fraudulent joinder and, further, that permitting the amendment they seek would unduly prejudice Plaintiff. Id. at 3-6.

B. Defendants' Contentions

For their part, Defendants urge the Court to consider and resolve their newly-asserted allegation of fraudulent joinder. ECF 12 at 2. Beginning with the premise that Defendant Yocum was not present at the subject Home Depot store at the time of Plaintiffs fall and “was in no way involved,” Defendants maintain that Plaintiff joined Defendant Yocum in a bad faith effort to defeat diversity jurisdiction and without “any possibility that she can prevail on a negligence cause of action against [him.]” Id. at 4-5.

In support of their Motion to Amend Answer, Defendants represent that they have “discovered additional factual and jurisdictional information that warrants Defendants' [sic] to amend their answer.” ECF 13 at 2. Insisting that their Motion to Amend Answer is both timely and “in the interest of justice,” Defendants urge the Court to allow amendment “so th[e] Court may ‘pierce the pleadings' to determine both the jurisdictional facts and whether Plaintiff has adequately established a claim against Mr. Yocum.” ECF 17 at 2-4.

III. APPLICABLE LEGAL STANDARDS

A party who removes a case to federal court must “affirmatively establish” that federal jurisdiction exists. McPhail v. Deere & Co., 529 F.3d 947, 955-56 (10th Cir. 2008). In doing so, the removing party must also comply with the statutory requirement to file “a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). Federal courts are courts of limited jurisdiction; thus, there is a presumption against removal that the removing party must overcome. See Dutcher v. Matheson, 733 F.3d 980, 984-85 (10th Cir. 2013). Moreover, “[r]emoval statutes are to be strictly construed, and all doubts are to be resolved against removal.” Fajen v. Found. Rsrv. Ins. Co., Inc., 683 F.2d 331, 333 (10th Cir. 1982) (citations omitted).

When jurisdiction is based on diversity, as here, the removing party must show that there is complete diversity of citizenship among the adverse parties and that the amount in controversy exceeds the sum or value of $75,000.00. Dutcher, 733 F.3d at 987. “Complete diversity is lacking when any of the plaintiffs has the same residency as even a single defendant.” Id. Fraudulent joinder is an exception to the complete diversity requirement that, in effect, allows a court to disregard the citizenship of a party who was fraudulently joined to defeat federal jurisdiction. See id. at 987-88. Fraudulent joinder must be “pleaded with particularity,”McLeod v. Cities Serv. Gas Co., 233 F.2d 242, 246 (10th Cir. 1956), and “established with complete certainty upon undisputed evidence,” Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378 F.2d 879, 882 (10th Cir. 1967).

In evaluating claims of fraudulent joinder, “all factual and legal issues [are] resolved in favor of the plaintiff' on a motion to remand. Dutcher, 733 F.3d at 988 (quoting Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998)). The Tenth Circuit has described the standard for establishing fraudulent joinder as “more exacting than that for dismissing a claim under Fed.R.Civ.P. 12(b)(6)” and has noted that it “entails the kind of merits determination that, absent fraudulent joinder, should be left to the state court where the action was commenced.” Montano v. Allstate Indemnity, 211 F.3d 1278, 2000 WL 525592, at *1-2 (10th Cir. Apr. 14, 2000) (unpublished table decision) (citation omitted).

The party defending removal on the basis of fraudulent joinder carries its burden by demonstrating either: (1) actual fraud in the pleading of jurisdictional facts, or (2) the inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Dutcher, 733 F.3d at 988; see also Montano, 211 F.3d at *1-2.

Given that the fraudulent joinder analysis is a jurisdictional inquiry, the Tenth Circuit has held that courts should “pierce the pleadings, consider the entire record, and determine the basis of joinder by any means available.” Dodd v. Fawcett Publ'ns, Inc., 329 F.2d 82, 85 (10th Cir. 1964) (citations omitted); see also Albert v. Smith's Food & Drug Centers, Inc., 356 F.3d 1242, 1247 (10th Cir. 2004) (fraudulent joinder analysis is a jurisdictional inquiry); Smoot, 378 F.2d at 882 (federal courts may look beyond the pleadings to determine if joinder is fraudulent). This does not mean that a court will “pre-try . . . doubtful issues of fact to determine removability.” Smoot, 378 F.2d at 882. Indeed, the fraudulent joinder “issue must be capable of summary determination.” Id.

IV. ANALYSIS

A. Motion to Remand

a. Jurisdictional Grounds Asserted in Notice of Removal

To begin, Defendants' Notice of Removal fails on its face to affirmatively establish the existence of federal diversity jurisdiction. Defendants allege that “at the time of filing the Complaint, and this Notice of Removal, Plaintiff was and is a citizen of New Mexico” and that “at the time of the filing of the[] Complaint, and this Notice of Removal, HOME DEPOT is and was a citizen of Georgia” ECF 1 at 2. But Defendants provide a conspicuously narrower allegation concerning Defendant Yocum's citizenship “ [a]t the time of the filing of this Notice of Removal, TOBY YOCUM is and was a citizen of Arizona.” ECF 1 at 2 (emphasis added). That is, Defendants make no mention of Defendant Yocum's citizenship at the filing of the Complaint. Yet, for purposes of...