Parker v. Exterior Restorations, Inc.

601 F.Supp.3d 1221

John H. PARKER, et al., Plaintiffs,

v.EXTERIOR RESTORATIONS, INC., et al., Defendants.

CIVIL ACTION 21-0425-WS-B

United States District Court, S.D. Alabama, Southern Division.

Signed April 27, 2022

Charles William Daniels, Jr., Christine Burns, Kenneth Bryant Hitson, Burr & Forman LLP, Mobile, AL, for Plaintiffs.

M. Warren Butler, Bonnie Branum Minopoli, Starnes Davis Florie LLP, Mobile, AL, for Defendants Exterior Restorations, Inc., Burl Barnett.

John M. Bergquist, Parsons, Lee & Juliano, P.C., Birmingham, AL, for Defendant Sto Corp.

Richard M. Gaal, Thomas Hart Benton, III, McDowell Knight Roedder & Sledge, L.L.C., Mobile, AL, for Defendant Wall And Ceiling Solutions, LLC.

Jeremy Gaddy, Clark, May, Price, Lawley, Duncan & Paul, LLC, Birmingham, AL, for Defendant Capitol Materials, Inc.

ORDER

WILLIAM H. STEELE, UNITED STATES DISTRICT JUDGE

This matter is before the Court on the plaintiffs’ combined motion for leave to amend the complaint and motion to remand. (Doc. 27). One of the five defendants ("Wall") has filed a brief in opposition, (Doc. 30), in which two other defendants join. (Docs. 32, 33). The plaintiffs have filed a reply, (Doc. 34), and the motions are ripe for resolution. After careful consideration, the Court concludes the motion for leave to amend is due to be granted and the motion to remand is due to be denied.

BACKGROUND

This action, which centers around stucco materials manufactured, distributed and/or inspected by certain defendants and applied by other defendants to the individual plaintiff's home, was filed in state court in January 2020. (Doc. 1-2 at 2). In March 2021, the plaintiffs filed their third amended complaint. (Doc. 1-7). This pleading for the first time added a federal claim, alleging in Count VI that all defendants violated the Magnuson-Moss Warranty Act ("Magnuson-Moss" or "the Act"). (Id. at 248-49). In September 2021, Wall removed the action, resting subject matter jurisdiction on federal question jurisdiction under 28 U.S.C. § 1331. (Doc. 1). The plaintiffs promptly moved to remand, on the grounds that removal was both untimely and waived. (Doc. 13). In their reply brief, the plaintiffs added the argument that the amount in controversy under Count VI does not exceed the $50,000 jurisdictional threshold for such claims. (Doc. 20). In December 2021, the Court denied the motion to remand. (Doc. 25). The instant motions were filed four weeks later, in January 2022. The single purpose of the proposed fifth amended complaint¹ is to remove the plaintiffs’ claim under the Act so that the plaintiffs may "return to their chosen forum." (Doc. 27 at 2).

A. Motion for Leave to Amend.

When, as here, a plaintiff cannot amend as of right, it "may amend its pleading only with the opposing party's written consent or the court's leave," and "[t]he court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2).

When a plaintiff, after a proper removal, seeks by amendment to add a new defendant whose citizenship would destroy diversity, "[t]he district court ... should scrutinize that amendment more closely than an ordinary amendment" and "consider the extent to which the purpose of the amendment is to defeat federal jurisdiction, whether plaintiff has been dilatory in asking for amendment, whether plaintiff will be significantly injured if amendment is not allowed, and any other factors bearing on the equities." Hensgens v. Deere & Co. , 833 F.2d 1179, 1182 (5th Cir. 1987).² The defendants propose that the Court transport these considerations to the context of an amendment that eliminates the federal claim on which removal was based. (Doc. 30 at 2-4). The defendants, however, neither identify any case that has ever done so nor offer a persuasive rationale for such an extrapolation.³ The Court therefore applies the usual Rule 15(a)(2) analysis.

As noted, a court should freely grant leave to amend when justice so requires. "A district court need not, however, allow an amendment (1) where there has been undue delay, bad faith, dilatory motive, or repeated failure to cure deficiencies by amendments previously allowed; (2) where allowing amendment would cause undue prejudice to the opposing party; or (3) where amendment would be futile." Bryant v. Dupree , 252 F.3d 1161, 1163 (11th Cir. 2001). The defendants argue that leave to amend should be denied on the grounds of bad faith and undue delay. (Doc. 30 at 2-3).

The defendants’ treatment of undue delay is confined to a single sentence: "Plaintiffs ... have been dilatory in seeking to amend their MMWA claim by having waited roughly ten months to delete the claim in [sic] since first pleading it." (Doc. 30 at 3). However, "[t]he mere passage of time, without anything more, is an insufficient reason to deny leave to amend." In re: Engle Cases , 767 F.3d 1082, 1118 (11th Cir. 2014) (internal quotes omitted). In Loggerhead Turtle v. County Council of Volusia County , 148 F.3d 1231 (11th Cir. 1998), the plaintiffs moved to amend on October 27, based on an exhibit they had attached to a motion for preliminary injunction in late July. Id. at 1235, 1256. The Eleventh Circuit held that the trial court's decision to deny the plaintiffs leave to amend based on undue delay was an abuse of discretion. Id. at 1236, 1257. The Court concluded that, where the plaintiffs sought leave to amend within the time provided by the Rule 16(b) scheduling order, "[a]t most, their failure to request leave to file an amended complaint in late July instead of October supports a finding of ‘delay,’ not ‘undue delay’ or ‘dilatory’ action." Id. at 1256-57. The Eleventh Circuit cases upholding denials of leave to amend based on undue delay in moving to amend involve delays measured in years and/or extending beyond key deadlines.⁴ Because the delay of which the defendants complain is measured in months, and because no deadline for amendments has even been established, much less expired, their undue delay argument must fail.

As to bad faith, the defendants argue that the plaintiffs, by seeking to remove their federal claim for the purpose of obtaining a remand, are engaged in "forum manipulation" within the contemplation of Carnegie-Mellon University v. Cohill , 484 U.S. 343, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988). (Doc. 30 at 2). The defendants in their one-sentence argument have cited no authority for the proposition that such forum manipulation is properly considered under Rule 15(a)(2), and the Court has discovered almost no decisions on either side of the issue.⁵

As discussed more fully in Part B, infra , the Supreme Court held in Cohill that federal courts should take a plaintiff's forum manipulation into account when deciding, under a balancing-of-factors analysis, whether to remand a case after the plaintiff amends his complaint to delete all federal claims. Id. at 357, 108 S.Ct. 614. The defendants’ invitation to consider forum manipulation under Rule 15(a)(2) would appear to be in hopeless tension with Cohill . Under Cohill , the existence of forum manipulation is only one of several factors to be considered in making the post-amendment decision whether to remand. Under the defendants’ proposed approach, the same forum manipulation would be sufficient, by itself, to justify denial of amendment in the first place, mooting any consideration of forum manipulation in the post-amendment context addressed in Cohill . As noted in Part B, forum manipulation is not a "trump card" that prevents remand regardless of the pull of other relevant factors. Under the defendants’ approach, however, forum manipulation would prevent amendment (and thus remand) whenever it is established, effectively establishing it as a trump card. The defendants have offered the Court no reason to believe the Supreme Court intended that its holding be so easily eviscerated.

"The Supreme Court has emphasized that leave to amend must be granted absent a specific, significant reason for denial ...." Spanish Broadcasting System, Inc. v. Clear Channel Communications, Inc. , 376 F.3d 1065, 1077 (11th Cir. 2004). The Court concludes that neither undue delay nor bad faith counsels against granting the plaintiffs leave to amend their complaint so as to delete their Magnuson-Moss claim, and no other basis for denial of amendment has been suggested. Accordingly, the motion is due to be granted.

B. Motion to Remand.

Because the parties are not completely diverse, the plaintiffs’ fifth amended complaint removes the only basis for original subject matter jurisdiction; the Court's jurisdiction over the plaintiffs’ state claims is supplemental within the contemplation of 28 U.S.C.§ 1367(a). "The court may decline to exercise supplemental jurisdiction over a claim under subsection (a) if ... the district court has dismissed all claims over which it has original jurisdiction." Id. § 1367(c)(3).

Section 1367 became law in 1990. Before then, such questions were addressed under the judicially developed doctrine of pendent jurisdiction, and Section 1367 "codifies these principles." City of Chicago v. International College of Surgeons , 522 U.S. 156, 173, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997). In particular, the discretion imparted by Section 1367(c)(3) is to be exercised " ‘in the manner that best serves the principles of economy, convenience, fairness, and comity which underlie the pendent jurisdiction doctrine.’ " Id. (quoting Cohill , 484 U.S. at 357, 108 S.Ct. 614 ). The parties agree that the relevant factors are those identified in Cohill and that those factors include "forum manipulation." (Doc. 27 at 4-5; Doc. 30 at 5; Doc. 34 at 14).

1. Forum Manipulation.

In Cohill , the removing defendants expressed concern that "a plaintiff whose suit has been removed to federal court will be able to regain a state forum simply by deleting all federal-law claims from the complaint and requesting that the district court remand the case." 484 U.S. at 357, 108 S.Ct. 614. The Supreme Court agreed that "forum...