United States District Court, W.D. New York
BUFFALO STATE ALUMNI ASSOCIATION, INC., BUFFALO STATE COLLEGE FOUNDATION HOUSING CORPORATION, LPCIMINELLI, INC., and LPCIMINELLI CONSTRUCTION CORP., Plaintiffs,
THE CINCINNATI INSURANCE COMPANY, ACADIA INSURANCE COMPANY, SELECTIVE WAY INSURANCE COMPANY, and HUBER CONSTRUCTION, INC., Defendants.
DECISION AND ORDER
MICHAEL A. TELESCA, United States District Judge
matter is before the Court upon the Report and Recommendation
(Dkt #56), dated November 4, 2014, issued by United States
Magistrate Judge Jeremiah J. McCarthy (“the
R&R”). The R&R recommended (1) granting the
motion (Dkt #16) of Buffalo State Alumni Association, Inc.,
Buffalo State College Foundation Housing Corporation,
LPCiminelli, Inc., and LPCiminelli Construction
Corp. (collectively, “Plaintiffs”)
to remand the action to State of New York, Supreme Court,
County of Erie due to lack of diversity jurisdiction; and (2)
denying the motion (Dkt #39) of defendant Acadia Insurance
Company (“Acadia”) for realignment of the parties
in order to preserve diversity. Defendant The Cincinnati
Insurance Company (“Cincinnati”) filed objections
(Dkt #57-2) to the R&R, as well as a reply (Dkt #62) in
response to Plaintiff's response (Dkt #60) to
Cincinnati's objections. Huber Construction Company
(“Huber”) filed a letter (Dkt #61) indicating
that it was not filing any pleadings in regard to the
R&R. Defendant Acadia and defendant Selective Way
Insurance Company (“Selective Way”) filed
affirmations (Dkt ##58, 63) joining in Cincinnati's
objections to the R&R. The matter was transferred (Dkt #64) to
the undersigned on May 1, 2017.
Court assumes the parties' familiarity with Judge
McCarthy's R&R and the fairly complex factual
background of the instant proceeding. For the reasons
discussed herein, the Court adopts Judge McCarthy's
recommendations that realignment of the parties be denied,
and that this matter be remanded to state court.
preserve a claim for review by the district court, the party
must make sufficiently specific objections to the R&R.
E.g., Mario v. P & C Food Mkts., Inc.,
313 F.3d 758, 766 (2d Cir. 2002). “To accept the report
and recommendation of a magistrate, to which no timely
objection has been made, a district court need only satisfy
itself that there is no clear error on the face of the
record.” Nelson v. Smith, 618 F.Supp. 1186,
1189 (S.D.N.Y. 1985) (citing Fed.R.Civ.P. 72(b), Advisory
Comm. Notes (when a party makes no objection, or only general
objections to a portion of an R&R, the district judge
reviews it for clear error or manifest injustice); further
citation omitted). When timely objection has been made to a
portion or portions of a magistrate judge's report, the
district judge must “make a de novo
determination” of “any portion of the . . .
disposition to which specific written objection has been
made. . . .” Fed.R.Civ.P. 72(b). The district judge may
then accept, reject or modify, in whole or in part, the
magistrate judge's proposed findings and recommendations.
28 U.S.C. § 636(b)(1).
R&R recommended granting the remand motion for the
following reasons: (1) realigning Huber from being a
defendant to a plaintiff is improper because Huber and
LPCiminelli have divergent interests (see R&R,
pp. 4-5); (2) Huber is a proper party, and even if it were
not a proper party, the fraudulent joinder doctrine is
inapplicable to this removed action (see R&R, p.
5); (3) the statutory language of 28 U.S.C. § 1447(e)
renders it inapplicable to amendments as a matter of course
under Fed.R.Civ.P. 15(a)(1), since Cincinnati added Huber
pursuant to its right to amend as a matter of course
(see R&R, pp., 8, 10); (4) notions of
fundamental fairness were not offended by LPCiminelli's
addition of Huber, notwithstanding the effect of Huber's
joinder on diversity of citizenship (see R&R, p.
11); (5) Fed.R.Civ.P. 21 may not be used by the Court to drop
Huber as a party so as to restore diversity jurisdiction
because Huber's presence deprives the Court of subject
matter jurisdiction to act pursuant to Fed.R.Civ.P. 21
(see R&R, pp. 12-13); and (6) Title 28 U.S.C.,
Section 1447(c) requires immediate remand of the action to
state court (see R&R, pp. 12-13). Judge McCarthy
reached these conclusions after a scholarly and thorough
analysis, and expressly recognized that his position was
against the weight of the contrary authority.
has asserted a number of specific objections to the R&R
focusing on its disagreement with Judge McCarthy's
refusal to follow the authority on which it relies, in
particular, the R&R's finding that Section 1447(e) is
inapplicable because Huber was added pursuant to Rule
15(a)(1). Primarily, Cincinnati urges this Court to apply 28
U.S.C. § 1447(e) as controlling. Section 1447(e)
provides that “[i]f[, ] after removal[, ] the plaintiff
seeks to join additional defendants whose joinder would
destroy subject matter jurisdiction, the [district] court may
deny joinder, or permit joinder and remand the action to the
State court.” 28 U.S.C. § 1447(e). Cincinnati
faults the R&R for declining to follow Masters v.
Erie Ins. Co., 1:13-cv-00694-WMS-HBS (W.D.N.Y. Mar. 31,
2014), which noted that “‘every federal court
that has considered the issue, ' has determined that the
‘the discretionary decision called for by §
1447(e) is appropriate even when [the] plaintiff has
amended as a matter of course under Rule
15(a).'” Decision and Order (Dkt #28 in
1:13-cv-00694-WMS-HBS) at 2 (quoting McGee v. State Farm
Mut. Auto. Ins. Co., 684 F.Supp.2d 258, 261 (E.D.N.Y.
2009); emphasis in original). According to Cincinnati, due to
the R&R's allegedly erroneous conclusion that Section
1447(e) does not apply here, it failed to conduct the
“fundamental fairness” inquiry required under
that statutory section. Cincinnati contends that if such an
analysis were performed, the result would be the dismissal of
Huber as a party, the denial of Plaintiffs' motion to
remand, and the Court's retention of jurisdiction over
purposes of resolving the pending motions, the Court has
assumed arguendo that the discretionary decision
called for by 28 U.S.C. § 1447(e) is appropriate even
where, as here, Plaintiffs have amended as a matter of course
under Fed.R.Civ.P. 15(a)(1). As discussed further below, the
endpoint of the Court's Section 1447(e) analysis is same
as that reached by Judge McCarthy: remand of this proceeding
to state court.
order to determine whether to permit joinder and remand a
case pursuant to 28 U.S.C. § 1447(e), the Court engages
in a two-part analysis. See, e.g.,
Abraham Nat. Foods Corp. v. Mt. Vernon Fire Ins.
Co., 576 F.Supp.2d 421, 424 (E.D.N.Y. 2008) (“The
determination as to whether joinder of non-diverse parties in
this situation is proper is based on a two-step showing that
‘joinder [is] merely permissible under Rule 20 of the
Federal Rules of Civil Procedure, and that the balancing of
certain relevant considerations weighs in favor of joinder
and its necessarily attendant remand.'”) (quoting
Gursky v. Northwestern Mut. Life Ins. Co., 139
F.R.D. 279, 281-82 (E.D.N.Y. 1991); alteration in original).
There is no dispute that joinder of Huber is
“permissible” under Fed.R.Civ.P. 20(a)(2);
indispensability of Huber as a party is not required. See
Gursky, 139 F.R.D. at 282 (“Courts in this circuit
have comported with Hensgens[ v. Deere & Co.,
833 F.2d 1179, 1182 n. 1 (5th Cir. 1987), cert.
denied, 493 U.S. 851 (1989)] in holding that additional
non-diverse parties need not be indispensable to be joined.
The courts in the cases cited have instead required that
joinder be merely permissible under Rule 20 of the Federal
Rules of Civil Procedure. . . .”) (internal citations
and footnote omitted). LPCiminelli's claim against Huber
is related to the claims made against the defendant insurance
companies, and arises out of the same factual circumstances.
Court accordingly turns to the second step, which requires a
“fundamental fairness” analysis in order to
“ascertain whether the balancing of certain relevant
considerations weighs in favor of joinder and its necessarily
attendant remand.” Roll On Express, Inc. v.
Travelers Indem. Co. of Connecticut, No. 09-CV-213, 2009
WL 1940731, at *1 (E.D.N.Y. July 2, 2009) (citing
Abraham, 576 F.Supp.2d at 424-25). In so doing, the
Court “must consider the totality of the circumstances
and, in particular, must weigh four factors: ‘(1) any
delay, and its reasons, in moving to amend; (2) any resulting
prejudice to the defendants; (3) the likelihood of multiple
litigations; and (4) the plaintiff's motivation in moving
to amend.'” Id. (quoting Abraham,
576 F.Supp.2d at 425 (citing Gursky, 139 F.R.D. at
the first factor, there was no apparent delay in
LPCiminelli's amending of the complaint to add Huber as a
party. The motion to amend was made 15 days after Cincinnati
filed its answer with affirmative defenses, well within the
21-day period permitted under Fed.R.Civ.P. 15(a)(1)(B). This
factor weighs in favor of joinder.
regard to the prejudice factor, the Court notes that this
case, albeit several years old, is still in its nascency.
See, e.g., Grogan v. Babson Bros. Co.
of Illinois, 101 F.R.D. 697, 700 (N.D.N.Y. 1984)
(“[G]ranting the motion [to remand] will not prejudice
the defendant because both lawsuits are in their
infancy.”). Indeed, “the potential for additional
discovery alone is not sufficient to constitute
prejudice[.]” Roll On Express Inc., 2009 WL
1940731, at *4 (citing Gursky, 139 F.R.D. at 283).
Here, discovery has not yet even commenced. The Court cannot
discern any appreciable prejudice to the parties opposing
joinder. See Gursky, 139 F.R.D. at 283 (“[T]he
Court fails to see how NML will be prejudiced as a result of