The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge
ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO AMEND COMPLAINT AND MOTION TO REMAND [Docket No. 13]
Pending before the Court is Plaintiff's motion for leave to amend the complaint and to remand the action. For the reasons discussed below, the Court GRANTS Plaintiff's motion for leave to amend and remands this case to state court.
Plaintiff is the sole beneficiary of Leo Sullivan ("Decedent"), holder of a life insurance policy issued by Defendant, OM Financial Life Insurance Co. (Compl. ¶ 6.) On October 16, 2006, Decedent submitted an application for a $50,000 "Home Certain" convertible life insurance policy. (Opp. 2-3.) Based on the answers provided in the application, Defendant approved the application and issued Decedent a policy dated October 31, 2006. (Id.) According to Defendant, agent Dennis Goodall, who has since passed away, was the insurance agent who assisted Decedent with the application. (Id.at 1.) On December 6, 2007, Decedent submitted a "Policy Change Application" to agent Howard Heatherly to convert his "Home Certain" policy to a "Secure Master" policy. (Id. at 4.) On December 31, 2007, Defendant approved the application and issued a policy to Decedent (the "December 2007" policy). (Compl. ¶ 6.) On March 8, 2008, Decedent passed away and Plaintiff provided prompt notice to Defendant and requested payment of benefits from the December 2007 policy. (Id. at ¶ 7.) According to Defendant, Decedent misrepresented his medical information on his original application in 2006. (Opp. 6.) Thus, Defendant rescinded the December 2007 policy based on the alleged misrepresentations. (Id.)
On January 22, 2010, Plaintiff filed a complaint in the Superior Court of California, County of San Diego. Plaintiff asserted two claims against Defendant: (1) breach of contract and (2) breach of implied covenant of good faith. (Compl. ¶¶ 11-29.) Plaintiff also asserted a claim of negligence against DOE agents/brokers for failing to ensure the policy was properly issued and would be effective upon Decedent's death. (Id. at ¶¶ 30-37.) Further, Plaintiff identified Defendant DOE 11 as an individual who held himself out as an expert life insurance agent or broker, and provided services to Decedent and Plaintiff concerning the life insurance policy. (Id. at ¶ 4).
On April 21, 2010, Defendant removed the case to this Court based on diversity jurisdiction. (Doc. 1.) On September 7, 2010, Plaintiff filed a motion to amend the complaint to name Howard Heatherly as the previously identified Defendant DOE 11. (Doc. 13.) Plaintiff also moved to remand the action because the addition of Heatherly, a California resident, as a third-party defendant would destroy diversity. (Id.) Defendant filed an opposition to the motion on October 1, 2010 (Doc. 16), and Plaintiff filed a reply on October 8, 2010. (Doc. 17.)
28 U.S.C. § 1447(e) states:
If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to state court.
Under this section, a court has discretion to permit joinder of a party that will destroy diversity jurisdiction. Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998). The Ninth Circuit does not appear to have articulated a standard to determine whether joinder is proper under § 1447(e).
However, courts have considered the following factors: (1) whether the new defendants should be joined under Fed. R. Civ. P. 19(a) as "needed for just adjudication"; (2) whether the statute of limitations would preclude an original action against the new defendants in state court; (3) whether there has been unexplained delay in requesting joinder; (4) whether joinder is intended solely to defeat federal jurisdiction; and (5) whether the claims against the new defendant appear valid. See Clinco v. Roberts, 41 F. Supp. 2d 1080, 1082 (C.D. Cal. 1999); see also Desert Empire Bank v. Ins. Co. of N. Am.,623 F.2d 1371, 1376 (9th Cir. 1980) (concluding that courts should look with particular care at motive when joinder will defeat the court's diversity jurisdiction); Lopez v. Gen. Motors Corp., 697 F.2d 1328, 1331 (9th Cir. 1983) (considering Rule 19 joinder and timeliness); Newcombe, 157 F.3d at 691 (considering prejudice to plaintiff). Accordingly, this Court will address each factor to determine whether granting Plaintiff leave to amend to join an additional party is proper under § 1447(e).
A. Joinder under Federal Rule of Procedure 19(a) Rule 19(a) requires joinder of a party if the party's absence will preclude complete relief amongst the existing parties, impede the party's ability to protect its interests, or subject an existing party to the risk of incurring inconsistent obligations. Fed. R. Civ. P. 19(a). Further, parties under Rule 19(a) are generally described as "[p]ersons having an interest in the controversy, and who ought to be made parties, in order that the court may act on that rule which requires it to decide on, and finally determine the entire controversy, and do complete justice, by adjusting all the rights involved in it." CP Nat'l Corp. v. Bonneville Power Admin., 928 F.2d 905, 912 (9th Cir. 1991) (quoting Shields v. Barrow, 58 U.S. 130, 139 (1855)).
Plaintiff contends that the policy at issue is the December 2007 policy, which involved Heatherly. (Reply 5.) Plaintiff further argues that a common-law claim for negligence arises from Heatherly's duties as a life insurance agent or broker, notwithstanding his agency status with Defendant. (Id. at 7.) Here, the December 2007 policy application was taken by Heatherly (Id. at 4), and ...