Plaintiff Tammie Davis seeks to amend her complaint against defendant Tower Select Insurance Company ("Tower") to add a cause of action against two new defendants, Michael and Natalie Barnett ("the Barnetts"), as well as fifty Doe defendants. (Notice Mot. & Mot. Leave to File Am. Compl., ECF 11.) Tower opposes Davis's motion. (Opp'n to Mot. Leave to File Am. Compl., ECF 13.) For the reasons set forth below, Davis's motion is DENIED.
Plaintiff Tammie Davis filed suit against defendants Tower, Tower Group Companies, Donald K. Sams & Associates, Inc., Avil Tuchman and Does 1-100 in Placer County Superior Court on February 12, 2012. (State Ct. File, ECF 1-2.)*fn1 Davis alleges that Tower wrongfully denied insurance claims she made after her house in Rocklin, California (the "Rocklin house") was damaged by a fire while it was covered by an insurance policy she purchased from Tower. (Id.) Davis's complaint contains several state law causes of action against Tower: (1) breach of insurance contract; (2) breach of the implied covenant of good faith and fair dealing; and (3) defamation of character. (Id.) Davis subsequently dismissed her claims against all defendants except Tower. (Notice of Removal of Action, ECF 1.) On June 14, 2012, Tower removed the case to this court on the basis of diversity jurisdiction, 28 U.S.C. § 1441(b). (Id.)
On February 8, 2012, Tower sent a letter to Davis that explained its coverage position. (Decl. of Tim Kroeger ¶ 2, ECF 13-1.) The letter states that Davis told Tower she lived in the Rocklin house but that Tower "determined through its investigation that neighbors to the [Rocklin house] advised that Ms. Davis does not live [there]." (Ex. 1 at 6, ECF 13-1.) The letter explains that Tower "denies coverage for additional living expenses in its entirety on the basis that it appears that the subject property was not used as . . . Davis' primary residence and material misrepresentations presented in support of the claim." (Id. at 7.) Tower denied full coverage for Davis and her family's personal property on the same grounds. (Id. at 13.)
Davis filed her motion for leave to amend her complaint to add a defamation claim against the Barnetts on October 9, 2012. (ECF 11.) The Barnetts were Davis's neighbors and are residents of California. (Proposed First Am. Compl, ¶¶ 8-9, ECF 11-1 .) Davis alleges that the Barnetts made defamatory statements about her and her family to Tower, falsely stating that Davis was "engaging in dishonest and unlawful activities." (Id. ¶¶ 43-46.) She further alleges that the "defamatory statements exposed [Davis] to hatred, contempt and ridicule" and led to the denial of her insurance claim (Id. ¶¶ 48-50.)
Davis designated her motion as a motion for leave to amend under Federal Rule of Civil Procedure 15(a). (ECF 11.) Federal Rule of Civil Procedure 15(a)(2) states, "[t]he court should freely give leave [to amend a pleading] when justice so requires." The Ninth Circuit has "stressed Rule 15's policy of favoring amendments." Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989). However, because granting Davis's motion would divest the court of diversity jurisdiction, the court must determine whether Rule 15(a) or 28 U.S.C. § 1447(e) applies. See IBC Aviation Servs. v. Compania Mexicana de Aviacion, S.A. De C.V., 125 F. Supp. 2d 1008, 1011 (N.D. Cal. 2000); Clinco v. Roberts, 41 F. Supp. 2d 1080, 1082 (C.D. Cal. 1999). Section 1447(e) provides that "[i]f 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 the State court."
Section 1447(e) provides the appropriate standard here, as opposed to that of Rule 15(a). "While there is a certain degree of overlap, courts use [the standard from Section 1447(e)] to scrutinize amendment more closely when the amendment will defeat diversity jurisdiction." IBC Aviation, 125 F. Supp. 2d at 1011 (citing Desert Empire Bank v. Ins. Co. of N. Amer., 623 F.2d 1371, 1376 (9th Cir. 1980)). See also Clinco, 41 F. Supp. 2d at 1087-88 (analyzing motion under both Rule 15(a) and Section 1447(e), but concluding that Rule 15(a)'s "presumption of the amendment's validity cannot apply" when amendment would defeat diversity jurisdiction of a removed case). Under Section 1447(e), if the court allows Davis to join the Barnetts as defendants, it must remand the case to state court. See Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1068 (9th Cir. 2001).
The following factors are relevant to whether the Barnetts may be joined as defendants under Section 1447(e):
(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; (5) whether the claims against the new defendant appear valid; and (6) whether denial of joinder will prejudice the plaintiff.
Palestini v. Gen. Dynamics Corp., 193 F.R.D. 654, 658 (S.D. Cal. 2000). See also IBC Aviation, 125 F. Supp. 2d at 1011.*fn2
A. Required Joinder under Rule 19(a)
A person must be joined as a party if "in that person's absence, the court cannot accord complete relief among existing parties" or "that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may as a practical matter impair or impede the person's ability to protect their interest." FED.R.CIV.P. 19(a). While Davis's claim against the Barnetts arises from the same events as her claims against Tower regarding her insurance policy, they are only tangentially related. Indeed, Davis does not argue that the Barnetts are necessary parties to her action against Tower. It is not necessary to consider Davis's defamation claim against the Barnetts to ...