United States District Court, C.D. California
Present: Honorable ANDREW J. GUILFORD
CIVIL MINUTES - GENERAL
[IN CHAMBERS] ORDER REGARDING PLAINTIFF'S MOTION TO FILE
an insurance bad faith action against Defendant MedPro Group,
Inc. (“MedPro”), a medical malpractice insurer.
Plaintiff Jeffrey Golden now moves to file an amended
complaint. (See generally Mot., Dkt. No. 17.)
Court GRANTS IN PART Plaintiff's motion to file an
amended complaint. The Court REMANDS this case to Orange
County Superior Court. All other pending matters are VACATED.
case stems from an underlying medical malpractice action
against Tung Nguyen, a vocational nurse. (Mot. at 2.) In
2015, Nguyen was charged with caring for two-year-old Emma
Borges, who depended on a tracheostomy tube in her throat to
breathe. (Id.) “It was Nguyen's duty to
ensure that the tracheostomy tube remained intact and
stable.” (Id.) But unfortunately, while under
Nguyen's care, Borges' tracheostomy tube fell out,
causing Borges “severe and permanent brain
then sued Nguyen in January 2016 for medical malpractice.
(Id.) Nguyen's medical malpractice insurer at
the time, Defendant MedPro, defended Nguyen in the action.
(Id.) Nguyen's MedPro insurance had a policy
limit of $1 million. (Id.) According to Plaintiff,
Borges offered to settle her case against Nguyen by demanding
Nguyen's $1 million policy limit on three separate
occasions. (Id. at 2-3.) But MedPro rejected all
three of Borges' settlement demands. Then, “on the
eve of arbitration, ” MedPro allegedly agreed to settle
the matter, but only if Borges' parents expressly waived
their right to sue MedPro for wrongful death if Borges died.
(Id. at 3.) Borges rejected MedPro's offer
because Borges “had already incurred substantial costs
. . . prepar[ing] for arbitration.” (Id.)
case then proceeded to arbitration. (Id.) In March
2018, the arbitrator found Nguyen negligent and awarded
Borges $6, 069, 139.73 in damages, plus 10% interest.
(Id.) Given Nguyen's $1 million policy limit,
this subjected Nguyen to substantial personal liability.
(Id.) MedPro appealed the award. (Id.) But
the appeal didn't stay enforcement of the arbitration
award, so Nguyen was forced to file for bankruptcy.
(Id.) Nguyen's bankruptcy case is pending in a
separate action before this Court. (Id.)
Jeffrey Golden was appointed Trustee of Nguyen's
bankruptcy estate in her bankruptcy case. (Id. at
4.) As Trustee, Golden took ownership of “any and all
legal claims that Nguyen might assert against third
parties.” (Id.) So on behalf of Nguyen, Golden
filed this case against MedPro alleging MedPro mishandled
Borges' medical malpractice action. (Id.)
Specifically, Golden claims MedPro acted unreasonably and in
bad faith by repeatedly rejecting Borges' $1 million
settlement offers. (Id.) As Trustee, Golden elected
to file this case in state court. Now, Golden seeks leave to
file an amended complaint.
proposed amendment does two things. First, it adds Margaret
Holm-MedPro's attorney in the underlying malpractice
action-as a defendant in this case. (Mot. at 1.) Second, it
asserts a new claim for negligent infliction of emotional
distress against MedPro. (Id. at 1, n.1.)
Court first turns to Golden's request to add Holm to this
case. Both parties agree that adding Holm as a defendant
destroys complete diversity among the parties, thus stripping
this Court of its diversity jurisdiction to hear this case.
(See Id. at 6; Opp'n, Dkt. No. 20 at 18.)
Consequently, to the extent Golden's proposed amendment
seeks to join Holm, it's governed by 28 U.S.C. Section
1447(e), which applies to diversity-destroying amendments
like this one. 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.” See
28 U.S.C. § 1447(e). The “permissive”
language of Section 1447(e) “clearly gives”
district courts discretion to join a non-diverse defendant.
See Newcombe v. Adolf Coors Co., 157 F.3d 686, 691
(9th Cir. 1998). When deciding whether to permit joinder
under Section 1447(e), courts consider the following factors:
(1) “whether there has been unexplained delay in
seeking the joinder”; (2) “whether the statute of
limitations would prevent the filing of a new action against
the new defendant should the court deny joinder”; (3)
“whether the party sought to be joined is needed for
just adjudication and would be joined under Federal Rule of
Civil Procedure 19(a)”; (4) “whether the claim
against the new party seems valid”; and (5)
“whether joinder is solely for the purpose of defeating
federal jurisdiction.” Clinco v. Roberts, 41
F.Supp.2d 1080, 1081-82 (C.D. Cal. 1999); see also
McGrath v. Home Depot USA, Inc., 298 F.R.D. 601, 607
(S.D. Cal. 2014) (listing similar factors).
given certain concessions in the parties' briefing, the
Court need only analyze the first, third, and fifth factors.
(See Mot. at 14; Opp'n at 21.)
the first factor, the Court finds Golden didn't
unreasonably delay in seeking to join Holm as a defendant in
this case. Golden didn't have reason to suspect Holm was
at fault for MedPro's decision to reject Borges'
settlement offers until recently, when MedPro told Golden it
planned on asserting an “advice-of-counsel”
defense to Golden's bad faith claims. (Mot. at 7.) Then,
“[w]ithin days, ” Golden “repeatedly
informed MedPro, verbally and in writing, of the need to join
Holm to the case and sought a stipulation from MedPro to that
end.” (Id.) MedPro refused and Golden promptly
filed this motion. Still, MedPro argues the delay here is
unreasonable mostly because one of Golden's
attorneys-Neil Howard- represented Borges in the underlying
medical malpractice action. (See Opp'n at 12-13,
21.) And MedPro claims that, in the malpractice case, Howard
and Holm exchanged information revealing that Holm assisted
MedPro in MedPro's evaluation of Borges' settlement
offers. (Id. at 2, 6.) This argument is
unconvincing. The mere fact that Howard (and, by extension,
Golden) knew Holm played some role in MedPro's
rejection of Borges' settlement proposals doesn't
automatically charge Howard with knowing that Holm ...