Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_05-cv-00783/USCOURTS-almd-2_05-cv-00783-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 12:635 Breach of Insurance Contract

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 Two other defendants, Palomar Insurance Corporation and Godwin Material Services, Inc.,

were dismissed by this court as fraudulently joined. 

IN THE DISTRICT COURT OF THE UNITED STATES

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

OLLIE GODWIN, )

)

Plaintiff, )

)

v. ) CIVIL ACTION NO. 2:05CV783-SRW

) (WO)

NATIONAL UNION FIRE INSURANCE )

COMPANY OF PITTSBURGH, INC., )

)

Defendant. )

ORDER

Plaintiff commenced this action against defendant National Union Fire Insurance

Company of Pittsburgh, Inc. (“NUFIC”) in the Circuit Court of Crenshaw County, Alabama,

on July 12, 2005, asserting bad faith and breach of contract claims arising from defendant’s

failure to provide medical benefits under an insurance contract.1

 Defendant removed the

action to this court on August 15, 2005 on the basis of diversity of citizenship. Plaintiff is

an Alabama citizen; defendant NUFIC is a Pennsylvania corporation with a principal place

of business in New York. This action is presently before the court on plaintiff’s motion for

leave to amend the complaint (Doc. # 28) and his motion to remand (Doc. # 29), both filed

on October 25, 2006. Plaintiff seeks leave to add claims against a new defendant, Blue Cross

Blue Shield of Alabama (“Blue Cross”), and to add an unjust enrichment claim against

defendant NUFIC. The court concludes that the motion to amend is due to be granted in part

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and, accordingly, that the action is due to be remanded.

DISCUSSION

Plaintiff asserts that, at the time he suffered an injury, he was insured by NUFIC under

an occupational accident policy purchased by plaintiff’s employer, Godwin Materials, Inc.,

and was also insured by Blue Cross under a health insurance policy. According to plaintiff,

NUFIC failed to pay his claim under the occupational accident policy because it classified

his injury as a disease that was not work-related. Blue Cross thereafter initially paid medical

bills associated with plaintiff’s hip replacement surgery under plaintiff’s health insurance

policy; however, in July 2006 – after the deadline for amendment had passed in this case –

it sought refunds from plaintiff’s medical providers because it determined that plaintiff’s

claims were not payable due to a work-related injury coverage exclusion in the policy.

Plaintiff now seeks to add state law breach of contract and unjust enrichment claims against

Blue Cross in this action. Blue Cross is incorporated and has its principal place of business

in Alabama (see Doc. # 33) and, thus, its joinder would destroy diversity. 

28 U.S.C. § 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.” 

In determining whether to allow the amendment, ‘the court should examine the

following factors: (1) the extent to which the purpose of the amendment is to

defeat federal jurisdiction, (2) whether the plaintiff has been dilatory in asking

for the amendment, (3) whether the plaintiff will be significantly injured if the

amendment is not allowed, and (4) any other factors bearing on the equities.’”

Weathington v. United Behavioral Health, 41 F.Supp.2d 1315, 1318 (M.D. Ala

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1999)(citation omitted); see also Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir.

1987). NUFIC argues that the factors identified above – the Hensgens factors – weigh

against allowing the amendment, contending that plaintiff seeks to amend his complaint in

an attempt to defeat diversity jurisdiction, that he has been dilatory in seeking amendment,

that the absence of Blue Cross will not prevent plaintiff from obtaining full relief, and that

defendant’s right to choose the federal forum weighs against allowing the amendment.

Defendant further asserts that plaintiff has not demonstrated good cause for seeking leave to

amend after the deadline established in the court’s scheduling order. 

With regard to the first and second factors, defendant contends that, because plaintiff

was aware at the time he filed the present complaint that he was covered under an insurance

policy with Blue Cross, “there is no reason not to believe the only reason for delay in adding

Blue Cross to this litigation at this point is to defeat diversity jurisdiction before trial” and,

further, that plaintiff was dilatory in seeking leave to amend. (Doc. # 38, pp. 2-4). However,

as plaintiff argues, he had no cause to sue Blue Cross at the time he filed the present

complaint. The cause of action plaintiff now seeks to assert against Blue Cross did not arise

until Blue Cross denied his claims and sought refunds from his medical providers in July

2006. The motion for leave to amend was filed three and a half months after this occurred;

plaintiff asserts that during that period he was attempting to negotiate a resolution with Blue

Cross. The court concludes that the present motion was not filed primarily for the purpose

of defeating federal jurisdiction and that plaintiff was not dilatory in seeking leave to add

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 These circumstances also satisfy the “good cause” requirement for modifying a scheduling

order under Fed. R. Civ. P. 16(b).

3

 Hensgens predates § 1447(e). However, courts continue to apply the Hensgens factors,

and some courts have determined that § 1447(e) is a codification of the holding of Hensgens. See

Cobb v. Delta Exports, 186 F.3d 675, 677 n. 4 (5th Cir. 1999).

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Blue Cross as a defendant.2

 

As to the third factor – whether the plaintiff will be significantly injured if amendment

is not allowed – defendant argues that plaintiff has not demonstrated how he will be unable

to obtain full relief from NUFIC without the presence of Blue Cross. NUFIC contends that

plaintiff’s claims can be fully adjudicated without joinder of the additional defendant. (Doc.

# 38, pp. 5-6). The “full relief” standard derives from Fed. R. Civ. P. 19, which provides for

joinder of a person who is subject to service of process and whose joinder will not destroy

jurisdiction if “in the person’s absence complete relief cannot be accorded among those

already parties.” Fed. R. Civ. P. 19(a). While this standard has been applied in some cases

to analysis of the third Hensgens factor, “[i]t is clear from the unambiguous language of

§ 1447(e) that a non-diverse party need not be indispensable as defined by Fed. R. Civ. P.

19 in order for a district court to permit joinder and remand the action to state court.”

Heininger v. Wecare Distributors, Inc., 706 F. Supp. 860, 862 (S.D. Fla. 1989); see also

Hensgens, 833 F.3d at 1182 (rejecting argument that district court may add only an

indispensable party).3

 While Rule 19 should be considered, it does not control the analysis

of whether joinder is proper. See Mayes v. Rappaport, 198 F.3d 457, 462 (4th Cir.

1999)(“Under Section 1447(e), the actual decision on whether or not to permit joinder of a

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[non-diverse] defendant . . . is committed to the sound discretion of the district court; thus,

this decision is not controlled by a Rule 19 analysis.”). If the court refuses to allow joinder

of Blue Cross, plaintiff will have to proceed against it, if at all, in state court. The court

concludes that the burden of having to prosecute two separate lawsuits is a significant injury

which, although it does not mandate allowing the amendment, weighs in favor of permitting

the joinder of Blue Cross under the circumstances in the present case. El Chico Restaurants

v. Aetna Casualty and Surety Co., 980 F. Supp. 1474, 1485 (S.D. Ga. 1997)(“Plaintiff will

be significantly injured if it is not allowed to amend its Complaint to name the additional

Defendants, as Plaintiff will then face the prospect of maintaining separate lawsuits in federal

and state court.”); see also Holcomb v. Brience, Inc., 2001 WL 1480756, *3 (N.D. Tex. Nov.

20, 2001)(“The main concern expressed in Hensgens was the possibility of parallel federal

and state proceedings. That possibility is a factor in this case.”)(footnote omitted). 

Defendant argues that the equities favor denying amendment and that “NUFIC, as a

non-diverse defendant in a case that has been litigated in federal court for a year, has the right

to keep the litigation in this forum.” (Doc. # 38, p. 7). The court agrees that the defendant’s

right to remove is entitled to consideration. The fact that this action has been litigated in this

court for well over a year also supports defendant’s argument against allowing the

amendment, as does the pendency of a motion for summary judgment. The court is also

mindful that the new circumstances that have prompted plaintiff’s motion for leave to add

Blue Cross at this late stage of the case – the insurer’s decisions to deny coverage and seek

refunds from plaintiff’s medical providers – were not within the control of the defendant

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before this court. However, the efforts expended by defendant in conducting discovery and

preparing its dispositive motion in this court are not wasted in the event of remand to state

court. Further, defendant’s interest in retaining a federal forum must be weighed against

“the danger of parallel federal/state proceedings with the inherent dangers of inconsistent

results and the waste of judicial resources.” Hensgens, 833 F.2d at 1182. The court

recognizes that plaintiff’s claims against Blue Cross and his claims against NUFIC are

independent of each other. However, the unique circumstances of this case present claims

which should, as a matter of equity, be tried in a single action. In view of the potential for

inconsistent results and concerns of judicial economy, the equities weigh in favor of allowing

amendment to add Blue Cross as a defendant. See Heininger, supra, 706 F. Supp. at 862-63.

Since the court has determined that plaintiff’s amendment to add Blue Cross is due

to be allowed, and since the joinder of Blue Cross divests this court of jurisdiction, the court

does not address the issue of whether plaintiff should be permitted, at this juncture, to add

an unjust enrichment claim against NUFIC. 

CONCLUSION

For the foregoing reasons, it is

ORDERED that plaintiff’s motion for leave to amend (Doc. # 28) is GRANTED to

the extent that plaintiff seeks to assert claims against defendant Blue Cross. The court here

makes no determination regarding the propriety of the amendment adding an additional claim

against NUFIC.

It is further ORDERED that plaintiff’s motion to remand (Doc. # 29) is GRANTED,

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and this action is hereby REMANDED to the Circuit Court of Crenshaw County pursuant

to 28 U.S.C. § 1447 (e) and § 1447(c) for lack of subject matter jurisdiction.

Done, this 15th day of December, 2006.

/s/ Susan Russ Walker 

SUSAN RUSS WALKER

UNITED STATES MAGISTRATE JUDGE

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