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UNITED STATES DISTRICT COURT 

DISTRICT OF NEW JERSEY 

BELMONT CONDOMINIUM 

ASSOCIATION, INC., 

 

 Plaintiff, 

 

 v. 

ARROWPOINT CAPITAL 

CORPORATION, ROYAL SURPLUS 

LINES INSURANCE COMPANY, ROYAL 

& SUN ALLIANCE INSURANCE 

COMPANY, NATIONAL INDEMNITY 

COMPANY, WATERFRONT 

MANAGEMENT CORPORATION, a New 

Jersey Corporation; COMMERCE 

CONSTRUCTION MANAGEMENT, LLC, a 

New Jersey Limited Liability Company; and 

JOHN DOES 1–15 (Names being fictitious), 

 Defendants. 

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Walls, Senior District Judge 

 Plaintiff Belmont Condominium Association, Inc. (“Belmont”) first filed the present 

action in the Superior Court of New Jersey, Law Division, Hudson County. Defendants 

Arrowpoint Capital Corp., Arrowpoint Group, Inc., and Arrowood Surplus Lines Insurance 

Company, with the consent of the defendant National Indemnity Company, removed the action to 

this Court pursuant to 28 U.S.C. § 1446(a). Belmont now moves to remand the case to the 

Superior Court of New Jersey pursuant to 28 U.S.C. §1447(c) for lack of subject matter 

jurisdiction. The removing defendants argue that this Court has jurisdiction under 28 U.S.C. § 

1332 because separate claims against non-diverse defendants Commerce Construction 

Management LLC (“Commerce”) and Waterfront Management Corporation (“Waterfront”) were 

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fraudulently joined. The Court grants Belmont’s motion to remand because the claim against 

Commerce was not fraudulently joined. 

FACTUAL AND PROCEDURAL BACKGROUND 

 Belmont is an association of owners of condominium units in the Belmont condominium 

building at 711 Clinton Street in Hoboken, New Jersey. Compl. ¶ 8. This litigation arises from a 

series of disputes regarding the construction and management of this building. Belmont brought 

an initial lawsuit in 2007 in the Superior Court of New Jersey (“Belmont I”) that resulted in part 

in a judgment against the building’s sponsor and developer Monroe Station Associates LLC 

(“Monroe”). Id. ¶¶ 21–23. On April 1, 2011, Belmont brought the present action in the Superior 

Court of New Jersey against several out-of-state insurance companies which Belmont argues are 

liable for the judgment against Monroe in Belmont I. Id. ¶¶ 55–69. Belmont also reasserts 

separate breach of contract claims against the building’s in-state construction and management 

companies that were dismissed or severed from Belmont I. Id. ¶¶ 70–79. 

 Throughout the litigation, Belmont’s primary allegations have been that faulty 

construction caused a water leak resulting in a toxic mold condition in the condominium 

building. In Belmont I, Belmont claimed in part that the toxic mold growth was due to the 

negligence of the sponsor / developer Monroe and several other defendants. Compl. ¶¶ 21–22. 

See Declaration of Kevin E. Wolff, Esq. in Opp. to Mot. to Remand (“Wolff Decl.”) Ex. C. After 

a jury returned a verdict against Monroe on these toxic mold claims, the court entered a final 

judgment in the amount of $7,236,677 on December 10, 2010. Compl. ¶¶ 22–23. Based on 

general commercial liability insurance policies Monroe allegedly purchased to cover the 

construction of the building, Belmont now sues out-of-state insurance companies Arrowpoint 

Capital Corp., Arrowpoint Group, Inc., Arrowood Surplus Lines Insurance Company (formerly 

Royal Surplus Lines Insurance Company), and National Indemnity Company (collectively the 

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“Insurers”). Id. ¶¶ 9–13, 16–20. Belmont, acting as assignee of Monroe, seeks a declaratory 

judgment that the Insurers are liable to pay the full amount of the final judgment against Monroe 

in Belmont I and brings a related breach of contract claim. Id. ¶¶ 56–61. Belmont also claims 

that the Insurers acted in bad faith and breached their fiduciary duties by failing to settle the 

claims in Belmont I. Id. ¶¶ 62–69. 

 In addition to the toxic mold claims, Belmont brings a separate breach of contract claim 

against defendant Commerce, which served as the building’s construction company. Id. ¶ 15. 

Belmont alleges that Commerce did not return certain parking spaces at the end of the 

construction period and has failed to pay assessments owed on those parking spaces. Id. ¶¶ 70–

73. The parking space claim in Belmont I was voluntarily dismissed without prejudice after the 

trial on August 18, 2010, when other claims against Commerce were dismissed with prejudice. 

Id. ¶ 72. See Certification of Eileen A. Lindsay, Esq. (“Lindsay Cert.”) Exs. L–M. Belmont 

reasserts the claim against Commerce in the present action. 

 Belmont also brings a separate breach of contract claim against defendant Waterfront, 

which served as the managing agent for the building. Compl. ¶ 14. Belmont alleges that 

Waterfront breached its management agreement by failing to oversee the proper management of 

the building and ensure that the building was properly insured. Id. ¶¶ 76–79. The claims against 

Waterfront in Belmont I were severed from trial on August 18, 2010. Id. ¶ 75. See Lindsay Cert. 

Ex. N. Although Belmont reasserts the breach of contract claim here, Belmont does not argue 

that this claim was ever formally dismissed in Belmont I or consolidated with the present action. 

 On May 20, 2011, Arrowpoint Capital Corp., Arrowpoint Group, Inc., and Arrowood 

Surplus Lines Insurance Company, with the consent of the defendant National Indemnity 

Company, removed the present action from the Superior Court of New Jersey. On June 17, 2011, 

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Belmont filed a motion to remand. The removing defendants opposed the motion for remand on 

July 5, 2011. This motion is decided without oral argument pursuant to Fed. R. Civ. P. 78(b). 

STANDARD OF REVIEW 

Under 28 U.S.C. § 1446, a defendant may remove a case from state court to federal 

district court. The federal court must remand under 28 U.S.C. §1447(c) if it determines at any 

time that it lacks subject matter jurisdiction over the case. When confronted with a motion to 

remand, the defendant bears the burden of establishing the propriety of the removal and that 

subject matter jurisdiction exists. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 

1990). Moreover, “removal statutes are to be strictly construed against removal and all doubts 

should be resolved in favor of remand.” Id. (citations omitted). 

Where federal subject matter jurisdiction justifying removal is based on 28 U.S.C. § 

1332, the removing party must demonstrate complete diversity of citizenship and an amount in 

controversy greater than $75,000. If the case includes a non-diverse defendant, the removing 

party “may avoid remand only by demonstrating that the non-diverse party was fraudulently 

joined.” Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992). Joinder is considered 

fraudulent where the plaintiff has (1) “no reasonable basis in fact or colorable ground supporting 

the claim against the joined defendant,” or (2) “no real intention in good faith to prosecute the 

action against the defendant or seek a joint judgment.” Boyer, 913 F.2d at 111 (citing Abels v. 

State Farm Fire & Cas. Co., 770 F.2d 26, 32 (3d Cir. 1985)). The removing party carries a “heavy 

burden of persuasion” in showing that non-diverse parties were fraudulently joined. Batoff, 977 

F.2d at 851. 

DISCUSSION 

 The parties here fail to satisfy the complete diversity of citizenship requirement for 

federal subject matter jurisdiction under 28 U.S.C. § 1332. To meet this requirement, the plaintiff 

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may not be a citizen of the same state as any defendant. Owen Equip. & Erection Co. v. Kroger, 

437 U.S. 365, 374 (1978). Under 28 U.S.C. § 1332(c), a corporation is deemed to be a citizen of 

both the state of incorporation and the state of its principal place of business. The plaintiff 

Belmont is a citizen of New Jersey because it is a New Jersey corporation with its principal place 

of business in New Jersey. Notice of Removal ¶ 18. The parties do not dispute that all of the 

Insurers are diverse defendants. Arrowpoint Capital Corp., Arrowpoint Group, Inc., and 

Arrowood Surplus Lines Insurance Company (formerly Royal Surplus Lines Insurance 

Company) are incorporated in Delaware and have principal places of business in North Carolina. 

Id. ¶¶ 19–22. National Indemnity Company is a Nebraska corporation with its principal place of 

business in Nebraska. Id. ¶ 23. Instead, complete diversity fails because Waterfront and 

Commerce are citizens of New Jersey. Both are incorporated in New Jersey with their principal 

places of business in New Jersey. Id. ¶¶ 14, 16. 

 Because of this lack of complete diversity, federal subject matter jurisdiction would only 

exist and removal would only have been appropriate if the claims against both Waterfront and 

Commerce were fraudulently joined. The removing defendants here fail to meet the heavy 

burden of persuasion necessary to show that both non-diverse defendants are fraudulently joined. 

Based on a determination that Commerce was not fraudulently joined, this Court finds that it 

lacks subject matter jurisdiction under 28 U.S.C. § 1332 and will remand the case to the Superior 

Court of New Jersey, Law Division, Hudson County. 

I. Fraudulent Joinder of Commerce 

 The removing defendants contend that Belmont’s parking space claim against Commerce 

was fraudulently joined with the claims against the Insurers in order to destroy diversity and 

prevent successful removal. Notice of Removal ¶ 14. The removing parties first argue that there 

is no reasonable basis in fact or colorable ground for this claim because it is barred by the 

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applicable statute of limitations and judicial estoppel. Opp. to Mot. to Remand 10–16. The 

removing defendants also argue that Belmont does not have a real intention in good faith to 

prosecute the parking space claim against Commerce based on its failure to fully litigate this 

cause of action in Belmont I. Id. at 16–17. Finally, the removing defendants argue that this Court 

should adopt procedural misjoinder as an alternative basis for fraudulent joinder and find that 

Commerce was egregiously misjoined under permissive joinder rules. Id. at 17–18. 

A. No Reasonable Basis in Fact or Colorable Ground for the Claim 

As said, the removing party bears a substantial burden to demonstrate that there is no 

reasonable basis in fact or colorable ground for a claim against a non-diverse defendant. Only if 

the claim is “wholly insubstantial and frivolous” will joinder be considered fraudulent. Batoff, 

977 F.2d at 852 (citing Lunderstadt v. Colafella, 885 F.2d 66, 70 (3d Cir. 1989)). The court “must 

assume as true all factual allegations of the complaint” and resolve uncertainties as to 

“controlling substantive law in favor of the plaintiff.” Id. at 851–52. The Third Circuit has 

emphasized that where “there is even a possibility that a state court would find that the complaint 

states a cause of action against any one of the resident defendants, the federal court must find 

that joinder was proper and remand the case to state court.” Boyer, 913 F.2d at 111. 

i. Statute of Limitations Defense 

The removing defendants first argue unsuccessfully that the parking space claim against 

Commerce is barred by the applicable statute of limitations. A claim for which the statute of 

limitations has expired is considered wholly insubstantial and frivolous for the purposes of 

fraudulent joinder. The Third Circuit has explained that“[i]f a district court can discern, as a 

matter of law, that a cause of action is time-barred under state law, it follows that the cause fails 

to present even a colorable claim against the non-diverse defendant.” In re Briscoe, 448 F.3d 

201, 219 (3d. Cir. 2006). Where the application of the statute of limitations depends on a factual 

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determination, the court must accept as true all of the facts alleged by the plaintiff but may also 

make “a limited consideration of reliable evidence” outside the pleadings as long as the 

determination does not “risk crossing the line between a proper threshold jurisdictional inquiry 

and an improper decision on the merits.” Id. at 219–20. The court may consider evidence in “the 

record from prior proceedings, which firmly establishes the accrual date for the plaintiff's claim, 

or in other relevant matters that are properly subject to judicial notice.” Id. 

 The general statute of limitations in New Jersey for a breach of contract claim is six 

years. The statute provides that a cause of action “for recovery upon a contractual claim or 

liability, express or implied, . . . shall be commenced within 6 years next after the cause of any 

such action shall have accrued.” N.J. Stat. Ann. § 2A:14-1 (2011). The date of accrual is 

typically “the date on which the right to institute and maintain a suit first arose.” Rosenau v. City 

of New Brunswick, 238 A.2d 169, 172 (N.J. 1968). To determine when a cause of action accrues 

in a breach of contract action, “the relevant question is when did the party seeking to bring the 

action have an enforceable right.” Metromedia Co. v. Hartz Mountain Assoc., 655 A.2d 1379, 

1381 (N.J. 1995) (citation omitted). In a breach of contract action, the date of accrual of an 

enforceable right is tied to the date that the defendant breached the contract. 

The application of the statute of limitations defense to Belmont’s breach of contract claim 

against Commerce depends on the nature of the alleged contract and the date of the breach. 

Belmont specifically alleges in the complaint only that “Belmont has been and continues to be 

damaged by Commerce’s failure to pay the Belmont amounts owed in connection with the 

parking spaces, which, under New Jersey condominium law, should have been converted to 

ownership by the Belmont or a unit owner at the Belmont shortly after all units at the Belmont 

had been sold.” Compl. ¶ 73. The removing defendants argue that the statute of limitations has 

expired because this language suggests that a breach could have occurred only at the time 

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Commerce was required to return the parking spaces. Opp. to Mot. to Remand 13–14. Based on a 

news article suggesting that all units in the building were sold before March 26, 2000, they 

conclude that the cause of action necessarily accrued more than six years before the complaint 

was filed. Id. Belmont does not dispute that the failure to return the parking spaces initially 

occurred before the limitations period. Belmont instead argues that the claim accrued within the 

limitations period when Commerce stopped paying assessments on the parking spaces in 2006. 

Mot. to Remand 37.1

 Belmont’s allegations find support in the removing defendants’ own 

suggestion that Commerce previously paid assessments on the parking spaces but stopped paying 

these assessments in 2006. Opp. to Mot. to Remand 15–16. 

If Belmont can demonstrate that Commerce breached a contractual obligation to pay 

assessments for the parking spaces and that Commerce breached the contract when it stopped 

paying assessments, then the statute of limitations would not bar a claim for recovery of unpaid 

assessments due after the start of the limitations period on April 1, 2005. Assuming all of 

Belmont’s allegations to be true and resolving all uncertainties in controlling law in its favor, this 

claim meets the low threshold for finding that the claim is not wholly insubstantial and frivolous. 

To repeat, the Third Circuit has directed that a claim should not be found wholly insubstantial 

 

1

 Belmont separately contends that Commerce still has possession of the parking spaces and that 

“each day’s continuance of that retention is a new breach.” Mot. to Remand 36. (citing 

Ballantyne House Assoc. v. City of Newark, 635 A.2d 551, 555–56 (N.J. App. Div. 1993)). 

Although the party may continue to suffer damages as a result of a single breach, these ongoing 

damages typically have no effect on the limitations period. The cited cases provide little support 

for applying any exception here. The doctrine maintains only that where a party breaches a 

contract with divisible installment-type payment requirements, a separate cause of action is 

deemed to accrue with each missed installment until the breaching party repudiates the contract. 

See Metromedia Co., 655 A.2d at 1381. A new limitations period “begins to run against each 

installment as that installment falls due” even if the initial breach predated the initial limitations 

period. County of Morris v. Fauver, 707 A.2d 958, 971 (N.J. 1998). The alleged contract here 

may have required payment of assessments in installments, but this doctrine would be irrelevant 

to the statute of limitations analysis because the first alleged missed payment in 2006 was within 

the limitations period. 

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and frivolous where there is “even a possibility that a state court would find that the complaint 

states a cause of action.” Boyer, 913 F.2d at 111. Although Belmont may ultimately be 

unpersuasive in arguing that Commerce had a contractual obligation to pay assessments on the 

parking spaces that it breached after April 1, 2005, the claim survives scrutiny here because there 

is at least the possibility that it could survive a motion to dismiss in the state court.2

A contrary finding at this stage that the parking space claim is barred by the statute of 

limitations would be inappropriate because it would require factual determinations bearing on the 

merits of the claim. The Third Circuit has emphasized that while a court has some latitude in 

resolving limited questions of fact bearing on threshold jurisdictional questions only, a court 

should not undertake an inquiry into the merits of the underlying claim. Boyer, 913 F.2d at 112; 

Batoff, 977 F.2d at 852. In Briscoe, the court found that the statute of limitations on product 

liability claims had not been tolled based on newspaper articles demonstrating notice of the 

claims and an evidentiary finding in earlier proceedings that the injuries suffered were not latent. 

In re Briscoe, 448 F.3d at 222–24. Any determination now that the claims were barred by the 

statute of limitations would require a much different factual finding that any alleged breach 

occurred, if at all, prior to the limitations period. This could not be resolved based on “a limited 

consideration of reliable evidence” alone, but would require a more searching inquiry that would 

cross “the line between a proper threshold jurisdictional inquiry and an improper decision on the 

merits.” Id. at 219–20. 

 

2

 The removing defendants argue that any breach of contract claim predicated on Commerce’s 

failure to pay assessments on the parking spaces would be precluded by the entire controversy 

doctrine under N.J. R. 4:30A because it was not raised and preserved in Belmont I. Opp. to Mot. 

to Remand 15–16. Belmont responds that the demand for compensatory damages in the earlier 

parking space claim in Belmont I incorporated the claim for unpaid assessments. Reply to Mot. 

to Remand 11. The removing defendants’ argument fails because the state court could reasonably 

agree that the parking space claim dismissed without prejudice in Belmont I encompassed the 

parking space claim for unpaid assessments asserted here. 

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Alternatively, if the breach is deemed to occur when Commerce allegedly failed to return 

the parking spaces, Belmont argues that Commerce waived the statute of limitations defense. 

Belmont insists that Dean Geibel, as principal of Commerce, provided an express waiver of this 

defense that was bargained for as “part of the overall negotiations that resulted in Geibel’s 

assigning all policy rights against the Insurers to the Belmont and Belmont’s agreement to drop 

its appeal against Geibel personally.” Reply to Mot. to Remand 12. Because Belmont first raises 

this argument on reply, the Court will consider it on a limited basis only as further support for 

the determination that resolving the statute of limitations question at this stage would not be 

appropriate. Determining whether Dean Giebel appropriately waived Commerce’s statute of 

limitations defense would ultimately require a factual inquiry into the circumstances of the 

negotiations and the terms of the settlement that would reach beyond a threshold jurisdictional 

review of evidence on the record in prior proceedings or public sources suitable for judicial 

notice. See In re Briscoe, 448 F.3d at 219–20. 

ii. Judicial Estoppel Defense 

The removing defendants also unsuccessfully argue that Belmont does not have a 

colorable ground for the parking space claim against Commerce because it is barred under the 

doctrine of judicial estoppel. Opp. to Mot. to Remand 10–11. The doctrine of judicial estoppel 

“applies to preclude a party from assuming a position in a legal proceeding inconsistent with one 

previously asserted.” Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 419 (3d 

Cir. 1988). A position taken or a representation made by counsel in a legal brief may form the 

basis for judicial estoppel. See Lewandowski v. Nat’l R.R. Passenger Corp., 882 F.2d 815, 819 

(3d Cir. 1989). 

The removing defendants insist that Belmont is precluded from bringing a breach of 

contract claim as a result of its earlier assertion in Belmont I that “Belmont has no contract with 

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Commerce Construction,” a statement made in a letter brief opposing summary judgment on a 

different claim. Opp. to Mot. to Remand 10–11 (citing Wolff Decl. Ex. I, at 11). Even assuming 

that the equitable doctrine of judicial estoppel could be a valid basis for finding that a claim is 

wholly insubstantial and frivolous for purposes of fraudulent joinder, the removing defendants’ 

argument here is unpersuasive. Although on its face Belmont’s statement might appear to be 

inconsistent with a breach of contract claim, it must be read in context. Belmont made this 

statement while arguing that the economic loss doctrine should not apply to bar the tort claims 

that Belmont asserted against Commerce related to the allegedly faulty construction of the 

Belmont building. Wolff Decl. Ex. I, at 10–12. Because Belmont did not represent that the 

building association (or the individual unit owners) did not have a contract with Commerce 

specifically related to the parking spaces and the assessments on those spaces, the state court 

could reasonably find that the statement is not inconsistent with its breach of contract claim for 

the parking spaces. It follows that Belmont’s parking space claim against Commerce is neither 

wholly insubstantial nor frivolous for purposes of fraudulent joinder. 

B. No Real Intention in Good Faith to Prosecute 

 The removing defendants also contend that the motion to remand should be denied 

because Belmont has no real intention in good faith to prosecute the parking space claim against 

Commerce. Notice of Removal ¶ 16. In assessing this ground for fraudulent joinder, a court must 

“look beyond” the complaint at the plaintiff’s conduct to determine whether it is consistent with 

“a subjective intent to proceed” against the non-diverse parties. Abels v. State Farm Fire & Cas. 

Co., 770 F.2d 26, 32 (3d Cir. 1985). The removing defendants argue that Belmont’s conduct is 

inconsistent with a good faith intention to prosecute the parking space claim because Belmont 

already failed to fully litigate its claim in Belmont I. Opp. to Mot. to Remand 16–17. They 

explain that the claims against Commerce were only dismissed after the close of evidence at trial 

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when Belmont had failed to introduce any evidence related to the parking space claim. Id. at 17. 

Belmont responds that Belmont I instead demonstrates a good faith intention to prosecute the 

claims against non-diverse defendants because it actively pursued the claim against Commerce 

until it was dismissed. Mot. to Remand 39–40. 

 Belmont’s conduct here overall has been consistent with a good faith intention to 

prosecute the parking space claim, even if it may not have pursued the claim as vigorously as it 

could have in earlier litigation. Belmont’s failure to fully litigate the claim at trial in Belmont I 

does not reflect the lack of a good faith intention to prosecute the claim either in Belmont I or in 

the present action. Notably, Belmont’s motive for first asserting the parking space claim could 

not have been to destroy diversity jurisdiction because it first raised this claim as part of a larger 

suit against Commerce, Waterfront, and other non-diverse defendants in Belmont I. Belmont also 

reserved its right to bring the claim in a future action by deliberately arguing for dismissal of the 

claim without prejudice in Belmont I and promptly reasserted the claim along with another 

unresolved claim against Waterfront in the present action. 

C. Procedural Misjoinder 

 Alternatively, the removing defendants encourage this Court to adopt procedural 

misjoinder as an additional ground for finding fraudulent joinder and deny the motion to remand 

on this basis. This argument relies on caselaw originating in the Eleventh Circuit that 

“egregious” misjoinder of defendants can be grounds for finding fraudulent joinder. Tapscott v. 

MS Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 2000). The Third Circuit has not directly 

considered the procedural misjoinder doctrine, but the cases in this district to address the issue 

have explicitly declined to adopt it. Kaufman v. Allstate Ins. Co., No. 07-cv-6160, 2010 WL 

2674130, at *7–8 (D.N.J. June 30, 2010) (declining to follow Tapscott based on concerns over 

widespread uncertainty regarding acceptance of the doctrine and confusion applying the 

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appropriate standard); Reuter v. Medtronics, Inc., No. 10-cv-3019, 2010 WL 4628439, at *3–4 

(D.N.J. Nov. 5, 2010) (noting that “other circuits have acknowledged fraudulent misjoinder in 

the wake of Tapscott, but few have formally adopted the principle”), adopted by, 2010 WL 

4902662 (D.N.J. Nov. 23, 2010). In the Third Circuit, only the Eastern District of Pennsylvania 

has tentatively adopted the procedural misjoinder doctrine. See In re Diet Drugs (Phentermine, 

Fenfluramine, Dexfenfluramine) Prod. Liab. Litig., 294 F. Supp. 2d 667, 673 (E.D. Pa. 2003); In 

re Avandia Mktg, Sales Practices & Prod. Liab. Litig., 624 F. Supp. 2d 396, 412–13 (E.D. Pa. 

2009). 

 This Court declines to include procedural misjoinder as an alternative ground for 

fraudulent joinder. The Third Circuit has emphasized that the fraudulent joinder doctrine should 

be interpreted narrowly in favor of remand. Batoff, 977 F.2d at 851; Boyer, 913 F.2d at 111. As 

recently as 2006, the Third Circuit reiterated that it has recognized only two grounds for finding 

fraudulent joinder. In re Briscoe, 448 F.3d at 216. Absent direct guidance from the Third Circuit 

that procedural misjoinder should be incorporated in the fraudulent joinder analysis, the Court 

finds that any question of whether defendants were procedurally misjoined would be more 

appropriately decided by the state court in which it was first filed. 

 Even if this Court were to adopt procedural misjoinder as a basis for fraudulent joinder, 

the removing defendants have offered no convincing argument that the claims were egregiously 

misjoined. Without delving too deeply into the analysis, this Court finds that a New Jersey state 

court applying permissive joinder rules could find that Belmont’s joinder was not egregious. The 

Court applies state rather than federal joinder law, consistent with the majority of the courts to 

have applied this doctrine. See In re Diet Drugs, 294 F. Supp. 2d at 673 (reasoning that “if the 

joinder of multiple plaintiffs is not improper under state law, it cannot be deemed a fraudulent or 

egregious effort to avoid federal jurisdiction”). New Jersey’s rules on permissive joinder allow 

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defendants to be joined where (1) the claims arise “out of or in respect of the same transaction, 

occurrence, or series of transactions or occurrences” and (2) proof of these claims “involves any 

question of law or fact common to all of them.” N.J. R. 4:29-1(a). See MacNeil v. Klein, 358 

A.2d 488, 495–96 (N.J. Super. Ct. App. Div. 1976). Belmont reasonably argues that the claims 

against Commerce and the Insurers are not egregiously misjoined because the parking space and 

insurance claims both arise from the construction and management of the Belmont condominium 

building and will require proof of common facts and the testimony of common witnesses. Reply 

to Mot. to Remand 16–17. To support its argument, Belmont insists that its claims against the 

Insurers include allegations of their bad faith failure to settle the claim against Commerce. Id. at 

17. Although the state court may later find that Commerce was improperly joined, the Court at 

this stage finds only that Commerce was not egregiously misjoined. 

II. Fraudulent Joinder of Waterfront 

 The removing defendants also contend that Belmont’s breach of contract claim against 

Waterfront was fraudulently joined with the claims against the Insurers to destroy diversity. 

Notice of Removal ¶ 16. The removing defendants argue that there is no reasonable basis in fact 

or colorable ground for this claim because it is still pending before the court in Belmont I and 

would otherwise be barred by the applicable statute of limitations. Opp. to Mot. to Remand 18–

20. The removing parties also contend that Belmont has no intent in good faith to prosecute the 

claim against Waterfront because Belmont consented to severing this claim during trial and did 

not continue to pursue the claim after severance. Id. at 20. Finally, the removing defendants 

reiterate that the Court should adopt procedural misjoinder as an alternative ground for 

fraudulent joinder and contend that the claim against Waterfront was egregiously misjoined with 

the claims against the Insurers. Id. at 20–21. 

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 The Court need not reach the question of whether Waterfront was fraudulently joined. To 

deny a motion for remand on the basis of fraudulent joinder, a district court must satisfy federal 

subject matter jurisdiction under 28 U.S.C. § 1332 by finding complete diversity of citizenship 

because all non-diverse defendants were fraudulently joined. If the district court finds that “any 

one of the resident defendants” is not fraudulently joined, then it “must find that joinder was 

proper and remand the case to state court.” Boyer, 913 F.2d at 111. Because the Court has 

already found that the non-diverse defendant Commerce was not fraudulently joined, the Court 

cannot find that complete diversity exists. Further consideration of the claim against non-diverse 

defendant Waterfront is unnecessary. 

CONCLUSION 

 Because the Court finds that it lacks federal subject matter jurisdiction under 28 U.S.C. § 

1332, Belmont’s motion, pursuant to 28 U.S.C. §1447(c), to remand this case to the Superior 

Court of New Jersey, Hudson County, Law Division is granted. 

December 20, 2011 

 /s/ William H. Walls 

United States Senior District Judge 

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