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Newman v. Prudential Insurance Company of America

August 11, 2009


The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge


This matter is before the court on Plaintiff Janet L. Newman's (Newman) motion for leave to file a first amended complaint and motion to remand. For the reasons stated below, we grant the motion for leave to file a first amended complaint. We also grant the motion to remand.


Newman alleges that she is the executrix of the estate of a deceased individual named Alfred Cilella (Decedent). Newman claims that in January and February 2007, with the assistance of a mortgage broker named Lou Anthony (Anthony), the Decedent applied for and was issued three separate life insurance policies (Policies) by Defendant Pruco Life Insurance Company (Pruco). Newman alleges that she was named the sole beneficiary for all three Policies, which were valued at $500,000, $500,000, and $250,000, respectively. Newman further alleges that the Decedent paid over $20,000 in premiums with respect to the Policies which were accepted without objection by Pruco. Newman claims that, since the Decedent's death, Pruco has refused demands made by Newman for the proceeds of the Policies. Newman brought the instant action in the Circuit Court of Cook County and includes in her complaint three claims for breach of contract against Pruco, one for each of the three Policies. Defendants removed the instant action to this court and have filed a counterclaim for rescission. Newman now seeks leave to file a first amended complaint joining Anthony as a Defendant and also seeks to remand the instant action to state court based on the amended complaint.


Removal is proper if it is based on statutorily permissible grounds, 28 U.S.C. § 1441, and if it is timely. 28 U.S.C. § 1446; Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529-32 (7th Cir. 2004). The party seeking to remove an action and invoking federal jurisdiction "bears the burden of demonstrating that removal is proper." Id. A motion to remand a case to state court that is based "on any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a)." 28 U.S.C. § 1447(c). The Seventh Circuit has cautioned that "[c]courts should interpret the removal statute narrowly and presume that the plaintiff may choose his or her forum" and that "[a]ny doubt regarding jurisdiction should be resolved in favor of the states." Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993).

Pursuant to Federal Rule of Civil Procedure15, "[a] party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served. . . ." Fed. R. Civ. P. 15(a). A party who wishes to amend a pleading after the opposing party has filed an answer may do so "only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(b). Such leave is "freely give[n] . . . when justice so requires." Id. However, joinder of additional non-diverse parties after an action has been removed to federal court is governed under 28 U.S.C. § 1447(e) (Section 1447(e)), which states that "[i]f after removal a 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." Id.


Newman seeks to amend her complaint, adding Anthony as a party to the action, and also seeks to have the instant action remanded under Section 1447(e) since Anthony is a non-diverse defendant whose presence in the action would defeat diversity subject matter jurisdiction. Defendants argue that the instant motions represent an attempt by Newman to destroy federal diversity jurisdiction and that both motions should be denied. Defendants contend that the attempt to join Anthony to the instant action constitutes a fraudulent joinder since Newman cannot possibly prevail in a cause of action against Anthony. In addition, Defendants argue that, even if the proposed amended complaint is not a fraudulent joinder, equitable considerations dictate the denial of joinder under Section 1447(e). Newman argues that, contrary to Defendants' assertion that Anthony is fraudulently joined, Anthony is, in fact, an indispensable party who must be joined to the instant action. Newman further argues that the balancing of the equities favors joining Anthony to the instant action and remanding it to state court.

I. Fraudulent Joinder

Defendants first argue that Newman's attempt to join Anthony to this action constitutes fraudulent joinder since Newman cannot possibly prevail on the proposed claim against Anthony. According to the Seventh Circuit, "[f]raudulent joinder occurs either when there is no possibility that a plaintiff can state a cause of action against nondiverse defendants in state court, or where there has been outright fraud in plaintiff's pleading of jurisdictional facts." Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir. 1993). In this case, there is nothing to suggest an outright fraud on the part of Newman in jurisdictional pleadings and, thus, Defendants must show that Newman's proposed cause of action against Anthony cannot succeed. Id. Fraudulent joinder is "a heavy burden" for a defendant to establish and such a defendant must show that the cause of action would fail even after "resolving all issues of fact and law in favor of the plaintiff. . . ." Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992)(emphasis in original); see also Wolf v. Kennelly, 2009 WL 2178674, at *3 (7th Cir. 2009)(stating that the standard for establishing fraudulent joinder is "much more imposing" than the standard for establishing misjoinder).

Newman's proposed amended complaint includes a fourth count for professional negligence under Illinois law against Anthony. Defendants first contend that Newman has not stated a claim for professional negligence against Anthony. A claim for professional negligence under Illinois law requires a plaintiff to establish "'(1) the existence of a professional relationship, (2) a breach of duty arising from that relationship, (3) causation, and (4) damages.'" Maxwell v. KPMG, LLP, 2007 WL 2091184, at *4 (N.D. Ill. 2007)(quoting MC Baldwin Fin. Co. v. DiMaggio, Rosario & Veraja, LLC, 560 N.E.2d 1180, 1181 (Ill. 1990)); see also Dausch v. Rykse, 52 F.3d 1425, 1434 (7th Cir. 1994)(stating that "'[t]he elements of a malpractice action are the same elements required of any negligence action'")(quoting St. Paul Fire & Marine Ins. Co. v. Downs, 617 N.E.2d 338, 345 (Ill. 1993)).

In her proposed amended complaint, Newman has included allegations that Anthony had a professional relationship with respect to the Decedent and that Anthony provided professional advice with respect to the Decedent's applications for life insurance. With that professional advice, Newman contends came a duty of care that Newman alleges Anthony breached when he failed to adequately check the applications to see if they were correctly completed. Finally, Newman asserts that such professional negligence by Anthony was a proximate cause of the Decedent's Policies allegedly being left incomplete. Defendants assert in a conclusory fashion that Newman's allegations are too vague and that such allegations fail to state a claim, but Defendants have pointed to nothing to specifically show that Newman could not possibly succeed in her claim against Anthony under Illinois law. See Schwartz v. State Farm Mut. Auto Ins. Co., 174 F.3d 875, 878 (7th Cir. 1999)(finding that joinder was fraudulent in a case where the claim asserted against the non-diverse defendant had never been recognized under the applicable state law); Hoosier Energy Rural Elec. Co-op, Inc. v. Amoco Tax Leasing IV Corp., 34 F.3d 1310, 1315-16 (7th Cir. 1994)(finding that joinder was fraudulent when a provision in the contract at issue barred the claim against the non-diverse defendant).

Defendants also contend that Newman could not prevail against Anthony since her professional negligence claim would be time-barred. Defendants point out that under 735 ILCS 5/13-214.4, there is a two-year statute of limitations with respect to Newman's claim against Anthony and that Anthony's conduct is alleged to have occurred in January and February 2007, which is more than two years before the instant action was filed. Under Illinois law, "a cause of action accrues, and the statute of limitations begins to run, when the party 'knows or reasonably should know both that an injury has occurred and that it was wrongfully caused.'" LeBlang Motors, Ltd. v. Subaru of America, Inc., 148 F.3d 680, 690-91 (7th Cir. 1998)(quoting in part Nolan v. Johns-Manville Asbestos, 421 N.E.2d 864, 868 (Ill. 1981)). Under Illinois law, "usually the determination of when the statute of limitations begins to ...

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