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The Passavant Memorial v. Lancaster Pollard & Co.

January 20, 2012

THE PASSAVANT MEMORIAL AREA HOSPITAL ASSOCIATION, PLAINTIFF,
v.
LANCASTER POLLARD & CO., LANCASTER POLLARD ASSET MANAGEMENT, LLC, AND STEVE KENNEDY, DEFENDANTS AND THIRD PARTY PLAINTIFFS,
v.
JASON L. GEORGE AND PECK, SHAFFER & WILLIAMS, LLP, THIRD PARTY DEFENDANTS.



The opinion of the court was delivered by: Sue E. Myerscough, United States District Judge.

E-FILED

Friday, 20 January, 2012 01:50:59 PM

Clerk, U.S. District Court, ILCD

OPINION

This cause is before the Court on the Motion to Reconsider the September 30, 2011 Text Order (d/e 65) filed by Third Party Defendants Jason L. George and Peck, Shaffer & Williams, LLP. For the reasons that follow, the Motion to Reconsider is GRANTED.

BACKGROUND

In April 2001, Plaintiff Passavant Memorial Area Hospital Association filed a Complaint in state court against Defendants Lancaster Pollard & Co., Lancaster Pollard Asset Management, LLC, and Steven W. Kennedy. In May 2011, Defendants filed a Notice of Removal on the basis of diversity jurisdiction. Thereafter, Defendants filed a Third Party Complaint against the Third Party Defendants and Allison M. Binkley. In November 2011, Binkley was dismissed from the case by stipulation.

In August 2011, Plaintiff filed an amended complaint to add state law claims against the Third Party Defendants. Third Party Defendants moved to dismiss the amended complaint on the grounds that the amended pleading was untimely and that amendment would be futile. See d/e 31, 49. Defendants joined in Peck, Shaffer & Williams' motion but took no position on whether an attorney-client relationship existed between Plaintiff and Peck, Shaffer & Williams. See d/e 36.

On September 30, 2011, this Court entered a text order that resolved numerous motions and allowed limited discovery on the issue of personal jurisdiction over third party defendant George. Regarding the Amended Complaint, the Court held:

Also pending are Motions to Strike the Amended Complaint. Passavant Memorial Area Hospital Association (Passavant) filed the Amended Complaint on August 1, 2011. Although Passavant has not yet responded to the Motions, the Court, in the interest of judicial economy, GRANTS Peck, Shaffer & Williams, LLP's Motion to Strike the Amended Complaint (d/e 31), Lancaster's Motion Adopting Peck, Shaffer & Williams, LLPs Motion (d/e 36), and George's Motion to Strike Plaintiff's Amended Complaint (d/e 49) on the ground that Passavant's right to amend its Complaint as a matter of course expired 21 days after Lancaster filed the Answer to the Complaint. See d/e 6; Fed.R.Civ.P. 15(a) (providing that a plaintiff can amend its complaint once as a matter of course within 21 days of the responsive pleading). Nonetheless, the Court GRANTS Passavant leave to file an Amended Complaint or indicate that it intends to stand on the original Complaint on or before November 21, 2011, which is one week following the close of discovery on the issue of personal jurisdiction. Passavant is reminded, however, that the case is in federal court on diversity jurisdiction. Peck Shaffer & Williams, LLP is a limited liability partnership whose citizenship is the citizenship of each of its members or partners. See Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998).

On November 21, 2011, Plaintiff filed its Second Amended Complaint (d/e 60) naming George and Peck, Shaffer & Williams as defendants. That same day, Plaintiff filed a Motion to Remand (d/e 61) asserting that the joinder of Peck, Shaffer & Williams destroyed diversity. Specifically, Plaintiff asserted that Peck, Shaffer & Williams was a limited liability partnership with an office in Chicago and that two partners in the Chicago office reside in Illinois.

Defendants oppose the Motion to Remand, asserting that Plaintiff has failed to demonstrate that Peck Shaffer & Williams is a citizen of Illinois. See d/e 64. Third Party Defendants also oppose the Motion to Remand, asserting, in part, that diversity is not destroyed because Peck Shaffer & Williams is a citizen of Ohio and, as of the date of the filing of the Complaint, Amended Complaint, and Second Amended Complaint, had no equity partners residing in Illinois. See d/e 67.

Despite asserting that diversity was not destroyed in response to the Motion to Remand, Third Party Defendants also filed a Motion to Reconsider the September 20, 2011 Text Order which granted Plaintiff leave to file an amended complaint. See d/e 65. In the Motion to Reconsider, the Third Party Defendants assert that this Court should reconsider allowing Plaintiff leave to file the Second Amended Complaint because the "Court did not have the benefit of the analysis of the [Third Party Defendants] that amendment not only would be futile, but also that joinder of the [Third Party Defendants] by an amended pleading was a 'fraudulent joinder' designed to defeat jurisdiction[.]" See Motion (d/e 65). That is, Third Party Defendants recognize the possibility that the joinder of Peck, Shaffer & Williams would destroy complete diversity and require remand. See, e.g., Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998) ("The citizenship of a ...


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