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Precht v. Columbia Gulf Transmission, LLC

United States District Court, W.D. Louisiana, Lafayette Division

October 29, 2018

KELLY PRECHT AND FLAVIA PRECHT
v.
COLUMBIA GULF TRANSMISSION, LLC

          MEMORANDUM RULING

          PATRICK J. HANNA UNITED STATES MAGISTRATE JUDGE

         Pending before the court is the motion to amend the complaint, which was filed by the plaintiffs, Kelly Precht and Flavia Precht. (Rec. Doc. 24). The motion is opposed. (Rec. Doc. 26). Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained below, the motion is DENIED.

         Background

         This case started in the 14th Judicial District Court, Calcasieu Parish, Louisiana and was removed to this forum under 28 U.S.C. § 1332. The plaintiffs filed a motion to remand the action back to state court, but that motion was denied. Now, the plaintiffs are seeking to amend their complaint to add an additional defendant that would destroy diversity and require remand.

         The plaintiffs, Kelly Precht and Flavia Precht, alleged in their original petition for damages that they lease land from the Stone Family, LLC for the purpose of grazing cattle, farming, and crawfishing. They further alleged that, after their lease was in effect, the Stone Family, LLC executed a right-of-way agreement, covering the same property and permitting defendant Columbia Gulf Transmission, LLC to construct a pipeline traversing the property. That agreement allegedly required Columbia Gulf to replace and restore the area disturbed by the laying, construction, operation, replacement, or maintenance of pipelines to a condition as near as practical to the property's original condition and also to pay for any damage to marketable timber, crops, approved fences, and approved tile drains.

         The plaintiffs alleged that Columbia Gulf did not enter into a similar right-of-way agreement with them. They further alleged that Columbia Gulf trespassed on the property that the Prechts lease and constructed a pipeline through their leased premises without regard for their crops, constructions, or possessions. The plaintiffs further alleged that they sustained damages due to Columbia Gulf's activities including damage to agricultural crops growing on the property, the cost of restoring farm infrastructure, past and future crop damage, losses due to the change in crop prices, losses due to a change in the yield per acre, and loss of crawfish income. The plaintiffs alleged that, despite amicable demand, Columbia Gulf did not honor their leasehold rights. The plaintiffs therefore sought to recover for their pecuniary and nonpecuniary damages plus attorneys' fees and court costs.

         In their proposed amending complaint, the plaintiffs seek to add Stone Family, LLC as a defendant.

         Law and Analysis

         Federal district courts are courts of limited jurisdiction, possessing only the power authorized by the Constitution and by statute.[1] Accordingly, federal courts have subject-matter jurisdiction only over civil actions presenting a federal question[2]and those in which the amount in controversy exceeds $75, 000 exclusive of interest and costs and the parties are citizens of different states.[3] For that reason, a suit is presumed to lie outside a federal court's jurisdiction until the party invoking federal-court jurisdiction establishes otherwise.[4] “[B]ecause the effect of removal is to deprive the state court of an action properly before it, removal raises significant federalism concerns.”[5] The removal statute must therefore be strictly construed, and any doubt about the propriety of removal must be resolved in favor of remand and against federal-court jurisdiction.[6]

         In its removal notice, Columbia Gulf established that the prerequisites for federal-court jurisdiction under 28 U.S.C. § 1332 were satisfied with regard to the parties in the lawsuit at that time. However, adding Stone Family, LLC as a defendant in the suit would destroy diversity.

         It has already been established that the plaintiffs are citizens of Louisiana and that Columbia Gulf is a citizen of Delaware and Texas. Accordingly, those parties are diverse. The plaintiffs alleged that Stone Family, LLC is a limited liability company. A limited liability company is a citizen of every state in which any member of the company is a citizen, [7] and the citizenship of an LLC is determined by the citizenship of all of its members.[8] Therefore, the diversity analysis for a limited liability company requires a determination of the citizenship of every member of the company.[9] If any member is not diverse, the limited liability company is not diverse. The plaintiffs alleged that the members of Stone Family, LLC are George Stone, who is domiciled in North Carolina, and Donna Welch, who is domiciled in Louisiana. Because the citizenship of a natural person is determined by the state in which he or she is domiciled, [10] Mr. Stone is a North Carolina citizen and Ms. Welch is a Louisiana citizen. Consequently, Stone Family, LLC is also a Louisiana citizen, and Stone Family, LLC is not diverse in citizenship from the plaintiffs. Therefore, if the amendment were permitted, this suit would have to be remanded to state court.

         Typically, amendments to pleadings are governed by Federal Rule of Civil Procedure 15(a), which states that leave to amend “shall be freely given when justice so requires.” In removed cases, however, a district court has discretion to either grant or deny the amendment of a complaint when subject-matter jurisdiction is based on diversity and the plaintiff seeks to amend the complaint to add a nondiverse party.[11] Thus, when faced with a motion to amend a complaint to add a nondiverse defendant in a removed case, federal courts are required to scrutinize the proposed amendment more closely than they would other proposed amendments.[12] Deciding whether to permit an amendment that would destroy the court's subject-matter jurisdiction requires a balancing of the diverse defendant's interest in retaining the federal forum with the plaintiff's competing interests.[13] In such a situation, “the court may deny joinder, or permit joinder and remand the action to the State court, ”[14]and “[t]he decision between these two options rests squarely within the discretion of the district court.”[15]

         In Hensgens v. Deere & Co., the Fifth Circuit identified four factors that should be considered in deciding whether to permit such an amendment: (1) whether the purpose of the amendment is to defeat federal jurisdiction, (2) whether the plaintiff was dilatory in requesting the amendment, (3) whether the plaintiff will be significantly injured if the amendment is not allowed, and (4) whether any other factors bear on the equities.[16] Each factor will be addressed in turn.

         In analyzing the first Hensgens factor, courts consider whether the plaintiff knew the identity of the non-diverse defendant when the state court complaint was filed and whether the plaintiff has stated a valid claim against the nondiverse defendant.[17] A plaintiff's possession of a valid claim suggests that the purpose of a proposed amendment is not to defeat diversity.[18] But when the plaintiff knew the nondiverse defendant's identity when the lawsuit was originally filed in state court but did not name him as a defendant, this suggests that the motion to amend was intended to frustrate diversity jurisdiction.[19]

         In this case, the plaintiffs were aware of Stone Family, LLC when they initiated this lawsuit in state court and actually mentioned Stone Family, LLC in their original petition. This suggests that the plaintiffs are seeking to name Stone Family, LLC at this time in an effort to avoid federal-court jurisdiction. The plaintiffs have not alleged any damages resulting solely from the independent actions of Stone Family, LLC. The only allegation in the proposed amended petition directed at Stone Family, LLC is that it “allowed a pipeline to be constructed through plaintiffs' leased premises without regard for plaintiffs' crops, constructions[, ] and possessions.” (Rec. Doc. 24-4 at 4). This is nothing new; it merely merges two separate allegations from the original petition. In the original petition, the plaintiffs alleged that a right-of-way agreement was executed by Stone Family, LLC and Columbia Gulf (Rec. Doc. 102 at 1) and that, acting pursuant to that agreement, Columbia Gulf “constructed a pipeline through plaintiffs' leased premises without regard for plaintiffs' crops, constructions[, ] and possessions.” (Rec. Doc. 1-2 at 3). The plaintiffs did not allege that they were damaged when Stone Family, LLC executed the right-of-way agreement. Instead, they alleged that they were damaged when Columbia Gulf undertook activities on the property pursuant to the right-of-way agreement. When the plaintiffs filed their original petition, they were aware of the existence of Stone Family, LLC and they were also aware of the role that Stone Family, LLC played with regard to the actions that allegedly caused their damages. Presumably, the plaintiffs consciously chose not to sue Stone Family, LLC at that time. Thus, this Court finds that the plaintiffs' decision to seek to amend their complaint to sue Stone Family, LLC now is an attempt to avoid litigating their claim against Columbia Gulf in federal court. The first Hensgens factor therefore weighs against granting the motion to amend.

         In analyzing the second Hensgens factor, courts often examine the amount of time between the initiation of the original state court action and the filing of the motion to amend as well as the amount of time between removal of the case to federal court and the filing of the motion to amend.[20] In general, a plaintiff is not dilatory in seeking to amend his complaint if the trial has not yet been scheduled and no significant activity beyond the pleading stage has occurred.[21] The analysis is different, however, when the proposed amendment would add a nondiverse defendant after removal and therefore defeat diversity jurisdiction. In that ...


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