United States District Court, E.D. Wisconsin
CANDY L. SHARPE, Plaintiff,
WAL-MART STORES EAST LP, ABC INSURANCE COMPANY, DEF INSURANCE COMPANY, GHI INSURANCE COMPANY, DEAN HEALTH PLAN INC., COMMON GROUND HEALTHCARE COOPERATIVE, NETWORK HEALTH PLAN, CONTINENTAL 76 FUND LLC, WAL-MART REAL ESTATE BUSINESS TRUST, JKL CORPORATION, and MNO INSURANCE COMPANY, Defendants.
STADTMUELLER, U.S. DISTRICT JUDGE
December 4, 2018, this personal injury case was timely
removed from Washington County Circuit Court to the Eastern
District of Wisconsin pursuant to 28 U.S.C § 1332.
(Docket #1). The action, which was initially assigned to
Magistrate Judge David E. Jones, was reassigned to this
branch of the Court on February 1, 2019. The case involves a
Wisconsin plaintiff who was injured at a Wal-Mart store, and
who subsequently sued Wal-Mart Stores East LP and Wal-Mart
Real Estate Business Trust, as well as her health insurers,
Dean Health Plan Inc., Common Ground Healthcare Cooperative,
and Network Health Plan. In their notice of removal,
Defendants explained that the health insurance defendants
from Wisconsin, i.e., Dean Health Plan, Inc. and Common
Ground Healthcare Cooperative, were better considered
involuntary plaintiffs for diversity purposes, (Docket #1 at
4), because “parties must be aligned according to their
attitude towards the actual and substantial
controversy.” City of Indianapolis v. Chase
Nat'l Bank, 314 U.S. 63, 75 n.4 (1941) (citations
and quotations omitted). In this case, Defendants contend that
realignment is proper because there is no actual controversy
between the health insurance defendants and Plaintiff-rather,
the health insurance defendants' interests are
“aligned with those of the insured for whose loss they
have paid, and against those of the tortfeasor.”
(Docket #1 at 4). Plaintiff did not contest this
characterization or object to removal.
sued the health insurance defendants pursuant to Wisconsin
law. See (Docket #1-1 at 4-6); (Docket #5 at 6-8).
Under Wis.Stat. § 803.04(2), “[i]n any action for
damages caused by negligence, any insurer which has an
interest in the outcome of such controversy adverse to the
plaintiff or any of the parties to such controversy. . .is by
this section made a proper party defendant in any
action brought by plaintiff in this state on account of any
claim against the insured.” (emphasis added)
(c.f. Wis. Stat. § 49.89(2), which makes clear
that state benefit providers have a subrogated interest in
the rights of the benefit recipients, and does not
require them to be added as defendants). Whether a defendant
added under Wis.Stat. § 803.04(2) is better construed as
plaintiff for diversity purposes is a case-by-case inquiry.
Compare Vandervest v. Wis. Cent., Ltd., 936 F.Supp.
601, 604-05 (E.D. Wis. 1996) (finding that plaintiff's
insurers had no adverse interest to the plaintiff, and
therefore did not destroy diversity); with Seth Peterson
Cottage Conservancy, Inc. v. Goodyear Tire and Rubber
Co., 2003 WL 23221149, at *1 (W.D. Wis. 2003)
(concluding that realignment would be improper where
plaintiffs had substantial conflict with both original
defendant and insurance defendant added pursuant to Section
803.04); see also Acme Printing Ink Co. v. Menard,
Inc., 812 F.Supp. 1498, 1519-20 (E.D. Wis. 1992)
(federal question case in which the court determined that it
had no jurisdiction over a cross-claim between a defendant
and an insurance company sued under Section 803.04). In light
of the statute, Plaintiff named Dean Health Plan, Inc.,
Common Ground Healthcare Cooperative, and Network Health Plan
as defendants. In the state court proceeding, Dean Health
Plan filed a cross-claim against its co-defendants and a
counterclaim against Plaintiff before assigning its claim to
Plaintiff in the federal litigation. See (Docket #9,
#10, and #36). Network Health Plan filed a counterclaim
against Plaintiff in the federal litigation. (Docket #14 and
#22). Common Ground Healthcare Cooperative has yet to appear
in the case. Therefore, not all non-diverse health insurance
defendants have interests that are directly aligned with
Plaintiff, and realignment is not obviously proper.
complicate matters, on December 19, 2018, Plaintiff filed an
amended complaint. (Docket #5). A party may amend a pleading
once as a matter of course within either 21 days of service
or 21 days after service of a responsive pleading; in all
other cases, a party may amend only “with the opposing
party's written consent or the court's leave.”
Fed.R.Civ.P. 15(a). Plaintiff filed her amended complaint
after the time allowed to amend as a matter of course, and it
does not appear that Plaintiff sought Defendants' written
consent. However, Defendants timely answered Plaintiff's
amended complaint and, in doing so, did not voice any
objection. (Docket #12, #14, #19, and #36). Therefore, the
Court will exercise its discretion and consider the amended
complaint to have been filed with the opposing party's
consent. See e.g., Armament Sys. & Proc.,
Inc. v. Emissive Energy Corp., 2007 WL 2572304, at *4
(E.D. Wis. Sept. 5, 2007) (electing to construe a third party
complaint as a motion to amend a counterclaim in order to
promote judicial efficiency); Novoselsky v. United
States, 2018 WL 6305598, at *1 (E.D. Wis. 2018)
(construing one portion of a motion to amend as a motion to
supplement); see also Taylor v. Brown, 787 F.3d 851,
858 (7th Cir. 2015) (construing a plaintiff's response to
a show-cause order as a motion to amend rather than a motion
to voluntarily dismiss).
a plaintiff files a complaint in federal court and then
voluntarily amends the complaint, courts look to the amended
complaint to determine jurisdiction.” Rockwell
Int'l Corp. v. United States, 549 U.S. 457, 473-74
(2007). In this case, Plaintiff did not dispute the original
complaint's removal to federal court, even though the
alignment of the health insurance defendants provided grounds
for such a dispute. Shortly thereafter, Plaintiff re-filed an
amended complaint in federal court. (Docket #5).
Plaintiff's amended complaint added Continental 76 Fund
LLC, a Wisconsin company, as a defendant, because that
company owns the property on which the Walmart in question is
operated. (Docket #5 at 4). In their answers, the Walmart
defendants admitted the allegations regarding Continental 76
Fund LLC's citizenship and relationship to the lawsuit.
(Docket #12 at 3); (Docket #19 at 2). It does not appear that
Plaintiff added Continental 76 Fund LLC to destroy
diversity-she alleged that this Court has diversity
jurisdiction in the amended complaint, (Docket #5 at 8), and
did not move to remand following her amended filing. The
time-of-filing rule, which holds that “jurisdiction
once properly invoked is not lost by developments after a
suit is filed” does not apply “if the plaintiff
amends away jurisdiction in a subsequent pleading.”
Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d
805, 807 (7th Cir. 2010) (citing Rockwell Int'l
Corp., 549 U.S. at 473-74).
light of its limited jurisdiction, the Court must evaluate
“sua sponte whenever a doubt arises as to the existence
of federal jurisdiction.” Tylka v. Gerber Prod.
Co., 211 F.3d 445, 447 (7th Cir. 2000). Additionally,
“uncertainties regarding the proper removal procedure
under the statute should be resolved in favor of
remand.” Auchinleck v. Town of LaGrange, 167
F.Supp.2d 1066, 1069 (E.D. Wis. 2001) (citing Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)). The
Court was already on shaky jurisdictional grounds with
regards to the health insurance defendants who, under
Wisconsin statute, must be added as defendants, and would
have needed to be realigned in order for jurisdiction to be
proper. See e.g., (Docket #14) (Network Health Plan,
who would have needed to be realigned as an involuntary
plaintiff, filed counterclaim against Plaintiff). Now, in
light of the amended complaint, which adds
diversity-destroying allegations against Continental 76 Fund,
a Wisconsin company, the Court firmly concludes that it lacks
jurisdiction over the matter, and must remand the case.
IT IS ORDERED that this action be and the
same is hereby REMANDED to the Washington
County Circuit Court for further proceedings.
Clerk of the Court is directed to take all appropriate steps
to effectuate the remand.
Defendants did not discuss Network
Health Plan, which is also a Wisconsin citizen, but Network
Health Plan's alignment in this case is similar to that
of Dean Health Plan, Inc. and Common Ground Healthcare
Cooperative, so the analysis is unchanged.
Common Ground Healthcare Cooperative is
the only defendant who has yet to appear and respond.
Some courts have observed tension
between Federal Rule of Civil Procedure 15(a) and 28 U.S.C.
§ 1447(e) when a complaint is amended as a matter of
course after removal. See e.g., Mayes v.
Rapoport, 198 F.3d 457, 46162 (4th Cir. 1999);
Bevels v. Am. States Ins. Co., 100 F.Supp.2d 1309,
1312 (M.D. Ala. 2000); Miami-Dade Cty. v. VIAD
Corp., 2006 WL 8433461, at *3-4 (S.D. Fla. 2006). Those
cases determined that where an amendment destroys diversity,
Section 1447(e) controls over Rule 15, and courts may either
refuse the amendment or allow the ...