Juan R. Sánchez, C.J.
In this negligence action, Plaintiff Marlene Aldorasi, individually and on behalf of her husband, Philip Aldorasi, seeks damages for injuries she and her husband sustained when they were struck by falling building material while exiting a Philadelphia hotel where they had parked their car. Plaintiff brings claims against Crossroads Hospitality and Management Company, LLC, the business entity that operates or manages the hotel where the accident occurred, and two hotel employees: Marsha Ray, the hotel's general manager, and George McFeeters, the director of engineering. After Plaintiff filed this action in the Court of Common Pleas of Philadelphia County, Defendants promptly removed the case to federal court, asserting Ray and McFeeters had been fraudulently joined to destroy diversity and that, disregarding these individual Defendants' Pennsylvania citizenship, subject matter jurisdiction was proper under 28 U.S.C. § 1332(a). Defendants also moved to dismiss all claims against the nondiverse individual Defendants. Plaintiff, disputing Defendants' fraudulent joinder allegations, responded with a series of her own motions, seeking to remand the case to state court, amend her Complaint to clarify her allegations against the individual Defendants, or voluntarily dismiss this action without prejudice so that she could refile her proposed amended complaint in state court. Although presented in several different motions governed by different legal
On April 3, 2016, Marlene and Philip Aldorasi, both citizens of Pennsylvania, parked their car in the parking garage at the Sheraton Philadelphia Downtown Hotel and walked from the garage into the hotel to exit onto 17th Street. While exiting the hotel, they were struck and injured by drywall, plasterboard, or other material that dislodged from a wall or ceiling above the doorway leading to 17th Street.
On October 9, 2017, Marlene Aldorasi commenced the above-captioned civil action by filing a Complaint against Crossroads, Ray, and McFeeters in the Court of Common Pleas of Philadelphia County.
The above-captioned action is the third civil action Plaintiff has filed in the Court of Common Pleas of Philadelphia County with respect to the April 3, 2016, accident. On May 11, 2017, five months before filing this action, Plaintiff and her husband filed an action against four corporate entities, including Interstate Hotels & Resorts, Inc., the parent company of Crossroads (the First Civil Action),
On June 23, 2017, Plaintiff filed a second negligence action against Crossroads and two other corporate entities
Three days later, Plaintiff filed the instant case (the Third Civil Action) in state court on October 9, 2017, again seeking damages in an amount in excess of $50,000, as in the First Civil Action. On October 13, 2017, Defendants removed the case to this Court citing the federal diversity jurisdiction statute and arguing the two individual Defendants (Ray and McFeeters) were fraudulently joined. Consistent with their position that Ray and McFeeters were fraudulently joined, Defendants also moved to dismiss Plaintiff's claims against these individual Defendants pursuant to Federal Rule of Civil Procedure 12(b)(6) on October 18, 2017.
On October 24, 2017, Plaintiff opposed the motion to dismiss and also moved to remand the case to state court. Three weeks later, on November 14, 2018, Plaintiff moved for leave to amend her Complaint to "clarify and detail" her allegations against Ray and McFeeters. Pl.'s Mot. for Leave to File Am. Compl. ¶ 6. Plaintiff's proposed amended complaint adds allegations that Ray specifically authorized inadequate repairs of the ceiling above the 17th Street exit and that McFeeters specifically directed co-employees to inadequately repair the ceiling, a known hazard. The proposed amended complaint also faults all Defendants, including Ray and McFeeters, for improperly repairing and maintaining the ceiling despite knowing it posed a risk of becoming detached and falling.
On December 14, 2017, the Court heard argument on all pending motions. At the conclusion of the argument, Plaintiff's counsel candidly advised the Court that if the Court were to deny Plaintiff's motion to remand, counsel intended to withdraw this federal court action and refile Plaintiff's
Plaintiff moves to remand this case to state court, disputing Defendants' contention that Ray and McFeeters were fraudulently joined to defeat diversity. The doctrine of fraudulent joinder is an exception to the requirement that when removal is predicated on diversity of citizenship, there must be complete diversity between the parties. See In re Briscoe, 448 F.3d 201, 215-16 (3d Cir. 2006). Under the doctrine, "[i]n a suit with named defendants who are not of diverse citizenship from the plaintiff, the diverse defendant may still remove the action if it can establish that the non-diverse defendants were `fraudulently' named or joined solely to defeat diversity jurisdiction." Id. at 216. As the proponent of federal jurisdiction, a removing defendant alleging fraudulent joinder bears a "heavy burden of persuasion." Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (citation omitted). To demonstrate a defendant was fraudulently joined, the removing party must show "there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendant or seek a joint judgment." Id. (emphasis added) (citation omitted). This test includes both an objective and a subjective component. See id.
With respect to the objective component—whether there is a "reasonable basis in fact or colorable ground supporting the claim"—a claim is colorable so long as it is not "wholly insubstantial and frivolous." Batoff v. State Farm Ins. Co., 977 F.2d 848, 851-52 (3d Cir. 1992) (citations omitted). The question is not whether the complaint states a claim sufficient to withstand a Rule 12(b)(6) motion to dismiss against the nondiverse defendant, but whether there is "a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants." Id. (quoting Boyer,
In determining whether a claim against a nondiverse defendant is colorable, a court "must `focus on the plaintiff's complaint at the time the petition for removal was filed.'" Id. at 851-52 (citation omitted); see also Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 29 (3d Cir. 1985) (recognizing "[t]he defendant's right to remove is to be determined according to the plaintiffs' pleading at the time of the petition for removal"). The court "must assume as true all factual allegations of the complaint" and "must resolve any uncertainties as to the current state of controlling substantive state law in favor of the plaintiff." Batoff, 977 F.2d at 852 (internal quotation marks and citations omitted). The court may also take a limited look beyond the pleadings to consider "reliable evidence" proffered by the defendant to support the removal. See Briscoe, 448 F.3d at 219-20 (holding a district court could consider evidence in the record of prior proceedings and matters subject to judicial notice in determining whether the plaintiffs could make a colorable argument to overcome the nondiverse defendants' statutory limitations defense); Boyer, 913 F.2d at 112 (suggesting a limited piercing of the pleadings may be permissible "to decide whether plaintiffs have asserted a `colorable' ground supporting the claim against the joined defendant"). However, the court may not, "in the guise of deciding whether the joinder was fraudulent, step[ ] from the threshold jurisdictional issue into a decision on the merits." Boyer, 913 F.2d at 112.
Defendants argue there is no colorable ground in law supporting Plaintiff's claims against Ray and McFeeters because, as employees of Crossroads, they can be liable only for misfeasance under the "participation theory," yet the Complaint lacks any allegations of misfeasance by either of them. Defendants maintain the participation theory is the only viable theory of liability against Ray and McFeeters. Plaintiff disputes that the participation theory applies to managers and supervisors like Ray and McFeeters and contends the Complaint alleges a basis for liability under this theory in any event.
Pennsylvania law also recognizes the "participation theory" as a basis on which corporate actors can be liable for their own tortious conduct:
Wicks, 470 A.2d at 90 (quoting 3A Fletcher, Cyclopedia of the Law of Private Corporations § 1137, p. 207 (perm. ed. rev. 1975)). Liability under the participation theory "attaches only where the corporate officer is an actor who participates in the wrongful acts." Id. Such liability may be imposed "for `misfeasance,' i.e., the improper performance of an act, but not `mere nonfeasance,' i.e., the omission of an act which a person ought to do." Loeffler v. McShane, 372 Pa.Super. 442, 539 A.2d 876, 878 (1988) (quoting Wicks, 470 A.2d at 90); see also Brindley v. Woodland Vill. Rest., Inc., 438 Pa.Super. 385, 652 A.2d 865, 869 (1995) (explaining that misfeasance is "the doing of something which ought not be done, something which a reasonable man would not do, or doing it in such a manner as a man of reasonable and ordinary prudence would not do it," while nonfeasance means "omitting to do, or not doing, something which ought to be done, which a reasonable and prudent man would do" (quoting Nelson v. Duquesne Light Co., 338 Pa. 37, 12 A.2d 299, 303 (1940))).
Although Plaintiff suggests the participation theory does not apply to managers and supervisors like Ray and McFeeters, see Pl.'s Resp. to Mot. to Dismiss of Ray and McFeeters ¶ 9, state and federal courts in Pennsylvania courts have routinely applied the theory to employees and other non-officer agents, see, e.g., Smoyer v. Care One, LLC, No. 16-1696, 2017 WL 575070, at *5 n.7 (W.D. Pa. Jan. 23, 2017) (noting that "[a]lthough Wicks involved corporate officers, the intermediate Pennsylvania appellate courts, as well as federal courts applying Pennsylvania law, have applied the participation theory to ordinary employees as well"), report & recommendation adopted by 2017 WL 573573 (W.D. Pa. Feb. 13, 2017); Greenberg v. Macy's, No. 11-4132, 2011 WL 4336674, at *4 (E.D. Pa. Sept. 15, 2011) ("Under Pennsylvania law's `participation theory,' a corporate employee may be held personally liable for negligent activity carried out within the
Under the participation theory, Ray and McFeeters may be held liable for misfeasance but not for "mere nonfeasance"; hence, the fraudulent joinder issue turns on whether Plaintiff's Complaint alleges a colorable claim of misfeasance by these individual Defendants. In evaluating this issue, the Court is guided by the Pennsylvania Supreme Court's decision in Wicks. In that case, the plaintiffs, owners of homes built on low ground in a sloped area of a residential development, sued the developer and the builder of some of the homes in the development, seeking damages for personal injury and property damage resulting from drainage problems in the development. See Wicks, 470 A.2d at 87. The plaintiffs also named as defendants three individual officers of the developer, two of whom were sole shareholders of the builder, alleging the individual defendants were aware or should have been aware of the potential drainage problems in the development and were negligent in failing to take appropriate measures to eliminate or minimize such problems, including not ordering or performing adequate soil testing of the site of the concentrated sewage and water; failing to provide for any special drainage considerations in the grading and landscaping of the premises; building and selling a house which, because of its location, would undoubtedly have a drainage problem; and negligently excavating drainage ditches. See id. at 88-89. Addressing the sufficiency of the allegations against the individual corporate officers and shareholders under the participation theory, the Pennsylvania Supreme Court held that while "the mere averment that a corporate officer should have known the consequences of the liability-creating corporate act" was insufficient to impose liability, the complaint "c[ould] be read as setting forth, generally, that the individual [defendants] actually knew that the location of the proposed [development] created, at least, an unreasonable risk of the drainage problems which occurred and that, having the power to do so, they deliberately ordered the work to proceed." Id. at 90. The court
Here, in contrast, the Complaint faults Ray and McFeeters only for what they failed to do. While the Complaint can be fairly read to allege that Ray and McFeeters knew or should have known of the dangerous condition of the wall or ceiling immediately above the hotel's 17th Street exit and had a duty to properly maintain the hotel premises, see Compl. ¶¶ 19, 23, Defendants are alleged to have breached this duty solely through inaction. Specifically, Plaintiff alleges Ray and McFeeters breached their duty by "fail[ing] to maintain the subject premises in a safe and reasonable manner"; "[f]ail[ing] to warn persons, such as Plaintiff, that the condition was a hazard"; "[f]ail[ing] to properly train, instruct and/or hire employees and/or third persons to monitor the conditions of the area where the accident occurred"; "[f]ail[ing] to establish appropriate policies and procedures to inspect the premises in a timely manner and discovery[ ] and/or correct the known or knowable unreasonable risks, including [the] hazard ... which directly and proximately caused Plaintiff's injuries"; and "[f]ail[ing] to hire third party contractors to take appropriate actions to preclude the occurrence which caused this Plaintiff's injuries." Id. ¶ 25(a)-(d), (f). Such allegations suggest only nonfeasance and are therefore insufficient to state a colorable negligence claim against Ray and McFeeters under the participation theory. See, e.g., Jackson v. Burlington Coat Factory, No. 17-2459, 2017 WL 3534983, at *3-4 (E.D. Pa. Aug. 17, 2017) (holding a negligence claim against a store manager was not colorable where the complaint alleged the manager was responsible for the store's conditions and had actual or constructive knowledge of the broken escalator on which plaintiff was injured, but faulted the manager only for actions he failed or omitted to take); cf. Greenberg, 2011 WL 4336674, at *5 (holding allegations that a department store manager "wrongfully created or directed the creation of the `dangerous and hazardous condition' that caused [p]laintiff's injury" sufficed to state a colorable claim under the participation theory (emphasis added)).
The Court next considers Plaintiff's motion for leave to amend, in which Plaintiff seeks to "clarify and detail" her allegations against Ray and McFeeters so as to correct any pleading deficiencies in the claims against these Defendants in her original Complaint. See Pl.'s Mot. for Leave to File Am. Compl. ¶ 6. Plaintiff seeks leave to amend pursuant to Federal Rule of Civil Procedure 15, which provides that such leave should be "freely give[n]... when justice so requires." Fed. R. Civ. P. 15(a)(2). Defendants oppose the motion, arguing amendment should be denied as futile because the new allegations in Plaintiff's proposed amended complaint regarding Ray and McFeeters's active participation in the inadequate repair of the hotel ceiling are refuted by Crossroads' written discovery responses in the Second Civil Action, which state the ceiling never required repair prior to the Aldorasis' accident.
Defendants' futility argument is unpersuasive. As Defendants acknowledge, futility of amendment is ordinarily evaluated under the Rule 12(b)(6) standard. See Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000) ("An amendment is futile if the amended complaint would not survive a motion to dismiss for failure to state a claim upon which relief could be granted."). Defendants do not dispute that Plaintiff's proposed amended complaint states a claim against Ray and McFeeters under the participation theory.
While the Third Circuit Court of Appeals "has not yet addressed the appropriate analytical approach to § 1447(e)," district courts within the Third Circuit have followed the approach adopted by the Fifth Circuit Court of Appeals in Hensgens v. Deere & Co., 833 F.2d 1179 (5th Cir. 1987).
In evaluating the first factor—the extent to which the purpose of the amendment is to defeat diversity—courts in this district have focused on "whether the plaintiff was aware of the non-diverse defendants at the time the complaint was filed in state
The Court also recognizes, however, that while Ray and McFeeters were named as defendants in this case from the outset, they were not sued in either of the two prior actions Plaintiff filed and voluntarily dismissed regarding the underlying accident. Although the reasons for this omission are not apparent from the record, the Court notes that Plaintiff withdrew the Second Civil Action and filed this action only after engaging in written discovery in the Second Civil Action through which Plaintiff discovered that Crossroads' engineering department was responsible for maintaining the premises on the date of the accident and that McFeeters was the supervisor of the engineering department at all relevant times and the person most knowledgeable about Crossroads' maintenance procedures. Even taking into account the broader history of this litigation, the Court cannot say the sole purpose of the amendment is to defeat federal jurisdiction. Cf. id. (finding the first Hensgens factor weighed in favor of allowing a plaintiff to amend his complaint to substitute diversity-destroying individuals for John Doe defendants where plaintiff did not learn the individual defendants' names until discovery).
The second Hensgens factors—whether the plaintiff has been dilatory in seeking amendment—also weighs in favor of permitting amendment. Plaintiff was not dilatory in seeking leave to amend, having filed her motion to amend just over a month after filing the original Complaint in this case in state court. Insofar as Plaintiff's earlier lawsuits are relevant to the dilatoriness inquiry, as noted, Plaintiff asserted claims against Ray and McFeeters less than two months after receiving Crossroads' discovery responses. See Stewart, 2013 WL 1482217, at *3 (holding a plaintiff was not dilatory where he filed a motion to amend approximately three months after filing his complaint in state court).
With respect to the third factor—whether the plaintiff will be significantly injured
Finally, as to the fourth factor — other equitable considerations—the factors considered by courts in this district include "the efficient use of judicial resources, the effect remand will have on the defendant, and the expertise of the court relative to the applicable law." Taylor v. GGNSC Phila., LP, No. 14-7100, 2015 WL 5584781, at *7 (E.D. Pa. Sept. 23, 2015). The first and third considerations clearly favor allowing amendment, which will serve the interest of judicial economy by avoiding the risk of parallel litigation and ensure that Plaintiff's Pennsylvania law claims are decided by a Pennsylvania court. See id. ("[W]hen there is a lack of significant federal interest in deciding the state law issues, federal courts prefer to have state courts interpret their own laws." (quoting Kahhan v. Mass. Cas. Ins. Co., No. 01-1128, 2001 WL 1454063, at *3 (E.D. Pa. Nov. 14, 2001))). The second consideration, in contrast, weighs to some extent against permitting amendment. Although courts in this district have held that remand is not prejudicial to a defendant where the claims are governed by state law, see id.; Montalvo, 2010 WL 3928536, at *5, Defendants note that if the case is remanded, they will lose certain procedural advantages available in federal court. Despite this loss of procedural advantage, the Court finds the Hensgens factors weigh in favor of allowing amendment in this case. Accordingly, the Court will grant Plaintiff's motion for leave to amend and remand the case to the Court of Common Pleas of Philadelphia County. Plaintiff's motion to voluntarily dismiss this action without prejudice under Rule 41(a)(2) will be dismissed as moot.
An appropriate order follows.