Webgistix Corporation v. Erie Insurance Company
1:13-cv-00289
W.D.N.Y.Apr 15, 2013Background
- Plaintiff WebGistix Corporation sued Erie Insurance Company and Petruzzi Insurance Agency in New York Supreme Court, Cattaraugus County.
- Erie removed to the Western District of New York asserting complete diversity as the basis for jurisdiction.
- Petruzzi is a New York LLC with principal place of business in Olean, New York, raising forum-state concerns under §1441(b)(2).
- THE court issued a text order requiring show cause by April 10, 2013 regarding removal viability; Plaintiff agrees remand.
- Erie sought additional briefing to address fraudulent joinder, but the court found no basis since fraudulent joinder was not alleged in the removal petition and the time to amend expired.
- The magistrate recommended remand to state court unless Judge Skretny orders otherwise; objections due by May 2, 2013.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal complied with the forum defendant rule. | WebGistix argues removal violated §1441(b)(2) because a local defendant (Petruzzi) is a citizen of the forum. | Erie contends Petruzzi's residency should be disregarded for fraudulent-joinder analysis and that removal remains proper. | Removal violation; recommended remand. |
| Whether Petruzzi's New York residency defeats diversity jurisdiction. | Diversity is lacking because Petruzzi is a New York resident. | Petruzzi's residency should not defeat removal given potential fraudulent joinder claims. | Remand recommended; diversity insufficient. |
| Whether fraudulent joinder was properly alleged and timely raised. | Fraudulent joinder was not alleged in the removal petition and there was no timely amendment. | Erie intended to brief fraudulent-joinder issues in response. | Fraudulent joinder not alleged; time to amend expired; no basis to extend removal. |
| Whether the court should grant additional briefing time for fraudulent-joinder issues. | Not applicable since issue was not properly raised in the removal petition. | Need more time to brief potential fraudulent-joinder concerns. | Not warranted; time limitations control; no amendment permitted. |
Key Cases Cited
- Phillips v. BJ's Wholesale Club, Inc., 591 F. Supp. 2d 822 (E.D. Va. 2008) (removal pleadings cannot be amended to add new grounds; misjoinder grounds may not be raised late)
- Wesolek v. Canadair Ltd., 838 F.2d 55 (2d Cir. 1988) (objections to magistrate recommendations governed by specific rules; de novo review limited)
- Thomas v. Arn, 474 U.S. 140 (U.S. 1985) (finality of review standards for objections to magistrate decisions)
- Patterson-Leitch Co. v. Massachusetts Municipal Wholesale Electric Co., 840 F.2d 985 (1st Cir. 1988) (district court discretion in handling objections and de novo consideration)