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Platinum Unit-Owners' Association v. Residential Constructors, LLC

United States District Court, D. Nevada

March 16, 2015

THE PLATINUM UNIT-OWNERS' ASSOCIATION, a Nevada non-profit corporation, Plaintiff,
RESIDENTIAL CONSTRUCTORS, LLC, a foreign limited liability company; and DOES 1 through 100, Defendant.


GLORIA M. NAVARRO, Chief District Judge.

Pending before the Court is the Motion to Dismiss (ECF No. 4) filed by Defendant Residential Constructors, LLC ("Defendant") on July 2, 2014. Plaintiff The Platinum Unit-Owners' Association ("Plaintiff") filed its Response to the Motion to Dismiss (ECF No. 13) on July 15, 2014, and Defendant filed its Reply (ECF No. 16) on July 25, 2014.

Also pending before the Court are the Motion to Remand (ECF No. 8) and Motion to Amend Complaint (ECF No. 10) filed by Plaintiff on July 15, 2014. Defendant filed its Response to the Motion to Remand (ECF No. 18) and Response to Motion to Amend (ECF No. 19) on August 1, 2014.

For the reasons discussed below, the Court denies Plaintiff's Motion to Remand and Motion to Amend Complaint, and the Court grants Defendant's Motion to Dismiss.


Plaintiff is a common-interest community owners' association formed under Nevada Revised Statutes Chapter 116 and is composed of the owners of residences, improvements, appurtenances, and structures existing on certain real property known as the Platinum Hotel or Platinum Condominium. (Compl. ¶¶ 1-3, ECF No. 1-1). The Platinum Hotel is governed by a Declaration of Covenants, Conditions and Restrictions ("CC&R's"), which defines three separate forms of ownership over the real property: (1) units are owned by Plaintiff's members as separate interests; (2) the common elements, comprised of the airspace above and the ground below the structures, are owned by Plaintiff's members as tenants in common; and (3) the common facilities are owned by Marcus Hotels, Inc. and its related entities, including Platinum Development, LLC ("Hotel Owner"). (Id.; Mot. to Remand 1:12-21, ECF NO. 8; CC&R's, ECF No. 5-3).[1] Defendant is a limited liability company registered in the State of Delaware with its principal place of business in the State of Missouri engaged in the business of home development and construction. (Compl. ¶¶ 4-6, ECF No. 1-1; Not. Of Removal ¶ 2, ECF No. 1).

Plaintiff alleges that Defendant was the developer and general contractor for the Platinum Hotel, and in that capacity, failed to design or construct various parts of the Platinum Hotel in a workman like manner, resulting in numerous defective conditions on the property. (Compl. ¶¶ 7-19, ECF No. 1-1). The Hotel Owner subsequently assigned its rights to pursue claims for defective construction against Defendant to Plaintiff, and on May 29, 2014, Plaintiff filed the operable Complaint in state court asserting claims of (1) Breach of Implied Warranties, (2) Breach of Express Warranties, and (3) negligence. (Id. ¶¶ 20-37; Mot. to Remand 1:22-26, ECF No. 8; Assignment of Rights, Ex. 2 to Clifford Aff., ECF No. 14). Defendant timely removed the action to this Court on the basis of diversity jurisdiction and filed its pending Motion to Dismiss. (Not. Of Removal, ECF No. 1; Mot. to Dismiss, ECF No. 4). In addition to responding to Defendant's motion, Plaintiff filed its pending motions, seeking to add a diversity-destroying defendant and remand this case to state court. (Mot. to Amend, ECF No. 10; Mot. to Remand, ECF No. 8).


A. Motions to Amend & Remand

"Federal courts are courts of limited jurisdiction, " and "possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree." Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994) (internal citations omitted). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).

District courts have jurisdiction in two instances. First, district courts have subject matter jurisdiction over civil actions that arise under federal law. 28 U.S.C. § 1331. Second, district courts have subject matter jurisdiction over civil actions where no plaintiff is a citizen of the same state as a defendant and the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(a). Therefore, the addition of a diversity-destroying defendant requires remand in a case where removal was based upon diversity jurisdiction. Stevens v. Brink's Home Sec., Inc., 378 F.3d 944, 949 (9th Cir. 2004); 28 U.S.C. § 1447(e).

"Although the permissive standard of Federal Rule of Civil Procedure 15(a) allows for amendment as a matter of course prior to the service of a responsive pleading, the proper standard for deciding whether to allow post-removal joinder of a diversity-destroying defendant is set forth in 28 U.S.C. § 1447(e)." Khoshnood v. Bank of Am., CV 11-04551 AHM FFMX, 2012 WL 751919, at *1 (C.D. Cal. 2012); see, e.g., Clinco v. Roberts, 41 F.Supp.2d 1080, 1088 (C.D. Cal. 1999); see also IBC Aviation Services, Inc. v. Compania Mexicana de Aviacion, S.A. de C.V., 125 F.Supp.2d 1008, 1011 (N.D. Cal. 2000) (recognizing that diversity-destroying amendment is analyzed under § 1447(e) and requires higher scrutiny than does amendment generally).

"If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the state court." 28 U.S.C. § 1447(e). The district court has discretion to deny or permit joinder that destroys diversity. Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998). When ruling on a motion that would destroy diversity jurisdiction, courts may consider the following factors:

(1) [W]hether the party sought to be joined is needed for just adjudication and would be joined under Federal Rule of Civil Procedure 19(a); (2) whether the statute of limitations would prevent the filing of a new action against the new defendant in state court; (3) whether there has been an unexplained delay in seeking to join the new defendant; (4) whether plaintiff seeks to join the new party solely to defeat federal jurisdiction; (5) whether ...

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