Reported / Citable
Background
Bennie A. Montez, a Texas citizen, sued Carrington Mortgage Services LLC in Texas state court to stop foreclosure proceedings on his San Antonio property. He alleged that Carrington, a Delaware citizen, breached duties as loan servicer by failing to provide adequate notice of amounts due, refusing payments, and permitting his former wife, Erica Mendoza Montez, to cancel a forbearance agreement.
Carrington removed on diversity grounds. After removal, Montez amended his complaint to add his ex-wife, also a Texas resident, asserting tortious-interference claims, and moved to remand on the ground that her addition destroyed complete diversity.
The Court’s Holding
Magistrate Judge Elizabeth S. Chestney recommended denying remand, striking the amended complaint, and terminating Erica Mendoza Montez as a defendant. Although Montez could ordinarily amend once as a matter of course under Rule 15, proposed post-removal joinder of a nondiverse defendant that would defeat jurisdiction is governed by 28 U.S.C. § 1447(e) and the Fifth Circuit’s Hensgens factors.
Those factors favored denying joinder. Montez knew the facts concerning his ex-wife before he filed suit, yet added her immediately after removal, indicating that the amendment was aimed at defeating federal jurisdiction. He also would not be substantially prejudiced by exclusion of his ex-wife: she remained a party to the mortgage loan and therefore could not tortiously interfere with that contract, while the alleged prospective-business-relations claim identified no new business relationship with Carrington.
Key Takeaways
- A plaintiff cannot use an as-of-course amendment to automatically add a nondiverse defendant after removal; Section 1447(e) controls.
- Adding a known defendant immediately after removal can support an inference that the amendment is intended to defeat federal jurisdiction.
- A party to a mortgage contract cannot tortiously interfere with that same contract under Texas law.
Why It Matters
The recommendation illustrates the close scrutiny federal courts apply to post-removal amendments that would eliminate diversity jurisdiction. It also underscores that a divorce decree allocating property between former spouses does not, without creditor consent, release either spouse from obligations to a third-party mortgage creditor.