Abbott v. Fca U.S. LLC

TIMOTHY ABBOTT, Plaintiff, v. FCA US LLC, a corporation, DAIMLER CHRYSLER,a corporation, TK HOLDINGS, INC.,AUTOLIV ASP, INC., a corporation,and RICHLAND AUTO REPAIRS AND SALES, INC., Defendants.

Case No. 3:17-CV-00497-NJR-SCW

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS

August 2, 2017

MEMORANDUM AND ORDER

ROSENSTENGEL, District Judge:

A Motion for Remand (Doc. 7), filed by Plaintiff Timothy Abbott, is pending before this Court. For the reasons set forth below, Abbott's Motion for Remand is granted.

Background

On March 23, 2015, Timothy Abbott was driving his Chrysler Crossfire in Swansea, Illinois, when it was hit by another vehicle. (Doc. 1-1, ¶¶ 12-13). The impact caused damage to the front and driver side of the Crossfire. (Doc. 1-1, ¶ 13). Abbott alleges the airbags failed to deploy during the accident, resulting in "catastrophic injuries." (Doc. 1-1, ¶16). Richland Auto Repairs, a towing business located in Swansea, Illinois, (Doc. 1-1, ¶ 7), towed and stored the Crossfire after the accident. (Doc. 1-1, p. 15, ¶¶ 18-19).¹ Since Richland took possession of the car, the driver side door has allegedly been misplaced, lost, or destroyed. (Doc. 1-1, p. 15, ¶ 21).

On March 16, 2017, Timothy Abbott filed a complaint in the Circuit Court of the Twentieth Judicial Circuit of Illinois against Defendants FCA US, LLC (FCA), Daimler Chrysler (Daimler), TK Holdings, Inc. (TK Holdings), Autoliv ASP, Inc. (Autoliv), and Richland Auto Repairs and Sales (Richland). (Doc. 1-1). The complaint includes claims for strict products liability and negligence against FCA, Daimler, TK Holdings, and Autoliv; and one count of negligence and bailment against Richland. (Doc. 1-1). Richland was served on March 30, 2017 (Doc. 1-1, p. 34); FCA, Daimler, and Autoliv were all served on April 10, 2017 (Doc. 1-1, pp. 18-20). While proof of service against TK Holdings appears to be missing from the record, the Court notes that counsel for TK Holdings entered an appearance (Doc. 1-1, p. 21), and therefore TK Holdings had actual notice of the proceedings.

On November 10, 2017, Defendant Autoliv filed a Notice of Removal alleging this Court has jurisdiction under 28 U.S.C. § 1332. (Doc. 1, ¶ 11). In support of its assertion of jurisdiction, Autoliv argues complete diversity exists because Abbott is a citizen of Illinois and all listed defendants, except for Richland, are citizens of Delaware. (Doc. 1, ¶¶ 3-7). While Richland is a corporation whose principal place of business is Illinois (Doc. 7, ¶ 4), Autoliv alleges the bailment claim against Richland is fraudulently joined and therefore does not defeat diversity of citizenship, (Doc. 1, ¶ 8).² In response, Abbott filed a Motion to Remand, arguing joinder was proper because important evidenceneeded to pursue the products liability claim against the other defendants was lost or destroyed as a result of Richland's negligence. (Doc. 8, p. 3).

Subsequently, on June 26, 2017, TK Holdings filed a Notice of Bankruptcy Filing and Imposition of Automatic Stay. (Doc. 17).

Legal Standard

Removal is governed by 28 U.S.C. § 1441, which provides, in pertinent part, that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a); see also Potter v. Janus Inv. Fund, 483 F.Supp.2d 692, 694-95 (S.D. Ill. 2007). In other words, "[a] defendant may remove a case to federal court only if the federal district court would have original subject matter jurisdiction over the action." Disher v. Citigroup Global Mkts. Inc., 419 F.3d 649, 653 (7th Cir. 2005) (vacated on other grounds). Under 28 U.S.C. § 1332, a federal district court has original subject matter jurisdiction over actions involving complete diversity between the parties plus an amount in controversy exceeding $75,000, exclusive of interest and costs. See 28 U.S.C. § 1332(a)(1); LM Ins. Corp. v. Spaulding Enters., Inc., 533 F.3d 542, 547 (7th Cir. 2008). Complete diversity exists where none of the parties on either side of the litigation are citizens of the same state as the parties on the other side. Howell v. Tribune Entertainment Co., 106 F.3d 215, 217 (7th Cir. 1997).

The party seeking removal has the burden of proving subject matter jurisdiction exists. See Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 540 (7th Cir. 2006); Brill v.Countrywide Home Loans, 427 F.3d 446, 447-49 (7th Cir. 2005); Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). There is a strong presumption in favor of remand and courts construe the removal statute narrowly. Fuller v. BNSF Ry. Co., 472 F.Supp.2d 1088, 1091 (S.D. Ill. 2007); Kalbfleisch ex rel. Kalbfleisch v. Columbia Community Unit School Dist. Unit No. 4, 644 F.Supp.2d 1084, 1087 (S.D. Ill. 2009). Any doubts concerning removal must be resolved in favor of remand to the state court. Alsup v. 3-Day Blinds, Inc., 435 F.Supp.2d 838, 841 (S.D. Ill. 2006) (citing McCoy v. General Motors Corp, 226 F.Supp.2d 939, 943 (N.D. Ill. 2002)).

Analysis

I. Improper Removal

Where removal is based on the federal court having original jurisdiction, all defendants who have been properly joined and served must consent to the removal of the action. 28 U.S.C. § 1446(b)(2)(A) (emphasis added); see also P.P. Farmers Elevator Co. v. Farmers Elevator Mutual Insurance Co., 395 F.2d 546, 547-48 (7th Cir. 1968). A legally defective removal petition subjects the case to remand. Northern Illinois Gas Co. v. Airco Indus. Gases, 676 F.2d 270, 273 (1982). However, a motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within thirty days after the filing of the notice of removal, or the defect is waived. 28 U.S.C. § 1447(c); Roe v. O'Donohue, 38 F.3d 298, 300 (7th Cir. 1994), (overruled on other grounds).

Here, the removal petition is technically deficient because only TK Holdings joined Autoliv consents to removal. (Doc. 1, ¶12). All of the other listed defendants had been served prior to filing of the Notice of Removal, but did not consent. (Doc. 1, ¶¶ 1-15). Autoliv explains the failure to obtain consent by stating there was no entry ofappearance for defendants FCA and Daimler. (Doc. 1, ¶ 13). The requirement for consent is based on service on the defendant, however, not entry of appearance by an attorney. See Kopff v. World Research Group, LLC., 298 F.Supp.2d 50, 57 (D.D.C 2003); Maybruck v. Haim, 290 F.Supp. 721, 722 (S.D.N.Y. 1968); Norwich Realty Corp. v. U.S. Fire Ins. Co., 218 F.Supp. 484, 486 (D.C. Conn. 1963).

Although the Notice of Removal was procedurally defective, this basis for remand was not raised by Abbott (Doc. 8, pp. 1-5), and the thirty day deadline for raising the procedural defect has passed. As a result, although technically deficient, the Notice of Removal remains before this Court.

I. Bankruptcy Stay

A bankruptcy petition operates as a stay of the "commencement or continuation" of a judicial action against the debtor that arose before the commencement of the case. 11 U.S.C. § 362(a).³ A stay under 11 U.S.C. §362 has two purposes: (1) to provide the debtor breathing space by stopping all collection efforts, harassment, and foreclosure actions, and (2) to prevent the dissipation of a debtor's assets through multiple suits outside the bankruptcy process. Holtkamp v. Littlefield, 669 F.2d 505, 508 (7th Cir. 1982); see also Winters v. George Mason Bank, 94 F.3d 130, 133 (4th Cir. 1996); Dean v. Trans World Airlines, Inc., 72 F.3d 754, 755-56 (9th Cir. 1995); In re Siciliano, 13 F.3d 748, 750-51 (3d Cir.1994).

Because remand is not a decision on the merits, it does not jeopardize or infringe on a debtor's "breathing space" or threaten to deplete the estate against the interests of other creditors. Sanders v. Farina, 67 F.Supp.3d 727, 730 (E.D. Va. 2014); MTGLQ Investors, L.P. v. Guire, 286 F.Supp.2d 561, 563-64 (D. Md. 2003). Moreover, a remand does not put either party "in a better or worse position, legally or financially, than the position [they] occupied at the time of removal." Sanders, 67 F.Supp.3d at 730. A remand simply sends the case back to the proper court, which should promptly enter a stay. Sanders, 67 F.Supp.3d at 730; Price v. Chrysler LLC, No. 09-232, 2009 WL 2208298, at *1 (E.D. Mo. June 23, 2009).

The majority of courts, therefore, do not find that remand is prohibited by the automatic stay provision of the bankruptcy code. Cnty. of Cook v. Mellon Stuart Co., 812 F.Supp. 793, 798 n. 3 (N.D. Ill. 1992) ("The subsequent bankruptcy filing and resulting stay under section 362 of the Bankruptcy Code, 11 U.S.C. § 362, do not prevent this court from remanding an improperly removed action."); Lindley Contours, LLC v. AABB Fitness Holdings, Inc., 414 F.App'x 62, 63 n. 1 (9th Cir. 2011) ("[B]ecause we find that subject matter jurisdiction is lacking and do not reach the merits of Appellant's claims, we need not retain jurisdiction over Mr. Cooper pursuant to the automatic stay provision of § 362."); MTGLQ Investors, L.P. v. Guire, 286 F.Supp.2d 561, 563-64 (D. Md. 2003); In the Matter of Federal Press Co., 117 B.R. 942, 950 (N.D. Ind. 1989); Teel v. Am. Steel Foundries, 529 F.Supp. 337, 346 (E.D. Mo. 1981); Evans v. Anderson, C 09-5227 MHP, 2010 WL 118398, at *1 (N.D. Cal. Jan. 7, 2010); Community Collectors LLC v. Mortgage ElectronicRegistration Services, Inc., 2012 WL 3249509, at *5 (N.D. CA August 7, 2012); but see Liljeberg Enter. Int'l, LLC v. Vista Hosp. of Baton Rouge, Inc., No. 04-2780, 2004 WL 2725965, at *1 (E.D. La. 2004). This Court thus finds it proper to consider the Motion for Remand despite TK Holdings' Notice of Bankruptcy Filing and Imposition of Automatic Stay.

III. Motion to Remand

This Order is in response to the parties' dispute over whether this Court has federal...