H & H Terminals, Lc v. R. Ramos Family Trust, Llp

634 F.Supp.2d 770

H & H TERMINALS, LC aka H & H Terminals, LLC, Plaintiff/Counter-Defendant, v. R. RAMOS FAMILY TRUST, LLP aka R. Ramos Family Trust, LLP, and Raul Ramos, Defendants/Counter-Plaintiffs and Third-Party Plaintiffs/Third-Party Counter-Defendants, v. Driggers Real Estate Services, Inc., d/b/a Century 21 APD Associates, and RJL Real Estate Consultants, LLC, Third-Party Defendants/Third-Party Counter-Plaintiffs.

No. EP-08-CV-435-DB.

United States District Court, W.D. Texas, El Paso Division.

July 6, 2009.

David R. Pierce, Law Office of David Pierce, El Paso, TX, for Plaintiff/Counter-Defendant.

David Moises Mirazo, Brown McCarroll, L.L.P., El Paso, TX, for Defendants/Counter-Plaintiffs and Third-Party Plaintiffs/Third-Party Counter-Defendants.

Henry C. Hosford, Baskind & Hosford, P.C., Todd Elliott Marshall, Ray, Valdez, McChristian & Jeans, PC, El Paso, TX, for Third-Party Defendants/Third-Party Counter-Plaintiffs.

MEMORANDUM OPINION AND ORDER

DAVID BRIONES, District Judge.

On this day, the Court considered Third-Party Defendants Driggers Real Estate Services, Inc. ("Century 21 APD") and RJL Real Estate Consultants, LLC's ("RJL") "Joint Motion For Remand By Third-Party Defendants," filed in the above-captioned cause on April 7, 2009. On April 20, 2009, Defendants R. Ramos Family Partners, L.P. and Raul Ramos filed a Response, to which Third-Party Defendants filed a Reply on April 30, 2009. After due consideration, the Court is of the opinion that the instant Motion should be denied for the reasons that follow.

BACKGROUND

The instant case concerns the sale of real property owned by Defendants to Plaintiff H & H Terminals, LC. Defendants are citizens of Texas; Plaintiff is a citizen of Michigan. On October 20, 2008, Plaintiff filed its Original Petition in the 488th Judicial District Court in El Paso County, Texas ("state court"). On November 5, 2008, Defendants timely filed a Notice of Removal in federal court. Therein, Defendants argued that the Court has original jurisdiction over the instant action because the Parties are completely diverse and the amount-in-controversy exceeds $75,000. See 28 U.S.C.A. § 1332(a) (West 2006). Plaintiff did not file a motion to remand the case to state court.

On February 26, 2009, Defendants filed their First Amended Answer, Counterclaim and Third-Party Petition, in which Century 21 APD and RJL were named as Third-Party Defendants. Century 21 APD is a Texas corporation whose principal place of business is El Paso, Texas. RJL is a limited liability company organized under the laws of the State of Texas whose principal place of business is El Paso, Texas. RJL and Century 21 APD were served with Defendants' Third-Party Petition on March 9 and 10, 2009. On March 30, 2009, Third-Party Defendants filed their Original Answer and Counterclaim against Defendant. The instant Motion followed.

AUTHORITIES

Title 28, section 1441 of the U.S.C., the general removal statute, allows a defendant to remove a case to the federal district court for the district and division within which the action is pending, provided that the district court possesses original jurisdiction. 28 U.S.C.A. § 1441(a) (West 2006). A federal district court possesses original jurisdiction if the parties could have initially filed in federal court pursuant to 28 U.S.C. §§ 1331-1334. Title 28, section 1332(a) of the U.S.C. confers jurisdiction on district courts over civil actions between citizens of different states where the amount-in-controversy exceeds $75,000. 28 U.S.C.A. § 1332(a). For jurisdiction to exist under § 1332, diversity must be complete in that no plaintiff and no defendant may be citizens of the same state. Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 388, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998). As a general rule, the burden of proving that federal jurisdiction exists falls on the removing party. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.1995).

Section 1446 establishes the procedures by which a defendant may remove a suit filed in state court to federal court. See 28 U.S.C.A. § 1446 (West 2006). A notice of removal must normally be filed within thirty (30) days after the defendant receives the initial pleading setting forth the claim for relief upon which the action is based, or within thirty (30) days of service of summons if the state's rules of procedure do not require the defendant to be served, whichever period is shorter. § 1446(b). However, the case stated by the initial pleading may not be removable, because, for example, it fails to allege facts that would provide a district court with subject matter jurisdiction. In such a case, the thirty-day clock to file a notice of removal does not start until the defendant receives a copy of an amended pleading, motion, or other paper that sets forth facts establishing that the cause is removable. § 1446(b).

Similarly, 28 U.S.C. § 1447 establishes the procedures following removal. Specifically, § 1447 provides that "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal...." See 28 U.S.C.A. § 1447(c) (West 2006). In contrast, if a court finds that it lacks subject matter jurisdiction, the court must remand the case, even if the thirty (30) days have passed. § 1447(c).

DISCUSSION

In the instant Motion, Third-Party Defendants seek to remand the instant cause to state court pursuant to 28 U.S.C. §§ 1441(b) and 1448. Specifically, Third-Party Defendants first argue that removal was inappropriate under the forum defendant rule, as Defendants are citizens of Texas. Second, Third-Party Defendants assert that § 1448 grants third-party defendants the right to move for remand. Further, Third-Party Defendants assert that the instant Motion is timely filed because they filed it within thirty (30) days of being served. Alternatively, Third-Party Defendants urge the Court to sua sponte remand the instant case.

Defendants respond that the citizenship of Defendants is not a jurisdictional defect that can be raised at this time; rather, it is a procedural defect that was waived by Plaintiff's failure to move for remand within thirty (30) days of removal. Defendants further contend that Third-Party Defendants have no right to move for remand and that, even if they had such a right, the instant Motion is untimely. The Court agrees with Defendants and will address Third-Party Defendants' arguments in turn.

A. Forum Defendant Rule

Section 1441(b) provides that any civil action over which district courts have original jurisdiction solely through § 1332—diversity of citizenship—is not removable if a defendant is a citizen of the state in which the action is brought. 28 U.S.C.A. § 1441(b) (West 2006). This is often referred to as the "forum defendant rule." In re 1994 Exxon Chem. Fire, 558 F.3d 378, 391 (5th Cir.2009). A majority of courts, including the United States Court of Appeals for the Fifth Circuit ("Fifth Circuit"), has determined that this rule is procedural and not jurisdictional.¹ See id. at 392. Accordingly, the forum defendant rule can be waived if a party does not object to removal within the requisite thirty (30) days.² Id. at 395 (stating that "where there is improper removal, the pertinent question is whether the removed action could have been filed originally in federal court"); In re Shell Oil Co., 932 F.2d 1518, 1523 (5th Cir.1991); see § 1446(b).

Here, Defendants are citizens of Texas and sought removal of the instant case from state court to a federal court sitting in Texas. Such a removal violates § 1441(b). Plaintiff, however, did not move to remand within thirty (30) days after Defendant filed the Notice of Removal As such, Plaintiff waived this procedural defect. See In re 1994 Exxon Chem. Fire, 558 F.3d at 393. Nevertheless, Third-Party Defendant seeks to assert the forum defendant rule in the instant Motion. To determine whether Third-Party Defendants have the right to do so, the Court first examines § 1448 and then addresses the timeliness of the instant Motion.

B. Third-Party Defendant's Right to Seek Remand

Section 1448 provides:

In all cases removed from any State court to any district court of the United States in which any one or more of the defendants has not been served with process or in which the service has not been perfected prior to removal, or in which process served proves to be defective, such process or service may be completed or new process issued in the same manner as in cases originally filed in such district court.

This section shall not deprive any defendant upon whom process is served after removal of his right to move to remand the case.

28 U.S.C.A. § 1448 (West 2006) (emphasis added). Section 1448 "simply allows the plaintiff to serve an unserved defendant or to perfect flawed service once the action has been removed." Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 355 n. 6, 119 S.Ct. 1322, 143 L.Ed.2d 448 (1999). As such, the purpose of § 1448 is to "secure to one of several defendants in an action, who alone has been duly served with process, the right of removal of an action . . . as soon as removability exists."³ Hutchins v. Priddy, 103 F.Supp. 601, 607 (D.C.Mo.1952); see 28 U.S.C.A. §§ 1446(b), 1448. If a removal petition is filed by a served defendant and another defendant is served after the case is removed, however, "the latter defendant may still either accept the removal or exercise its right to choose the state forum by making a motion to remand." Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1263 (5th Cir.1988); see § 1448. As such, § 1448 permits a defendant who had not been served prior to removal to challenge the removal by requesting remand.

Third-Party Defendants argue that the term "defendant" in § 1448 includes third-party defendants. The Court acknowledges that no case law directly addresses a third-party...