Opinion
Cause No. 2:04-CV-242 PS.
November 16, 2004.
ORDER
This matter is before the Court on Plaintiff's Motion to Remand [Doc. 14]. Plaintiff argues that this matter should be remanded to the Lake Circuit Court because the Defendants' notice of removal was untimely under 28 U.S.C. § 1446(b) and because the notice of removal was insufficient. The Court heard oral argument on Plaintiff's motion on August 26, 2004. After a close review of the state court record and the briefing, the Court finds that Defendants' removal in June 2004 was timely and complied with the technical requirements of the removal statutes, and therefore Plaintiff's Motion to Remand is denied.
PROCEDURAL BACKGROUND
On June 10, 1993, an action was commenced in Lake Circuit Court, entitled Cathy Price and Charles Price v. American Cyanamid Co., et al., Cause No. 45C01-9306-CT-01186. The complaint was served upon American Cyanamid Company ("American Cyanamid") and Lederle Laboratories, Inc. ("Lederle") via certified mail, postmarked on June 14, 1993. On June 25, 1993, Ronald J. Cracas, the Manager of Litigation of American Cyanamid's Legal Department, sent a letter to Plaintiffs' counsel, Delmar Kuchaes, by facsimile, advising that the National Childhood Vaccine Injury Act of 1986 requires that any claim "based on the administration of a childhood vaccine after September, 1988 must be filed with the Federal Compensation Program. ( See Notice of Removal at Ex. B.) That same day, the Plaintiffs filed a Notice of Dismissal without Prejudice. ( See id. at Ex. A at A14.) In addition, counsel for the Plaintiffs sent a letter on June 25, 1993, to Ronald Cracas that provided:
Enclosed you will find a copy of the Notice of Dismissal which we filed in this action which discontinues, or non-suits the named defendants. We shall pursue this matter before the U.S. Court of Claims and await a decision by a special master.
( Id., at Ex. C.) Defendants' answer or other response to Plaintiffs' complaint was not yet due on June 25, 1993, the date on which Plaintiffs filed their dismissal. Defendants were thus not in default, and had no obligation to enter an appearance at that time or file anything at all.
Approximately five years later, on July 17, 1998, after Cathy Price had already received a judgment in the Court of Claims, Plaintiffs filed a motion to reinstate their cause of action against the Defendants. Plaintiff concedes that the Defendants were never served with a copy of the motion to reinstate. Three days later, on July 20, 1998, the Lake Circuit Court reinstated Plaintiffs' cause of action, without a hearing and with no notice to Defendants.
Cathy Price and Charles Price moved to reinstate their case in 1998. On June 16, 2000, Plaintiff Cathy Price voluntarily dismissed her cause of action against all Defendants pursuant to Indiana Trial Rule 41(A)(1)(a).
Almost two years after the reinstatement, on April 11, 2000, Plaintiff Charles Price moved for default judgment against American Cyanamid and Lederle Laboratories claiming that the Defendant "is currently in default for failing to have appeared and or answered the Complaint filed herein . . ." ( See Notice of Removal at Ex. A at A28.) But, Plaintiff failed to mention in the motion that he had dismissed all of his claims against Defendants on June 25, 1993, prior to the date on which any response to the complaint would have been due, and had not provided any notice to Defendants when he reinstated his claims in 1998, and had not served them with any filings since the reinstatement. The motions for default judgment were also never served on the Defendants.
On April 19 and April 26, 2000, the motions for default judgment were granted and the court scheduled a hearing on damages. On May 10, 2000, the court attempted to mail a copy of the order granting the motion for default judgment and the order scheduling the hearing on damages to Lederle Laboratories, but it was returned on July 7, 2000, marked "NO SUCH OFFICE IN STATE" because it was sent to Pearl River, New Jersey, and not Pearl River, New York, where Lederle Laboratories maintains a place of business. There is no record that either order was mailed to American Cyanamid.
On June 16, 2000, the court went ahead with the damages hearing, noting that "Defendants and counsel failed to appear." On July 3, 2000, the Lake Circuit Court awarded damages in the amount of $5 million to Plaintiff Charles Price. No notice of any kind was sent to Defendants of this award until June 2004. On June 3, 2004, on motion of Plaintiff, the court issued an order directing "Judgment Defendants" American Cyanamid and Lederle Laboratories to appear in court on June 23, 2004, to provide information on the Judgment Defendants' property, income, and profits subject to execution. The court also directed that summonses be issued to the Garnishee Defendants. Defendants filed their Notice of Removal in this Court on June 22, 2004 — within thirty days after receipt by either Defendant on or about June 15, 2004, of the notice that Plaintiff had reinstated this lawsuit in 1998.
Counsel for the Plaintiff concedes that he neither contacted Defendants nor forwarded any of his court submissions or court orders to the Defendants from the time he filed the motion to reinstate on July 17, 1998, up until June, 2004.
DISCUSSION
Section 1441(a) permits a defendant to remove to federal court any civil action originally brought in state court if the federal court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). Pursuant to 28 U.S.C. § 1332, a district court has such original jurisdiction of "all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest or costs" and where the case is between citizens of different states. 28 U.S.C. § 1332. To remove a case from state to federal court, a defendant must file a notice of removal which contains "a short and plain statement of the grounds for removal" in the appropriate district court. 28 U.S.C. § 1446(a). The defendant must do this within thirty days of receiving a copy of the initial pleading. 28 U.S.C. § 1446(b). On a motion for remand, the party seeking removal has the burden of establishing the district court's jurisdiction and the propriety of the removal. See Wellness Cmty.-Nat'l v. Wellness House, 70 F.3d 46, 49 (7th Cir. 1995) (the party seeking a federal forum has the burden of establishing that jurisdiction in the federal courts is appropriate); P.P. Farmers' Elevator Co. v. Farmers Elevator Mut. Ins. Co., 395 F.2d 546, 548 (7th Cir. 1968) ("The burden of proof as to any controverted material issue is upon the party who removed to show that the suit was properly removed") (internal quotations and citation omitted).
Plaintiff makes two arguments on the appropriateness of the removal, both under 28 U.S.C. § 1446(b). Plaintiff first contends, relying on the first paragraph of Section 1446(b), that Defendants' notice of removal was untimely because it was not filed within thirty days of receipt of the initial pleading in June, 1993. Second, Plaintiff argues that the one year limitation in the second paragraph of Section 1446(b) also makes Defendants' removal improper. Neither argument is persuasive.
A. Thirty Day Procedural Deadline
The time for removal begins to run when the defendant receives "a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based." 28 U.S.C. § 1446(b) (first paragraph). Removal must occur within thirty days of receipt of the initial pleading. Id. In this case, Defendants' thirty days arguably began to run with the receipt of the summons and initial complaint (sometime between June 14, 1993, when the clerk mailed the summons and complaint, and June 23, 1993, when the docket recorded the return of summons). Critically, however, pursuant to Ind. Trial Rule 41(A)(1)(a), Plaintiffs voluntarily dismissed all of their claims against the Defendants on June 25, 1993 — well before Defendants' time to respond to the complaint, or to remove the case had expired.
Under Indiana law, once a case is voluntarily dismissed, it is treated as if it was never filed. See Burnett v. Camden, 254 N.E.2d 199, 201 (Ind. 1970) ("The law is well settled that once a suit is voluntarily dismissed the situation is just as though the suit has never been filed."), cert. denied; accord Ilagan v. McAbee, 634 N.E.2d 827, 829 (Ind.Ct.App. 1994); see also State ex rel. Allis-Chalmers Mfg. Co. v. Boone Cir. Ct., 86 N.E.2d 74, 77 (Ind. 1949) ("A dismissal as to a party leaves the case as if he had never been a party at all. Proceedings against a defendant after dismissal as to him are a nullity." (internal citation omitted)). Accordingly, once the case was voluntarily dismissed by the Plaintiff on June 25, 1993, there was neither a "case" nor a "controversy" between the parties that could have been removed to federal court. Indeed, a federal court judge might justifiably look askance at the removal of a case that had been previously dismissed in state court.
Plaintiff attempts to characterize his voluntary dismissal of the initial complaint as a "discontinuance," an "abatement," and a "suspension," but regardless of the label, the fact of the matter is that Plaintiff dismissed the lawsuit.
It was not until Plaintiff reinstated his claim in 1998 that Defendants' time for removal began to run again. See Marquette v. Matra Transp., S.A., No. 96 C 6768, 1997 WL 222933, at *3 (N.D. Ill. May 1, 1997) (plaintiffs created a new "action" within the meaning of 28 U.S.C. § 1446(b) when they filed a second case against a defendant that they had previously voluntarily dismissed); Chott v. Cal Gas Corp., 746 F. Supp. 1377, 1378 (E.D. Mo. 1990) (holding that "plaintiff's refiling of the petition after a voluntary dismissal creates a new action for purposes of removal.") The fact that Indiana procedure did not require Plaintiff to re-file his initial complaint or obtain new summons upon "reinstatement" does not change the fact that the "initial pleading" for purposes of removal — the motion for reinstatement — was filed with the Court in 1998.
What is astounding, is that neither Plaintiff's motion for reinstatement nor the court's order reinstating the case were ever served on the Defendants. Plaintiff's counsel admitted in open court that the Defendants were never sent a copy of the notice of reinstatement. (Transcript of Oral Argument at 16-17.) In fact, Defendants received no copies of pleadings and no notice whatsoever of any proceeding related to this action until June 2004, when the summons and garnishment interrogatories were issued by the state court.
Relying largely on Lyerson v. Hogan, 441 N.E.2d 683 (Ind.Ct.App. 1982), Plaintiff contends that the Defendants were not entitled to actual notice of any filings or proceedings in the reinstated case because they never filed an appearance in the original matter. Plaintiff's reliance on Lyerson is misplaced for two reasons. First, in Lyerson, the defendants failed to appear or plead for a period of eight years. Id. at 685. They were clearly in default. Almost two years after the case was filed, the Lyerson matter was dismissed with prejudice by the court for a failure to prosecute pursuant to Indiana T.R. 41(E). Id. Six days later, the plaintiffs moved to reinstate the case upon oral motion. No notice of the motion to reinstate was sent to the defendants or their attorneys. Id. The reason that the defendants were not entitled to receive notice of the motion for reinstatement was because they had been in default for a period of two years. Under T.R. 5(A):
No service need be made on parties in default for failure to appear, except that pleadings asserting new or additional claims for relief against them shall be served upon them in the manner provided for service of summons in Rule 4.
This case is readily distinguishable. Here, the Defendants were not in default when the Plaintiff voluntarily dismissed his action in June, 1993. Therefore, the "default" provision of Indiana T.R. 5(A) is inapplicable. Instead, the remainder of T.R. 5(A) applies. It provides:
Unless otherwise provided by these rules or an order of the court, each party and special judge, if any, shall be served with:
(1) every order required by its terms to be served;
(2) every pleading subsequent to the original complaint;
(3) every written motion except one which may be heard ex parte;
(4) every brief submitted to the trial court;
(5) every paper relating to discovery required to be served upon a party; and
(6) every written notice, appearance, demand, offer of judgment, designation of record appeal or similar paper.
Indiana T.R. 5(A) is clear: when a party is not in default, he is required to be served with every written motion and every pleading subsequent to the complaint, regardless of whether his attorney has filed an appearance. Because, unlike the defendants in Lyerson, the deadline for Defendants to answer or move to dismiss had not passed before Plaintiff voluntarily dismissed his action, Plaintiff was obliged under Indiana T.R. 5(A) to serve "each party" with "every" subsequent motion he filed, including his motion to reinstate. Here, Plaintiff failed to do so.
Second, Lyerson is further distinguished from the case before the Court because it involved an involuntary dismissal pursuant to T.R. 41(E) and the motion to reinstate was filed only six days after the dismissal — not five years after the dismissal. In fact, Plaintiff Price's motion to reinstate in this matter would have been barred as untimely in Lyerson.
A dismissal for failure to prosecute pursuant to Indiana Trial Rule 41(E) is a dismissal with prejudice unless the trial court provides otherwise. Lee v. Pugh, 811 N.E.2d 881, 884 n. 2 (Ind.Ct.App. 2004). T.R. 41(F) provides that a "dismissal with prejudice may be set aside by the court for the grounds and in accordance with the provisions of Rule 60(B)." That rule requires that a motion for reinstatement be made within one year of the dismissal. See Patton Elec. Co., Inc. v. Gilbert, 459 N.E.2d 1192, 1194 (Ind.Ct.App. 1984). Failure to file the motion within one year is fatal. Id.
Pursuant to Ind. T.R. 41(F), to set aside a dismissal without prejudice, like the dismissal at issue here, there are two requirements. First, plaintiff must show good cause for the reinstatement of the action. Second, the petition for reinstatement must be filed "within a reasonable time." Under the facts of this case, five years is certainly an unreasonable amount of time for the Plaintiff to assume that the Defendants are checking the docket. It is only reasonable under these circumstances for the Plaintiff to give Defendants notice of his intention to reinstate.
In sum, Defendants filed their Notice of Removal in this Court on June 22, 2004 — within thirty days after receipt by either Defendant on or about June 15, 2004, of the notice that Plaintiff had reinstated his lawsuit in 1998. Prior to that notification, there was simply no way that Defendants should have known that the lawsuit had been reinstated. It was Plaintiff's responsibility under Indiana T.R. 5(A) to serve the Defendants with a copy of his motion to reinstate. He failed to do so. Defendants should not be penalized for his failure.
Even if the Defendants' notice of removal was filed after the thirty-day deadline, the exceptional circumstances at issue in this case demand that removal be allowed. When determining whether removal is proper more than thirty days after receipt of a pleading in the case, "it is within the equitable power of the court to consider such exceptional circumstances on a case-by-case basis." Doe v. Kerwood, 969 F.2d 165, 169 (5th Cir. 1992). Defendants were informed that a case brought against them was dismissed eleven days after it was filed, before Defendants' time for removal of the case had expired. As a result, the Defendants treated the case in accordance with Indiana law — as one that had never existed. Five years after the dismissal, the case was reinstated without notice to Defendants, despite the fact that they clearly were entitled under Indiana law to receive notice of the motion of reinstatement. Proceedings in the case, including a default judgment and a $5 million award to Plaintiff, continued, all without notice to Defendants. When Defendants finally learned of the reinstated case, they immediately removed it. Under these exceptional circumstances, removal is proper.
B. One-Year Limitation of Section 1446(b)
Plaintiff next argues that the one year limitation provision in the second paragraph of section 1446(b) is an absolute bar to removal after one year thus making Defendants' removal in this case improper. This is a strained reading of the statute.
The second paragraph of section 1446(b) reads in relevant part:
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.
Four circuits hold that the one-year limitation modifies only the second paragraph of § 1446(b) (quoted above), and therefore only applies to cases that were not removable to federal court when the case was originally filed. See e.g., Brown v. Tokio Marine Fire Ins. Co., 284 F.3d 871, 872-73 (8th Cir. 2002); Johnson v. Heublein Inc., 227 F.3d 236, 241 (5th Cir. 2000); Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534-35 (6th Cir. 1999) ("Based upon ordinary language usage, the qualifying clause . . . can only be interpreted to modify the antecedent clause to which it is attached, and not previous sections of the text. If Congress had intended to place a one-year limitation on removal of all diversity cases, it surely would have chosen less obscure and counter-intuitive wording to accomplish that purpose."); Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1316-18 (9th Cir. 1998) ("The first paragraph of § 1446(b) addresses a defendant's right to promptly remove when he is served. The second paragraph addresses a defendant's right to remove beyond the initial period of 30 days, if the case only becomes removable sometime after the initial commencement of the action. Only the latter type of removal is barred by the one-year exception."). The Seventh Circuit has not directly addressed this issue, but some district courts within the Circuit have embraced this view. See Schweihs v. Burdick, No. 94 C 7106, 1995 WL 124267, at *4 (N.D. Ill. Mar. 20, 1995) (finding one-year limitation on removal applicable to cases that were not originally removable but later become removable).
In Rothner v. City of Chicago, 879 F.2d 1402 (7th Cir. 1989), the Seventh Circuit discussed the 1988 House Report on the amendment to 1446(b) stating, "Congress has amended the statute to place a one-year limit on removal of diversity cases in situations where a case is not initially removable but becomes removable at a later stage in the proceedings." Id. at 1418. This explanation of the amendment is helpful in predicting how the Seventh Circuit might rule on this issue.
Taking into consideration the plain language of the statute, the Seventh Circuit's understanding of the effect of the amendment, and the persuasive reasoning in the decisions from the Fifth, Sixth, Eighth, and Ninth Circuits, this Court finds that the one-year limitation in § 1446(b) is not an absolute bar to removal in this case because it is only applicable to cases that were not originally removable but later become removable. We also find that the one-year limit on removal is procedural, and not jurisdictional. See Leidolf by Warshafsky v. Eli Lilly Co., 728 F. Supp. 1383 (E.D. Wis. 1990); see also Ariel Land Owners, Inc. v. Dring, 351 F.3d 611, 613 (3d Cir. 2003) (one year removal deadline for cases not initially removable is procedural; case removed two years after being filed); Barnes v. Westinghouse Elec. Corp., 962 F.2d 513, 516 (5th Cir. 1992) (case removed four years after being filed).
Here, both parties agree that this matter was originally removable. Therefore, the one-year limitation is not an absolute bar to removal in this case. Defendants' removal was therefore timely and proper.
CONCLUSION
For the foregoing reasons, Plaintiff's Motion to Remand [Doc.14] is hereby DENIED. The Plaintiff's Response to Defendants' Motion to Vacate Default Judgment is due on or before December 2, 2004, and the Defendants' Reply, if any, is due seven (7) days after service of the response.
SO ORDERED.