Opinion
A-23-CV-137-RP
06-01-2023
DANESHJOU FAMILY LIMITED PARTNERSHIP, Plaintiff, v. VSD TRUST 2016-1; VSD 2016-1 TRS 1 LLC; VSD 2017-PLT1 LLC; and TRIMONT REAL ESTATE ADVISORS, LLC, Defendants.
HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE UNITED STATES MAGISTRATE JUDGE
Before the court is Plaintiff's Motion to Remand (Dkt. #7) and all related briefing. After reviewing the pleadings, the relevant case law, as well as the entire case file, and finding that a hearing is unnecessary, the undersigned submits the following Report and Recommendation to the District Court.
The motion was referred by United States District Judge Robert Pitman to the undersigned for a Report and Recommendation as to the merits pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. See Text Order dated Mar. 28, 2023.
I. Background
Daneshjou Family Limited Partnership (“DFLP”) filed its original complaint in state court on April 5, 2022 against VSD Trust 2016-1 (“VSD Trust”) and VSD 2016-1 TRS 1 LLC (“VSD TRS”). Dkt. #1-2 at 4. DFLP filed an Amended Complaint on December 5, 2022, which added VSD 2017-PLT1 LLC (“VSD PLT”), and Trimont Real Estate Advisors, LLC (“Trimont”) as defendants. Dkt. #1-3 at 12. DFLP asserts state-law claims to remove cloud and quiet title, fraud, constructive fraud, and for a declaratory judgment. Id.
Trimont removed the case on February 10, 2023, under the court's diversity jurisdiction.Dkt. #1. Trimont contended removal was timely because it had not yet been served. Id. at 1-2. DFPL moves to remand because the removal was untimely. DFPL contends Trimont was served on January 5, 2023, the other new defendant was served on January 6, 2023, and, under 28 U.S.C. § 1446(b), a notice of removal must be filed within 30 days of service of the complaint on the removing defendant. Dkt. #13 at 1-2.
The undersigned is satisfied that diversity jurisdiction exists. See Dkt. #1 at 206 (establishing diversity jurisdiction).
In response, Defendants contend removal was timely because Trimont did not receive DFPL's Amended Complaint from its registered agent before removing the case. Dkt. #8 at 1. Additionally, Defendants contend Trimont removed the case shortly after receiving responsive information from FOIA requests that demonstrated the parties were diverse. Thus, Defendants contend removal occurred within 30 days of receiving a paper demonstrating the case was removable. See 28 U.S.C. § 1446(b)(3). On the day DFLP's reply brief was due, and less than two hours before DFLP filed its reply, Defendants filed an amended response in which they conceded that Trimont had received notice from its agent that it had been served. Dkt. #9. Unsurprisingly, DLFP's response primarily addressed Trimont's assertion that it had not been served or had not received notice of service from its agent. Dkt. #10. DFLP also argued that Defendants should not be able to claim ignorance of their own citizenship in order to extend the removal period.
II. Standard of Review
A civil action brought in state court may be removed to the district court where such action is pending if the district court has original jurisdiction. 28 U.S.C. § 1441(a). The two principal bases upon which a district court may exercise removal jurisdiction are: (1) the existence of a federal question, see 28 U.S.C. § 1331; and (2) complete diversity of citizenship among the parties, see 28 U.S.C. § 1332.
Title 28 U.S.C. § 1446 governs the procedural aspects of removal, including timeliness. 28 U.S.C. § 1446. In general, a notice of removal must be filed within 30 days of the defendant's receipt of the initial pleading. See 28 U.S.C. § 1446(b)(1). If the case stated by the initial pleading is not removable, the 30-day removal clock may restart when, in certain circumstances, it becomes first ascertainable that an action is removable. See 28 U.S.C. § 1446(b)(3) (emphasis added). The statute provides:
[I]f the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 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.Id. Under the statute, “other paper” may include items such as deposition transcripts, S. W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir. 1996), answers to interrogatories, Chapman v. Powermatic, Inc., 969 F.2d 160, 164 (5th Cir. 1992), and correspondence between opposing counsel, Stramel v. GE Cap. Small Bus. Fin. Corp., 955 F.Supp. 65, 67 (E.D. Tex. 1997). The Fifth Circuit has stated that the 30-day removal period in 28 U.S.C. § 1446(b)(3) is triggered only when information supporting removal is “unequivocally clear and certain” from the amended pleading, motion, order, or other paper. See Bosky v. Kroger Texas, LP, 288 F.3d 208, 211 (5th Cir. 2002).
When considering a motion to remand, “[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); accord DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006). Because removal raises significant federalism concerns, removal is strictly construed and any doubt about the propriety of removal jurisdiction is resolved in favor of remand. See Gasch v. HartfordAcc. & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007) (citation omitted).
III. Analysis
Under the plain language of 28 U.S.C. § 1446(b)(3), the timeliness of removal in this case turns on whether Trimont can establish that it received a copy of an “amended pleading, motion, order, or other paper” from which it could “first be ascertained” that the case was removable. Trimont argues removal was proper because it removed the case within 30 days of receiving responses to its FIOA requests that demonstrated the parties are diverse.
The court finds that Trimont did not timely remove this action, but for a reason not directly addressed by the parties. The Fifth Circuit has specifically found that “other paper” requires a “voluntary act by the plaintiff.” S.W.S. Erectors Inc., 72 F.3d at 489 (citation omitted). In other words, an action that is not initially removable can only become removable based on a voluntary act by a plaintiff-not a voluntary act by a defendant. See, e.g., id. at 494 (finding that “an affidavit created by the defendant and based on the defendant's subjective knowledge cannot convert a nonremovable action into a removable one”); Par. of Plaquemines v. Chevron USA, Inc., 7 F.4th 362, 373 (5th Cir. 2021) (an “‘other paper' must result from the voluntary act of a plaintiff'); Addo v. Globe Life Acc. & Ins. Co., 230 F.3d 759, 761-62 (5th Cir. 2000) (citation omitted) (finding that plaintiff's demand letter that gave defendant notice of the amount in controversy was “other paper” and noting that “the letter in this case complies with our rule that ‘other paper' must result from the voluntary act of a plaintiff which gives the defendant notice of the changed circumstances which now support federal jurisdiction”); Gaitor v. Peninsular & Occidental S.S. Co., 287 F.2d 252, 254 (5th Cir. 1961) (explaining that an initially non-removable case “cannot be converted into a removable one by evidence of the defendant”); Certified Pressure Testing, LLC v. Markel Am. Ins. Co., No. 3:20-CV-2783-S, 2021 WL 674124, at *3 (N.D. Tex. Feb. 21, 2021) (finding that another defendant's statement concerning his residence was not an “other paper” that extended the deadline to remove); de Vida v. Nautilus Ins. Co., Civil Action No. H-10-1078, 2010 WL 2541806, at *3 (S.D. Tex. June 23, 2010) (finding defendant's affidavit stating that he was a citizen of Indiana, not Texas as pled in plaintiff's state-court petition, was not “other paper” because the affidavit was created by defendant based on defendant's subjective knowledge); Borquez v. Brink's Inc., Civil Action No. 3:10-cv-380-0, 2010 WL 931882, at *6 (N.D. Tex. Mar. 12, 2010) (finding affidavit of co-defendant's employee shedding light on the citizenship of other co-defendants was not “other paper” because the affidavit did not arise from a voluntary act of the plaintiff); Jones v. Hartford Fire Ins. Co., 347 F.Supp.2d 328, 331 (S.D.Miss. 2004) (quoting Addo, 230 F.3d at 762) (internal quotation marks omitted) (“Other paper is continually defined as the voluntary act of a plaintiff which gives the defendant notice of the changed circumstances which now support federal jurisdiction.”); Russell v. Home State Cnty. Mut. Ins. Co., 244 F.Supp.2d 669, 672 (E.D. La. 2003) (finding letter sent from defense counsel to plaintiff's counsel was not “other paper” because it did not stem from a voluntary act of plaintiff); John Hunter, Inc. v. Great Impressions Apparel, Inc., 313 F.Supp.2d 644, 646 (N.D. Tex. 2002) (citation omitted) (noting that a defendant's affidavit does not constitute “other paper”).
A court may sua sponte consider a procedural defect not addressed by the parties, which may constitute an independent ground for remand. See Schexnayder v. Entergy Louisiana, Inc., 394 F.3d 280, 284 (5th Cir. 2004) (rejecting argument that court may not sua sponte consider a procedural defect that is not raised in timely-filed motion for remand based on other procedural defects); Certified Pressure Testing, LLC v. Markel Am. Ins. Co., No. 3:20-CV-2783-S, 2021 WL 674124, at *3 (N.D. Tex. Feb. 21, 2021) (sua sponte considering a similar issue as presented here). Additionally, Trimont did not assert in its Notice of Removal that it removed within 30 days of receiving documents that all defendants are diverse.
Under this case law, the information Trimont received responsive to its FOIA request did not result from a “voluntary act by the plaintiff' and is therefore not an “other paper” under § 1446(b)(3). Accordingly, those records cannot start a new 30-day deadline to remove. The Fifth Circuit cases Defendants cite to support their position address different issues and do not conflict with the cases cited above. Defendants also cites a Ninth Circuit case, Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121, 1125 (9th Cir. 2013), which allowed a defendant to remove a case based on its own investigation of a basis for jurisdiction. But that case recognized that the Fifth Circuit's S.W.S. Erectors case suggested a different outcome. Roth, 720 F.3d at 1122 (citing S.W.S. Erectors, 72 F.3d at 491).
A nearly identical issue was addressed in Certified Pressure Testing, LLC v. Markel American Insurance Company, 2021 WL 674124 (N.D. Tex. Feb. 21, 2021). In that case, a corporate defendant removed under diversity jurisdiction on the basis of an individual defendant's affidavit stating his residence. Id. at *1. The removing defendant asserted removal was timely under 28 U.S.C. § 1446(b)(3). Id. at *2. The district court found defendant's documents could not provide the basis for removal as an “other paper” because they were created by a defendant and not by the plaintiff's voluntary act. Id. at *3. Like Certified Pressure, the undersigned finds the responses to Triton's FOIA's requests are not “other paper” under § 1446(b)(3) because they were not the result of DFLP's voluntary act. This holding also satisfies DFLP's argument that Defendants should not be allowed to be ignorant, or feign ignorance, of their own citizenship to extend the deadline to remove. Accordingly, the undersigned will recommend DFLP's motion to remand be granted.
IV. Recommendation
The undersigned RECOMMENDS that the District Court GRANT Plaintiff's Motion to Remand to State Court (Dkt. #7).
V. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm 'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996)(en banc).