Bcctc Associates, Inc. v. Summerdale/Aahfi, L.P., Civil Action No. 09-10908-WGY.

• Citation: 656 F.Supp.2d 208
• Decision Date: 12 September 2009
• Docket Number: Civil Action No. 09-10908-WGY.
• Parties: BCCTC ASSOCIATES, INC., BCCTC Associates VI, LLC, BCCTC Associates VI, L.P., Boston Capital Corporate Tax Credit Fund VI, L.P., C & M Management, Inc., BCA Associates L.P., Boston Capital Associates IV, L.P., Boston Capital Tax Credit Fund IV, L.P., and Boston Capital Partners, Inc., Plaintiffs v. SUMMERDALE/AAHFI, L.P., Summerdale/AAHFI, L.P. II, M. Vincent Murphy, III, and E. Donald Dressel, Defendants.
• Court: U.S. District Court — District of Massachusetts

656 F.Supp.2d 208

BCCTC ASSOCIATES, INC., BCCTC Associates VI, LLC, BCCTC Associates VI, L.P., Boston Capital Corporate Tax Credit Fund VI, L.P., C & M Management, Inc., BCA Associates L.P., Boston Capital Associates IV, L.P., Boston Capital Tax Credit Fund IV, L.P., and Boston Capital Partners, Inc., Plaintiffs v. SUMMERDALE/AAHFI, L.P., Summerdale/AAHFI, L.P. II, M. Vincent Murphy, III, and E. Donald Dressel, Defendants.

Civil Action No. 09-10908-WGY.

United States District Court, D. Massachusetts.

September 12, 2009.

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Sigmund J. Roos, Block & Roos, LLP, Boston, MA, for Plaintiffs.

William D. Chapman, Melick, Porter & Shea, LLP, Boston, MA, Stanley E. Kreimer, Johnson & Ward, Atlanta, GA, for Defendants.

MEMORANDUM OF DECISION

YOUNG, District Judge.

I. INTRODUCTION

In this action against Summerdale/AAHFI, L.P. ("Summerdale/AAHFI I"), Summerdale/AAHFI, L.P. II ("Summerdale/AAHFI II"; collectively the "Summerdale/AAHFI Defendants"), M. Vincent Murphy, III,("Murphy") and E. Donald Dressel, ("Dressel") (collectively the "Defendants"), the Plaintiffs, BCCTC Associates, Inc., BCCTC Associates VI, LLC, BCCTC Associates VI, L.P., Boston Capital Corporate Tax Credit Fund VI, L.P. ("Fund VI"), C & M Management, Inc., BCA Associates L.P., Boston Capital Associates IV, L.P., Boston Capital Tax Credit Fund IV, L.P. ("Fund IV"), and Boston Capital Partners, Inc. (collectively the "Plaintiffs"), allege breach of partnership agreements and demand payment pursuant to guaranty agreements.

A. Procedural Posture

The Plaintiffs moved to remand this case to state court, [Doc. 9] ("Remand Mem."); the Defendants opposed. [Doc. 18] ("Remand Opp."). The Defendants in turn moved to dismiss the case for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or in the alternative, under the doctrine of "forum non conveniens," [Doc. 5] ("Dismiss Mem."); the Plaintiffs opposed. [Doc. 10] ("Dismiss Opp.").

B. Jurisdictional Facts

The Plaintiffs, various Massachusetts entities, are investors in two Georgia limited partnerships, Summerdale Partners L.P. ("Summerdale I") and Summerdale Partners L.P. II ("Summerdale II"; collectively "Summerdale Partners"), which own an apartment complex in Georgia. Summerdale/AAHFI I is a general partner in Summerdale I. Summerdale/AAHFI II is a general partner in Summerdale II. The Plaintiffs allege that the Summerdale/AAHFI Defendants breached certain partnership agreements. They also allege that Murphy and Dressel, residents of Georgia, are guarantors for the Summerdale/AAHFI Defendants.

The Plaintiffs sought out the Defendants in Georgia for investment opportunities, though they conducted due diligence from Massachusetts. A number of interstate communications occurred with regard to Fund VI's investment in Summerdale I and BCCTC Fund X's ("Fund X")¹ investment in Summerdale II.

1. Investment in Summerdale I

Scott Arrighi ("Arrighi"), Boston Capital's Vice President of Acquisitions, states in his affidavit ("Arrighi Aff.") that there have been written communications between Dressel and a former employee of Boston Capital, Raul Moore ("Moore"), which were sent into Massachusetts. Arrighi Aff. ¶¶ 14-15 [Doc 11. Ex. E]. These communications occurred in July, August, and September of 1996 and relate to negotiations over the terms of Fund VI's investment in Summerdale I. Fund VI's investment agreement with Summerdale/AAHFI I was executed on July 3, 1997. Compl. ¶ 19. Arrighi asserts that these communications reflect the position of the Defendants because they include a memorandum addressed to Dressel from Alison Drummond ("Drummond") who was counsel for Dressel, Murphy and the Summerdale/AAHFI Defendants. Arrighi Aff. ¶ 15.

2. Syndication Agreement

Arrighi states that he was directly involved in the due diligence and negotiation of the syndication agreement which outlined the general terms of Fund X's proposed investment in Summerdale II, Arrighi Aff. ¶¶ 9, 11, including receiving a memorandum from Dressel proposing changes to the agreement. Id. ¶ 10 [Doc. 11, Ex. B]. On October 10, 1997, Arrighi executed the syndication agreement in Boston. Id. ¶ 12.

3. Investment in Summerdale II

Arrighi states that after executing the syndication agreement he had a number of communications in Massachusetts regarding the proposed changes in Summerdale II's Partnership Agreement. Arrighi Aff. ¶ 13. He had at least six telephone conversations with Dressel, most of which were initiated by Dressel and related to the negotiation of the Summerdale II's Partnership Agreement. Id. ¶ 12. Arrighi alleges that some of the conversations included Drummond. Id. Arrighi understood that during their communications in the spring, summer, and fall of 1997, Dressel was representing himself, Murphy, and the Summerdale/AAHFI Defendants. Id. ¶ 6.

4. Post-Agreement Contacts

During the eleven years of the relationship, many communications regarding the investments in the Summerdale Partners were sent to Boston. As required by the syndication agreement, the Summerdale/AAHFI Defendants submitted certain documents to Fund IV and Fund VI as a condition of their capital investments. The Summerdale/AAHFI Defendants also sent various annual reports into Massachusetts. Dismissal Opp. at 7-8.

C. Federal Jurisdiction

Federal Jurisdiction is alleged under 28 U.S.C. § 1332. The Defendants, however, assert that the Court lacks personal jurisdiction.

II. ANALYSIS

A. The Plaintiffs' motion to remand

The Plaintiffs moved pursuant to 28 U.S.C. § 1447(c) to remand the case to the Massachusetts Superior Court. They claim that the Defendants' notice of removal was untimely.

In this case, service of the complaint by certified mail was completed upon Dressel on April 12, 2009, and on the Summerdale/AAHFI Defendants on April 13, 2009. Although service had not yet been made upon him, Murphy (named as a defendant in the complaint) removed the case to federal court on June 1, 2009, more than thirty days after service upon each of his codefendants. All co-defendants agreed to the removal at that time.

Pursuant to 28 U.S.C. § 1446(b), a defendant may file notice to remove a case to the federal court:

within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

If there are multiple defendants in the case, the consent of all defendants is required for removal. Chicago, R.I. & P. Ry. Co. v. Martin, 178 U.S. 245, 248, 20 S.Ct. 854, 44 L.Ed. 1055 (1900). The statute is silent and the case-law is unsettled as to what happens if various defendants are served at different dates, and whether the thirty day period ought start at the time of service upon the first defendant (first-served defendant rule) or last defendant (last-served defendant rule).

Under the first-served defendant rule, once the first-served defendant fails to file the notice of removal during his thirty day period, he definitively forfeits his right to remove; he cannot restore it by joining the last-served defendant's removal. Gorman v. Abbott Labs., 629 F.Supp. 1196, 1201 (D.R.I.1986) (Selya, J.) ("failure of a defendant to embark upon removal within the statutorily allotted time causes the right to perish. Such neglect cannot be cured retroactively by joining a subsequently-served defendant's removal pavane"); see also Karpowicz v. Blue Cross & Blue Shield of Mass., Inc., 1996 WL 528372 at *7 (D.Mass.1996) (Wolf, J.) (following Judge Cyr's opinion in Hill v. Phillips, Barratt, Kaiser Eng'g Ltd., 586 F.Supp. 944 (D.Me.1984) (holding that notice outside thirty day period applicable to the first-served defendant was untimely, and that the last-served defendant, who was served ten days before the thirty day period applicable to first-served defendant expired, should have filed notice of removal within that ten day period)).

This approach focuses on the fixed and finite period of thirty days afforded to the first-served defendant. It is thus argued that permitting the first-served defendant to agree to a notice of removal outside his thirty day period runs against the strict interpretation of the statute. See Davidson v. Rand, 2005 WL 768593 at *4 (D.N.H.2005) (applying the first-served rule because "the removal statutes are strictly construed against removal") (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941)).²

Under the last-served defendant rule the thirty day period applies to the last-served defendant. Thus, during his thirty days, the last-served defendant can exercise his right to file the notice, regardless of the prior inactivity of his co-defendants. The focus here is on protecting each defendant's right to remove, a right that would be nullified through no fault of their own, were the first-served defendant rule to be applied. In Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202, 1205 (11th Cir.2008), the Eleventh Circuit concluded that "common sense and consideration of equity favor the last-defendant rule." The Sixth Circuit also follows the last-served defendant rule, Brierly v. Alusuisse Flexible Packaging Inc., 184 F.3d 527, 532 (6th Cir.1999), stating that it was not the Congressional intention to afford the thirty day period for removal only to the first-served defendant.

Since Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 353-354, 119 S.Ct. 1322, 143 L.Ed.2d 448,(1999), the argument for strict construction against removal has weakened. In that case, the Supreme Court held that even though the defendant received a faxed copy of a complaint, the formal summons was the "sine...