Alexander By Alexander v. Goldome Credit Corp., Civ. A. No. 91-H-380-E.

• Decision Date: 10 July 1991
• Docket Number: Civ. A. No. 91-H-380-E.
• Citation: 772 F. Supp. 1217
• Court: U.S. District Court — Middle District of Alabama
• Parties: Jasper ALEXANDER, by his attorney-in-fact, Betty ALEXANDER; and Betty Alexander v. GOLDOME CREDIT CORPORATION, a corporation, and C & J Construction Company, a corporation, and Morris Capsuto.

772 F. Supp. 1217

Jasper ALEXANDER, by his attorney-in-fact, Betty ALEXANDER; and Betty Alexander v. GOLDOME CREDIT CORPORATION, a corporation, and C & J Construction Company, a corporation, and Morris Capsuto.

Civ. A. No. 91-H-380-E.

United States District Court, M.D. Alabama, E.D.

July 10, 1991.

Ruth S. Sullivan, Michael Mosley, Dadeville, Ala., for plaintiffs.

Azar & Azar, Charles W. Edmondson, Montgomery, Ala., for Goldome Credit Corp.

Edwin L. Yates, Montgomery, Ala., for C & J Const. and Capsuto.

MEMORANDUM OPINION AND ORDER

HOBBS, District Judge.

This cause comes before the Court on plaintiffs Jasper and Betty Alexander's motion to remand. A hearing was held on this motion on June 5, 1991. Upon consideration of the motion, defendants' responses thereto, the record, and for the reasons set out herein, the Court finds that plaintiffs' motion is due to be granted.

I. BACKGROUND

Plaintiffs initiated this action in Tallapoosa County, Alabama circuit court on March 1, 1991 against defendants Goldome Credit Corporation ("Goldome"), C & J Construction Company ("C & J Construction"), and Morris Capsuto ("Capsuto").¹ Plaintiffs' complaints arise from an agreement they entered into on March 4, 1989 with C & J Construction for $7,555.82 worth of exterior home improvements on plaintiffs' residence in Equality, Alabama.² To finance the improvements, plaintiffs executed a real estate mortgage on their home. Plaintiffs contend that the work was not performed to their satisfaction. As a result, plaintiffs refused to sign a certificate of completion. Plaintiffs contend that, notwithstanding the absence of such a certificate, defendant Goldome disbursed to C & J Construction the amount financed under the March 4, 1989 installment sales agreement and mortgage in violation of the Truth in Lending Act, 15 U.S.C. § 1601, et seq. Plaintiffs seek compensatory and punitive damages for fraud and breach of contract as well as rescission of the installment sales agreement and mortgage. The fraud and breach of contract claims are alleged against all three defendants while the Truth in Lending Act claim is directed against defendant Goldome only. Goldome filed a notice of removal on April 8, 1991, alleging that this Court has federal question jurisdiction in this case based on plaintiffs' Truth in Lending Act claim. C & J Construction and Morris Capsuto did not join in the notice of removal. The notice of removal does not contain any explanation as to why Goldome's codefendants did not join in removing the case.

II. REMOVAL

This case presents some interesting questions concerning the process of removal of a case from state to federal court on the basis of federal question jurisdiction. The Court must determine whether this case has been removed properly, and if so, pursuant to what statute. "A federal court presented with a motion to remand is limited solely to the question of its authority to hear the case pursuant to the removal statute." 14A C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3739, at 580 (2d ed. 1985). The right to remove a case from state to federal court is purely statutory. Regard for the independence of state governments requires federal courts to "scrupulously confine their own jurisdiction to the precise limits which the statute has defined." Shamrock Oil Corp. v. Sheets, 313 U.S. 100, 109, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941) (quoting Healy v. Ratta, 292 U.S. 263, 270, 54 S.Ct. 700, 703, 78 L.Ed. 1248 (1934)). The burden of establishing federal jurisdiction is upon the party or parties seeking removal, and the removal statute is strictly construed against removal jurisdiction. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir.1988).

A. 28 U.S.C. § 1441(a) & (b)

The first possible basis for removal that will be examined is contained in 28 U.S.C. § 1441(a) & (b).³ Goldome expressly relies on § 1441(b) for removal in this case, alleging that the Court has federal question jurisdiction based on the Truth in Lending Act claim. Plaintiffs contend, however, that § 1441(b) is not a proper basis for removal in this case. The Court agrees, although not for the same reasons as those argued by plaintiffs.

Plaintiffs contend that, when federal question jurisdiction is the basis for removal, § 1441(b) only applies in those cases where there is one cause of action and that cause of action is federal in nature. Under plaintiffs' interpretation of § 1441(b), federal question removal could be defeated in all cases simply through the joinder of a state law claim. This construction, however, completely ignores the Court's ability to exercise pendent jurisdiction over related claims.⁴See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). See also Steinman, Removal, Remand, and Review in Pendent Claim and Pendent Party Cases, 41 Vand.L.Rev. 923, 932-33 (1988) (discussing and rejecting the argument that § 1441(c) is the exclusive statutory means of removing cases involving federal and nonfederal claims). Pendent claim jurisdiction is available in removed cases just as it is available in cases originally filed in federal court. See Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350-51, 108 S.Ct. 614, 618-19, 98 L.Ed.2d 720 (1988) (noting that, in a case removed under § 1441(a) where plaintiffs' complaint stated a single federal claim and numerous state-law claims, "the state-law claims fell within the jurisdiction of the District Court to which the action was removed because they derived from the same nucleus of operative fact as the federal claim"); Contemporary Serv. Corp. v. Universal City Studios, Inc., 655 F.Supp. 885, 892 (C.D.Cal.1987).

Plaintiffs also erroneously argue that removal is prohibited in this case because the Truth in Lending Act does not confer exclusive jurisdiction in the federal courts, but allows for concurrent jurisdiction with state courts. See 15 U.S.C. § 1640(e). In other words, plaintiffs contend that remand is called for because the state court is a competent court to hear the federal claim in this case and that is where plaintiffs have chosen to adjudicate their claim. Whether the federal court's jurisdiction over a removed claim is concurrent or exclusive, however, is irrelevant in a removal analysis. An overwhelming majority of courts supports the proposition that "a Congressional grant of concurrent jurisdiction in a statute does not imply that removal is prohibited." 14A C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure, § 3729, at 495 (2d ed. 1985); see Dorsey v. City of Detroit, 858 F.2d 338, 341 (6th Cir.1988). Indeed, prior to the 1986 addition of § 1441(e)⁵, a claim filed in state court that was within the exclusive jurisdiction of the federal courts could not ever be removed on the theory that removal jurisdiction was derivative. Because the state court lacked jurisdiction over the exclusively federal claim, a federal court could not obtain any jurisdiction from the "transferor" state court through removal. Under that practice, a plaintiff would be forced to refile the federal claim in federal court or drop the claim altogether. See Steinman, supra, 41 Vand.L.Rev. at 926-27.

The key requirement for removal is that the claim be within the federal court's original, not necessarily exclusive, jurisdiction. The plain language of § 1441(a) shows that, today, all federal claims, whether of an exclusive or concurrent jurisdictional nature, may be removed to federal court unless there is an express statutory prohibition against doing so.⁶ Thus, the fact that the Truth in Lending Act claim could be heard in state court does not require a remand in this case. Without a doubt, a suit brought under the Truth in Lending Act is subject to removal from state to federal court. See Chandler v. Riverview Leasing, Inc., 602 F.Supp. 157, 158 (E.D.Pa.1984); Butler v. Rye, 544 F.Supp. 143 (W.D.Mo.1982); Sicinski v. Reliance Funding Corp., 461 F.Supp. 649 (S.D.N.Y.1978).

At this point in the analysis, it is clear that, if Goldome were the only defendant in this case, removal undoubtedly would be proper under § 1441(a) and (b). Under 28 U.S.C. § 1331, the Court would have original federal question jurisdiction over the Truth in Lending Act claim, and could exercise pendent claim jurisdiction over the two state claims under 28 U.S.C. § 1367 because all the claims derive from a common nucleus of operative fact and are such that a plaintiff ordinarily would be expected to try them all in one judicial proceeding.⁷

Goldome, however, is not the only defendant in this case. State law claims are alleged against C & J Construction and Capsuto. Nevertheless, § 1367 now allows for the exercise of pendent party jurisdiction, the absence of which previously presented a large obstacle in cases such as this one, where federal and state claims are asserted against one defendant, only state claims are alleged against other defendants, and the entire case is then removed.⁸ See Charles D. Bonanno Linen Serv., Inc. v. McCarthy, 708 F.2d 1 (1st Cir.), cert. denied, 464 U.S. 936, 104 S.Ct. 346, 78 L.Ed.2d 312 (1983); Johnson v. AT & T Technologies, Inc., 713 F.Supp. 885 (M.D. N.C.1989); Adolph Coors Co. v. Sickler, 608 F.Supp. 1417 (C.D. Cal.1985).⁹ See also Steinman, supra, 41 Vand.L.Rev. at 975-990 (discussing in detail the problems presented with pendent party jurisdiction in removed cases). Thus, notwithstanding the absence of any federal claims alleged against C & J Construction and Capsuto, it is possible that the Court could exercise pendent party jurisdiction over these parties. The Court need not decide this question, however, because, as the discussion below reveals, the notice of removal in this case is defective for removal under § 1441(a) and (b).

B. Procedural Defects

It is well established that the notice of removal must be signed or joined in by all defendants over whom the state court has acquired jurisdiction. See ...