Bellone v. Roxbury Homes, Inc.

• Decision Date: 11 October 1990
• Docket Number: Civ. A. No. 90-0027-C.
• Citation: 748 F. Supp. 434
• Court: U.S. District Court — Western District of Virginia
• Parties: Joseph C. BELLONE, et al., Plaintiffs, v. ROXBURY HOMES, INC., et al., Defendants.

748 F. Supp. 434

Joseph C. BELLONE, et al., Plaintiffs, v. ROXBURY HOMES, INC., et al., Defendants.

Civ. A. No. 90-0027-C.

United States District Court, W.D. Virginia, Charlottesville Division.

October 11, 1990.

Matthew W. Perry, Jr., Palmyra, Va., for plaintiffs.

Robert Cantor, Richmond, Va., for defendants.

MEMORANDUM OPINION

MICHAEL, District Judge.

The action presently before the Court is the motion to remand the case to the Circuit Court of Fluvanna County, Virginia, filed by the plaintiffs, Joseph and Julia Bellone, on June 12, 1990. According to the plaintiffs, the case was improperly removed and is not within the jurisdiction of this Court due to the fact that one of the two defendants, Roxbury Homes, Inc. (hereinafter "RH"), did not join in the petition for removal filed by the other defendant, International Building Systems, Inc. (hereinafter "IBS"), as is required by 28 U.S.C. § 1446(a) (1990). In its response to this motion to remand filed on July 12, 1990, defendant IBS argues that defendant RH was not required to join in the petition since RH has no assets and is, therefore, strictly a nominal or formal party to the lawsuit. The parties agreed to waive oral argument on this motion, and therefore, it is ripe for resolution.

I.

The plaintiffs instituted this action against the defendants in the Circuit Court of Fluvanna County, Virginia, on May 3, 1990. In their complaint, the plaintiffs allege that the defendants were, inter alia, guilty of fraud and breach of contract concerning their agreement to construct a house for the plaintiffs in the Lake Monticello region of Fluvanna County, Virginia. Specifically, the plaintiffs maintain that, on January 9, 1989, they entered into a contract with RH which obligated the corporation, in exchange for an agreed contract price, to construct a house for the plaintiffs on a lot that they owned in the Lake Monticello area. According to the plaintiffs, when the house was only 50% complete and they had paid to RH the full contract price, they were notified by RH's representatives that the corporation no longer had assets or money available, that the corporation would not complete the house, and that the corporation would not refund to the plaintiffs any of the amount that they had paid under the contract.

The plaintiffs, thereafter, filed suit against RH in the Circuit Court of Fluvanna County, Virginia. The plaintiffs also named IBS as a party defendant because IBS, in their estimation, was only a "continuation" of RH and had acquired, through fraudulent conveyances, RH's remaining assets. On May 25, 1990, IBS petitioned to remove the case to this Court. IBS asserted that, pursuant to 28 U.S.C. § 1332 (1990), this Court had jurisdiction over the case because there was complete diversity of citizenship between the parties and the amount in controversy exceeded $50,000; therefore, IBS concluded that removal to this Court was proper under 28 U.S.C. § 1441(a) (1990). RH did not, however, join in this petition.

On June 12, 1990, the plaintiffs filed a motion to remand the case to the Circuit Court of Fluvanna County, Virginia. They argued that the case was improperly removed and that this Court did not have jurisdiction due to the fact that RH, the principal alleged wrongdoer, did not join the petition for removal and that the deadline for RH's joining of that petition had passed. On July 2, 1990, IBS filed its response to this motion. It argued that RH was not required to join the petition for removal because RH, having no assets and engaging in no business enterprise at the time the case was filed, was a strictly nominal or formal party to the lawsuit.

II.

The provisions of the United States Code dealing with the removal of cases from state to federal courts are found in 28 U.S.C. §§ 1441-52 (1990). The general rule announced by these provisions is that, if a federal court has original jurisdiction over a controversy brought in state court, then that case can be removed to federal court as long as the procedural requirements of 28 U.S.C. § 1446 are met. Section 1446(a) of Title 28 of the United States Code states, in pertinent part, that:

A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.

28 U.S.C. § 1446(a) (1990). Courts have consistently interpreted this provision to mean that all defendants to the action must join in the petition for removal or consent to such removal. See Toyota of Florence, Inc. v. Lynch, 713 F.Supp. 898, 905 (D.S.C. 1989); Cohen v. Hoard, 696 F.Supp. 564, 565 (D.Kan.1988); Courtney v. Benedetto, 627 F.Supp. 523, 525 (M.D.La.1986); Romashko v. Avco Corp., 553 F.Supp. 391, 392 (N.D.Ill.1983); Mason v. International Business Mach., Inc., 543 F.Supp. 444, 446 (M.D.N.C.1982); McKinney v. Rodney C. Hunt Co., 464 F.Supp. 59, 62 (W.D.N.C. 1978). Even more importantly, courts have also continuously expressed their unwavering belief that the requirement of consensual unanimity among defendants in order for a lawsuit to be removed as well as all other aspects of the removal provisions must be strictly construed. See Toyota, 713 F.Supp. at 900; Thompson v. Gillen, 491 F.Supp. 24, 26 (E.D.Va.1980).

Three reasons are traditionally given for the general unwillingness of courts to expand upon these statutory provisions. First, removal of civil cases to federal court is, quite simply, an infringement on state sovereignty. Consequently, federal courts have concluded that the statutory provisions regulating removal must be strictly applied and that the federal judiciary cannot extend the jurisdiction of its courts beyond the boundaries set by those provisions. See Mason, 543 F.Supp. at 445; Gillen, 491 F.Supp. at 26. Second, state courts are generally courts of general jurisdiction while federal courts are courts of limited jurisdiction. From this fundamental principle, federal courts have reasoned that they should be strictly limited to those cases in which original jurisdiction has been conferred upon them and should not be allowed to denigrate the requirements of the removal statutes to enhance their jurisdiction. See Gillen, 491 F.Supp. at 26. Finally and most importantly, a court without jurisdiction in a lawsuit is incapable of rendering a valid judgment. See id.; Mason, 543 F.Supp. at 445. Therefore, in order to avoid reversal for lack of jurisdiction and, hence, to avoid the entry of valueless judgments, federal courts have reasoned that the removal statutes should be applied strictly. See Mason, 543 F.Supp. at 445; Gillen, 491 F.Supp. at 26.

The view that removal statutes should be strictly construed is so well ingrained, moreover, that amendment of removal petitions after the deadlines prescribed by the relevant statutes have passed is limited to those instances involving only minor technical corrections as opposed to substantive revisions. See Courtney, 627 F.Supp. at 527; Friedrich v. Whittaker Corp., 467 F.Supp. 1012, 1014 (S.D.Tex.1979). In sum, the practice that has been adopted by federal courts is that any doubts regarding compliance with removal provisions must be resolved in favor of remanding the case to state court. See Gillen, 491 F.Supp. at 26.

Despite the stringency with which courts interpret removal procedures, however, three exceptions to the requirement that all defendants join in or consent to a petition for removal have been recognized: (1) when the non-joining defendant has not been properly served at the time the removal petition is filed; (2) when the non-joining defendant is merely a nominal or formal party; and (3) when the removed claim is separate and independent from other aspects of the lawsuit filed in state court as defined by 28 U.S.C. § 1441(c). See Northern Ill. Gas Co. v. Airco Indus. Gases, 676 F.2d 270, 272 (7th Cir.1982); Nannuzzi v. King, 660 F.Supp. 1445 (S.D.N.Y. 1987); McKinney, 464 F.Supp. at 62. In the present case, IBS maintains that RH did not join the removal petition because RH falls within the second exception, i.e. that RH is only a nominal or formal party to the lawsuit. IBS argues that RH is a corporation without assets and is not presently engaged in any business enterprise. In support of its position that RH was not required to join the petition for removal, IBS cites a variety of cases in which defendants were not required to join a removal petition due to their status as purely nominal parties. See, e.g., Stonybrook Tenants Assn., Inc. v. Alpert, 194 F.Supp. 552 (D.Conn.1961). This Court's task, therefore, is to analyze the relevant statutory provisions and case law on this issue in light of the known facts in the present case to determine whether or not RH is, indeed, a nominal party or is, instead, a real party in interest whose failure to join the petition for removal requires the Court to remand the case to the Circuit Court of Fluvanna County, Virginia. See Tri-Cities Newspapers, Inc. v. Tri-Cities P.P. & A. Local 349, 427 F.2d 325, 327 (5th Cir.1970) (discussing the trial court's responsibility of conducting an ad hoc examination of each case to determine whether or not a party can accurately be described as a nominal or formal party).

To begin with, the Court accepts IBS' representations that RH is no longer operating as a business and, for this reason, did not intend to respond to the complaint filed in this case. Putting these representations aside, however, it is still undisputed that RH remains a corporation properly licensed under the laws of the State of Delaware. RH has not liquidated formally pursuant to any bankruptcy...