Blakeley v. United Cable System

• Citation: 105 F.Supp.2d 574
• Decision Date: 22 June 2000
• Docket Number: No. CIV.A.4:99CV121LN.,CIV.A.4:99CV121LN.
• Parties: Ellie Mae BLAKELEY, Plaintiff, v. UNITED CABLE SYSTEM, Amcore Financial, Inc., D/B/A Amcore Consumer Finance Company, Inc., and Dow Financial, Defendants.
• Court: U.S. District Court — Southern District of Mississippi

105 F.Supp.2d 574

Ellie Mae BLAKELEY, Plaintiff, v. UNITED CABLE SYSTEM, Amcore Financial, Inc., D/B/A Amcore Consumer Finance Company, Inc., and Dow Financial, Defendants.

No. CIV.A.4:99CV121LN.

United States District Court, S.D. Mississippi, Eastern Division.

June 22, 2000.

COPYRIGHT MATERIAL OMITTED

Stanford Young, Waynesboro, MS, for Plaintiff.

Silas W. McCharen, Carol Ann Estes, Daniel, Coker, Horton & Bell, Jackson, MS, Brooks R. Buchanan, Lee Davis Thames, J. Collins Wohner, Jr., Butler, Snow, O'Mara, Stevens & Cannada, Jackson, MS, T.H. Freeland, III, Freeland & Freeland, Oxford, MS, for Defendants.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of plaintiff Ellie Mae Blakeley to remand pursuant to 28 U.S.C. § 1447. Defendants Amcore Consumer Finance Company, Inc. and Amcore Financial, Inc. (the Amcore defendants)¹, joined by defendant Dow Electronics,² have responded in opposition to the motion. The court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that plaintiff's motion to remand is due to be granted for reasons which the court will herein undertake to explain.

According to the allegations of plaintiff's complaint, which she filed in the Circuit Court of Wayne County, Mississippi, plaintiff, in response to certain advertisements by defendants, communicated with agents for defendants and purchased a wireless cable television system, known also as a "Home Satellite System," executing a purchase agreement for the system. Plaintiff alleges that in connection with her purchase of this satellite system, defendants "told [her] that her monthly payment for the purchase of the [system], with programming, would pay for the system within three (3) years"; that she was "led to believe that she would pay a regular monthly payment without the addition of interest"; and that defendants at no time "revealed or disclosed [to plaintiff] that the purchase of the [system] was an `open-end credit card transaction' in which the purchase price would be financed with the defendant, Amcore Consumer Finance Company, Inc." According to the complaint, "[t]he credit transaction unknowingly entered into by the Plaintiff resulted in little or no principal debt reduction on the initial Satellite purchase price [inasmuch as] [t]he regular monthly payment was allocated to pay interest and finance charges only." She alleges that as a result, the balance owed now approaches or exceeds the original amount financed, notwithstanding that she has made regular monthly payments on the transaction over a period of time. Based on these allegations, and specifically on her claim that defendants both affirmatively misrepresented the transaction and failed to disclose the true nature of the transaction as an open-end credit card transaction, plaintiff purported to set forth ten claims for relief in her complaint, including inter alia, for negligence, breach and tortious breach of contract, breach of the duty of good faith and fair dealing and economic duress.³

Within thirty days of service of the complaint, the Amcore defendants, joined by Dow Electronics, removed the case to this court on the basis of diversity jurisdiction under 28 U.S.C. § 1332, and bankruptcy removal jurisdiction as set forth in 28 U.S.C. § 1334. Plaintiff timely moved to remand, asserting on the diversity front that while the parties are of diverse citizenship, the amount in controversy does not exceed $75,000 so that there is no diversity jurisdiction, and contending, with reference to defendants' allegations of bankruptcy jurisdiction, first, that Dow Electronics, the party that was in bankruptcy, is not a defendant in this case and that in any event, even were the case properly removed on the basis of bankruptcy removal jurisdiction, remand should be ordered on the basis of mandatory abstention, discretionary abstention and/or equitable remand.

In their response to plaintiff's motion to remand, defendants conceded that since plaintiff had agreed, post-removal, to irrevocably stipulate that she will never seek or accept any amount in excess of $75,000, then the requirements of diversity jurisdiction are not satisfied. They maintained, however, that jurisdiction is nevertheless proper in this court on either or both of two bases, first, because plaintiff's claims, though nominally pled as state-law claims, actually "arise under" federal law, and specifically the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., and second, because the court has bankruptcy removal jurisdiction, which it must and/or should exercise.

As plaintiff points out, while defendants did assert that this case was removable pursuant to 28 U.S.C. § 1334, the bankruptcy removal statute, they did not purport to remove the case on the basis of federal question jurisdiction under 28 U.S.C. § 1331 and instead, first asserted TILA-based federal question jurisdiction in response to plaintiff's motion to remand. Plaintiff thus insists that defendants' assertion of this additional basis for jurisdiction was untimely and that the court may not properly exercise jurisdiction on this basis.

The court agrees that defendants failed to timely assert federal question jurisdiction as a basis for removal. Under 28 U.S.C. § 1441, a defendant may remove a case from state to federal court if federal jurisdiction exists. To effect removal, the defendant must file in the district court "a notice of removal ... 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." 28 U.S.C. § 1446(a). The notice of removal must be filed within thirty days after a defendant receives or is served with a copy of the state court complaint, or within thirty days of his receipt of some "other paper" from which the removability of the case is first ascertainable. 28 U.S.C. § 1446(b).

Within the thirty-day period prescribed by § 1446(b), a defendant may freely amend its notice of removal. And the majority of courts have recognized—at least in more recent times—that even after expiration of this thirty-day period, a defendant may still be allowed to amend its removal petition in order to cure defective allegations of jurisdiction. See, e.g., D.J. McDuffie, Inc. v. Old Reliable Fire Ins. Co., 608 F.2d 145, 146 (5th Cir.1979) (holding that amendment of removal petition was properly allowed to correct jurisdictional allegations in removal petition which were defective or faulty due to defendants' failure to specifically allege the citizenship of the parties at the time the suit was brought and at the time the removal petition was filed; missing allegation was not a fatal omission which could not be cured by amendment). The authorization for such amendments derives from 28 U.S.C. § 1653, which states that "defective allegations of jurisdiction may be amended ... in the trial and appellate courts." Thus, where a defendant, for example, has alleged the existence of diversity jurisdiction in its removal petition but has failed to allege all of the specific facts, or has incorrectly alleged some of the facts underlying its jurisdictional conclusion, courts have allowed amendments to cure these deficiencies. See, e.g., FHC Options, Inc. v. Security Life Ins. Co. of America, 993 F.Supp. 378, 382 (E.D.Va.1998) (amendment allowed where defendant incorrectly pled its own citizenship). However, the courts that have addressed the issue have uniformly recognized that a defendant's ability to amend the removal petition after the thirty-day time limit for removal prescribed by § 1446 extends only to "amendments to correct `technical defects' in the jurisdictional allegations in the notice of removal," and that amendments to remedy a "a substantive defect in the [removal] petition", i.e., to add a new basis for federal jurisdiction, are not permitted. See, e.g., Briarpatch Ltd. v. Pate, 81 F.Supp.2d 509, 516-17 (S.D.N.Y.2000) ("[f]ailure to assert federal question jurisdiction as a basis for removal is a substantive defect" which defendant may not cure by amendment after expiration of thirty-day time limit of § 1446(b)); Stein v. Sprint Communications Co., 968 F.Supp. 371, 374 (N.D.Ill.1997) ("[A] defendant may not amend its notice of removal after the 30-day limit in § 1446(b) to remedy a substantive defect in the petition"); Wright v. Combined Ins. Co. of America, 959 F.Supp. 356, 359 (N.D.Miss.1997) ("If a defendant seeks to amend the notice of removal at any time thereafter, he may only do so to clarify the jurisdictional grounds for removal, which were unartfully stated in the original notice. He may not allege new jurisdictional grounds for removal."); Spillers v. Tillman, 959 F.Supp. 364, 372 (S.D.Miss.1997) ("Although a defendant is free to amend a notice of removal within the 30-day period set forth in 28 U.S.C. § 1446(b), once the 30-day period has expired, amendment is not available to cure a substantive defect in removal proceedings."); Lowes v. Cal Dive Int'l, Inc., No. 97-407, 1997 WL 178825 (E.D.La.1997) (recognizing that "[w]hile defendants may freely amend their notice of removal within thirty days of service, they may not add new grounds for removal after the thirty day period has expired"); Iwag v. Geisel Compania Maritima, 882 F.Supp. 597, 601 (S.D.Tex.1995) (observing that "[s]ection 1653 does not allow the removing party to assert additional grounds of jurisdiction not included in the original pleading," and thus holding that court would "disallow amendments to notices of removal that present grounds for removal not included in the original notice"); Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3733, at 358-61 (3d ed. 1998) ("[T]he notice may be amended only to set out more specifically the grounds for removal that already have been stated, albeit imperfectly, in...