Borne v. New Orleans Health Care, Inc., Civ. A. No. 89-3249.
| Decision Date | 21 May 1990 |
| Docket Number | Civ. A. No. 89-3249. |
| Citation | 116 BR 487 |
| Parties | Melville F. BORNE, Jr., Evangeline Health Care, Inc. and Ferncrest Manor v. NEW ORLEANS HEALTH CARE, INC., Ara Healthcare Management, Inc. and Middleberg, Riddle & Gianna. |
| Court | U.S. District Court — Eastern District of Louisiana |
Carl W. Cleveland, Cleveland, Barrios, Kingsdorf & Casteix, New Orleans, La., for plaintiffs.
Paul John Mirabile, Lillian Marlene Quarles, Sue Buser, Middleberg, Riddle & Gianna, New Orleans, La., for defendants.
Roy Clifton Cheatwood, Carole Gallagher Boggs, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Walter Frederic Marcus, III, John Joseph Hainkel, III, Lemle & Kelleher, New Orleans, La., for Middleberg, Riddle & Gianna, A Louisiana Law Partnership, defendant.
Plaintiffs filed this lender liability action on April 14, 1989 in Orleans Parish Civil District Court alleging state law causes of action for breach of contract, mismanagement, and defamation. The action arose out of a loan agreement negotiated between plaintiff Melville Borne and defendant Sandia Federal Savings & Loan Association ("Sandia"), under which Sandia agreed to finance the construction of Ferncrest Manor ("Ferncrest"), a nursing care facility in New Orleans, Louisiana. Generally, plaintiffs allege that Sandia and the other named defendants1 effectively repudiated the original loan agreement, failed to close renegotiated loan agreements demanded by Sandia, and engaged in a deliberate pattern of activity that disrupted plaintiffs' business operations and caused plaintiffs to incur substantial losses.
Defendants removed the action to federal court on July 24, 1989, alleging that the action is related to Ferncrest's Chapter 11 bankruptcy proceeding currently pending in the Bankruptcy Court for the Eastern District of Louisiana.2 At the time of removal, the Federal Savings & Loan Insurance Corporation ("FSLIC") had been appointed conservator for Sandia,3 yet defendants did not predicate jurisdiction upon 12 U.S.C. § 1730(k)(1) (1989) ().
Following removal, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub.L. No. 101-73, 1989 U.S.Code Cong. & Admin.News (103 Stat.) 183, which became effective on August 9, 1989. Under FIRREA, the Resolution Trust Corporation ("RTC") succeeds to FSLIC's conservator duties. Pursuant to FIRREA, the RTC was appointed receiver for Sandia on September 13, 1989. The RTC moved to intervene as a party defendant on October 2, 1989. Plaintiffs then filed their motion to abstain and remand on October 4, 1989. On October 6, 1989, the RTC formally joined as a party and invoked the ninety day stay provided by FIRREA § 212(d)(12)(A)(ii), 1989 U.S.Code Cong. & Admin.News (103 Stat.) 231-32 (to be codified at 12 U.S.C. § 1821(d)(12)(A)(ii)).
When the stay expired on December 13, 1989, plaintiffs filed a motion to dismiss the RTC and Sandia pursuant to Fed.R.Civ.P. 41(a)(1)(i).4 I granted plaintiffs' motion on January 23, 1990, thereby leaving NOHC, ARA, and Middleberg as the remaining defendants.
On February 13, 1990, plaintiffs re-filed their motion to remand. Plaintiffs argue that the claims involved in this case are unrelated or only tangentially related to Ferncrest's bankruptcy proceeding, and therefore I should abstain and remand the case to state court. Defendants virtually ignore this argument, contending that at the time of removal, federal jurisdiction existed by virtue of FSLIC's conservatorship for Sandia. Defendants argue that this federal interest continues by virtue of RTC's conservatorship of the entity which owns NOHC even though RTC is no longer a party.
In keeping with their argument, defendants seek, by motion filed on February 20, 1990, to supplement and amend their notice of removal to reflect the existence of removal jurisdiction under § 1730(k)(1) (the FSLIC removal statute) at the time of removal and currently under FIRREA § 212(d)(12)(A)(ii). Plaintiffs oppose this motion and argue that defendants are asserting an entirely different basis for jurisdiction, and because the amendment is untimely, defendants' motion must be denied. Defendants respond that even if the allegations set forth in the notice of removal do not support jurisdiction, the supplemental and amending notice of removal sets forth a basis of federal jurisdiction that arose after the initial removal (i.e., FIRREA). Further, defendants contend that they timely filed the supplemental and amending notice of removal under FIRREA's removal provisions.
Removal jurisdiction is strictly construed. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir.1988). When a plaintiff moves to remand for lack of jurisdiction, the burden of establishing original federal jurisdiction rests upon the defendant. Kidd v. Southwest Airlines, Co., 891 F.2d 540, 543 (5th Cir.1990). Any doubts concerning the propriety of removal are resolved in favor of remand and state court jurisdiction. York v. Horizon Federal Savings & Loan Association, 712 F.Supp. 85, 87 (E.D.La.1989) (Feldman, J.).
For purposes of determining whether subject matter jurisdiction exists, the judge must look to the complaint and the notice of removal at the time the notice of removal was filed.5 Therefore, I examine the facts as they existed at the time of removal (July 24, 1989) and at the time of filing the supplemental and amending notice of removal (February 20, 1990). I then discuss whether abstention and remand are appropriate in this case.
Initially, plaintiffs contend that the defendants untimely filed the original notice of removal. The removal statute provides that "the petition for removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading." 28 U.S.C. § 1446(b). Although plaintiffs seem to concede that defendants removed the action within thirty days of proper service, plaintiffs argue that defendants had notice of the suit well before service was effected. As evidence of defendants' knowledge of the suit, plaintiffs cite defendants' filing of motions for extensions of time on May 24, 1989—two months prior to the filing of the notice of removal.
Defendants do not contest this presentation of the relevant facts.6 Rather, noting that the cases are split on the question of when the thirty day removal period begins, defendants urge that I apply the "majority rule": the thirty day period runs from the time of proper service. See Hunter v. American Express, 643 F.Supp. 168, 169-70 (S.D.Miss.1986). However, this interpretation conflicts with the plain language of the rule. I interpret the statute to mean what it says: the thirty day period begins to run upon receipt of a copy of the pleading, regardless of whether service was properly effected.7 Under this interpretation, the asserted basis of jurisdiction is immaterial because defendants simply removed this case too late.
Plaintiffs, however, have waived any objection to defendants' untimely removal. Although defendants do not raise this point, the removal statute also provides: "A motion to remand the case on the basis of any defect in removal procedure must be made within 30 days after the filing of the notice of removal." 28 U.S.C. § 1447(c). Failure to timely raise an objection to the timeliness of the notice of removal constitutes a waiver of the objection.8 In this case, the defendants filed the notice of removal on July 24, 1989, and plaintiffs filed their first motion to remand on October 4, 1989 and re-filed it on February 13, 1990—well beyond the thirty day period.
Defendants' notice of removal alleges that the action arose in and is related to Ferncrest's bankruptcy petition, and therefore this court has original jurisdiction pursuant to 28 U.S.C. § 1334(b) and removal jurisdiction pursuant to 28 U.S.C. § 1452(a). Section 1334(b) provides, in relevant part:
Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11 (emphasis added).
Section 1452(a) provides, in relevant part:
Had defendants removed this case under the FSLIC removal statute, jurisdiction unquestionably would have existed.9 However, defendants elected to remove on the basis of title 11. Seeking to correct their error, defendants now wish to "clarify" Sandia's status. Defendants point out that Sandia was in FSLIC conservatorship at the time of removal, and they argue that I have original and removal jurisdiction over this action by virtue of Sandia's status at the time of removal. In response, plaintiffs argue that defendants are belatedly and impermissibly asserting an entirely different jurisdictional basis.
Removal by the FSLIC is governed by the general removal provisions of 28 U.S.C. § 1446(b). Under § 1446(b), a party is free to amend his or her notice of removal as he or she wishes within thirty days of service or receipt of a copy of the initial pleading.10 Once the thirty day limit has expired, however, a party may not amend to assert a wholly new ground for removal.11 Rather, a party may only amend defective allegations of jurisdiction pursuant to 28 U.S.C. § 1653.12 Section 1653 is limited to curing technical...
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