Daligcon v. Bank of Am., N.A., CIVIL NO. 21-00020 JAO-RT

Decision Date09 April 2021
Docket NumberCIVIL NO. 21-00020 JAO-RT
PartiesZENAIDA DALIGCON, Plaintiff, v. BANK OF AMERICA, N.A.; DOE DEFENDANTS 1-50, Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Court (Hawaii)
ORDER GRANTING PLAINTIFF'S MOTION FOR ORDER OF REMAND

Defendant Bank of America, N.A. ("BANA") removed this action from the Circuit Court of the Fifth Circuit, State of Hawai'i ("state court"), on the basis of diversity jurisdiction. Plaintiff Zenaida Daligcon ("Daligcon") seeks remand on grounds of untimeliness, violation of the unanimity rule, and the voluntary-involuntary rule. ECF No. 10-1. She also requests attorneys' fees and costs. ECF No. 10. For the following reasons, the Court GRANTS Daligcon's Motion and REMANDS this action to state court. The Court DENIES Daligcon's request for attorneys' fees and costs.

BACKGROUND
I. State Court Proceedings

Daligcon joined an already-existing action in state court, Wallis, et al. v. Bank of America, N.A., et al., Case ID 5CCV19-1-0070 ("Wallis state court case"), which was initiated by Kimberly Wallis, Jack McConnachie, Jr., and Donna McConnachie. See Wallis v. Bank of Am., N.A., Civil No. 20-00220 KJM ("Wallis federal court case"), ECF No. 1-1. An amended complaint, filed on June 24, 2019, added as plaintiffs Daligcon, Frances Foster, Kendall Goo, Laura Goo, and Cynthia Green.1 ECF No. 10-13. The amended complaint also joined the following defendants, against whom the plaintiffs asserted quiet title and ejectment claims: Shawn and Roberta Cohen; Tracie Ibara; Jason and Allison Barber; Mortgage Electronic Registration Systems, Inc. ("MERS"); Kamaaina Mortgage Group, Inc.; Gregory S. Baxter, individually and as trustee; Montana Knightsbridge, individually and as trustee; and Finance Factors, Limited (collectively, "QTE defendants"). Id.

On November 8, 2019, BANA and MERS filed a Motion to Dismiss First Amended Complaint and Motion to Sever ("Motion to Dismiss and Sever"),arguing that claims against the QTE defendants were time barred and that the plaintiffs' claims should be severed. ECF No. 10-14; ECF No. 14-2. The state court heard the matter on January 23, 2020. ECF No. 14-5. Relevant to these proceedings, in an order issued on April 14, 2020 ("4/14/20 Order"),2 the state court dismissed the claims against the QTE defendants as barred by a six-year statute of limitations and severed and dismissed all but Wallis' (the first-named plaintiff) claims. ECF No. 10-3; ECF No. 14-5. The state court authorized the dismissed plaintiffs to refile actions with the court "subject to the rulings contained in th[e] Order." ECF No. 10-3.

On April 21, 2020, Wallis, the McConnachies, Daligcon, Foster, the Goos, and Green appealed the 4/14/20 Order. ECF No. 10-1 at 15; see also ECF No. 10-11.

II. First Removal to Federal Court

On May 12, 2020, BANA removed the remaining portion of the case — Wallis' claims against BANA — to federal court on the basis of diversity jurisdiction, arguing that the case became removable upon the issuance of the 4/14/20 Order. See Wallis federal court case, ECF No. 1. Magistrate Judge Mansfield remanded the case, ruling that BANA failed to obtain the consent of theapplicable QTE defendants (the Cohens). ECF No. 10-12. Magistrate Judge Mansfield reasoned that although the state court dismissed the QTE defendants, no final judgment had entered pursuant to Rule 54(b) of the Hawai'i Rules of Civil Procedure ("HRCP") so they remained parties to the action whose consent was required to effectuate removal. Id. at 10-16.

III. Further State Court Proceedings

On September 11, 2020, the Intermediate Court of Appeals ("ICA") dismissed the appeal for lack of appellate jurisdiction, concluding that the 4/14/20 Order was interlocutory and that the circuit court "neither resolved all of the multiple claims in this case nor reduced its dispositive rulings to an appealable final judgment." ECF No. 10-11 at 2-3.

Pursuant to the 4/14/20 Order, Daligcon refiled her claims in a new action on November 4, 2020Daligcon v. Bank of America, N.A., Case ID 5CCV-20-0000116, ECF No. 1-1. Daligcon served BANA on December 11, 2020. ECF No. 10-1 at 16.

IV. Current Proceedings

BANA removed the present action on January 11, 2021, alleging that diversity jurisdiction exists because Daligcon is a citizen of Hawai'i, it is a citizen of North Carolina, and the amount in controversy exceeds $75,000.00. ECF No. 1 ¶¶ 8-24.

Daligcon filed this Motion for Order of Remand on February 10, 2021. ECF No. 10. BANA filed its Opposition on March 2, 2021, ECF No. 14, and Daligcon filed her Reply on March 9, 2021. ECF No. 16. The Court held a hearing on April 2, 2021. ECF No. 21.

LEGAL STANDARD

Under 28 U.S.C. § 1441, a defendant may remove a civil action brought in a state court to federal district court if the district court has original jurisdiction. See Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 679-80 (9th Cir. 2006). "Removal . . . statutes are 'strictly construed,' and a 'defendant seeking removal has the burden to establish that removal is proper and any doubt is resolved against removability.'" Hawaii v. HSBC Bank Nev., N.A., 761 F.3d 1027, 1034 (9th Cir. 2014) (citation omitted); see Hunter v. Phillip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) ("The 'strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper,' and that the court resolves all ambiguity in favor of remand to state court." (citation omitted)). Courts should presume that a case lies outside the limited jurisdiction of the federal courts. See id.

"If a case is improperly removed, the federal court must remand the action because it has no subject-matter jurisdiction to decide the case." Dennis v. Hart,724 F.3d 1249, 1252 (9th Cir. 2013) (internal quotation marks and citation omitted).

DISCUSSION

Daligcon moves to remand on four grounds: (1) BANA untimely removed because more than one year has passed since the commencement of this case; (2) BANA arguably missed the 30-day window to remove; (3) QTE defendant Ibara should be treated as a party to this case, thereby requiring her consent to removal; and (4) the voluntary-involuntary rule precludes removal. ECF No. 10-1.

I. Thirty-Day Removal Windows
A. 28 U.S.C. § 1446(b)(1)

BANA treats Daligcon's post-severance case as a new action and calculated its removal window from the date it received the pleading, pursuant to 28 U.S.C. § 1446(b)(1). ECF No. 1 ¶¶ 5-6. Section 1446(b)(1) provides: "The notice of 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 setting forth the claim for relief upon which such action or proceeding is based[.]" 28 U.S.C. § 1446(b)(1). This "only applies if the case stated by the initial pleading is removable on its face." Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005). That is, "the ground for removal must be revealed affirmatively in the initial pleading in order for the first thirty-day clock under§ 1446(b) to begin." Id. at 695 (footnote omitted). If the post-severance complaint is viewed as the initial pleading, BANA timely removed. Daligcon served BANA on December 11, 2020, and BANA filed its Notice of Removal on January 11, 2021. ECF No. 1 ¶ 6; see also Fed. R. Civ. P. 6(a)(1).

B. 28 U.S.C. § 1446(b)(3)

Ultimately at issue here, however, is the second window for removal under § 1446(b)(3), which applies when a case is not removable based on the initial pleading:

Except as provided in subsection (c), if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

28 U.S.C. § 1446(b)(3). This provision necessarily applies if Daligcon's post-severance case is treated as an extension of the Wallis state court case because the "initial pleading" was filed therein. Significantly, as the Court discusses below, § 1446(b)(3) is subject to a one-year outer limit. See 28 U.S.C. § 1446(c)(1). So even though a defendant timely removes within 30 days pursuant to the second removal window, the one-year limit can nevertheless bar removal.

Daligcon's primary basis for remand is that BANA removed beyond § 1446(c)(1)'s one-year limit, and she urges the Court to view her post-severance complaint — the document making the case removable — as a continuance of theWallis state court case. ECF No. 10-1 at 24. Daligcon challenges neither BANA's compliance with § 1446(b)(3)'s 30-day limit in this context,3 nor the removability of her post-severance complaint, on its face. Although BANA appears to have also timely removed under § 1446(b)(3), this is not dispositive given the Court's eventual determination that the one-year limit bars removal.

II. One-Year Limitation on Removal

As the Court noted in the preceding section, even though a case becomes removable under § 1446(b)(3), cases founded upon diversity jurisdiction, as here, "may not be removed . . . more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action." 28 U.S.C. § 1446(c)(1). "'Commencement' in this context refers to when the action was initiated in statecourt, according to state procedures." Bush v. Cheaptickets, Inc., 425 F.3d 683, 688 (9th Cir. 2005).4

Rule 3 of the HRCP states: "A civil action is commenced by filing a complaint with the court." HRCP Rule 3. This rule offers no clarity under the circumstances because it is undisputed that the complaints at issue — the initial complaint in the Wallis state court case and the post-severance complaint — were filed in state court under different case numbers. At issue is which case commenced the...

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