E-Dealer Direct v. Bank of Am., N.A.

• Decision Date: 12 April 2021
• Docket Number: EP-21-CV-62-DB
• Parties: E-DEALER DIRECT, et al., Plaintiffs, v. BANK OF AMERICA, N.A., Defendant.
• Court: U.S. District Court — Western District of Texas

E-DEALER DIRECT, et al., Plaintiffs, v. BANK OF AMERICA, N.A., Defendant.

EP-21-CV-62-DB

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS EL PASO DIVISION

April 12, 2021

MEMORANDUM OPINION AND ORDER

On this day, the Court considered Plaintiffs E-Dealer Direct, et al.,'s (collectively, "Plaintiffs") "Emergency Motion to Remand to State Court" ("Motion") filed in the above-captioned case on March 16, 2021. ECF No. 2. Defendant Bank Of America, N.A. ("Defendant") filed a Response on March 30, 2021. ECF No. 12. After due consideration, the Court will deny Plaintiffs' Motion.

BACKGROUND

This case arises from Defendant's restraint of several of Plaintiffs' accounts in connection with two collection actions in New York state courts. Notice of Removal ¶¶ 6-11, ECF No. 1; Third Am. Compl. ¶¶ 7-18, ECF No. 8. On February 23, 2021, Plaintiffs initiated a lawsuit ("state court case") in the 41st Judicial District Court of El Paso County, Texas ("state court") against Defendant and GECU. Notice of Removal ¶¶ 1-2, ECF No. 1; Original Pet., ECF No. 1-4. Plaintiffs sought a temporary restraining order and temporary and permanent injunctions preventing Defendant from freezing their accounts in connection with the New York collection actions. Notice of Removal ¶¶ 1-2, ECF No. 1; Original Pet. ¶¶ 21-22, ECF No. 1-4.

The state court issued an Ex Parte Temporary Restraining Order and set Plaintiffs' application for temporary injunction for a hearing on March 12, 2021. Notice of Removal ¶ 3, ECF No. 1; Resp. ¶ 3, ECF No. 11. At the hearing, the state court accepted Plaintiffs' voluntary dismissal of GECU. Notice of Removal ¶ 17, ECF No. 1; Resp. ¶ 5, ECF No. 11.

On March 15, 2021, Defendant filed a Notice of Removal in this Court. Notice of Removal, ECF No. 1. Therein, Defendant argued for removal based on diversity of citizenship pursuant to 28 U.S.C. § 1332. Id. ¶¶ 14-24. On March 16, 2021, Plaintiffs filed the instant Motion arguing for remand on various grounds. Mot., ECF No. 2. On March 17, 2021, Defendant filed a supplement to its Notice of Removal. Supplement to Notice of Removal, ECF No. 3. On the same day, Plaintiffs responded to the Supplement. Resp. to Supplement, ECF No 6. The Court will now consider Plaintiffs' arguments for remand.

LEGAL STANDARDS

Provided the district court has original jurisdiction of the civil action, defendants may timely remove a case from state to federal court. 28 U.S.C. § 1441(a). District courts have original jurisdiction of civil actions that do not arise under federal law when the amount in controversy exceeds $75,000 and the parties are completely diverse, meaning that no plaintiff and defendant are citizens of the same state. 28 U.S.C. § 1332(a); Wis. Dep't of Corrs. v. Schacht, 524 U.S. 381, 388 (1998). Individuals are citizens of the state in which they are domiciled. 28 U.S.C. § 1332(a). A national banking association is a citizen of the state designated in its articles of association as its main office. 28 U.S.C. § 1348; Wachovia Bank v. Schmidt, 546 U.S. 303, 318, (2006) (stating that "one would sensibly 'locate' a national bank for . . . qualification for diversity jurisdiction . . . in the State designated in its articles of association as its main office."). A defendant may remove a state court action to federal court based on diversity jurisdiction. 28 U.S.C. § 1441(b).

A plaintiff may challenge an improper removal by filing a motion to remand under 28 U.S.C. § 1447. "On a motion to remand, the removing party bears the burden of showing that federal jurisdiction exists and that removal was proper." Barker v. Hercules Offshore, Inc., 713 F.3d 208, 212 (5th Cir. 2013) (internal quotation marks and citations omitted). Further, "removal statutes are to be construed strictly against removal and for remand." Eastus v. Blue Bell Creameries, L.P., 97 F.3d 100, 106 (5th Cir. 1996).

ANALYSIS

In its Motion, Plaintiffs argue for remand on various grounds. Mot., ECF No. 2. The Court will deny Plaintiffs' Motion, finding that the Court has diversity jurisdiction over the case under 28 U.S.C. § 1332 and Defendant properly removed the case under 28 U.S.C. § 1441. The Court will reject Plaintiffs' other arguments for remand.

1. The Court Has Diversity Jurisdiction Over This Case.

The Court has diversity jurisdiction over the case under 28 U.S.C. § 1332 because (1) GECU's citizenship will not be considered in determining whether complete diversity exists, (2) Plaintiffs and Defendant are completely diverse, and (3) the amount in controversy exceeds $75,000.

a. The Court will not consider GECU's citizenship in determining whether complete diversity exists in this case.

Plaintiffs argue that GECU's dismissal from the state court case was secured under false pretenses. Resp. to Supplement ¶¶ 1-3, ECF No. 6. Thus, Plaintiffs argue that the Court should consider GECU's citizenship when determining whether complete diversity exists in this case. Id.; Mot. ¶¶ 12-14, ECF No. 2. Because GECU is also a citizen of Texas, Plaintiffs argue that complete diversity does not exist between them and GECU and Defendant. Mot. ¶¶ 12-14,ECF No. 2. Plaintiffs claim that remand is therefore proper. Mot. ¶¶ 12-14, ECF No. 2; Resp. to Supplement ¶ 3, ECF No. 6.

Defendants respond that because GECU was dismissed from the state court case at the time of removal, GECU's citizenship should not be considered in determining whether complete diversity exists in this case. Resp. ¶¶ 13, ECF No. 11.

Plaintiffs cite no authority for their proposition that, because GECU's dismissal from the state court case was secured under false pretenses, GECU's citizenship should be considered in determining whether complete diversity exists. See, generally, Resp. to Supplement ¶¶ 1-3, ECF No. 6. On the contrary, the Court determines whether complete diversity exists at the time of removal. Texas Beef Grp. v. Winfrey, 201 F.3d 680, 686 (5th Cir. 2000). In this case, GECU was dismissed from the state court case at the time of removal. Supplement ¶¶ 5-8, ECF No. 3; Resp. ¶¶ 13-16, ECF No. 11.

The Court agrees with Defendant that dismissal of GECU was fully effectuated in the state court case, regardless of Plaintiffs' claim that the dismissal was secured under false pretenses. In determining whether nonsuit and voluntary dismissal is effective in state court before removal, the Court looks to state procedural rules. Boulanger v. Devlar Energy Mktg., LLC, No. 3:15-CV-3032-B, 2015 WL 7076475, at *4 n.4 (N.D. Tex. Nov. 13, 2015) (citing Fed. R. Civ. P. 81(c)(1)). Under Texas law, nonsuit and voluntary dismissal is effective when announced in court. FKM Partnership, Ltd. v. Board of Regents of University of Houston System, 255 S.W.3d 619, 632 (Tex. 2008). Moreover, a party can be dismissed from a case by omitting the party's name in an amended pleading. Randolph v. Walker, 29 S.W.3d 271, 274 (Tex. App.—Houston [14th Dist.] 2000, pet. denied).

In this case, Plaintiffs voluntarily dismissed GECU at the March 12th hearing, and the state court accepted the dismissal as a nonsuit. Notice of Removal ¶ 17, ECF No. 1; Resp. ¶ 5, ECF No. 11. Additionally, Plaintiffs' First Amended Petition omits GECU as a party. Resp. ¶ 6, ECF No. 11; see also First Am. Pet., ECF No. 3-1. The First Amended Petition was filed prior to removal and became the operative complaint at the time of removal through Defendants filing their Notice of Filing of Notice of Removal to the state court. Resp. ¶ 6-7, ECF No. 11; First Am. Pet., ECF No. 3-1; Stephens v. Portal Boat Company, 781 F.2d 481, 482 n.1 (5th Cir. 1986) ("[A] removal is not effective until notice is given to the state court."). Therefore, GECU was properly dismissed at the time of removal.

Moreover, in a case not originally removable because of lack of complete diversity, defendants may remove the case to federal court upon voluntary dismissal of a nondiverse party. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68-69 (1996); Great Northern Ry. Co. v. Alexander, 246 U.S. 276, 281 (1918). That is the situation here. The state court case was not originally removable because GECU was not diverse to the Plaintiffs. Original Pet. ¶ 3, ECF No. 1-4. However, GECU was dismissed from the state court case creating complete diversity. Supplement ¶¶ 5-8, ECF No. 3; Resp. ¶¶ 13-16, ECF No. 11. Defendant is permitted to remove the case to this Court upon dismissal of a nondiverse party. Lewis, 519 U.S. at 69.

Plaintiffs further contend that remand is proper because it has made a motion to re-open the case against GECU in the state court case and GECU will be brought back into the case. Resp. to Supplement ¶¶ 2-3, ECF No. 6. This argument likewise fails because complete diversity is determined at the time of removal, not after some hypothetical, future event in a state court case. Winfrey, 201 F.3d at 686. Moreover, the state court's jurisdiction divests upon it being notified of removal. Dukes v. S.C. Ins. Co., 770 F.2d 545, 547 (5th Cir. 1985) ("[T]he state courtretains jurisdiction until the state court receives actual or constructive notice of the removal."). Thus, the state court does not at present have jurisdiction to rule on Plaintiffs' motion to re-open the case against GECU. Id.

b. Complete diversity exists between Plaintiffs and Defendant.

Both Plaintiffs and Defendant agree that Plaintiffs are citizens of Texas. Notice of Removal ¶ 15, ECF No. 1; Original Pet. ¶ 2, ECF No. 1-4. However, Plaintiffs and Defendant disagree about Defendant's citizenship. Defendant asserts that it is a citizen of North Carolina. Notice of Removal ¶ 16, ECF No. 1. Conversely, Plaintiffs suggest that Defendant is a citizen of Texas because it is registered to do business in Texas and Plaintiffs' accounts with Defendant are registered in Texas. Mot. ¶ 14, ECF No. 2.

Plaintiffs are mistaken in their characterization of Defendant's citizenship. For qualification for diversity jurisdiction, a national banking association such as Defendant is a...