Dultra v. U.S. Med. Home, Inc., 13 C 07598
| Decision Date | 04 April 2014 |
| Docket Number | No. 13 C 07598,13 C 07598 |
| Parties | GLORIA DULTRA and MARYANNE LASTA, individually and derivatively on behalf of LEDMAN HEALTH CARE, INC., an Illinois Corporation Plaintiffs, v. US MEDICAL HOME, INC., a Delaware corporation, MICHAEL KESELICA and GRACE KULIK, Defendants/Counter-Plaintiff. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiff Ledman Health Corporation ("Ledman") filed suit against US Medical Home, Inc. ("US Medical Home") in the Circuit Court of Kane County on September 26, 2012, seeking the rescission of a stock purchase agreement and certain employment agreements. Compl. (Dkt. 18-1). Ledman later amended its complaint in state court and added Michael Keselica and Grace Kulik as defendants. Am. Compl. (Dkt. 18-9). Keselica removed the case to this Court on October 22, 2013, on the basis of diversity jurisdiction and with the consent of US Medical Home. The plaintiffs seek to remand the case to the Circuit Court of Kane County pursuant to 28 U.S.C. § 1447(c). For the reasons discussed below, the Court denies the plaintiffs' motion.
The underlying facts of this lawsuit are hotly contested but not particularly relevant to the motion before the Court. The procedural facts, which are highly relevant, are as follows:
After Ledman filed suit in state court, US Medical filed a motion to dismiss (Dkt. 18-3), a counterclaim against Ledman seeking a declaratory judgment that the stock purchase agreement was valid and enforceable (Dkt. 18-4), and a third-party complaint against Andrew Kolb, Ledman's former attorney (Dkt. 18-5).
On April 2, 2013, Gloria Dultra and Maryanne Lasta, Ledman shareholders, filed an amended complaint on Ledman's behalf for fraud, rescission, breach of contract, and other relief against US Medical Home and two additional defendants, Michael Keselica and Grace Kulik. Am. Compl. (Dkt. 18-9). The amended complaint alleged that Keselica and Kulik are, or were, officers, representatives, or agents of US Medical. Id. ¶ 4. Filings in the state case and in this Court identify Keselica as the "President and CEO" of US Medical Home.
On April 16, 2013, the plaintiffs were granted leave to appoint a special process server and after several rounds of unsuccessful settlement negotiations, the plaintiffs filed a Motion for Service by Special Order of the Court on September 24, 2013. Dkt. 18-10; Dkt. 18-20. The plaintiffs explained in their remand motion that "despite diligent efforts ... including multiple searches and repeated attempts at service by a process server, Plaintiffs have been unable to effect personal service upon Keselica ...." Dkt. 18-20 at 1. The plaintiffs add that US Medical Home's counsel would not indicate whether he would accept service on Keselica's behalf. Id. The plaintiffs do not report, nor do the exhibits attached to the plaintiffs' motion to remand reflect, that their motion for service was granted or that Keselica was ever served with the amended complaint.
For his part, Keselica filed a Request for Service of Process on the same day as the plaintiffs' motion for service. In this odd motion, Keselica stated that he had been added as a defendant in the plaintiffs' amended complaint, that a special process server had been appointedto serve him, and that the plaintiffs had nevertheless failed to serve him. The plaintiffs, Keselica suggested, were somehow "abusing process" and he requested an order requiring them to serve him with the amended complaint. Dkt. 18-21 at 1-2. So far as the state court docket reflects, no order was entered with respect to Keselica's motion for service.
About four weeks later, on October 18, 2013, Keselica filed a Notice of Removal to this Court, asserting that the parties are completely diverse and the amount in controversy exceeds $75,000. Dkt. 1 ¶¶ 5-7.1 He attached to the notice US Medical Home's Consent to Removal, which Keselica signed as the company's president and CEO. Dkt. 18-23.
On November 19, 2013, the plaintiffs filed a Joint Motion to Remand (Dkt. 18), which is now before this Court.
Section 1446(b)(1) of Title 28 sets forth the procedures governing removal of an action from state to federal court. It states, in relevant part:
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 ... or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
Keselica, as the party seeking to invoke federal jurisdiction, bears the burden of demonstrating that removal is proper. See Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529 (7th Cir. 2004).
Keselica asserts that his notice of removal was timely because he was never formally served in state court and so a 30-day clock for removal was never triggered. Def. Resp. (Dkt. 21) at 6-7. Keselica submitted a sworn declaration with his removal notice stating that he had sought service of process on September 25, 2013 because the plaintiffs "never attempted service" of the amended complaint and that he had "yet to receive anything from the Circuit Court for Kane County ... or Counsel for Plaintiff, regarding my Request for Service of Process ...." Dkt. 4 ¶¶ 3, 4. He adds that he picked October 24, 2013 to file a notice of removal in this Court because it was twenty-two days after he sought formal service in state court; during that time, Keselica waited for formal service, but he ultimately decided to remove. Def. Resp. at 7.
The plaintiffs contend that Mot. to Remand (Dkt. 18) at 9. The plaintiffs add that because, in their view, Keselica received the initial complaint and the amended complaint (naming Keselica as a defendant) no later than December 18, 2012, or September 5, 2013, respectively, Keselica was subject to the 30-day limit from at least one of those two dates. Id. at 8.2 By not removing thecase until October 18, 2013, Keselica's removal, the plaintiffs assert, was untimely. The plaintiffs add that Keselica removed when he did to avoid a court order for new counsel for US Medical to appear after the company's previous counsel withdrew. Pls.' Reply (Dkt. 25) at 4-5.
Keselica's notice of removal was timely. He filed his notice on October 18, 2013, but he was never formally served with a summons, so the 30-day clock never began to run.3 Formal service is required to trigger the 30-day clock, as the Supreme Court held 15 years ago in Murphy Brothers v. Michetti Pipe Stringing, 526 U.S. 344 (1999). In Murphy, the Supreme Court rejected what had been known as the "receipt rule," by which the 30-day removal clock could be triggered when a defendant merely received the amended complaint. 526 U.S. 344, 347 (1999). The Supreme Court instead read the removal statute "in light of a bedrock principle: An individual or entity named as a defendant is not obliged to engage in litigation unless notified of the action, and brought under a court's authority, by formal process." Id. The Court held:
[A] named defendant's time to remove is triggered by simultaneous service of the summons and complaint, or receipt of the complaint, 'through service or otherwise,' after and apart from service of the summons, but not by mere receipt of the complaint unattended by any formal service.
Id. at 348. In other words, the 30-day removal period does not begin to run until a defendant is formally served with the complaint. Id. See also, e.g., Save-A-Life Found., Inc. v. Heimlich, 601 F. Supp. 2d 1005, 1010 (N.D. Ill. 2009) ().4 In Illinois, service of a summons requires leaving a copyof the summons with the defendant personally or at the defendant's usual place of abode with a family member or another resident, subject to certain conditions. 735 ILCS 5/2-203(a) ("Service on individuals"). Keselica may have received the initial complaint and the amended complaint, and very well may have read them and even participated in the litigation on behalf of US Medical Home, but "mere receipt ... unattended by any formal service" is insufficient to start the 30-day removal clock. Those documents were served on US Medical, not on Keselica. When Keselica filed his notice of removal, he was therefore timely under 28 U.S.C. § 1446(b).5
The plaintiffs' arguments that Keselica is attempting to delay proceedings by removing the case after it had been pending in state court for more than a year are, in light of Murphy, not relevant, as section 1446(b)(1) does not give courts authority to override the 30-day removal period. In any event, it was the plaintiffs who failed to include Keselica in their original complaint, and then opted to amend their complaint to add Keselica as a defendant, and it was the plaintiffs who failed to serve him in a timely fashion. If the removal has delayed the plaintiffs' efforts to obtain relief, they have only themselves to blame—the plaintiffs wanted Keselica in the case and now he is. Their complaints that they were unable to serve Keselica are both unpersuasive, particularly given what they describe as his active role in the state court litigation on behalf of US Medical Home, and moot.6
A final note on this point. The Supreme Court's opinion in Murphy is clearly controlling as to the question of the timeliness of Keselica's removal of this case. The plaintiffs have argued that Keselica's mere receipt of the complaint unattended by formal...
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