Everett Fin. v. Kocher
| Decision Date | 20 September 2019 |
| Docket Number | CIVIL ACTION NO. 3:19-CV-1563-B |
| Parties | EVERETT FINANCIAL, INC., D/B/A SUPREME LENDING, Plaintiff, v. JOHN E. KOCHER, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
This is an order concerning a motion to remand the case to state court. The Court concludes that Defendant improperly removed the case based on the same grounds as its first removal. Therefore, the Court hereby GRANTS the motion to remand (Doc. 4) and orders the case to be remanded to the 298th District Court of Dallas County, Texas. The Court, however, DENIES Plaintiff's motion for attorney's fees (Doc. 4).
This is the second time this action has been removed based on diversity jurisdiction. Doc. 4, Pl.'s Mot. To Remand and Br. in Supp. ("Pl.'s Br."), 3. Both times, the Defendant, John E. Kocher, has alleged that the amount-in-controversy exceeds $75,000, on the basis that the Plaintiff, Everett Financial, Inc. d/b/a Supreme Lending, is seeking attorney's fees over $75,000 and is attempting to recover those fees. Id. In the first action, Judge Godbey ordered the case be remanded, concluding that this claim "[fell] well short of the 'summary judgment type evidence' required to establish that the amount-in-controversy is satisfied." Doc. 5, App. in Supp. of Remand, 102-03 ("App.").
Following the remand, Defendant posed an interrogatory to Plaintiff regarding attorney's fees incurred, and Plaintiff responded that it "incurred approximately $125,000 in attorneys' fees and $5,000 in costs of court." Doc. 4, Pl.'s Br., 3. This interrogatory was answered on May 29, 2019. Doc. 5, App., 105. Based on this new evidence, Defendant again removed the case, this time on June 27, 2019. Doc. 4, Pl.'s Br., 3. As the case was removed within thirty days of obtaining the information that would be the basis for federal court jurisdiction, removal here ordinarily would have been be timely. See 28 U.S.C. § 1441(a). Plaintiff does not dispute that the requirements for diversity of citizenship have been satisfied. Doc. 4, Pl.'s Br., 6.
Nevertheless, Plaintiff filed a motion to remand (Doc. 4), on three grounds. First, Plaintiff argues that permitting Defendant to rely solely on attorney's fees to establish the amount-in-controversy contravenes the policies underlying removal. Id. at 6. Second, Plaintiff argues that because Defendant has already sought removal on the same grounds (that the attorney's fees met the amount-in-controversy requirement), Defendant is barred from removing on that same basis again. Id. at 8. Third, the interrogatory does not provide sufficient evidence that Plaintiff will seek more than $75,000 in attorneys fees, and thus Defendant has not satisfied the amount-in-controversy requirement. Id. at 10. Plaintiff also asks for attorney's fees associated with the alleged improper removal. Id.
Plaintiff filed its motion on July 25, 2019 (Doc. 4), and Defendant filed its response on August 22, 2019 (Doc. 8). More than fourteen days have passed since Defendant has filed its response, and Plaintiff has not filed a reply. The motion is now ripe.
"'Federal courts are courts of limited jurisdiction.'" Settlement Funding, L.L.C. v. Rapid Settlements, Ltd., 851 F.3d 530, 537 (5th Cir. 2017) (quoting Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001)). Thus, courts "'must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum.'" Id.
The federal removal statute, 28 U.S.C. § 1441(a), permits a defendant to remove any civil action that falls within the original jurisdiction of the district courts. District courts have original jurisdiction over 28 U.S.C. § 1332(a)(1).
To timely remove a case, a defendant must file a notice of removal within thirty days after the receipt of the initial pleading. 28 U.S.C. § 1446(b)(1). But if a case is not removable based on the initial pleading, a defendant may remove a case within thirty days after receiving "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." Id. § 1446(b)(3). Therefore, even if a removed case has already been remanded, "it is possible that 'an amended pleading, motion, order or other paper' may render the case removable anew under 28 U.S.C. § 1446(b)." Kindred Hosps. Ltd. P'ship v. Aetna Life Ins. Co., 2018 WL 4215118, at *3 (N.D. Tex. Sept. 5, 2018) (Fitzwater, J.) (citation omitted). The Fifth Circuit has clarified that a defendant may "'seek subsequent removals after remand' so long as the second removal is not sought 'on the same ground.'" Id. (quoting S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 492 (5th Cir. 1996)). "'Removal 'on the same ground' does not prohibit removalbased on the same theory of federal jurisdiction (i.e., federal question or diversity jurisdiction), but it forecloses removal absent 'a different set of facts establishing a new ground for removal.'" Kindred Hosps., 2018 WL 4215118, at *3 (citing S.W.S. Erectors, 72 F.3d at 492-94).
In addition, motions for remand are governed by 28 U.S.C. § 1447(c), which provides that "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). "Because removal raises significant federalism concerns, the removal statutes are strictly and narrowly construed, with any doubt resolved against removal and in favor of remand." Coffman v. Dole Fresh Fruit Co., 927 F. Supp. 2d 427, 430-31 (E.D. Tex. 2013) (). Such orders are "not reviewable on appeal or otherwise." § 1447(d).
At issue is whether the interrogatory, which stated that Plaintiff had incurred more than $75,000 in attorney's fees, Doc. 5, App. 105, is an "other paper" that formed a new ground for removal, as allowed by the Fifth Circuit in S.W.S. Erectors. See 72 F.3d at 494. The Court concludes that the interrogatory does not form new facts that establish a new ground for removal. See Kindred Hosps., 2018 WL 4215118, at *3 (citation omitted). Therefore, Defendant cannot seek removal on this basis a second time. The case must be remanded to state court.
Defendant believes that S.W.S. Erectors allows "a second removal on the same grounds under section 1446(b) if the subsequent removal petition alleges a different factual basis for the removal."Doc. 8, Def.'s Resp. in Opp. to Pl.'s Mot. to Remand and Supp. Br. ("Def.'s Resp."), 4. Defendant argues that Plaintiff's answer to the interrogatory was an "other paper" that provided Defendant with "newly acquired facts" upon which the case could be removed. Id. Therefore, Defendant believes its second removal "is not prohibited as a successive removal." Id.
Plaintiff, however, believes S.W.S. Erectors establishes that, "although defendants may file second or successive removals, they may not do so based on the same grounds as any prior removal in the same case." Doc. 4, Pl.'s Resp., at 4. Because this attempt at removal is based on "precisely the same grounds" as the first removal, even with new facts supporting the same grounds, Plaintiff believes Defendant's removal is prohibited and requires a remand to state court. Id. at 9-10 (emphasis in original).
Plaintiff is correct. It is not enough to have new facts supporting removal; these new facts must provide a new ground for removal. See Kindred Hosps., 2018 WL 4215118, at *3. "[A] defendant is precluded only from seeking a second removal on the same ground." S.W.S Erectors, 72 F.3d at 492 (emphasis in original).
In S.W.S. Erectors, the Fifth Circuit cited two cases in support of its conclusion. It first cited O'Bryan v. Chandler, 496 F.2d 403 (10th Cir. 1974). In that case, the Tenth Circuit explained that "'different grounds more precisely mean a different set of facts that state a new ground for removal.'" S.W.S. Erectors, 72 F.3d at 493 (quoting O'Bryan, 496 F.2d at 410). The Fifth Circuit also relied on the District of Connecticut's explanation in One Sylvan Road North Associates v. Lark International, Ltd., that "'[a] defendant who fails in an attempt to remove on the initial pleadings can file a second removal petition when subsequent pleadings or events reveal a new and different ground for removal.'"S.W.S. Erectors, 72 F.3d at 493 (quoting One Sylvan Road N. Assocs. v. Lark Int'l, Ltd., 889 F. Supp. 60, 62 (D. Conn. 1995) (emphasis in S.W.S. Erectors).
In One Sylvan Road, the district court's first remand order found that the amount-in-controversy requirement was not met because "only possession of the premises was at issue." 889 F. Supp. at 62. As the Fifth Circuit in S.W.S. Erectors put it, the second petition for removal in One Sylvan Road was eventually filed, with new evidence "that the plaintiff actually was seeking damages in excess of" the amount-in-controversy requirement. S.W.S. Erectors, 72 F.3d at 493. The new evidence did not "present[] a different set of facts establishing a new ground for removal," and therefore the defendant could not seek removal on that basis a second time. Id. The evidence, instead, related to the prior ground for removal, which the district court had already found did not satisfy the amount-in-controversy requirement.
The S.W.S. Erectors court then applied these rules to its case, and found that a successive removal petition was not barred. 72 F.3d at 493. The first removal petition in S.W.S. Erectors was based on the defendant's own affidavit that the...
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