Foster v. Mutual Fire, Marine & Inland Ins. Co.

• Citation: 986 F.2d 48
• Decision Date: 19 February 1993
• Docket Number: No. 92-1062,92-1062
• Parties: Constance B. FOSTER, Insurance Commissioner of the Commonwealth of Pennsylvania, as Rehabilitator of the Mutual Fire, Marine & Inland Insurance Company v. The MUTUAL FIRE, MARINE & INLAND INSURANCE COMPANY Harris Trust and Savings Bank, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 48

986 F.2d 48

Constance B. FOSTER, Insurance Commissioner of the

Commonwealth of Pennsylvania, as Rehabilitator of

the Mutual Fire, Marine & Inland Insurance Company v. The MUTUAL FIRE, MARINE & INLAND INSURANCE COMPANY

Harris Trust and Savings Bank, Appellant.

No. 92-1062.

United States Court of Appeals, Third Circuit.

Argued July 16, 1992.

Decided Feb. 19, 1993.

James M. Breen (argued), Chapman & Cutler, Chicago, IL, for appellant.

Ralph A. Jacobs (argued), Joseph A. Eagan, Jr., Hoyle, Morris & Kerr, Philadelphia, PA, for appellee.

Before: SCIRICA, ROTH and HIGGINBOTHAM, Circuit Judges.

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, Jr., Circuit Judge.

Under 28 U.S.C. § 1441, a state court civil action over which a federal district court has original jurisdiction is normally removable to the appropriate federal district court in that state. Under 28 U.S.C. § 1446(b), a defendant has thirty days from the time the defendant receives the initial pleadings notifying it of federal jurisdiction to file a Notice of Removal in the district court. ¹ On this appeal, we are asked to consider what constitutes sufficient notice to trigger the running of the thirty-day period.

The issue of timeliness was raised before the district court by the appellee in response to appellant's Notice of Removal. The district court declined to decide the issue of timeliness, but instead ordered that the case be remanded to state court pursuant to the doctrines of abstention and comity. Appellant now challenges the decision of the district court, and appellee once again raises the issue of timeliness of the Notice of Removal.

We hold that when a writ of summons, a praecipe, or of course a complaint provides adequate notice to defendant of federal jurisdiction, the thirty-day period is triggered. Pursuant to that standard we conclude that in this case the Notice of Removal was timely even though it was filed more than a year after the praecipe for the writ of summons. However, while finding the Notice was timely, we affirm the decision of the district court to remand the case to state court, abstaining from the exercise of federal jurisdiction.

I.

Appellant, Harris Trust and Savings Bank (Harris), is an Illinois banking corporation with its principal place of business in Illinois. Mutual Fire, Marine and Inland Insurance Company (Mutual Fire) is an insurance company which is incorporated in Pennsylvania. After Mutual Fire encountered financial difficulties, its activities were restricted by the Pennsylvania Insurance Commissioner under an Order of Supervision. Appellee, Constance Foster (Foster), is the Insurance Commissioner of the Commonwealth of Pennsylvania. Foster was designated the Rehabilitator for Mutual Fire pursuant to an Order of Rehabilitation dated December 8, 1986. The rehabilitation is regulated under 40 Pa.Cons.Stat.Ann. §§ 221.1-221.63.

Litigation between Harris and Foster arose out of a dispute over the nature of corporate money market accounts Harris handled for Mutual Fire. Harris was the beneficiary of a surety bond issued by Mutual Fire, and when Mutual Fire defaulted on Harris's demand for payment of the bond. Harris set off the money market accounts in partial satisfaction of its unpaid claim.

Litigation between the parties commenced on August 31, 1988, when Foster caused to be filed in the Commonwealth Court of Pennsylvania a praecipe for writ of summons and obtained issuance of a writ of summons against Harris. On October 27, 1989 the Rehabilitator filed a praecipe to reissue the summons. On January 15, 1991, the complaint was filed, and on January 16, 1991 was served on Harris. On February 14, 1991, based on diversity of citizenship, Harris filed a Notice of Removal pursuant to 28 U.S.C. §§ 1441 and 1446. On March 8, 1991, Foster filed a motion for remand. She asserted that Harris's failure to file a timely Notice of Removal under § 1446(b) and the doctrines of abstention required an order to remand the case to state court.

On December 30, 1991, the district court for the Eastern District of Pennsylvania remanded the action to the Commonwealth Court. It found that abstention of federal court jurisdiction was warranted under the principles of abstention as set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct 1236, 47 L.Ed.2d 483 (1976), and Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), as well as principles of comity. After concluding that it lacked jurisdiction under the abstention doctrines, the district court did not address the timeliness issue. Harris appeals the district court's order, and Foster, in her reply brief, in addition to defending the district court's abstention, reiterates her claim that Harris's Notice of Removal was not timely. She asserts:

Harris Bank did not attempt to remove this action to federal court until more than two years after its receipt of the summons which commenced this action and gave Harris Bank notice of the basis for removal. This Court should affirm the district court's decision to remand the case because Harris Bank did not file its Notice of Removal within the 30-day time limit prescribed by 28 U.S.C. § 1446(b).

The United States Supreme Court and this circuit have determined which types of orders to remand are reviewable by appellate courts. Orders to remand based on defects in removal procedure, see 28 U.S.C. § 1447(c), are not reviewable pursuant to 28 U.S.C. § 1447(d). ² However, § 1447(d) is not dispositive as to remand orders not based on § 1447(c). See Thermtron Products Inc. v. Hermansdorfer, 423 U.S. 336, 343, 96 S.Ct. 584, 589, 46 L.Ed.2d 542 (1976) (§ 1447(d) bars review of remand orders issued pursuant to § 1447(c)); Foster v. Chesapeake Ins. Co., 933 F.2d 1207, 1210 (3d Cir.1991), cert. denied Chesapeake Ins. Co. v. Foster, --- U.S. ----, 112 S.Ct. 302, 116 L.Ed.2d 245; Black & Decker (U.S.) Inc. v. Brown, 817 F.2d 13, 14 (3d Cir.1987). Thus, orders of remand based on failure to file a timely Notice of Removal are not reviewable by appellate courts. Due to this lack of appellate jurisdiction, there is a paucity of circuit cases addressing the question as to what constitutes an initial pleading under § 1446(b).

Unfortunately, the instant suit is representative of litigation generated in our circuit due to the uncertainty of timeliness under § 1446(b). Although, as we have previously stated, we are affirming the district court's order remanding the case to state court pursuant to the doctrines of abstention and comity, we will take this opportunity to resolve the question as to when the time period in § 1446(b) is triggered. ³

II.

28 U.S.C. § 1446(b) provides:

§ 1446. Procedure for Removal

. . . . .

(b) The notice of removal of a civil action or proceeding shall be filed within thirty 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, or within thirty 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.

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty 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, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

Foster claims that the thirty-day time period provided by § 1446(b) was triggered in this case by the receipt by Harris of the summons served on November 8, 1989. Foster argues that this summons gave Harris sufficient notice of federal jurisdiction and that Harris should have filed its Notice of Removal in federal court within thirty days of November 8, 1989. Foster argues in addition that subsequent discussion between the parties served as notice to Harris of the federal nature of the action. Foster claims that because Harris waited until February 14, 1991, over a year after the receipt of the summons, its Notice of Removal should have been time-barred.

Harris responds that its Notice was timely because the prescriptions of § 1446(b) were not relevant until the complaint was filed on January 16, 1991. Harris maintains that the "initial pleadings" described in § 1446(b) refers only to complaints and not summonses or writs of praecipe.

As previously mentioned, due to the unreviewability of orders to remand, appellate court rulings have been infrequent on the issue of precisely what constitutes an "initial pleading," triggering the thirty-day period for defendants to file a petition for removal. There has been widespread disagreement among federal district courts as to what documents will trigger 1446(b). These courts have defined the trigger point in two opposite ways, supporting both Harris's and Foster's claims.

In our own circuit, some district courts have focused their attention on the knowledge of the defendants, adopting an expansive reading of how and what documents might start the thirty-day period. Nero v. Amtrak, 714 F.Supp. 753 (E.D.Pa.1989); Presidential Dev. & Inv. Corp. v. Travelers Ins. Cos., 1989 WL 147616, 1989 U.S.Dist. LEXIS 14499 (E.D.Pa. Dec. 5, 1989); Moore v. City of Philadelphia, 1988 WL 50382, 1988 U.S.Dist. LEXIS 4339 (E.D.Pa. May 16, 1988), appeal dismissed, 865 F.2d 251 (3d Cir.1988). In attempting to adhere to Congress' purpose of creating only a limited right of removal in defendants, these decisions find that the thirty-day period begins to run when the defendant learns the case is removable. Thus, the judicial inquiry is directed away from defining which court documents are "initial...