Hrivnak v. Nco Portfolio Mgmt. Inc. .

Decision Date19 July 2010
Docket NumberCase No. 1:10-CV-646.
Citation723 F.Supp.2d 1020
PartiesChristopher G. HRIVNAK, Plaintiff, v. NCO PORTFOLIO MANAGEMENT, INC., et al., Defendants.
CourtU.S. District Court — Northern District of Ohio

OPINION TEXT STARTS HERE

Anand N. Misra, Beachwood, OH, Robert S. Belovich, Parma, OH, for Plaintiff.

Allison L. Cannizaro, Brian D. Roth, David Israel, Sessions, Fishman, Nathan & Israel, Metairie, LA, Franklin C. Malemud, Reminger & Reminger, Michael D. Slodov, Robert G. Knirsch, Javitch, Block & Rathbone, Cleveland, OH, for Defendants.

MEMORANDUM & ORDER

KATHLEEN McDONALD O'MALLEY, District Judge.

Before the Court are a number of pending motions. As explained below, Plaintiff Christopher Hrivnak's Motion to Remand (Doc. 17) is DENIED, Hrivnak's Motion to Strike (Doc. 18) is DENIED, Hrivnak's Motion for Class Certification is TERMED (Doc. 18), Defendant Javitch, Block & Rathbone LLP's (“Javitch”) Unopposed Motion to Amend their Notice of Removal (Doc. 20) is GRANTED, and Javitch's Motion for Judgment on the Pleadings (Doc. 4) is TERMED.

I. PROCEDURAL HISTORY

On June 4, 2009, NCO Portfolio Management (NCM) filed an action in Bedford Municipal Court against Christopher G. Hrivnak. 1 On July 9, 2009, Hrivnak filed an Answer and Counterclaim. Hrivnak's counterclaims included a claim under the Fair Debt Collection Practices Act (“FDCPA”), and added several new parties to the action as counterclaim defendants: NCO Portfolio Management, Inc. (NPI); NCO Group, Inc. (“NGI”); NCO Financial Systems, Inc. (“NFS”); and Javitch.

It appears that the Defendants then filed a motion before the municipal court seeking to dismiss Hrivnak's counterclaims. Rather than dismiss the claims, the Bedford Municipal Court transferred this action to the Cuyahoga County Court of Common Pleas, as the counterclaim sought monetary relief exceeding the Municipal Court's jurisdiction. The Defendants apparently renewed their motion to dismiss Hrivnak's counterclaim, which this time was denied.

On October 26, 2009, NPM filed an Answer to Hrivnak's counterclaim.

Some discovery was conducted, and, on January 8, 2010, NPM moved to dismiss its own complaint. This motion was granted, and, on January 19, 2010, Javitch filed a motion asking the state court to realign the parties. This motion was opposed by Hrivnak, who asserted that the motion to realign was an improper attempt to vest this Court with jurisdiction. On February 11, 2010, however, the Common Pleas Court granted Javitch's motion, and instructed Hrivnak to “file a complaint asserting his affirmative claims for relief.”

On March 15, 2010, Hrivnak filed a complaint as instructed by the state court. Pursuant to the state court's realign order, Original-Defendant Hrivnak was now identified as the Plaintiff, and Original-Plaintiff NCM and Original-Counterclaim Defendants NPI, NGI, NFS, and Javitch were now identified as defendants.

On March 29, 2010, Javitch, with the consent of the other defendants (including Original-Plaintiff NCM), filed a removal notice with this Court. The pending motions followed.

II. MOTION TO REMAND

The threshold issue before the Court is whether subject matter jurisdiction is proper, which is the subject of Hrivnak's Motion to Remand (Doc. 17). Hrivnak argues that this situation is indistinguishable from the one in which a plaintiff attempts to remove an action solely on the basis of a counterclaim; he asserts that jurisdiction cannot be conferred upon this Court simply because the state court realigned the parties. ( See generally id.) Javitch's argument is that the state court realignment order distinguishes this case from one in which a party attempts to remove based upon a counterclaim, because the state court's realignment order transformed Hrivnak's counterclaim into a claim. (Doc. 21 at 5.) 2

A. Standard of Review

On a motion for remand, the defendant bears the burden of establishing that removal was proper. Long v. Bando Mfg. of America, Inc., 201 F.3d 754, 757 (6th Cir.2000). Removal jurisdiction raises significant federalism concerns and, for this reason, federal courts must strictly construe such jurisdiction. See Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 104, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). Accordingly, a federal court must resolve any doubt of its removal jurisdiction in favor of state court jurisdiction. Shamrock Oil, 313 U.S. at 108-09, 61 S.Ct. 868; Her Majesty the Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir.1989) (citation omitted).

B. Discussion

The question before the Court is whether realignment by a state court can confer subject matter jurisdiction in federal court where none existed at the inception of the lawsuit. In the particular context of this case, to find that removal is proper would arguably limit two rather important jurisdictional principals. First, although the notice of removal was filed by Javitch, there is no escaping the fact that it is joined by NPM: in other words, there is a sense in which a plaintiff is attempting to remove its own lawsuit. Construed this way, there is a problem. See Abulkhair v. Liberty Mut. Ins. Co., Case No. 15-1580, 379 Fed.Appx. 130, 132, 2010 WL 1896422, at *1, 2010 U.S.App. LEXIS 9699, at *3 (3d Cir. May 12, 2010) ([I]t is axiomatic that a plaintiff may not remove an action to federal court.”) (quoting La Chemise Lacoste v. Alligator Co., 506 F.2d 339, 343 n. 4 (3d Cir.1974)); see also 14C Wright, Miller, Cooper, et al., Federal Practice and Procedure § 3730 (4th ed.2010) (“The federal courts ... often speak[ ] of the right to remove as being limited to ‘true’ defendants.”). Second, although Hrivnak was realigned as the plaintiff,” the claim that forms the basis for removal began life as a counterclaim, and a counterclaim may not form the basis for removal. Capital One Bank (USA) N.A. v. Jones, Case No. 09-2833, 710 F.Supp.2d 630, 632, 2010 WL 1258110, at *1-2, 2010 U.S. Dist. LEXIS 29540, at *4 (N.D.Ohio Mar. 29, 2010), petition for review denied, CA 10-309 (6th Cir. June 17, 2010) (§ 1441 does not allow removal by a counterclaim defendant....”); Cross Country Bank v. McGraw, 321 F.Supp.2d 816, 820 (S.D.W.Va.2004) ( [T]here can be no serious contention that the basis for federal subject matter jurisdiction can ordinarily be contained in a defendant's counterclaim.” (citing Holmes Group, Inc. v. Vornado Air Circulation Sys., 535 U.S. 826, 122 S.Ct. 1889, 153 L.Ed.2d 13 (2002))).

To order remand, however, is not without its own conceptual problems. First, remand would limit the rule that subject matter jurisdiction must be evaluated at the time of removal. See, e.g., Northup Props., Inc. v. Chesapeake Appalachia, L.L.C., 567 F.3d 767, 769-70 (6th Cir.2009). There is, after all, a way to view this case as no more complicated than any other case in which the filing of an amended complaint indicates for the first time that an action is removable. Second, an order of remand could only issue if this Court finds that the state court's realignment order does not really mean what it says, a troubling proposition in its own right.

No circuit appears to have considered this question outside of readily distinguishable contexts, the few district courts to have discussed this issue are not in agreement with each other, and most of those opinions are also arguably distinguishable from the unique facts presented here. In short, there is not a clear answer here, much less a binding one.

1. The Removal Statute

The question before the Court is fundamentally one of statutory interpretation. The federal removal statute explains, in relevant part:

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....

28 U.S.C. § 1446(b). In this case, unfortunately, the statute does not answer the question, the statute is the question: should the Court consider all of the parties who removed this case to be defendants as the term is used in § 1446(b). 3

The Supreme Court has made clear that a district court must look beyond the case caption to determine whether removal was proper:

Diversity jurisdiction cannot be conferred upon the federal courts by the parties' own determination of who are plaintiffs and who defendants. It is our duty, as it is that of the lower federal courts, to look beyond the pleadings and arrange the parties according to their sides in the dispute. Litigation is the pursuit of practical ends, not a game of chess. Whether the necessary collision of interests exists, is therefore not to be determined by mechanical rules. It must be ascertained from the principal purpose of the suit and the primary and controlling matter in dispute.

Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 70, 62 S.Ct. 15, 86 L.Ed. 47 (1941) (citations and quotation marks omitted); see also, e.g., Malison v. UPS, Case No. 09cv629, 2009 WL 4912172, at *4 n. 2, 2009 U.S. Dist. LEXIS 115241, at *14 n. 2 (N.D.Okla. Dec. 10, 2009) ([W]hether diversity jurisdiction exists includes the realignment of the parties based on their real interests regardless of labels placed upon the parties by the litigants themselves or the state court.” (citations omitted)). 4 Although these cases refer to diversity jurisdiction and this case was removed based on federal question jurisdiction, the principle articulated in Chase National Bank, that “federal courts [must] look beyond the pleadings and arrange the parties according to their sides in the dispute,” applies with equal force here.

This being said, Chase National Bank, like the removal statute itself, is not really of much guidance, because it does not explain whether the Court should look to the “principal purpose of the suit” at...

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