Husko v. Geary Elec., Inc.

• Decision Date: 07 May 2004
• Docket Number: No. 03 C 6772.,03 C 6772.
• Citation: 316 F.Supp.2d 664
• Parties: William HUSKO, Plaintiff, v. GEARY ELECTRIC, INC., an Illinois corporation, and Axian Communications, Inc., f/k/a Pegasus Communications, Inc., a Florida corporation, Defendants.
• Court: U.S. District Court — Northern District of Illinois

316 F.Supp.2d 664

William HUSKO, Plaintiff, v. GEARY ELECTRIC, INC., an Illinois corporation, and Axian Communications, Inc., f/k/a Pegasus Communications, Inc., a Florida corporation, Defendants.

No. 03 C 6772.

United States District Court, N.D. Illinois, Eastern Division.

May 7, 2004.

COPYRIGHT MATERIAL OMITTED

John J. Foley, Maurides & Foley, L.L.C., Chicago, IL, for Plaintiff.

John A. Ybarra, D. Chad Anderton, Littler Mendelson, P.C., Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

DENLOW, United States Magistrate Judge.

I. INTRODUCTION

Plaintiff William Husko ("Plaintiff") seeks to recover attorney's fees and actual expenses incurred as a result of the improper removal of this action from state court to federal court by Defendants Geary Electric, Inc. and Axian Communications, Inc. (collectively "Defendants"). This case was remanded to Illinois state court by Judge Marvin E. Aspen who rejected Defendants' argument that there was federal question jurisdiction by reason of ERISA preemption. Husko v. Geary Electric, Inc., 314 F.Supp.2d 787, 792, 2003 WL 23415987, at *4 (N.D.Ill.2003). For the reasons stated herein, the Court awards Plaintiff $31,629.33 for attorney's fees and actual expenses pursuant to 28 U.S.C. § 1447(c).

II. BACKGROUND FACTS

Plaintiff once owned half of the outstanding shares of Geary Electric, Inc. ("Geary"), an Illinois corporation that installs electrical power systems and performs maintenance for telecommunications companies. Husko, 314 F.Supp.2d at 788, 2003 WL 23415987, at *1. On May 31, 2000, Plaintiff entered into an agreement with Axian Communications, Inc. ("Axian"), agreeing to sell to Axian his interest in Geary in exchange for $3.3 million, over one million shares of common stock in Axian, and a bonus payment calculated according to a formula set forth in a sales contract. Id. Plaintiff alleges that Axian never paid him the agreed upon bonus, which was due to him on April 12, 2003. Id. at 788, 2003 WL 23415987 at *1.

As a result of the non-payment, Plaintiff filed a four-count complaint against Defendants in the Circuit Court of Lake County, Illinois. Id. at 788, 2003 WL 23415987, at *1. The complaint sought the following: (1) damages for breach of contract, (2) rescission of the sales contract's non-compete provision, (3) a declaration that a credit agreement between the parties does not prohibit Axian from paying the agreed upon bonus, and (4) specific performance of payments of retirement benefits into Plaintiff's employee pension plan. Id. at 788, 2003 WL 23415987, at *1.

Defendants removed the case to federal court on September 25, 2003, alleging federal question jurisdiction because Count IV of Plaintiff's complaint was completely preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff filed a motion to remand, arguing a lack of subject matter jurisdiction because federal preemption did not apply to his claim. Id.

In granting Plaintiff's motion to remand, Judge Aspen applied the Seventh Circuit's three-part Jass test for determining whether an action is completely preempted by ERISA. Id. at 789-90, 2003 WL 23415987, *2-3. Section 502(a) of ERISA is the basis for the Jass test and defines those persons who are empowered to bring a civil action under ERISA. 29 U.S.C. § 1132(a). The elements of the Jass test are as follows: (1) whether a plaintiff is eligible to bring a claim under § 502(a); (2) whether that plaintiff's cause of action falls within the scope of an ERISA provision that the plaintiff can enforce via § 502(a); and (3) whether the plaintiff's state law claim cannot be resolved without an interpretation of the contract governed by ERISA. Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1487 (7th Cir.1996). Judge Aspen concluded that Defendants failed to satisfy all three prongs of the Jass test and remanded the case to the Circuit Court of Lake County, Illinois. Husko, 2003 WL 23415987, at *4. Judge Aspen also noted that Defendants' argument, asserting that removal jurisdiction exists pursuant to 29 U.S.C. § 1144, was an incorrect statement of the law because § 1144 deals with conflict preemption and not complete preemption. Id. at 791 n. 5, 2003 WL 23415987, *2 n. 5. The Supreme Court clearly has held that removal is proper only in cases involving complete preemption under § 502(a) codified at 29 U.S.C. § 1132(a). Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

As a result of Defendants' improper removal of Plaintiff's claim, Plaintiff now seeks attorney's fees and actual costs totaling $32,729.33. The parties have consented to this Court's jurisdiction to decide this issue pursuant to 28 U.S.C. § 636(c)(1).

Plaintiff's motion for attorney's fees and actual expenses raises the following three issues:

1) Whether Plaintiff's motion was timely filed?

Answer: Yes.

2) Whether Plaintiff is entitled to an award of attorney's fees and expenses under 28 U.S.C. § 1447(c)?

Answer: Yes.

3) If so, what constitutes a reasonable award of attorney's fees and expenses?

Answer: $31,629.33.

The Court will address each issue in turn.

III. PLAINTIFF'S MOTION FOR ATTORNEY'S FEES AND EXPENSES WAS NOT WAIVED AND WAS TIMELY FILED.

When a case is remanded because a district court lacks subject matter jurisdiction to hear the case, "an order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of removal." 28 U.S.C. § 1447(c). Plaintiff made no request for attorney's fees at the time he moved for a remand before Judge Aspen. The order remanding the case was entered on December 23, 2003. Plaintiff filed his motion for attorney's fees and expenses twenty-three days later on January 15, 2004. Defendants contend that Plaintiff's motion should be denied because (1) he waived the motion by failing to request attorney's fees at the time he filed his motion for remand, or alternatively, (2) he did not timely file his motion, because he did not file it within fourteen days of Judge Aspen's order of remand.

A. PLAINTIFF DID NOT WAIVE HIS RIGHT TO REQUEST ATTORNEY'S FEES AND ACTUAL EXPENSES.

Defendants argue that Plaintiff waived his right to request attorney's fees or actual expenses when he failed to make any mention or request for fees at the time he filed his motion to remand on October 24, 2003, citing Graft v. Alcoa, No. 1:02-cv01848-JDT-TAB, 2003 WL 1984347, at *5 (S.D.Ind. April 4, 2003) (declining to award costs and expenses to the plaintiffs because (1) the plaintiffs did not request relief in their motion to remand, and (2) because, even if the plaintiffs had requested relief, the defendants had a reasonable belief that removal was appropriate).

Plaintiff was not required to request attorney's fees and actual expenses as part of his motion to remand because district courts retain jurisdiction to consider collateral matters after remand and attorney's fees may be awarded under a separate order from the order remanding the case. Wisconsin v. Hotline Industries, Inc., 236 F.3d 363, 365 (7th Cir.2000). In Hotline, the Seventh Circuit rejected the argument that the fee award had to be included in the very same order remanding the case. Id.See also, Citizens For a Better Environment v. The Steel Co., 230 F.3d 923, 926 (7th Cir.2000) ("In particular a court may lack authority to resolve the merits of a claim yet have jurisdiction to award costs and attorney's fees to the prevailing party.")

B. PLAINTIFF'S MOTION WAS TIMELY FILED.

Defendants argue that Plaintiff's motion was untimely under Fed.R.Civ.P. 54(d)(2)(b) because it was not filed within fourteen days of the remand order. Any claim for attorney's fees and related nontaxable expenses shall be made by motion within fourteen days of the entry of judgment, unless otherwise provided by statute or order of the court. Fed.R.Civ.P. 54(d)(2)(A)-(B). The motion must specify the judgment and the statute entitling the moving party to the award and it must state the amount sought or provide a fair estimate of that amount. Fed.R.Civ.P. 54(d)(2)(B).

Northern District of Illinois Local Rule 54.3(b) gives the moving party ninety days after entry of a judgment to file a motion pursuant to Federal Rule of Civil Procedure 54(d)(2)(B), unless the court's order includes a different schedule for such filing. N.D. Ill. L.R. 54.3. A court may enter an order with respect to the filing of a fee motion pursuant to Federal Rule 54 either before or after entry of judgment. Id. If the court has not entered such an order before a motion is filed pursuant to Federal Rule 54(d)(2)(B), then after the motion is filed, the court may order the parties to comply with the procedure set out in Local Rule 54.3 as a post-filing rather than as a pre-filing procedure. Id.

The order remanding this case to state court was entered on December 23, 2003. Plaintiff filed his motion for attorney's fees and actual expenses twenty-three days later on January 15, 2004. This filing was in accordance with the ninety-day filing requirement set forth in Local Rule 54.3(b). The district court's remand order did not contain a different schedule for filing, and the fourteen-day limit set forth in Federal Rule of Civil Procedure 54(d)(2)(B) is inapplicable because the Local Rule is an order of the court. See Fed.R.Civ.P. 54(d)(2)(B) ("Unless otherwise provided by statute or order of the court, the motion must be filed and served no later than 14 days after entry of judgment." (emphasis added)). Therefore, Plaintiff's motion was timely filed.

IV. PLAINTIFF IS ENTITLED TO ATTORNEY'S FEES AND EXPENSES UNDER 28 U.S.C. § 1447(c).

A. THE STATUTE AS AMENDED

28 U.S.C. § 1447(c) was amended in November 1988. Judicial Improvements and Access to Justice Act of 1988, Pub.L. 100-702, § 1016, 102 Stat. 4669; Tenner v. Zurek, 168 F.3d 328, 329 (7th Cir.1999). Prior to the amendment, § 1447(c) authoriz...