Iowa Lamb Corp. v. Kalene Industries, Inc.

Decision Date19 December 1994
Docket NumberNo. C 94-4094.,C 94-4094.
Citation871 F. Supp. 1149
CourtU.S. District Court — Northern District of West Virginia
PartiesIOWA LAMB CORPORATION, Plaintiff, v. KALENE INDUSTRIES, INC., Defendant.

Michael P. Jacobs, Sioux City, IA, for plaintiff.

Robert W. Green, Sioux City, IA, for defendant.

BENNETT, District Judge.

This matter comes before the court pursuant to plaintiff's motion to remand this case to state court on the ground that defendant's notice of removal was untimely. Plaintiff also asserts that there was insufficient amount in controversy stated in its state court petition to sustain federal jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332. Defendant removed this action to federal court prior to answering and filing a counterclaim, asserting that removal was timely because notice was filed less than thirty days after defendant actually received notice of the complaint. Defendant also asserts that its counterclaim states an amount in controversy in excess of $50,000, thus sustaining federal jurisdiction over the removed complaint.

I. PROCEDURAL BACKGROUND

Plaintiff Iowa Lamb Corporation, an Iowa corporation, filed its petition in the Iowa District Court for Sioux County on August 10, 1994, seeking to recover the unpaid purchase price on merchandise of $24,360.00, plus interest. Defendant Kalene Industries, Inc., is a corporation not organized under the laws of the state of Iowa, with its principal place of business outside of the state of Iowa.1 Iowa Lamb served Kalene on August 16, 1994, by serving the Secretary of State of the State of Iowa as required by Iowa Code § 617.3, and on August 19, 1994, mailed notice of the filing with the Secretary of State to Kalene by certified mail.2 Kalene asserts, without explanation, that it did not receive actual notice of the filing of the complaint with the Secretary of State until September 26, 1994. On October 17, 1994, therefore, Kalene filed a petition for removal of this action to this federal court. Kalene stated as grounds for removal diversity of citizenship and that Kalene has a counterclaim against Iowa Lamb which exceeds $50,000.3 Also on October 17, 1994, Kalene filed its answer and counterclaim in federal court. Iowa Lamb has not yet answered the counterclaim.

Instead, on November 4, 1994, Iowa Lamb moved to remand this action to state court. Iowa Lamb argues that Kalene's petition for removal follows by more than thirty days any credible date of notice to Kalene of the filing date of the complaint with the Secretary of State. Iowa Lamb argues that Kalene has failed to prove that although the notice of the complaint was mailed to it by certified mail on August 19, 1994, Kalene did not receive actual notice until September 26, 1994. Iowa Lamb also argues that no part of the amount in controversy requirement for federal jurisdiction can be met by considering Kalene's counterclaim. Kalene resisted the motion to remand on November 21, 1994. In its resistance, Kalene repeated its bald assertion that it did not receive actual notice of the filing of the complaint until September 26, 1994, and thus its petition for removal was timely. Kalene also asserts that the amount in controversy exceeds $50,000 as shown by the petition for removal.

Neither party requested a hearing or oral argument on Iowa Lamb's motion to remand, but the court nevertheless set the matter for telephonic oral arguments on December 19, 1994. At the hearing, plaintiff Iowa Lamb was represented by counsel Michael P. Jacobs. Defendant Kalene was represented by counsel Robert W. Green. The matter is now fully submitted.

II. ANALYSIS

The grounds and procedures for removal of a state court proceeding to federal court and for remand to state court are stated in three statutes, 28 U.S.C. § 1441, 1446, and 1447. The statute identifying removable actions, 28 U.S.C. § 1441, states in pertinent part:

(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

28 U.S.C. § 1441(a) (emphasis added).

The procedure for removal is stated in 28 U.S.C. § 1446, which provides in pertinent part:

(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.

28 U.S.C. § 1446(b). After filing, a matter that was not initially removable may become removable, and the statute provides for that eventuality as follows:

If the case stated in 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 diversity of this title more than 1 year after commencement of the action.

28 U.S.C. § 1446(b).

The procedure and grounds for a challenge to removal are stated in 28 U.S.C. § 1447:

(c) A motion to remand the case on the basis of any defect in removal procedure must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded....

Iowa Lamb's challenge to removal is based on both a "defect in removal procedure," specifically, timeliness of the removal, and upon lack of subject matter jurisdiction over the action at the time of removal, on the basis of insufficient amount in controversy as required by 28 U.S.C. § 1332. The court will consider each of these challenges.

A. Timeliness Of The Petition For Removal

Iowa Lamb asserts that Kalene's petition for removal was not filed until 59 days after it was served with notice of the complaint by certified mail. Kalene counters that it did not receive actual notice of the complaint until September 26, 1994, and therefore its petition for removal filed October 17, 1994, was timely. At the hearing, counsel for Kalene stated that it was his understanding that the certified mailing of the notice of suit went to an empty office, was returned, and was ultimately forwarded by regular first class mail. However, Kalene presented no evidence, by way of affidavit or otherwise, to support this explanation, and the court has serious doubts that the necessity of forwarding the notice would add over thirty days to its delivery time.

Although the court agrees with Iowa Lamb that Kalene's assertion that it did not have actual notice of the complaint until September 26, 1994, is hardly credible in light of the date notice was sent to Kalene by certified mail, the court's belief in the matter is not dispositive. Neither Iowa Lamb nor Kalene has proved its assertions of the date actual notice was received.

Iowa Lamb did not request a return notice of delivery with its certified mailing of the complaint to Kalene which might have provided some evidence of receipt of actual notice similar to the evidence of the date of mailing. Section 1446(b) requires "receipt" by the defendant of the complaint before the thirty days to remove begin to run. See also Eyak Native Village v. Exxon Corp., 25 F.3d 773, 779 (9th Cir.1994) (§ 1446(b) requires "the receipt by the defendants of a paper in the action from which removability may be ascertained."). By the same token, Kalene has not proven when it "received" the original notice, beyond making its assertion that the thirty days did not begin to run until September 26, 1994. Counsel's explanation of the delay, unsupported by evidence, is insufficient. The law presumes that correspondence properly addressed, stamped and mailed was received by the individual or entity to whom it was addressed. Rosenthal v. Walker, 111 U.S. 185, 193, 4 S.Ct. 382, 386, 28 L.Ed. 395 (1884) ("The rule is well settled that if a letter properly directed is proved to have been either put into the post-office or delivered to the postman, it is presumed, from the known course of business in the post-office department, that it reached its destination at the regular time, and was received by the person to whom it was addressed."); Hagner v. United States, 285 U.S. 427, 430, 52 S.Ct. 417, 419, 76 L.Ed. 861 (1932) ("The rule is well settled that proof that a letter properly directed was placed in a post office, creates a presumption that it reached its destination in usual time and was actually received by the person to whom it was addressed."); see also Arkansas Motor Coaches v. Commissioner, 198 F.2d 189, 191 (8th Cir.1952); Godfrey v. United States, 997 F.2d 335, 338 (7th Cir.1993); In re East Coast Brokers and Packers, Inc., 961 F.2d 1543, 1545 (11th Cir.1992); Hoffenberg v. Commissioner, 905 F.2d 665, 666 (2d Cir. 1990); Beck v. Somerset Technologies, Inc., 882 F.2d 993, 996 (5th Cir.1989); Roush v. Kartridge Pak Co., 838 F.Supp. 1328, 1335 (S.D.Iowa 1993); Phillips v. Riverside, Inc., 796 F.Supp. 403, 407 (E.D.Ark.1992); Truesdale v. Pacific Holding Co./Hay Adams Div., 778 F.Supp. 77, 81 (D.D.C.1991). "While the presumption is a rebuttable one it is a very strong presumption and can only be rebutted by specific facts and not by invoking another presumption." Arkansas Motor Coaches, 198 F.2d at 191; see also Meckel v. Continental Resources Co., 758 F.2d...

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