Jhohman, LLC v. U.S. Sec. Associates, Inc.

• Decision Date: 24 September 2007
• Docket Number: No. 07-10725.,07-10725.
• Citation: 513 F.Supp.2d 913
• Parties: JHOHMAN, LLC, Plaintiff, v. UNITED STATES SECURITY ASSOCIATES, INC., Carl Watts, and Will Riley, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

513 F.Supp.2d 913

JHOHMAN, LLC, Plaintiff, v. UNITED STATES SECURITY ASSOCIATES, INC., Carl Watts, and Will Riley, Defendants.

No. 07-10725.

United States District Court, E.D. Michigan, Southern Division.

September 24, 2007.

David B. Lipski, Bloomfield Hills, MI, for Plaintiff.

Brian A. Kreucher, Kevin T. Sutton, Keller Thoma, Detroit, MI, for Defendants.

OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR REMAND

GERALD E. ROSEN, District Judge.

I. INTRODUCTION

Plaintiff JHohman, LLC commenced this action in Wayne County Circuit Court on December 5, 2006, asserting a variety of state-law claims against Defendant United States Security Associates, Inc. ("USSA") and two of its employees, Defendants Carl Watts and Will Riley. Generally speaking, Plaintiff alleges that the individual Defendants made false and defamatory statements to potential customers of Plaintiff's security services, resulting in the loss of customers and overall damage to Plaintiff's business.

In an initial round of discovery accompanying their answer in the state-court proceedings, Defendants served a variety of discovery requests upon Plaintiff on January 8, 2007, including several requests for admissions. Pursuant to Michigan Court Rule 2.312(B)(1), Plaintiffs responses to these requests were due within 28 days, or on or before February 5, 2007. Eight of Defendants' requests asked Plaintiff to admit that it had no admissible evidence in its possession, custody, or control to support its allegation that Defendant Riley or Defendant Watts had made a particular defamatory statement regarding Plaintiff's business. When the February 5 deadline passed without Plaintiff responding to these or the other requests for admissions, the matters addressed in these requests were "deemed admitted" by operation of Michigan Court Rule 2.312(B)(1).

Based on Plaintiff's failure to respond, Defendants removed the case to this Court on February 20, 2007, contending that Defendants Watts and Riley were fraudulently joined as parties without any basis for charging them with liability. In their notice of removal, Defendants assert that Plaintiff's failure to timely respond to the requests for admissions leaves it with no evidentiary support for its claims against either individual Defendant. Defendants further state that, absent any viable claims against these individuals, the remaining parties (Plaintiff and Defendant USSA) are of diverse citizenship, thereby permitting removal to federal court. See 28 U.S.C. §§ 1441(a), 1332(a).

Through the present motion, Plaintiff now seeks a remand to state court, arguing that Defendants have failed to identify a proper basis for disregarding the claims against — and hence the citizenship of — individual Defendants Watts and Riley. Even accepting that its lack of timely responses resulted in admissions by operation of the Michigan Court Rules, Plaintiff argues that it should be left to the state court on remand to determine whether Plaintiff should be permitted to serve untimely responses, see Michigan Court Rule 2.312(D)(1), and that, absent an unfavorable state court ruling on this point, it cannot be said that Plaintiff's claims against the individual Defendants lack viability. In response, Defendants reiterate their contention that the individual Defendants were fraudulently joined as parties, whether because of Plaintiff's failure to timely respond to their requests for admissions or because of a general absence of evidence to support the claims against Defendants Watts and Riley.

Having reviewed the parties' briefs in support of and opposition to Plaintiff's motion, the accompanying exhibits, and the record as a whole, the Court finds that the relevant facts, allegations, and legal arguments are adequately presented in these written submissions, and that oral argument would not aid the decisional process. Accordingly, the Court will decide Plaintiffs motion "on the briefs." See Local Rule 7.1(e)(2), U.S. District Court, Eastern District of Michigan. For the reasons stated below, the Court finds that this case should be remanded to state court as removed without a proper jurisdictional basis.

II. ANALYSIS

Defendants' removal of this case to this Court rests upon the doctrine of fraudulent joinder. Accepting Plaintiff's complaint on its face, there would be no basis for removal, as Plaintiff and the individual Defendants share Michigan citizenship and no federal claims have been asserted. Yet, as the Sixth Circuit has explained, the "fraudulent joinder of nondiverse defendants will not defeat removal on diversity grounds." Coyne v. American Tobacco Co., 183 F.3d 488, 493 (6th Cir.1999). Defendants contend that this doctrine is applicable here, where Plaintiff allegedly has failed to state any viable claims against the two Michigan Defendants, Riley and Watts. As the removing parties, Defendants have the burden of "present[ing] sufficient evidence that a plaintiff could not have established a cause of action against non-diverse defendants under state law." Coyne, 183 F.3d at 493. "However, if there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, this Court must remand the action to state court." 183 F.3d at 493. Moreover, "all disputed questions of fact and ambiguities in the controlling state law" must be resolved in Plaintiffs favor, and "[a]n doubts as to the propriety of removal are resolved in favor of remand." 183 F.3d at 493 (internal quotation marks, alteration, and citations omitted).

The removal of this case features an additional wrinkle. Defendants did not remove the case based on Plaintiff's initial complaint alone, evidently concluding that the allegations of the complaint, in and of themselves, did not establish the fraudulent joinder of Defendants Riley and Watts.¹ Rather, as noted above, Defendants' removal was triggered by Plaintiff's failure to timely respond to requests for admissions directed at the purported absence of evidentiary support for certain of the complaint's allegations. In their notice of removal, Defendants assert that Plaintiff's lack of timely responses gave rise to a right of removal under 28 U.S.C. § 1446(b), which states in pertinent part:

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.

(emphasis added). The removal of this action, then, rests on two premises: (i) that a request for admission, if not timely answered and therefore deemed admitted by operation of a state court rule, qualifies as an "other paper" that permits removal, and (ii) that the matters admitted by Plaintiff in this case, by virtue of its failure to timely respond to Defendants' requests for admissions, establish the fraudulent joinder of individual Defendants Watts and Riley. As explained below, the Court rejects both of these propositions.

The courts have recognized that discovery responses may qualify as "other paper[s]" that permit the removal of a case that was not initially removable. See, e.g., Peters v. Lincoln Electric Co., 285 F.3d 456, 466 (6th Cir.2002) (plaintiff's responses to deposition questioning); Haber v. Chrysler Corp., 958 F.Supp. 321, 326 (E.D.Mich.1997) (same); Green v. A.W. Chesterton Co., 366 F.Supp.2d 149, 154 (D.Me.2005) (interrogatory responses); Williamson v. Fleetwood Homes of Mississippi, Inc., 346 F.Supp.2d 851, 852 & n. 1 (N.D.Miss.2004) (response to request for admission); Health Care Service Corp. v. TAP Pharmaceutical Products, Inc., 274 F.Supp.2d 807, 818 (E.D.Tex.2003) (same); RBC Mortgage Co. v. Couch, 274 F.Supp.2d 965, 968-69 (N.D.Ill.2003) (same). Even less formal writings, such as correspondence between counsel, have also been deemed to constitute "papers" that trigger a right of removal. See, e.g., Addo v. Globe Life & Accident Insurance Co., 230 F.3d 759, 761-62 (5th Cir.2000); Efford v. Milam, 368 F.Supp.2d 380, 385-86 (E.D.Pa.2005).²

Here, however, Defendants seek to rely on the lack of a "paper" — namely, Plaintiff's failure to respond to requests for admissions within the 28-day period set forth in Michigan Court Rule 2.312(B)(1). At the expiration of this 28-day deadline, the matters addressed in Defendants' requests were "deemed admitted," Michigan Court Rule 2.312(B)(1), unless and until Plaintiff filed, and the state court granted, a motion to withdraw or amend these admissions, see Michigan Court Rule 2.312(D)(1).³ Thus, Defendants seek to rely on Plaintiff's inaction, and the effect of this inaction under the Michigan Court Rules, as the basis upon which they "first ... ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446(b).

As reflected by the dearth of authorities cited by the parties, and as confirmed by the Court's own research, there is very little case law on the precise question before this Court. In their notice of removal, Defendants cite the decision in Bonnell v. Seaboard Air. Line Railroad Co., 202 F.Supp. 53, 55 (N.D.Fla.1962), in which the court permitted removal on the basis of the plaintiff's failure to respond to a request to admit that the amount in controversy exceeded the sum necessary to support diversity jurisdiction (which was then $10,000).⁴ This ruling rested upon notions of fairness, rather than any attempt to construe the "other paper" language of § 1446(b), with the court reasoning:

Defendant need not wait until a case is ready for trial before using methods at his disposal to make the record clear that [the] jurisdictional amount is present. The method here employed by defendant was prompt and effective in pinpointing the issue.

Bonnell, 202 F.Supp. at 55-56;⁵ see also Wilbanks v. North American Coal Corp., 334 F.Supp.2d 921, 925-26 (S.D.Miss.2004) ...