Kiesgen v. St. Clair Marine Salvage Inc.

• Decision Date: 12 July 2010
• Docket Number: Case No. 09-13396.
• Citation: 724 F.Supp.2d 721
• Parties: Gregory L. KIESGEN, Plaintiff, v. ST. CLAIR MARINE SALVAGE, INC., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

724 F.Supp.2d 721

Gregory L. KIESGEN, Plaintiff,

v.ST. CLAIR MARINE SALVAGE, INC., Defendant.

Case No. 09-13396.

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

July 12, 2010.

Armand Velardo, Darwin L. Burke, Peter M. Ruggirello, Ruggirello, Velardo, Novara & Ver Beek, P.C., Mt. Clemens, MI, for Plaintiff.

John R. Tatone, John R. Tatone and Assoc., Mt. Clemens, MI, for Defendant.

OPINION AND ORDER GRANTING PLAINTIFF'S MOTIONS TO STRIKE THIRD-PARTY COMPLAINT AND REMAND TO STATE COURT, DENYING DEFENDANT'S MOTION TO SET ASIDE DEFAULT AS MOOT, AND REMANDING CASE TO STATE COURT

DAVID M. LAWSON, District Judge.

This case involves a dispute over the price charged by defendant St. Clair Marine Salvage, Inc. for services rendered in freeing a vessel that plaintiff Gregory L. Kiesgen ran aground in the shallow waters of Lake St. Clair. After the boat was freed, the plaintiff successfully piloted it to a marina, where he put it on a trailer and transported it to his home, but he refused to pay the defendant for the charges, which he alleges are inflated and far in excess of the quoted price. In response, the defendant took possession of the boat and asserted a salvage lien. The plaintiff then filed a tort action in state court to recover his boat, and the defendant removed the action to this Court and attempted to file an untimely third-party complaint against the vessel, invoking the Court's admiralty jurisdiction. In the meantime, because the defendant failed to file a timely answer to the plaintiff's complaint in this Court, the Clerk entered a default. Presently before the Court are the plaintiff's motions to remand the case to state court and strike the third-party complaint, and the defendant's motion to set aside the default. The Court heard oral argument on these motions on December 22, 2009, at which time the parties expressed a desire to attempt a resolution of their dispute through mediation facilitated by the magistrate judge. That attempt was unsuccessful, and the motions are now ready for decision. For reasons explained below in detail, the Court finds that it does not have subject matter jurisdiction over the original complaint, the removal therefore was improper, the defendant's attempt to implead an admiralty action must be rejected, and the absence of jurisdiction renders the Clerk's entry of default a nullity. Therefore, the Court will grant the plaintiff's motions to remand and strike the third-party complaint, and deny the defendant's motion to set aside the default as moot.

I.

On a Sunday morning in August last year, the plaintiff, Gregory L. Kiesgen, piloted his 48' Sea Ray yacht, which he purchased two months previously for $425,000 and named Toys “For” Us, into shallow waters near the western shore of Lake St. Clair and ran it aground in approximately eighteen inches of water. He called defendant St. Clair Marine Salvage, Inc. for assistance. According to the complaint, the defendant's employee, Jason Elliott, came to the scene and quoted the plaintiff a price to tow the vessel from the marsh and free it based on the following formula: “the towing fee would be calculated by multiplying $20.00 by the length of Plaintiff's Boat (48 feet), by the number of hours to tow the Boat, and by the number of boats used (“Quoted Rate”; $960.00 per towing boat per hour).” Compl. ¶ 10. Apparently this was not a simple task. But three rescue boats and four hours later, Toys “For” Us was freed from the marsh. It was only then, the plaintiff alleges, that Elliott told him that the charges could run between $60,000 and $75,000.

The charges were not nearly that expensive. However, instead of the $2,500-2,800 that the plaintiff anticipated based on Elliott's original quote, the defendant presented the plaintiff with the bill of $26,260. When the plaintiff refused to pay the bill, the defendant came to the plaintiff's house and towed the boat away, asserting a salvage lien against the vessel. The defendant then assessed a surcharge of $4 per day per foot of vessel length on account of storage and a $750 impound fee.

On August 21, 2009, the plaintiff sued the defendant in Macomb County, Michigan circuit court in a seven-count complaint alleging: (1) invalidity of the lien and seeking declaratory and injunctive relief declaring the charge for towing the boat excessive and the lien invalid; (2) claim and delivery for the wrongful taking of the boat without legal justification; (3) conversion; (4) statutory conversion; (5) fraudulent misrepresentation; (6) violation of the Michigan Consumer Protection Act; and (7) negligence. On August 24, 2009, the plaintiff served the defendant with a summons and complaint and a motion for immediate possession pending final judgment pursuant to Mich. Ct. R. 3.105(E)(1) & (2)(a).

Three days later, on August 27, 2009, the defendant removed the case to this Court. When doing so, the defendant filed a complaint naming Toys “For” Us as the defendant, followed by a notice of removal. The Clerk marked the entry of St. Clair Marine Salvage, Inc.'s complaint against the in rem defendant as “Filing Error-See Notice of Removal” and proceeded with the removal in a usual manner. On September 14, 2009, the plaintiff moved to remand.

In the meantime, the plaintiff continued to litigate the case in the state court. On August 31, 2009, after the defendant filed its notice of removal, served the plaintiff, and informed the state court of the same, the state court held a hearing on the plaintiff's motion for possession of the boat over the defendant's objections. On the same date, the state court entered an order instructing the defendant to return the boat to the plaintiff. However, on September 4, 2009, it appears that the state judge reconsidered his previous decision and instead gave the defendant seven days to object to the order to return the boat. It is unclear whether the state court ultimately ordered the return of the boat to the plaintiff, but at the motion hearing the parties confirmed that the plaintiff is in possession of the boat.

On September 11, 2009, the defendant inexplicably filed an answer to the complaint in the state court but filed no such answer in this Court, to which the defendant itself had removed the case. Therefore, on September 15, 2009, the plaintiff requested the Clerk to enter a default pursuant to Federal Rule of Civil Procedure 55(a). The Clerk entered the default on September 17, 2009, and the defendant moved to set it aside on the same day.

Despite its unsuccessful attempt at the time of removal to bring an action against the vessel in rem, the defendant made another try to convert the action into an in rem proceeding on September 30, 2009 by filing a third-party complaint naming the boat as the third-party defendant. The defendant labeled the case as one of admiralty and maritime jurisdiction under Federal Rule of Civil Procedure 9(h) and Supplemental Rule for Admiralty or Marine Claims and Asset Forfeiture Actions C(1)(a). The plaintiff moved to strike the third-party complaint on October 14, 2009.

After presenting oral argument on the motions, the parties acknowledged to the Court that attorney's fees could quickly consume the approximately $30,000 in dispute. They agreed to seek help from the magistrate judge to settle the case, but apparently settlement efforts have not borne fruit. Further cultivation of the parties' claims must occur in the state court, however, because the defendant's removal of the plaintiff's state court action to this Court was improper.

II.

The federal district courts are courts of “limited jurisdiction,” and the burden of establishing jurisdiction rests with the defendant as the party removing the case and asserting federal jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). “Because lack of jurisdiction would make any decree in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts resolved in favor of remand.” Brown v. Francis, 75 F.3d 860, 864-65 (3d Cir.1996) (quoting Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 29 (3d Cir.1985)); see also Her Majesty The Queen In Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir.1989); Jacada (Europe), Ltd. v. Int'l Mktg. Strategies, Inc., 401 F.3d 701, 704 (6th Cir.2005) (citing Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir.1999)), abrogated on other grounds by Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008).

Section 1441(a) of Title 28 provides that “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.” There is no suggestion that the parties to this action are citizens of different states, and therefore there can be no subject matter jurisdiction under 28 U.S.C. § 1332(a). However, federal courts have jurisdiction over actions “arising under the Constitution, laws, or treaties of the United States,” 28 U.S.C. § 1331, and such a case may be removed by the defendant if the complaint is based on federal law. See 28 U.S.C. § 1441(b). If a matter over which this Court lacks subject matter jurisdiction is removed to this Court, “the case shall be remanded.... The State court may thereupon proceed with such case.” 28 U.S.C. 1447(c). Federal courts “look to the complaint at the time of removal, ... and determine whether the action was properly removed in the first place.” Ahearn v. Charter Twp. of Bloomfield, 100 F.3d 451, 453 (6th Cir.1996).

The defendant resists the plaintiff's remand motion by asserting that its third-party complaint invokes this Court's exclusive admiralty...