Laurelwood Care Ctr., LLC v. Pavlosky

• Decision Date: 29 January 2018
• Docket Number: Case No. 3:17-cv-184
• Parties: LAURELWOOD CARE CENTER, LLC, Plaintiff/Counter-Defendant, v. KAREN PAVLOSKY, Defendant/Counter-Plaintiff, v. LAURELWOOD CARE CENTER AND GRANE HEALTHCARE COMPANY, Counter-Defendant and Additional Counter-Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

LAURELWOOD CARE CENTER, LLC, Plaintiff/Counter-Defendant, v. KAREN PAVLOSKY, Defendant/Counter-Plaintiff, v. LAURELWOOD CARE CENTER AND GRANE HEALTHCARE COMPANY,Counter-Defendant and Additional Counter-Defendant.

Case No. 3:17-cv-184

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

January 29, 2018

JUDGE KIM R. GIBSON

MEMORANDUM OPINION

I. Introduction

Pending before this Court is the Motion for Remand and Counsel Fees filed by Defendant/Counter-Plaintiff Karen Pavlosky ("Pavlosky"). (ECF No. 12.) This Motion is fully briefed (ECF Nos. 12, 13, 17) and ripe for disposition.

Pavlosky's Motion presents the issue of whether a party joined as a defendant to a counterclaim (i.e., an additional counter-defendant) may remove a case to federal court. The United States Court of Appeals for the Third Circuit has not resolved this issue. However, the majority of courts that have faced this question or that have faced a corresponding question regarding the ability of third-party defendants to seek removal have answered in the negative. Thus, because this Court's interpretation of 28 U.S.C. § 1441, as guided by decisions by the United States Supreme Court, reaches the same conclusion as this aforementioned majority of courts, this Court holds that an additional counter-defendant is not a "defendant" within the meaning of the general removal statute. See 28 U.S.C. § 1441.

Accordingly, for the reasons stated below, Pavlosky's Motion for Remand and Counsel Fees (ECF No. 12) will be GRANTED IN PART and DENIED IN PART. The Court GRANTS Pavlosky's request to remand this case to the Cambria County Court of Common Pleas, but DENIES Pavlosky's request for attorneys' fees because Grane Healthcare Company ("Grane") advanced a colorable removal claim in an unsettled area of law.

II. Relevant Background

LaurelWood Care Center, LLC ("LaurelWood") initiated this case by filing a breach of contract action in the Cambria County Court of Common Pleas against Pavlosky. (See ECF Nos. 1, 12, 13, 17.) In its Complaint, LaurelWood alleged that Pavlosky was personally liable for the payment of an alleged debt of approximately $3,000 to LaurelWood based on her signing of a "Responsible Person Agreement" that purported to guarantee payment for nursing care and services provided to a third party, Mary Dragich. (See ECF Nos. 1, 13.)

After the state court denied Pavlosky's preliminary objections, Pavlosky filed an Answer, New Matter and Class Action Counterclaim, denying liability and alleging four counterclaims for (1) fraud and deceit, (2) violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, (3) Civil Conspiracy, and (4) Unjust Enrichment. (See ECF Nos. 1, 13, 17.) In addition to bringing these counterclaims against LaurelWood, Pavlosky added Grane as an additional counter-defendant. (See ECF Nos. 1, 13, 17.)

Grane filed its Notice of Removal with this Court on October 10, 2017 (ECF No 1), to which LaurelWood consented and joined on October 12, 2017. (ECF No. 3.) Pavlosky responded by filing the instant Motion for Remand and Counsel Fees and brief in support thereof on November 3, 2017. (ECF Nos. 12, 13.) LaurelWood and Grane filed their Response to Motion for Remand and Counsel Fees on November 22, 2017. (ECF No. 17.)¹

III. Legal Standard

"Section 1441 of Title 28, United States Code, governs the removal of a case to federal court." Smoyer v. Care One, LLC, No. 2:16-CV-1696, 2017 WL 575070, at *1 (W.D. Pa. 2017), report and recommendation adopted, No. 2:16-CV-1696, 2017 WL 573573 (W.D. Pa. 2017); Kosicki v. Nationstar Mortg., LLC, 947 F. Supp. 2d 546, 552 (W.D. Pa. 2013) (same).

Section 1441 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." 28 U.S.C. § 1441 (emphasis added). "Subject matter jurisdiction may be based upon federal question or diversity grounds." In Re Plavix Prod. Liab. & Mktg. Litig., No. 3:13-CV-03610-FLW, 2014 WL 4954654, at *2 (D.N.J. 2014) (citing 28 U.S.C. § 1331) (regarding federal question jurisdiction); 28 U.S.C. § 1332 (regarding diversity jurisdiction).

"The burden of establishing federal jurisdiction rests with the party asserting its existence." Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (citingDaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006)). "[R]emoval statutes 'are to be strictly construed against removal and all doubts should be resolved in favor of remand.'" A.S. ex rel. Miller v. SmithKline Beecham Corp., 769 F.3d 204, 208 (3d Cir. 2014) (quoting Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992)); Morocco v. Hearst Stations, Inc., No. 2:16-CV-1083, 2016 WL 4447798, at *2 (W.D. Pa. 2016). A case that is removed to district court shall be remanded to state court "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c).

IV. Discussion

A. Section 1441 Does Not Permit Additional Counter-Defendants to Remove Cases to Federal Court

In Grane's Notice of Removal and Defendants' joint Response to Motion for Remand and Counsel Fees, Defendants argue that Section 1441, which permits removal of a civil action over which federal district courts have original jurisdiction by "the defendant or the defendants," 28 U.S.C. § 1441, permits Grane, as an additional counter-defendant, to remove LaurelWood's state case to federal court. (See ECF Nos. 1, 17.) This Court recognizes the unresolved nature of this issue in the Third Circuit and acknowledges the appeal of the arguments in favor of Defendants' position. However, this Court does not agree with Defendants' interpretation of Section 1441 and, thus, will remand this case to the Cambria County Court of Common Pleas.

As observed supra, the Third Circuit has not addressed whether Section 1441's reference to "the defendant or the defendants" incorporates additional counter-defendants.² Furthermore, based on this Court's research, although five circuit courts of appeals have addressed the related issue of whether third-party defendants³ may remove state cases to federal court under Section 1441, only the United States Court of Appeals for the Fourth Circuit has squarely addressed additional counter-defendants' ability to seek removal. See Palisades Collections LLC v. Shorts, 552 F.3d 327 (4th Cir. 2008) (Williams, C.J.) (describing this issue as "an issue of first impression" and holding that additional counter-defendants dot qualify as a "defendant" under Section 1441 and, thus, cannot remove cases to federal court).

This Court is persuaded by and adopts the reasoning of the Fourth Circuit's opinion in Palisades. The Fourth Circuit explained:

In Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S. Ct. 868, 85 L. Ed. 1214 (1941), the Supreme Court considered the question of "whether the suit in which [a] counterclaim is filed is one removable by the [original] plaintiff to the federal district court . . . ," id. at 103, 61 S. Ct. 868, under the statutory predecessor to § 1441(a), which provided that an action "may be removed by the defendant or defendants therein to the district court of the United States for the proper district," id. at 105 n.1, 61 S. Ct. 868. Although the Court acknowledged that, between 1875 and 1887, the removal statute allowed "either party" to remove the suit to federal court, id. at 104-05, 61 S. Ct. 868, the Court concluded that Congress "narrow[ed] the federal jurisdiction on removal" by amending the statute in 1887 to allow removal only "by the 'defendant or defendants' in the suit," id. at 107, 61 S. Ct. 868. Noting that interpretation of removal statutes "call[ed] for . . . strict construction," id. at 108, 61 S. Ct. 868, the Court thus held that the original plaintiff against whom the original defendant had filed a counterclaim could not remove the case to federal court under § 1441(a)'s predecessor.

Id. at 332.

The Fourth Circuit acknowledged that Shamrock Oil was not dispositive of the precise issue in the matter before it, but found that Shamrock Oil dictates that the phrase "the defendant or the defendants," as used in Section 1441, be interpreted narrowly to refer to defendants in the traditional sense of parties against whom the original plaintiff asserts claims. Id. at 333 (citing First Nat'l Bank of Pulaski v. Curry, 301 F.3d 456, 462-63 (6th Cir. 2002)). Accordingly, because additional counter-defendants are "certainly not defendants against whom the original plaintiff asserts claims, the Fourth Circuit "easily conclude[d] that an additional counter-defendant is not a 'defendant' for the purposes of § 1441(a)." Id.; see Capitalsource Fin., L.L.C. v. THI of Columbus, Inc., 411 F. Supp. 2d 897, 900 (S.D. Ohio 2005) (holding that "additional counterclaim defendants . . . are not defendants within the meaning of the removal statute [and] do not have statutory authority . . . to remove this case."); Dartmouth Plan, Inc. v. Delgado, 736 F. Supp. 1489, 1492 (N.D. Ill. 1990) ("But just asa third-party has no special rights to remove, neither does a nonplaintiff counter-defendant. A counterdefendant is not a defendant joined in the original action and therefore not a party that can remove a state action to federal court."); Tindle v. Ledbetter, 627 F. Supp. 406, 407 (M.D. La. 1986) (stating that because the parties in question were joined as defendants on a counterclaim, they "are [additional] counterclaim defendants, [and] they cannot remove this suit to federal court."); see also 16 James W. Moore et al., Moore's Federal Practice § 107.11(1)(b)(iv) (3d ed. 1998) (suggesting that the "better view" is that counter-defendants, cross-claim defendants, and third-party defendants "are not defendants within the meaning of [§ 1441(a) ...