Miller Block Co. v. U.S. Nat. Bank in Johnstown
| Decision Date | 11 December 1989 |
| Citation | 567 A.2d 695,389 Pa.Super. 461 |
| Parties | MILLER BLOCK COMPANY; Miller Block Company, Inc.; James R. Walsh, Esquire, Trustee of the Bankrupt Estate of Miller Block Company, Otherwise Miller Block Company Inc.; Dean W. Miller; and the Estate of Frederick C. Miller, Deceased, v. UNITED STATES NATIONAL BANK IN JOHNSTOWN, a National Banking Association; United States National Bank in Johnstown, a Corporation, and Usbancorp, Inc., Appellants. 1734 PITTS. 1988 |
| Court | Pennsylvania Superior Court |
Dennis S. Mulvihill, Pittsburgh, for U.S. Nat. Bank, appellants.
Norman A. Krumenacker, Jr., Johnstown, for appellees.
Before CAVANAUGH, BROSKY and ROWLEY, JJ.
This is an appeal by United States National Bank in Johnstown (Bank) from an order denying its motion to strike or open a default judgment entered in an action commenced by Miller Block Co. seeking damages for wrongful repossession by the Bank of some chattels. After thoroughly reviewing the record and the arguments of the parties, we reverse.
On August 3, 1987, the complaint was filed in the instant case. Thereafter, there were four letters exchanged by counsel regarding an extension of time within which to file a responsive pleading, the last of which was from counsel for appellees and advised counsel for the Bank that he should file the responsive pleading by October 6, 1987. On October 2, 1987, the Bank filed a removal petition in U.S. District Court to have the case transferred to federal court. On October 7, 1987, default judgment was entered in state court, but no notice of the default judgment was given to the Bank until March, 1988. On March 4, 1988, the federal court denied the Bank's removal petition and remanded the case to the Pennsylvania courts. On March 18, 1988, the instant petition to strike/open the default judgment was filed and was subsequently denied. The instant appeal followed.
On appeal, the Bank raises numerous arguments in support of its assertion that the default judgment should have been stricken or opened. First, it claims that the Pennsylvania court was without jurisdiction to entertain the default judgment on October 7, 1987, because the federal removal petition had been filed on October 2, 1987, and under the federal removal statute, 28 U.S.C.A. § 1446(e), the filing of a removal petition bars state court jurisdiction until the case is remanded to the state court. The Bank also argues that there was no written agreement between the parties for an extension of time to file a responsive pleading and consequently, the default judgment entered without prior notice, as required by Pa.R.C.P. 237.1, should be stricken. Alternatively, the Bank argues that the judgment should be opened because its petition to open was timely filed, it presented a legitimate reason for not having filed a responsive pleading, and it has sixteen meritorious defenses. The Bank also claims that the judgment should be stricken/opened because Miller Block, which had filed a Chapter 11 bankruptcy petition, failed to obtain from the bankruptcy court the requisite permission to file the instant case. In addition, the Bank argues that the judgment should be stricken/opened because Miller Block's complaint failed to state a cause of action against the defendants. Finally, the Bank asserts that the judgment must be set aside because service was deficient.
The federal removal statute provides that the filing of a petition for removal and the filing of the requisite bond, with notice to the parties and the filing of a copy of the petition in the state court, "shall effect the removal and the State court shall proceed no further unless and until the case is remanded." 28 U.S.C. § 1446(d). In the present case it is undisputed that the removal petition and bond were filed on October 2, 1987, that notice was provided to the parties, and that a copy of the removal petition was timely filed in the state court. It is also undisputed that the removal petition was denied in March, 1988. Thus, the issue before us is whether or not the removal petition operated to divest the state court of jurisdiction between the time the petition was filed and the time it was denied.
Crown Const. Co. v. Newfoundland American Ins. Co., 429 Pa. 119, 124, 239 A.2d 452, 455 (1968) (emphasis in original). However, where there has not been strict compliance with the removal statute, or where the removal is subsequently determined to be invalid for lack of subject matter jurisdiction, proceedings in the state court between the filing of the removal petition and its denial are valid. See Metropolitan Casualty Ins. Co. v. Stevens, 312 U.S. 563, 61 S.Ct. 715, 85 L.Ed. 1044 (1941); Yankaus v. Feltenstein, 244 U.S. 127, 37 S.Ct. 567, 61 L.Ed. 1036 (1917); Wenrick, supra. This is the logical corollary of the rule that if the removal is valid, any interim proceedings in the state court are void. Metropolitan Casualty Ins. Co., supra.
Applying these rules to the facts in the present case, we conclude that the state trial court was not divested of jurisdiction upon the filing of the removal petition because there was not strict compliance with the requirements of the removal statute, and because the federal court determined that the removal was invalid for lack of subject matter jurisdiction.
The federal removal statute requires that the removal petition be filed in federal court within thirty days after receipt by the defendant of the initial pleading setting forth the claim for relief upon which the action is predicated. However, if it is not apparent from the initial pleading that the case is removable, the case may be removed by the defendant within 30 days after receipt by the defendant of an amended motion, pleading, order, or other paper from which it can be determined that the case is removable. 28 U.S.C. § 1446(b).
It is undisputed that the removal petition in the present case was not filed within 30 days of the Bank's receipt of the complaint. However, the Bank argues that "because of recent receipt of documents relating to the prior bankruptcy proceedings of Miller Block Company" (appellants' brief at 17) and a 1985 lawsuit filed by Miller Block against the Bank in state court, but removed to federal court because of the bankruptcy proceedings, it was timely for it to file the removal petition on October 2, 1987. We agree with the federal court which considered the removal petition filed in the instant case that there was not a legal basis for extending the 30 day time limit of § 1446(b).
To the extent that the Bank was relying on the bankruptcy proceedings to provide the basis for removal, its argument is unfounded because the bankruptcy proceedings were terminated by court order prior to the commencement of the instant suit. The Bank also argues that the removal petition was timely filed because it had "recently" learned that the prior action by appellees against the Bank (Miller I ), which had been removed to federal court because of the bankruptcy proceedings, was still active. However, the Bank has not specified what information it "recently" received which led it to believe that the first federal action was still pending, thereby serving as a basis for removal of the instant case and consolidation of it with the prior action. Nor has the Bank specified when it obtained this information. Because the Bank has not indicated when the information was obtained, it has failed to establish that the removal petition was filed within 30 days of receipt of that information. Moreover, since the Bank in the present case was the party responsible for removing Miller I to federal court, the validity of its claim that it was unaware of the status of Miller I is suspect. For these reasons, we find that the removal statute was not strictly complied with, and consequently the filing of the removal petition failed to divest the state court of jurisdiction.
In the present case, the federal court to which the Bank tried to remove the case held not only that the removal petition was filed untimely, but also that the federal court did not have subject matter jurisdiction of the case because: 1) the prior federal bankruptcy of Miller Block had been terminated prior to the commencement of the instant litigation; and 2) no federal claim under the federal banking laws and regulations appears on the face of the complaint. In addition, Miller I could not provide jurisdiction in the present case.
Long before the instant action (Miller II ) was commenced, Miller I had been terminated by an order of the federal court which provided: "should further proceedings become necessary or desirable, any party may initiate it in the same manner as if this Order had not been entered." Between the entry of the order terminating Miller I and the filing of the removal petition in Miller II, no party took any action to re-activate Miller I. Thus, at the time that the Miller II removal petition was filed, there was no active federal case with which Miller II could have been consolidated. Furthermore, the federal court noted that a complaint was never filed in Miller I, and that there was "insufficient evidence...
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