Nat'l Credit Union Admin. Bd. as Liqu v. McElroy
| Decision Date | 28 June 2021 |
| Docket Number | CASE NO. 5:21-CV-01081 |
| Parties | NATIONAL CREDIT UNION ADMINISTRATION BOARD AS LIQU v. HEARD MCELROY & VESTAL L L C |
| Court | U.S. District Court — Western District of Louisiana |
Before the undersigned Magistrate Judge, on reference from the district court, is a motion to remand and an associated request for costs and fees filed by Defendant Heard McElroy & Vestal LLC ("HMV"). [doc. # 11]. The motion is opposed. For the following reasons, it is recommended that Defendant's motion to remand be GRANTED and that Defendant's request for costs and fees be GRANTED.
On November 25, 2020, the National Credit Union Administration Board as Liquidating Agent of the former Shreveport Federal Credit Union ("NCUAB") filed the instant action against HMV pursuant to LA. R.S. 37:114 in the First Judicial District Court for Caddo Parish. [doc. # 1-2]. NCUAB has asserted several tort and breach of contract claims against HMV in connection with two audits performed by HMV for NCUAB in its role as Liquidating Agent of the former Shreveport Federal Credit Union ("SFCU"). [doc. # 1-2, p. 5-6]. NCUAB seeks discovery and to have HMV submit to the accountant review panel process mandated by Louisiana law. [doc. # 1-2]. On April 1, 2021, HMV filed an exception of prescription, asserting that NCUAB's underlying claims have prescribed, and, therefore, their action for discovery and for an accountant review panel should be dismissed. [doc. # 1-2, p. 6]. HMV alleges that the statute of limitations for NCUAB's underlying claims has expired pursuant to 12 U.S.C. § 1787 and Louisiana law. [doc. # 1-2, p. 6].
On April 22, 2021, NCUAB removed this case to federal court based on federal question jurisdiction under 28 U.S.C. § 1331. [doc. # 1, p. 3]. NCUAB alleges that HMV's affirmative defense of prescription and/or peremption is a civil action arising under the laws of the United States and that it has properly removed this action pursuant to 12 U.S.C. §1789(a)(2) and 28 U.S.C §§1331, 1345, and 1441. [doc. # 1]. On May 19, 2021, HMV timely filed a motion to remand on the basis that there is a defect in the removal procedure because 28 U.S.C. §§1441 and 1446 do not provide for removal by a plaintiff to federal court. [doc. # 11]. On June 10, 2021, NCUAB filed a memorandum in opposition. [doc. # 14]. HMV filed a reply on June 23, 2021. [doc. # 15]. Accordingly, this matter is ripe.
Pursuant to 28 U.S.C. § 1447(c), the Court may grant a motion to remand if it finds it lacks subject matter jurisdiction over the suit, or if removal was procedurally defective. As explained more fully below, the Court has subject matter jurisdiction, but NCUAB's removal was procedurally defective and the case should therefore be remanded.1
HMV claims that NCUAB could have originally filed its action for discovery and review by an accountant panel in federal court,2 but NCUAB claims that it could not have filed its action in federal court and that no federal question was raised until HMV filed its exception of prescription and/or peremption.
HMV's filing an exception of prescription does not provide federal question jurisdiction. Pursuant to 28 U.S.C. §1331, district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. §1331. The Supreme Court has held that "a defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case 'arises under' federal law." Renegade Swish, L.L.C. v. Wright,857 F.3d 692, 695-96 (5th Cir. 2017)(quoting Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 10 (1983)). The well-pleaded complaint rule provides:
[W]hether a case is one arising under the Constitution or a law or treaty of the United States, in the sense of the jurisdictional statute, . . . must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose.
In addition,"[t]he well-pleaded-complaint rule also governs whether a case is removable from state to federal court pursuant to 28 U.S.C. § 1441(a)[.]" Id. at 697 (quoting Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826, 830 n.2 (2002)).
In evaluating whether an affirmative defense can satisfy the well-pleaded complaint rule and provide subject matter jurisdiction, the Supreme Court has held that "a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987)(citing Franchise Tax Board of Cal., 463 U.S. at 12); see also Holmes Group, Inc., 535 U.S. at 831; Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). Thus, HMV's exception of prescription and/or peremption under federal law does not confer federal subject matter jurisdiction because it is an affirmative defense3 and does not satisfy the well-pleaded complaint rule.
However, NCUAB could have originally filed this suit in federal court under 12 U.S.C. § 1789(a)(2) and/or 28 U.S.C. § 1345. Federal district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. §1331. Pursuant to 12 U.S.C. § 1789 (a)(2), "[a]ll suits of a civil nature at common law or in equity to which [NCUAB] shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy." 12 U.S.C. § 1789 (a)(2)(emphasis added). Accordingly, the court has federal question subject matter jurisdiction over any civil action to which NCUAB is a party, and NCUAB therefore could have filed its original petition in this court instead of in state court.
Likewise, 28 U.S.C. § 1345 provides that "the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress." NCUAB is an agency of the United States, is expressly authorized to sue pursuant to 12 U.S.C. § 1789 (a)(2), and it commenced this proceeding. Thus, there is federal subject matter jurisdiction over NCUAB's action for discovery and review by an accountant panel, and NCUAB could have filed this suit in federal court originally. However, though there is subject matter jurisdiction in this case, removal jurisdiction is defective.4
procedure, a plaintiff may not remove its own action absent realignment of the parties.
In the Fifth Circuit, any objection to removal that does not involve whether the action could have originally been brought in federal district court is a procedural error that may be waived by a litigant's failure to object to removal within the thirty-day period provided in § 1447(c), rather than a lack of subject matter jurisdiction. Wachovia Bank, N.A. v. PICC Prop. & Cas. Co., 328 Fed. App'x 946, 948 (5th Cir. 2009)(citing Williams v. AC Spark Plugs Div. of Gen. Motors Corp., 985 F.2d 783, 787 (5th Cir. 1993)). Under 12 U.S.C. § 1789 (a)(2), NCUAB may "sue and be sued, complain and defend, in any court of law or equity, State or Federal." 12 U.S.C. § 1789 (a)(2). It has been established that NCUAB could have filed its action in federal court originally under 12 U.S.C. § 1789 (a)(2) or 28 U.S.C. § 1345, but instead chose to file in state court.5 The statute further provides that NCUAB "may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States district court for the district or division embracing the place where the same is pending by following any procedure for removal now or hereafter in effect." Id. (emphasis added).
The parties do not dispute that 28 U.S.C. § 1441 governs the removal of this action.6 In general, the law does not provide for a plaintiff to remove his own case to federal court when hehas already filed in state court. Removal from state to federal court is governed by 28 U.S.C. § 1441(a), which provides:
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). See also 28 U.S.C. § 1446 (); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 106-07 (1941) ().
NCUAB argues that, although it filed suit in state court as a plaintiff, removal is nevertheless proper because HMV's exception of prescription filed in state court effectively realigned the parties and rendered NCUAB a defendant. For purposes of removal, federal law determines who is the plaintiff and who is the defendant. Chicago R.I. & P.R. Co. v. Stude, 346 U.S. 574, 575, 580 (1954); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,...
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