Pub. Emps. Ret. Ass'n of New Mexico v. Clearlend Sec.

• Decision Date: 18 July 2011
• Docket Number: No. 10–CV–1102 JEC/DJS.,10–CV–1102 JEC/DJS.
• Citation: 798 F.Supp.2d 1265
• Court: U.S. District Court — District of New Mexico
• Parties: PUBLIC EMPLOYEES RETIREMENT ASSOCIATION OF NEW MEXICO, Plaintiff, v. CLEARLEND SECURITIES f/k/a Wachovia Global Securities Lending f/k/a Metropolitan West Securities, L.L.C.; Wachovia Bank, N.A.; and Wells Fargo & Company, Defendants.

798 F.Supp.2d 1265

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION OF NEW MEXICO, Plaintiff,

v.CLEARLEND SECURITIES f/k/a Wachovia Global Securities Lending f/k/a Metropolitan West Securities, L.L.C.; Wachovia Bank, N.A.; and Wells Fargo & Company, Defendants.

No. 10–CV–1102 JEC/DJS.

United States District Court, D. New Mexico.

July 18, 2011.

Brian Lehman, David B. Harrison, Rebecca M. Katz, Stanley D. Bernstein, Bernstein Liebhard LLP, New York, NY, Jennifer L. Attrep, Long, Pound & Komer, PA, Santa Fe, NM, for Plaintiff.

Ross L. Crown, Erin Langenwalter, Lewis and Roca LLP, Albuquerque, NM, Jack B. Cobetto, Jayme Butcher, Mary J. Hackett, Reed Smith LLP, Pittsburgh, PA, for Defendants.

MEMORANDUM OPINION AND ORDER

JOHN E. CONWAY, Senior District Judge.

THIS MATTER comes before the Court on Plaintiff's Motion to Remand the Case to State Court and for Expenses Including Attorney's Fees, filed December 20, 2010 (Doc. 8); Defendants' Motion for Leave to Take Jurisdictional Discovery and for an Extension of Time to Respond to Plaintiff's Motion to Remand, filed January 6, 2011 (Doc. 16); and Defendants' Objection to Plaintiff's Notice of Completion of Briefing on Plaintiff's Motion to Remand to State Court, filed January 26, 2011 (Doc. 26). The primary issues are: (i) whether Defendants' Notice of Removal (“Notice”) is sufficient on its face to establish that Plaintiff is a citizen of New Mexico for purposes of diversity of citizenship; (ii) if the Notice is not sufficient, whether Defendants are entitled to conduct jurisdictional discovery in this Court before responding to Plaintiff's Motion to Remand; and (iii) if federal jurisdiction is not present and the case must be remanded, whether Plaintiff is entitled to its costs and attorney fees related to the removal. Having reviewed the pleadings, the governing authority, and being otherwise fully advised, the Court finds the Notice itself insufficient to establish federal diversity jurisdiction, because it does not state facts sufficient to support a finding that Plaintiff Public Employees Retirement System (“PERA” or “Plaintiff”) is a citizen of New Mexico where PERA is a state-created retirement association. Next, the Court determines that Defendants are not entitled to pursue discovery in this Court in an effort to uncover facts supporting federal jurisdiction because, although discovery may be permitted where facts pertaining to jurisdiction are in dispute, there are no facts alleged in the Notice that are disputed. Instead, the undisputed facts required fleshing out through discovery in state court. Finally, given the language in Plaintiff's Complaint, the Court is not prepared to say there was no “objectively reasonable” basis for the premature removal and will, therefore, deny Plaintiff's request for fees and costs.

I. Background

On October 20, 2010, PERA filed this action in the First Judicial District Court, County of Santa Fe, New Mexico, asserting claims sounding in breach of contract and breach of fiduciary duty. See Complaint. On November 18, 2010, Defendants Clearlend Securities f/k/a Wachovia Global Securities Lending f/k/a Metropolitan West Securities, L.L.C. (“Clearlend”); Wachovia Bank, N.A. (“Wachovia”); and Wells Fargo & Company (“Wells Fargo”) (collectively, “Defendants”) removed the case to this Court based on diversity of citizenship pursuant to 28 U.S.C. § 1332. Notice ¶ 4. In support of federal jurisdiction, Defendants state in pertinent part:

At the time of the commencement of this action and the filing of the Complaint, Plaintiff was, and still is, an entity organized under the laws of the state of New Mexico with its principal place of business located in New Mexico.

Notice ¶ 5. Defendants also aver that this Court would have had original jurisdiction over this action “in that it is a civil action between citizens of different states,” and conclude that “all jurisdictional requirements established by 28 U.S.C. § 1332” are present, the requirements of 28 U.S.C. §§ 1441 and 1446 have all been met, and removal is therefore proper. Notice ¶ 10, at 2–3; 4.

On December 20, 2010, PERA filed its Motion to Remand (“Motion”). Plaintiff asserts that public retirement associations like itself are invariably determined to be arms of the state and, therefore, not “citizens” for purposes of diversity. Plaintiff contends the case must be remanded and that jurisdiction is so plainly absent on the face of the Notice that it is entitled to recover all costs and fees associated with Defendants' improper removal. To its Motion, Plaintiff attaches (1) a Declaration of Rebecca M. Katz, Bernstein Liebhard, LLP, New York, New York, in support of the Motion; (2) Ms. Katz' December 1, 2010 letter to defense counsel requesting voluntary remand (stating, in pertinent part, that “PERA is an arm of the state of New Mexico; it is not a ‘citizen’ of that state,” setting forth the applicable fact-bound inquiry and applicable law for determining when an entity is an “arm of the state,” identifying that Defendants' Notice fails to allege facts sufficient for the Court to make the necessary jurisdictional determination, and asserting there is a lack of “objectively reasonable basis for removal”), and (3) Defendants' response letter declining to agree to remand or amend its Notice. See Doc. 8–1; Motion, Exs. 2, 3.

In lieu of a response to Plaintiff's Motion, on January 6, 2011, Defendants filed their Motion for Leave to Take Jurisdictional Discovery and for an Extension of Time to Respond to Plaintiff's Motion to Remand (Doc. 16) and Memorandum in Support (Doc. 17), requesting ninety days to conduct jurisdictional discovery in this Court and an additional fourteen days beyond the close of that discovery to respond to Plaintiff's Motion.

The Court had not ruled on Defendants' Motion for Discovery as of January 17, 2011, the due date for Defendants' response to Plaintiff's Motion absent relief from the Court. On January 24, 2011, Plaintiff filed its Notice of Completion of Briefing on Plaintiff's Motion to Remand (Doc. 24), which drew Defendants' Objection to Plaintiff's Notice of Completion of Briefing on Plaintiff's Motion to Remand to State Court (Doc. 24), wherein Defendants again assert that they are “in need of and entitled to” jurisdictional discovery in this Court and that, without permitting discovery, “the Court cannot properly determine its jurisdictional obligations.” Doc. 26 ¶ 2.

II. Legal StandardsA. Removal

Removal of a case from state to federal court is proper only if the complaint could originally have been filed in federal court. 28 U.S.C. § 1441(a). Pursuant to 28 U.S.C. § 1332(a), a federal district court enjoys original subject-matter jurisdiction over a case when the parties have complete diversity of citizenship and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a); Johnson v. Rodrigues, 226 F.3d 1103, 1107 (10th Cir.2000). “The burden of establishing subject-matter jurisdiction is on the party asserting jurisdiction.” Montoya v. Chao, 296 F.3d 952, 955 (10th Cir.2002).

“Statutes conferring jurisdiction upon the federal courts, and particularly removal statutes, are to be narrowly construed in light of [the courts'] constitutional role as limited tribunals.” Pritchett v. Office Depot, Inc., 404 F.3d 1232, 1235 (10th Cir.2005)(citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941), and United States ex rel. King v. Hillcrest Health Ctr., 264 F.3d 1271, 1280 (10th Cir.2001)). “All doubts are to be resolved against removal.” Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir.1982).

When analyzing notice required under § 1446(b) to trigger the time limit for removal, the Tenth Circuit has held that “[i]f the statute is going to run, the notice ought to be unequivocal. It should not be one which may have a double design.” DeBry v. Transamerica Corp., 601 F.2d 480, 489 (10th Circuit 1979). “The removal period does not begin until the defendant is able ‘to intelligently ascertain removability so that in his petition for removal he can make a simple and short statement of facts.’ ” Id. (emphasis added). To “ascertain” means “to .... learn with certainty.” Id. Hence, the word “ascertained” as used in section 1446(b) “means a statement that ‘should not be ambiguous.’ ” Akin v. Ashland Chem. Co., 156 F.3d 1030, 1035 (10th Cir.1998) (quoting DeBry, 601 F.2d at 490). The Tenth Circuit expressly “disagrees with cases from other jurisdictions which impose a duty to investigate and determine removability when the initial pleading merely indicates that the right to remove may exist.” Id. at 1036 (emphasis in original). Instead, the Tenth Circuit “requires clear and unequivocal notice from the pleading itself, or a subsequent ‘other paper’ such as an answer to interrogatory.” Id.

B. Remand

28 U.S.C. § 1447 governs remand after removal. Section 1447(c) states:

A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. A certified copy of the order of remand shall be mailed by the clerk to the clerk of the State court. The State may thereupon proceed with such case.

28 U.S.C. § 1447(a). See Miller v. Lambeth, 443 F.3d 757, 759 (10th Cir.2006)(“The statutory provision[ ] governing remands of cases removed to federal court [is] 28 U.S.C. § 1447(c)....”); RMP Consulting Group, Inc. v. Datronic Rental Corp., No. 98–5062, 1999 WL 617690, 1999 U.S.App. LEXIS 19246, 1999 WL 617690, at *4 (10th Cir.1999)(applying 28 U.S.C. § 1447(a)).

C. Costs and Fees

28 U.S.C. § 1447(c) allows...