Ross v. Thousand Adventures of Iowa, Inc., 3-00-CV-10236.

• Decision Date: 20 September 2001
• Docket Number: No. 3-00-CV-10236.,3-00-CV-10236.
• Citation: 178 F.Supp.2d 996
• Parties: Tony ROSS, Brian and Toni Hammond, George and Nadine Hess, Don and Donna Gerbeling, individually and on behalf of all other persons similarly situated, Plaintiffs, v. THOUSAND ADVENTURES OF IOWA, INC. and Thousand Adventures, Inc., and Heller Financial, Inc., and Allstate Financial, Inc., and Cascade Finance, and Zarr, Inc., and Consumer Loan Portfolios, Inc., and Travel America, Inc., and Western American Bank, N.A., and Liberty Bank, and Community First Bank f/k/a Carrolton Federal Bank, and Great Western Bank f/k/a Douglas County Bank, and 900 Capital, and Travelers Acceptance Corp., and Geico Financial Services, Inc., and Farmers & Merchants Bank f/k/a Nebraska State Bank, and Washington County Bank, and Wheeler Investment Group, and First Savings Bank of Arlington, and Receivable Financing Corp., Defendants.
• Court: U.S. District Court — Southern District of Iowa

178 F.Supp.2d 996

Tony ROSS, Brian and Toni Hammond, George and Nadine Hess, Don and Donna Gerbeling, individually and on behalf of all other persons similarly situated, Plaintiffs, v. THOUSAND ADVENTURES OF IOWA, INC. and Thousand Adventures, Inc., and Heller Financial, Inc., and Allstate Financial, Inc., and Cascade Finance, and Zarr, Inc., and Consumer Loan Portfolios, Inc., and Travel America, Inc., and Western American Bank, N.A., and Liberty Bank, and Community First Bank f/k/a Carrolton Federal Bank, and Great Western Bank f/k/a Douglas County Bank, and 900 Capital, and Travelers Acceptance Corp., and Geico Financial Services, Inc., and Farmers & Merchants Bank f/k/a Nebraska State Bank, and Washington County Bank, and Wheeler Investment Group, and First Savings Bank of Arlington, and Receivable Financing Corp., Defendants.

No. 3-00-CV-10236.

United States District Court, S.D. Iowa, Davenport Division.

September 20, 2001.

Douglas H. Napier, Napier Wolf & Napier, Fort Madison, IA, for plaintiffs.

James R. Adams, Douglas R. Dennis, Frost Brown Todd, LLC, Cincinnati, OH, for Thousand Adventures of Iowa, defendant.

Thomas M. Cunningham, Pingel & Templer, PC, West Des Moines, IA, for Heller Financial, Inc., defendant.

Mark L. Zaiger, Shuttleworth & Ingersoll, Cedar Rapids, IA, Jeffrey E. Altshul, Miki Vucic, Hopkins & Sutter, Chicago, IL, Antony S. Burt, Michael P. Mullins, Schiff Hardon & Waite, Chicago, IL, for Allstate Financial, Inc., defendant.

Michael P. Mallaney, Smith Schneider Stiles Hudson Serangeli Mallaney & Shindler, Des Moines, IA, for Travel America, Inc., defendant.

G. Mark Rice, Adams & Rice, Des Moines, IA, Mark C. Enoch, Lawrence Fischmann, Glast Phillips & Murray PC, Dallas, TX, for Western American Bank, NA, defendant.

Nick Critelli, Critelli & Associates, Des Moines, IA, Elizabeth A. Fitzsimmons, Sabia & Hartley, Hartford, CT, for Liberty Bank, defendant.

Robert S. Hatala, James L. Sines, Crawford Sullivan Read Roemerman & Brady PC, Cedar Rapids, IA, for Community First Bank, defendant.

William G. Dittrick, Heidi A. Guttau-Fox, Thomas O. Ashby, Baird Holm McEachen Pedersen Hamann & Strasheim, Omaha, NE, for Great Western Bank, defendant.

Brent Ruther, Aspelmeier Fisch Power Warner & Engberg, Burlington, IA, for Geico Financial Services, Inc., defendant.

Scott J. Coziahr, Ronald E. Eggers, Gross & Welch PC, Omaha, NE, for Washington County Bank, defendant.

Robert V. P. Waterman, Jr., Lane & Waterman, Davenport, IA, John F. Pollick, Hill Gilstrap & Balson, Chicago, IL, for First Savings Bank of Arlington, defendant.

ORDER

LONGSTAFF, Chief Judge.

This Court held a hearing on May 9, 2001 to address plaintiffs' motion to remand. At the hearing, the Court set up a briefing schedule which has since been adhered to by the parties. While defendants have filed other motions,¹ this Court has determined that the preliminary motion this Court must address is the motion to remand.²

Following the May 9 hearing, an amended notice of removal was filed by defendant, Great Western, on May 14, 2001. This pleading adopted the amendments this Court allowed in its May 7, 2001 Order addressing defendants' motion to amend the notice of removal. On June 1, 2001 plaintiffs filed an amended motion to remand. On July 2, 2001 defendants filed a joint resistance to this motion. Defendant Community First Bank filed a supplemental resistance to the remand motion on this same day. On July 3, 2001 defendants Heller Financial, Inc., Allstate Financial, Inc., Western American Bank, Liberty Bank, Community First Bank, Geico Financial, and First Savings Bank filed a separate resistance to the remand motion. Plaintiffs then filed a reply on July 13, 2001. While in-person oral argument has been requested by defendants, the Court finds it unnecessary. The matter is well briefed and fully submitted.

In a motion to remand, the following principles are applied:

(1) the party seeking removal and opposing remand bears the burden of establishing federal subject matter jurisdiction; (2) a fundamental principle of removal jurisdiction is that whether subject matter jurisdiction exists is a question answered by looking to the complaint as it existed at the time the petition for removal was filed; (3) lack of subject matter jurisdiction requires remand to the state court under the terms of 28 U.S.C. § 1447(c); (4) the court's removal jurisdiction must be strictly construed; therefore, (5) the district court is required to resolve all doubts about federal jurisdiction in favor of remand; and, finally, (6) in general, remand orders issued under 28 U.S.C. § 1447(c) are not reviewable by appeal or writ of mandamus.

Foslip Pharmaceuticals, Inc. v. Metabolife Int'l, Inc., 92 F.Supp.2d 891, 901 (N.D.Iowa 2000) (quoting McCorkindale v. American Home Assur. Co./A.I.C., 909 F.Supp. 646 (N.D.Iowa 1995) (other citation omitted)).

In this case, defendants have asserted two grounds for this Court to exercise subject matter jurisdiction. The first is federal question jurisdiction under 28 U.S.C. § 1331. See Amended Notice of Removal at ¶ 3. Defendants argue that plaintiffs have presented a substantial question of federal law by relying on a federal regulation, 16 C.F.R. § 433. The second ground for subject matter jurisdiction asserted by defendants is related-to-bankruptcy jurisdiction, pursuant to 28 U.S.C. §§ 157, 1334(b), and 1452.³ See Amended Notice of Removal at ¶¶ 4-5. However, under either theory of subject matter jurisdiction, defendants' burden as the party opposing remand is to establish that the joinder requirement for removal has been properly met.

"As a general rule, all defendants must join in a removal petition in order to effect removal." Jones v. Kremer, 28 F.Supp.2d 1112, 1113 (D.Minn.1998) (citing Bradley v. Maryland Cas. Co., 382 F.2d 415, 419 (8th Cir.1967) (other citations omitted)). This is referred to as the rule of unanimity. Each defendant must join in the notice of removal or file a separate notice of removal within thirty days of the date they are served with the plaintiff's state court petition, see Marano Enter. of Kansas v. Z-Teca Restaurants, L.P., 254 F.3d 753, 755-57 (8th Cir.2001),⁴ or each defendant must meet one of the three exceptions to the rule of unanimity. Those three exceptions to the joinder requirement are: 1.) when a co-defendant has not been served at the time the removal petition is filed; 2.) when a co-defendant is only a nominal defendant; and 3.) when the removed claim is separate and independent under 28 U.S.C. § 1441(c). See Kremer, 28 F.Supp.2d at 1113 n. 2 (citing Bradley, 382 F.2d at 419 (other citations omitted)).

In this case, there are nineteen separate defendants. Great Western was served on December 4, 2000, and filed its notice of removal within thirty days, on December 20, 2000. Thereafter, several defendants joined within thirty days of the time that they were served.⁵ Plaintiff has conceded that one defendant is nominal and excepted from the rule of unanimity.⁶ Two defendants joined in the notice of removal after their thirty day window passed.⁷ Three defendants have not joined in the notice of removal.⁸ The remaining defendants are excused from joinder as the record reflects that they were not served at the time Great Western filed its notice of removal.⁹

Defendants argue that only those defendants who had been served, and whose returns of service had been filed by plaintiffs with the state court at the time the notice of removal was filed, were required to timely join. Defendants rely on the Milstead rule, as stated in Milstead Supply Co. v. Cas. Ins. Co., 797 F.Supp. 569, 573 (W.D.Tex.1992) (holding joinder in a removal petition need only be accomplished by those defendants who have been served and whom the removing defendant actually knew or should have known had been served). Great Western, as the first served defendant, asserts that on December 19, 2000 it was informed by the Lee County District Court Clerk that no other returns of service were on file. See Defendants' Joint Opposition to Plaintiffs' First Amended Motion For Remand, Exhibit A at ¶ 5 (Affidavit of Heidi Guttau-Fox). At that time, however, returns of service for Washington County Bank and GEICO Financial were actually on file with that court. Defendants argue that no other defendants were required to timely join in Great Western's notice of removal as Great Western was not aware that any other defendants had been served. Implied from Great Western's argument is that it believed all other defendants would be excused from joinder because returns of service were not on file. In the alternative, defendants argue Washington County Bank and GEICO were both excused from timely joinder.

The Eighth Circuit, however, has not adopted the Milstead rule. Further, it is unlikely the Eighth Circuit would agree with the district court in Milstead as that court was bound by the rules of the Fifth Circuit, which hold that the thirty-day time period to join a notice of removal begins to run from the time the first defendant is served. See Milstead, 797 F.Supp. at 572 (citing Getty Oil Corp. v. Ins. Co. of North America, 841 F.2d 1254, 1262 (5th Cir. 1988)). The Eighth Circuit has rejected this rule. See Marano, 254 F.3d at 757. In Milstead, the fact that the time began to run from the time the first defendant was served caused the district court to view the first served defendant as having a "dilemma" of "removing first and asking questions later." Id. This concern is not present in this case, as each defendant had thirty days from the time that they were individually served to join in any existing notice of removal or file their own notice of removal. See Marano, 254 F.3d at 757.

This Court thus finds defendants, who did not fit one of the three exceptions, were required to join in Great Western's notice of removal within thirty days of being served. Even assuming service on GEICO was defective, other ...