CML-AZ Blue Ridge LLC et al v. Blue Ridge Plaza East LLP et al

Filing 44

ORDER denying Defendants/Third-Party Plaintiffs' Motion for Award of Costs and Attorneys' Fees Incurred as a Result of Improper Removal (Doc 41 ). Signed by Judge James A Teilborg on 2/22/2012.(KMG)

Download PDF
1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 16 17 18 CML-AZ Blue Ridge, LLC, a Florida) ) limited liability company, ) ) Plaintiff, ) ) vs. ) ) Blue Ridge Plaza East, LLP, an Arizona) ) limited liability partnership, et al. ) ) Defendants. ) ) vs. ) Federal Deposit Insurance Corporation, ) ) ) Third-Party Defendant. ) No. CV-11-01123-PHX-JAT ORDER 19 Pending before the Court is Defendants/Third-Party Plaintiffs’ Motion for Award of 20 Costs and Attorneys’ Fees Incurred as a Result of Improper Removal. Doc. 41. The Court 21 now rules on the motion. 22 I. BACKGROUND 23 On January 21, 2011, Plaintiff CML-AZ Blue Ridge, LLC initiated this action in 24 Maricopa County Superior Court against Defendants/Third-Party Plaintiffs Blue Ridge Plaza 25 East, LLP, among others. Defendants/Third-Party Plaintiffs subsequently filed a Third-Party 26 Complaint against the Federal Deposit Insurance Corporation (FDIC). The FDIC was served 27 with the Third-Party Complaint on April 20, 2011. The FDIC filed a notice of removal with 28 this Court on June 3, 2011. Doc. 1. The FDIC filed its notice 44 days after the FDIC was 1 served with the Third-Party Complaint and 91 days after the filing of the Third-Party 2 Complaint. Doc. 41 at 5-6. On June 27, 2011, Third-Party Plaintiffs filed a motion to remand 3 this case to state court. Doc. 17. This Court granted the motion, and remanded the case to 4 Maricopa County Superior Court on September 2, 2011. Doc. 38. 5 On September 30, 2011, Third-Party Plaintiffs filed a motion for an award of costs 6 and attorneys’ fees incurred as a result of improper removal. Doc. 41. 7 II. AWARD OF ATTORNEYS’ FEES 8 A. 28 U.S.C. § 1447(c) 9 28 U.S.C. § 1447(c) provides that “[a]n order remanding [a] case may require payment 10 of just costs and any actual expenses, including attorney fees, incurred as a result of the 11 removal.” 12 B. Legal Standard 13 When a district court has remanded a case to state court, the district court retains 14 jurisdiction to award attorneys’ fees permitted under 28 U.S.C. section 1447(c). Moore v. 15 Permanente Medical Group, Inc., 981 F.2d 443, 445 (9th Cir. 1992). Attorneys’ fees may 16 be awarded if the “removing party lacked an objectively reasonable basis for seeking 17 removal.” Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2006) (quoting 18 Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)). The purpose of this statute is 19 to grant district courts the discretion to “deter removals sought for the purpose of prolonging 20 litigation and imposing costs on the opposing party.” Martin, 546 U.S. at 140. When an 21 objectively reasonable basis exists for seeking removal, fees should be denied. Lussier, 518 22 F.3d at 1065 (citation omitted). 23 The Ninth Circuit has implied, though it has not explicitly stated, that an untimely 24 filed notice of removal lacks an objectively reasonable basis for removal. See Durham v. 25 Lockheed Martin Corp., 445 F.3d 1247, 1254 (9th Cir. 2006); see also Things Remembered, 26 Inc. v. Petrarca, 516 U.S. 124, 128 (1995) (untimely removal is “precisely the type of 27 removal defect contemplated by § 1447(c).”). The Eleventh Circuit has found filing an 28 untimely notice of removal to be objectively unreasonable. Taylor Newman Cabinetry, Inc. -2- 1 v. Classic Soft Trim, Inc., 436 F. App’x 888, 893, 2011 WL 2150183, at *4 (11th Cir. 2011). 2 The Tenth Circuit also considers untimely removals to be objectively unreasonable. Garrett 3 v. Cook, 652 F.3d 1249, 1254 (10th Cir. 2011) (“[i]f objectively unreasonable, an untimely 4 removal may give rise to an award of fees and costs”) (citing Durham, 445 F.3d at 1254). 5 There may be, as there was in this case, a dispute regarding whether a notice of removal was 6 timely filed. It is then appropriate to examine whether the removing party’s timeliness 7 argument was objectively reasonable. 8 When the relevant case law clearly forecloses the defendant’s basis of removal, 9 removal is not objectively reasonable. See Lussier, 518 F.3d at 1066-67 (citing Lott v. Pfizer, 10 Inc., 492 F.3d 789, 793-94 (7th Cir. 2007)). The Ninth Circuit has held that removal is not 11 objectively reasonable when the petition for removal is unsupported by the relevant statute 12 or case law. Patel v. Del Taco, Inc., 446 F.3d 996, 999 (9th Cir. 2006). 13 C. Discussion 14 As Third-Party Plaintiffs implicitly concede, Doc. 41 at 5, there is no Ninth Circuit 15 case clearly holding that an untimely filed notice of removal is per se objectively 16 unreasonable. Although Durham’s implication of such a per se rule is well-supported by the 17 Supreme Court’s holding in Martin and with the decisions of the other Circuits, because there 18 is no case law directly on point, Lussier requires this Court to analyze whether the relevant 19 case law regarding the notice’s timeliness clearly foreclosed the FDIC’s basis of removal. 20 In determining whether the FDIC made objectively reasonable arguments regarding 21 the timeliness of its notice of removal, the Court considers the removal statutes in question 22 and the extent of other Circuits’ case law supporting or contradicting the FDIC’s position. 23 In its reply to Third-Party Plaintiffs’ motion, the FDIC repeatedly points out that it has a 24 special removal statute, 12 U.S.C. section 1819(b)(2)(B). This is certainly true and is not in 25 dispute. The FDIC then argues that all case law not mentioning the special removal statute 26 is inapposite in finding that untimely notice of removal is objectively unreasonable. The 27 FDIC’s argument is incorrect. Notice of removal is untimely if it fails to comply with the 28 requirements of the applicable removal statute, whether that is 28 U.S.C. section 1446(b) or -3- 1 the FDIC’s special removal statute. Cases need not mention the special removal statute to be 2 relevant on the issue of whether a notice of removal, once found untimely, is objectively 3 reasonable. 4 Since the parties agree that the FDIC filed its notice of removal outside of the 5 timeliness standard of 28 U.S.C. section 1446(b), the relevant question is whether the FDIC 6 was objectively reasonable in its interpretation of the special removal statute’s timeliness 7 requirement. Although this Court has previously held in this same case that the FDIC’s 8 interpretation is inconsistent with the unambiguous text of the special removal statute, CML- 9 AZ Blue Ridge, LLC v. Blue Ridge Plaza East, LLP, No. CV11-1123-PHX-JAT, 2011 WL 10 3876040, at *4 (D. Ariz. 2011), this holding does not necessarily preclude the FDIC’s 11 interpretation from being objectively reasonable. 12 In making its argument, the FDIC relied solely upon a District Court of Colorado 13 decision, Costin Engineering Consultants, Inc. v. Latham, 905 F. Supp. 861, 864 (D. Colo. 14 1995). The court in Costin concluded in dicta that Congress, in drafting a statute that uses the 15 word “filed,” actually intended the 90-day period to run from when the FDIC was “served.” 16 905 F. Supp at 864. See also W. States Contracting v. Spilsbury, No. 2:10-CV-1141-TC, 17 2011 WL 2357883, at *2 (D. Utah 2011) (approving of Costin). At the time that the FDIC 18 filed its notice of removal, this Court had never interpreted the removal period provided in 19 12 U.S.C. section 1819(b)(2)(B). This Court has subsequently twice rejected the FDIC’s 20 argument. CML-AZ Blue Ridge, 2011 WL 3876040, at *2; CML-AZ Blue Ridge, LLC v. 21 Sterling Plaza West, LLC, No. CV11-01122-PHX-FJM, 2011 WL 4068877, at *2 (D. Ariz. 22 2011). 23 Despite rejecting the FDIC’s interpretation of the special removal statute, this Court 24 is not prepared to say that the FDIC lacked an objectively reasonable basis for its 25 interpretation. Costin was the product of an Article III judge reaching a conclusion based 26 upon a reasoned and fully articulated opinion. While this Court respectfully disagrees with 27 the result in Costin, it was not objectively unreasonable for the FDIC to rely upon the 28 decision. When another district court has issued a decision supporting the removing party’s -4- 1 argument, the relevant case law does not clearly foreclose the basis for removal. 2 Accordingly, the basis for the argument is objectively reasonable. See Lussier, 518 F.3d at 3 1066-67 (citing Lott, 492 F.3d at 793-94). 4 5 Because the FDIC had an objectively reasonable basis for seeking removal, this Court will not grant attorneys’ fees to Third-Party Plaintiffs. 6 Accordingly, 7 IT IS ORDERED denying Defendants/Third-Party Plaintiffs’ Motion for Award of 8 9 Costs and Attorneys’ Fees Incurred as a Result of Improper Removal. Doc 41. DATED this 22nd day of February, 2012. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5-

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?