CACH, LLC v. Echols

Filing 28

MEMORANDUM OPINION AND ORDER granting 17 Motion to Remand filed by William Echols; further denying as moot 20 Motion to Dismiss for Failure to State a Claim. Defendant Echols's request for attorney's fees is DENIED. Signed by Honorable Robert T. Dawson on July 2, 2015. (hnc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF ARKANSAS
HOT SPRINGS DIVISION

CACH, LLC

PLAINTIFF/COUNTER-DEFENDANT

v.

Case No. 15-6042

WILLIAM ECHOLS, on behalf of
a class of similarly situated
Arkansas residents

DEFENDANT/COUNTER-PLAINTIFF
AND THIRD-PARTY PLAINTIFF

v.
SQUARETWO FINANCIAL CORPORATION

THIRD-PARTY DEFENDANT

GENE SLAYTON

THIRD-PARTY PLAINTIFF

MEMORANDUM OPINION AND ORDER
Currently before the Court are Defendant William Echols’s
motion to remand (Doc. 17) and brief in support (Doc. 18), and
Plaintiff CACH, LLC’s response in opposition (Doc. 25) and brief
in support (Doc. 26).

For the reasons set forth below, the

motion to remand is GRANTED.
Plaintiff CACH, LLC (“CACH”) is the assignee of a credit
card account in the name of Defendant Echols.

The original

creditor, non-party GE Money Retail Bank, issued the credit card
in

Echols’s

name.

Echols

received

and

used

the

card.

On

November 14, 2013, CACH filed a complaint against Echols in
Clark

County

District

Court,

Arkadelphia

Page 1 of 6

Division,

alleging

breach of contract.1

CACH alleged that Echols defaulted on his

obligation to pay for the charges incurred with the credit card
issued by GE Money Retail Bank, and that the obligation had been
assigned to CACH, who was therefore entitled to enforce the
contract and receive payment of the credit card balance.
Echols responded that same day by filing an answer, class
action

counterclaim,

and

class

action

third-party

complaint.

The counterclaim against CACH included claims under the Arkansas
Deceptive Trade Practices Act (“ADTPA”), the Federal Fair Debt
Collection

Practices

Act

(“FDCPA”),

the

Arkansas

Fair

Debt

Collection Practices Act (“AFDCPA”), and for abuse of process.
The

third-party

against

complaint

third-party

(“SquareTwo”).

alleged

defendant

a

claim

SquareTwo

under

Financial

the

ADTPA

Corporation

CACH and SquareTwo separately filed answers to

the claims asserted against them.
On September 15, 2014, Echols filed a first amended class
action

counterclaim

against

amended counterclaim”).2
violations

of

the

ADTPA

CACH

and

SquareTwo

(the

“first

The first amended counterclaim alleged
and

claims

for

unjust

enrichment,

malicious prosecution, and abuse of process against both CACH

1

The action was later transferred to the Circuit
County, Arkansas.
2
Although it is a third-party complaint and not
with respect to SquareTwo, the Court will use the
the state court pleadings—which is also used by
their briefs—throughout this opinion.
Page 2 of 6

Court of Clark
a counterclaim
terminology of
the parties in

and SquareTwo.

CACH and SquareTwo filed a joint answer to the

amended counterclaim on October 20, 2014, and an amended answer
on December 4, 2014.
On April 6, 2015, CACH and SquareTwo filed a motion for
partial summary judgment on the first amended counterclaim.
April

8,

2015,

counterclaim

Echols

against

counterclaim”).

In

filed

CACH
the

a

and

second

SquareTwo

second

amended

amended
(the

class

“second

counterclaim,

On

action
amended
Echols

added Gene Slayton as an additional class representative and
joined

him

as

a

party

to

the

action.

The

second

amended

counterclaim alleged violations of the FDCPA and AFDCPA against
CACH,

and

violations

SquareTwo.

of

the

ADTPA

against

both

CACH

and

It also asserted claims of unjust enrichment and

abuse of process against CACH.
CACH filed a motion to voluntarily dismiss the state court
lawsuit under Arkansas Rule of Civil Procedure 41(a) on April
29,

2015.

SquareTwo
§

The

following

removed

1441(a),

jurisdiction.

day,

on

April

the

case

to

this

asserting

both

federal

30,

Court

2015,
under

question

and

CACH
28

and

U.S.C.

diversity

In the notice of removal, CACH and SquareTwo

asserted that the second amended counterclaim “constituted the
filing of a new and independent Complaint by Slayton against
CACH and SquareTwo as defendants.”

(Doc. 1, p. 4).

On May 5,

2015, Echols filed the instant motion, seeking remand on grounds
Page 3 of 6

that removal was improperly based on a counterclaim and neither
CACH nor SquareTwo had statutory authority to remove the case.
“The right of removal is entirely a creature of statute
and a suit commenced in a state court must remain there until
cause is shown for its transfer under some act of Congress.”
Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002)
(internal quotation omitted).

“The[] statutory procedures for

removal are to be strictly construed.”

Id.

party

to

seeking

subject

removal

matter

has

the

burden

jurisdiction;

all

“Critically, the
establish

doubts

about

jurisdiction must be resolved in favor of remand.”

federal
federal

Cent. Iowa

Power Coop. v. Midwest Indep. Transmission Sys. Operator, Inc.,
561 F.3d 904, 912 (8th Cir. 2009) (citations omitted).
Echols argues that CACH and SquareTwo are not defendants
for purposes of removal, and therefore they failed to establish
federal jurisdiction.
filed

in

state

Under the removal statute, a civil action

court

may

be

removed

by

the

defendant

or

defendants to federal court if the action is one over which the
federal court has original jurisdiction.
CACH

and

SquareTwo

contend

that

removal

28 U.S.C. § 1441(a).
was

proper

because

Slayton, as a plaintiff, filed a new complaint against them, as
defendants, on April 8, 2015, when his claims were added to the
second

amended

counterclaim.

They

characterize

the

second

amended counterclaim as a new complaint and urge the Court to
Page 4 of 6

realign the parties and deny remand, as Slayton has asserted
federal question claims against them and diversity exists.
“[J]urisdiction is determined at the time of removal, even
though subsequent events may remove from the case the facts on
which jurisdiction was predicated.”

McLain v. Andersen Corp.,

567 F.3d 956, 965 (8th Cir. 2009) (quoting Quinn v. Ocwen Fed.
Bank FSB, 470 F.3d 1240, 1248 (8th Cir. 2006)).

Reviewing the

record as it existed at the time of removal, it is clear that
neither CACH nor SquareTwo had statutory authority to remove the
case to federal court.

Although CACH had filed a motion to

dismiss the case in state court, the motion was still pending at
the time of removal.

The Court concludes that CACH was the

plaintiff in the state court action with claims pending against
Echols.

CACH and SquareTwo have not provided the Court with any

authority to indicate that a plaintiff is entitled to removal.
Further, the Eighth Circuit Court of Appeals has held that
the

removal

defendants.

statute

does

not

permit

removal

by

third-party

See Lewis v. Windsor Door Co., 926 F.2d 729, 733-34

(8th Cir. 1991).

It is undisputed that SquareTwo was a third-

party defendant at the time of removal.

Accordingly, SquareTwo

also lacked statutory authority to remove the case.3

3

CACH and SquareTwo argue that Slayton’s claims have independent
legal significance that must be considered a separate complaint,
but failed to provide the Court with any compelling argument or
case law to support this position.
Page 5 of 6

Ultimately, CACH and SquareTwo have not shown that they
were entitled to remove the case and invoke the jurisdiction of
the federal courts.

For the reasons set forth above, Defendant

Echols’s motion for remand (Doc. 17) is GRANTED and the case is
remanded to the Clark County Circuit Court.
It is FURTHER ORDERED that the motion to dismiss (Doc. 20)
filed by Plaintiff CACH, LLC and Third-Party Defendant SquareTwo
Financial Corporation is DENIED as moot.
Defendant Echols’s request for attorney’s fees and costs in
pursuit of this motion is DENIED.

The parties are to bear their

own fees and costs.
IT IS SO ORDERED this 2nd day of July, 2015.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge

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