Branch v. Tifton Banking Company

Filing 12

ORDER dismissing 2 Motion to Substitute ; dismissing 3 Motion to Quash; dismissing 6 Motion to Dismiss for Lack of Jurisdiction; granting 9 Motion to Remand. Case is remanded to Superior Court of Tift County, Georgia. Ordered by Judge Hugh Lawson on 7/19/2011. (nbp)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
VALDOSTA DIVISION
TIMOTHY V. BRANCH,

:
:
Plaintiff,
:
:
v.
:
:
TIFTON BANKING COMPANY,
:
:
Defendants.
:
___________________________________ :

Civil Action No.
7:11-cv-45 (HL)

ORDER
Before the Court is a Motion to Remand (Doc. 9) filed by Plaintiff Timothy V.
Branch (“Branch”). For the following reasons the Motion is granted. The Motions
to Substitute Federal Deposit Insurance Corporation (Doc. 2), Motion to Quash
Service of Process (Doc. 3), and the Motion to Dismiss for Lack of Jurisdiction (Doc.
6) are dismissed.
I.

BACKGROUND
On January 13, 2011, Branch filed a complaint against Defendant Tifton

Banking Company (“the Bank”) in the Superior Court of Tift County, Georgia (Doc.
1-4). The complaint alleges that the Bank breached a contract made between
Branch and the Bank. Branch seeks damages, attorneys’ fees, and litigation costs.
In November 2010 the Georgia Department of Banking and Finance closed
the Bank and appointed the Federal Deposit Insurance Corporation (the “FDIC”) as
receiver. The FDIC accepted the appointment. On March 28, 2011, the FDIC filed
in the Superior Court action a Motion to Substitute itself, as receiver for the Bank, as

the defendant in the Superior Court action. The Superior Court granted Branch thirty
days to respond to the Motion to Substitute. Before Branch filed his response and
before the Superior Court ruled on the Motion to Substitute, the FDIC removed the
case to this Court.
The FDIC claims that removal was timely and proper under 12 U.S.C. §
1819(b)(2)(A). Branch moved to remand the case to the Superior Court of Tift
County on May 31, 2011, more than thirty days after the FDIC filed its notice of
removal. The FDIC opposes the Motion to Remand arguing that removal was proper
and even if it was not, Branch waived any objection to the removal by not moving to
remand within thirty days of the removal.
II.

DISCUSSION
The FDIC removed this case pursuant to 12 U.S.C. § 1819(b)(2)(A) and §

1819(b)(2)(B). Section 1819(b)(2)(A) states that “all suits of a civil nature at common
law or in equity to which the [FDIC], in any capacity, is a party shall be deemed to
arise under the laws of the United States.” Section 1819(b)(2)(B) states that “the
[FDIC] may . . . remove any action . . . from a State court to the appropriate United
States district court before the end of the 90-day period beginning on the date the
action, suit, or proceeding is filed against the [FDIC] or the [FDIC] is substituted as
a party.”
Federal courts have subject matter jurisdiction over removed actions involving
the FDIC as a party under § 1819(b)(2). Castleberry v. Goldome Credit Corp., 408
2

F.3d 773, 781 (11th Cir. 2005). Except as provided in § 1819(b)(2), the general
removal statute, 28 U.S.C. § 1441(a) still applies when the FDIC is a party. Id. at
781 n. 8.

The general remand statute, 28 U.S.C. § 1447, also applies. Section

1447(c) provides that a motion to remand a case for defects other than lack of
subject matter jurisdiction must be made within thirty days after filing a notice of
removal.
A.

Whether the case was properly removed

Branch argues that the case should be remanded because the FDIC was
never made a party to the case. The FDIC argues that its formal substitution was not
required to trigger its removal rights under § 1819(b)(2); instead, it believes that its
status as a receiver or the filing of its Motion to Substitute was sufficient.
In Castleberry, the Eleventh Circuit found that a complaint naming a subsidiary
of a bank as a defendant and not the FDIC-Receiver meant the complaint was not
an action “filed against the [FDIC]” and no removal rights existed. Id. at 781. More
recently, a district court in the Eleventh Circuit found that the FDIC’s status as a
receiver for a bank does not make it a party to a case. Vision Bank v. Bama Bayou,
LLC, 2011 WL 521611, at * 1 (S.D. Ala. Feb. 14, 2011).

It reasoned that

appointment as a receiver does not equate with substitution as a party. Id. (citation
omitted). Castleberry and Vision Bank cause this Court to find that no removal rights
were triggered when the case was filed because Branch’s complaint does not name
the FDIC as a party.
3

Whether filing of a motion to substitute triggers removal rights is a question of
federal law. Castleberry, 408 F.3d at 784 ( “[W]e must look to Federal Rules of Civil
Procedure to determine whether [cross claimant] filed an action against the FDIC
under §1819.") (citation and quotations omitted). Federal Rule of Civil Procedure
25(c) requires “that the court act upon a motion to substitute.” It does not allow for
an automatic substitution when there is a transfer of interest. Here, the Superior
Court did not enter an order substituting the FDIC as a party in the case. Therefore,
the FDIC was not a party and could not remove the case to federal court. The FDIC
could only remove after the Superior Court granted its Motion to Substitute. See
Uhlig v. Darby Bank & Trust Co., 2011 WL 1807014, at * 3 (S.D. Ga. May 11, 2011)
(ordering remand because the state court had not entered an order substituting the
FDIC as a party to the case).
B.

Whether the Court can remand

The FDIC argues that even if the removal was improper, the error was a
defect in the removal process and waived by Branch. A district court cannot remand
for procedural defects if a motion to remand was filed outside the thirty-day window.
In re Bethesda Memorial Hosp., Inc., 123 F. 3d 1407, 1410 (11th Cir. 1997). A
district court can remand a case for lack of subject matter jurisdiction at any time. 28
U.S.C. § 1447(c). Here, Branch filed his motion to remand more than thirty days after
the FDIC filed its notice of removal. Therefore, the case may be remanded only if
the Court determines it lacks subject matter jurisdiction.
4

A defect in the removal process “refers to any defect that does not go to the
question of whether the case originally could have been brought in federal district
court . . . .” Corporate Mgmt. Advisors, Inc. v. Artjen Complexus, Inc., 561 F.3d 1294,
1297 (11th Cir. 2009) (citation omitted). For example, a failure to allege citizenship
in the original notice of removal is a procedural error if the record discloses no
dispute that diversity jurisdiction actually exists. Id. (citation omitted). For procedural
errors, a district court may consider additional evidence after the notice of removal
is filed “to establish the facts present at the time of removal.” Pretka v. Kolter City
Plaza II, Inc., 608 F.3d 744, 751 (11th Cir. 2010) (citation omitted).
This case shows no procedural error, but rather a lack of subject matter
jurisdiction. Under the plain language of § 1819(b)(2), a district court does not have
subject matter jurisdiction over a case until the FDIC is a party. The statute states
that it is not until the FDIC becomes a party that the case arises under “the laws of
the United States” and gives district courts jurisdiction. 18 U.S.C. § 1819(b)(2)(A);
see also 28 U.S.C. § 1331 (stating “[t]he district courts shall have original jurisdiction
of all civil actions arising under the Constitution, law, or treaties of the United
States.”). Moreover, Congress made clear that § 1819(b)(2) refers to subject matter
jurisdiction when it titled § 1819(b)(2) “federal court jurisdiction.”
This Court is not persuaded by the cases Estate of Harding by Williams v.
Bell, 817 F. Supp. 1186, 1193 (D.N.J. 1993) (finding failure to substitute FDIC prior
to removal was a procedural error), and Pyle v. Meritor Sav. Bank, 821 F. Supp.
5

1072, 1078 (E.D. Pa. 1993) (finding same). Those cases fail to account for §
1819(b)(2)'s plain language establishing subject matter jurisdiction when the FDIC
is made a party.
In this case, there is no dispute that the FDIC was never substituted as a
party prior to removal. Therefore, subject matter jurisdiction does not exist. The
error cannot be cured by presenting additional evidence or filing an amended notice
of removal. Remand is required. Furthermore, the Court cannot grant the FDIC’s
motion to substitute because it lacks subject matter jurisdiction over the case.
III.

CONCLUSION
The Motion to Remand (Doc. 9) is granted because the Court lacks subject

matter jurisdiction. The Motion to Substitute (Doc. 2), Motion to Quash Service of
Process (Doc. 3), and Motion to Dismiss for Lack of Jurisdiction (Doc. 6) are
dismissed. The case is remanded to the Superior Court of Tift County, Georgia.
SO ORDERED, this the 19th day of July, 2011.
s/ Hugh Lawson
HUGH LAWSON, SENIOR JUDGE
lmc

6