Lewis et al v. HSBC Bank USA, N.A. et al
FINDINGS AND RECOMMENDATION TO GRANT PLAINTIFFS' MOTION FOR AN ORDER OF REMAND re 17 - Signed by MAGISTRATE JUDGE KEVIN S.C. CHANG on 8/25/2017. "For the reasons stated above, the Court HEREBY RECOMMENDS that Plaintiffs' Motion be GRANTED and that this action be remanded to the Circuit Court of the Fifth Circuit, State of Hawaii." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
PAUL W. LEWIS; CONNIE K.
HSBC BANK USA, N.A.; MICHAEL )
JAMES MARTIN; COLLEEN ANN
JERGENS; WELLS FARGO BANK,
N.A.; DOE DEFENDANTS 1-50,
CIVIL NO. 17-00234 DKW-KSC
FINDINGS AND RECOMMENDATION TO
GRANT PLAINTIFFS’ MOTION FOR AN
ORDER OF REMAND
FINDINGS AND RECOMMENDATION TO GRANT PLAINTIFFS’
MOTION FOR AN ORDER OF REMAND
Before the Court is Plaintiffs Paul and Connie Lewis’
(collectively “Plaintiffs”) Motion for an Order of Remand, filed
June 22, 2017.
Defendants Wells Fargo Bank N.A. (“Wells Fargo”),
Michael James Martin (“Martin”), and Colleen Ann Jergens
(“Jergens”) (collectively “Removing Defendants”) filed an
Opposition on July 31, 2017, which Defendant HSBC Bank USA, N.A.
On August 7, 2017, Plaintiffs filed a Reply.
This matter came on for hearing on August 21, 2017.
John Perkin, Esq., appeared on behalf of Plaintiffs; Summer
Kaiawe, Esq., and Michael Bird, Esq., appeared on behalf of
Removing Defendants; and Blaine Rogers, Esq., appeared on behalf
After careful consideration of the parties’
The Court refers to Removing Defendants and HSBC
collectively as “Defendants”.
submissions, the record, the applicable law, and the arguments of
counsel, the Court HEREBY RECOMMENDS that Plaintiffs’ Motion be
GRANTED for the reasons set forth below.
On February 8, 2017, Plaintiffs commenced this action
against Defendants in the Circuit Court of the Fifth Circuit,
State of Hawaii.
Plaintiffs filed a First Amended Complaint
(“FAC”) on February 15, 2017.
Wells Fargo was served with the FAC on April 27, 2017.
Martin and Jergens were served on May 7, 2017.
On May 23, 2017, Defendants removed the action on the
basis of diversity jurisdiction.
Notice of Removal (“Notice”) at
Included in the Notice was the following averment:
Based upon a review of the public docket for the
State Court Action accessed on Ho‘ohiki on May 24,
2017,2 no return of service as to HSBC has been
filed. Upon information and belief, it does not
appear that HSBC has been served with the FAC. As
a result, HSBC’s consent to removal is not
Id. at ¶ 8.
On June 22, 2017, Plaintiffs filed the instant Motion.
On July 12, 2017, HSBC filed a Consent and Joinder in
In the Consent and Joinder, HSBC represented that
its counsel informed removing defense counsel on June 26, 2017
Defendants filed an Errata correcting this date to May
that it consented to removal of the action.
Plaintiffs seek remand of this action to state court.
They argue that the Notice is defective because HSBC failed to
timely consent to and join in the removal, and the time for doing
so has expired.
Removing Defendants respond that HSBC’s consent
was not required because they were unaware that HSBC had been
served when they removed this action, and that consent was timely
given subsequent to removal.
In addition, Removing Defendants
contend that even if HSBC’s consent was untimely, Plaintiffs have
failed to establish prejudice.3
Removal Was Procedurally Defective
Removing Defendants removed the instant case on the
basis of diversity of citizenship.
Under 28 U.S.C. § 1441, a
defendant may remove a civil action brought in a state court to
federal district court if the district court has original
Abrego Abrego v. The Dow Chemical Co., 443 F.3d
676, 679-80 (9th Cir. 2006).
“Removal . . .
‘strictly construed,’ and a ‘defendant seeking removal has the
burden to establish that removal is proper and any doubt is
resolved against removability.’”
Hawaii ex rel. Louie v. HSBC
Demonstration of prejudice is not a factor in the Court’s
inquiry under governing law. Removing Defendants, not
Plaintiffs, bear the burden of establishing the propriety of
Bank Nevada, N.A., 761 F.3d 1027, 1034 (9th Cir. 2014) (quoting
Luther v. Countrywide Home Loans Serv. LP, 533 F.3d 1031, 1034
(9th Cir.2008)); Durham v. Lockheed Martin Corp., 445 F.3d 1247,
1252 (9th Cir. 2006); California ex rel. Lockyer v. Dynegy, Inc.,
375 F.3d 831, 838 (9th Cir. 2004).
There is a strong presumption against removal
jurisdiction, which “means that the defendant always has the
burden of establishing that removal is proper,’ and that the
court resolves all ambiguity in favor of remand to state court.”
Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009)
(quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)
(per curiam)); California ex rel. Lockyer, 375 F.3d at 838
(“[T]he burden of establishing federal jurisdiction falls to the
party invoking the statute.”); Durham, 445 F.3d at 1252 (Courts
resolve any doubts about the propriety of removal in favor of
remanding the case to state court).
Courts should presume that a
case lies outside the limited jurisdiction of the federal courts.
Hunter, 582 F.3d at 1042.4
Known as the rule of unanimity, 28 U.S.C.
§ 1446(b)(2)(A) requires “all defendants who have been properly
joined and served [to] join in or consent to the removal of the
28 U.S.C. § 1446(b)(2)(A); Destfino v. Reiswig, 630
Removing Defendants have completely disregarded this
legal standard in their briefing.
F.3d 952, 956 (9th Cir. 2011) (citations omitted); Proctor v.
Vishay Intertechnology Inc., 584 F.3d 1208, 1224 (9th Cir. 2009)
(“In a case involving multiple defendants, ‘[a]ll defendants must
join in a removal petition.’”) (citation omitted) (alteration in
Excepted from this rule are nominal, fraudulently
joined or unknown defendants, Emrich v. Touche Ross & Co., 846
F.2d 1190, 1193 n.1 (9th Cir. 1988); Abrego, 443 F.3d at 680
(citation omitted), and defendants that have not been properly
served in the state court action.
Salveson v. Western States
Bankcard Ass’n, 731 F.2d 1423, 1429 (9th Cir. 1984), overruled on
other grounds by Ethridge v. Harbor House Rest., 861 F.2d 1389
(9th Cir. 1988).
A defendant’s failure to join is fatal under
See Pressman v. Meridian Mortgage Co., 334 F. Supp. 2d
1236, 1240-41 (D. Haw. 2004) (citing Hewitt v. City of Stanton,
798 F.2d 1230, 1232-33 (9th Cir. 1986)); Prize Frize, Inc. v.
Matrix (U.S.) Inc., 167 F.3d 1261, 1266 (9th Cir. 1999),
overruled on other grounds by Abrego, 443 F.3d at 670 (“[T]he
failure to adhere to the unanimity rule is dispositive.”).
If fewer than all defendants join in removal, the
removing party has the burden, under § 1446(a), of affirmatively
explaining the absence of the non-joining defendant(s) in the
notice of removal.
Prize Frize, 167 F.3d at 1266 (finding the
removal notice insufficient where it stated that the defendants
believed that many, rather than all, of the non-consenting
defendants were not properly served).
Insofar as HSBC was served
on May 1, 2017, removing Defendants were required to obtain
HSBC’s consent prior to removing the action, and their failure to
do so renders the Notice defective.
Removing Defendants Failed to Obtain HSBC’s Consent or
Joinder in the Notice
Removing Defendants argue that they were not required
to obtain HSBC’s consent because it was not a “[k]nown [p]roperly
[s]erved and [j]oined [d]efendant at the [t]ime of [r]emoval,”
Opp’n at 7, as no proof of service was posted on Ho‘ohiki at the
time of removal.
Id., Decl. of Summer H. Kaiawe (“Kaiawe
Decl.”), Ex. A (reflecting no proof of service for HSBC in the
case document list on May 23, 2017).
They further contend that
they were reasonably diligent in their effort to ascertain
whether HSBC had been served, and in any event, that they
properly explained HSBC’s absence in the Notice.
issue is not whether they explained HSBC’s absence, but whether,
prior to removal, they exercised reasonable diligence in
attempting to ascertain the status of service upon HSBC.
Removing Defendants Failed to Exercise Reasonable
To support their assertion of diligence, Removing
Defendants submit that 1) they reviewed Ho‘ohiki on May 23, 2017,
prior to filing the Notice, and no proofs of service were on the
document list and 2) on May 17, 2017, they contacted David Rosen,
Esq., who represented HSBC in another action, but Mr. Rosen was
unaware of this action.5
After considering the record before it,
the Court is unpersuaded that Removing Defendants’ efforts
constitute reasonable diligence in this case.
Conflicting authority exists regarding the extent of a
removing defendant’s duty to ascertain whether co-defendants have
been served at the time the notice of removal is filed.
many courts require the consent of served co-defendants,
regardless of the filing of proofs of service, and they find that
diligence is lacking when removing defendants merely check the
state court record for proofs of service as to co-defendants.
See, e.g., Barbera v. WMC Mortg. Corp., No. C 08-02677 SBA, 2009
WL 742843, at *2 (N.D. Cal. Mar. 18, 2009) (“[T]he obligation to
join all defendants is based on whether the defendant actually
has been served, not on the subjective knowledge of the removing
party.”); Career Network, Inc. v. Wot Servs., Ltd., No.6:10-CV1826-ORL-31, 2011 WL 397906, at *2 (M.D. Fla. Feb. 3, 2011)
(holding that because service was effected prior to removal, a
co-defendant’s consent to the removal was required even though
the proofs of service were not filed prior to removal); AGI Pub.,
Inc. v. HR Staffing, Inc., No. 1:12-CV-00879-AWI, 2012 WL
Removing Defendants included this second showing of
“diligence” in the procedural history section of their
Opposition, but they primarily rely on their review of the
3260519, at *6 (E.D. Cal. Aug. 8, 2012) (finding a lack of
diligence sufficient to excuse the removing defendant’s failure
to join its co-defendants where the removing defendant 1) had
knowledge that one defendant had been served prior to removal and
2) checked the docket once, eight days prior to removal, but did
not recheck or consult the state court clerk’s office);6 Orozco
v. EquiFirst Corp., No. CVC08-8064PA(CWX), 2008 WL 5412364, at *1
(C.D. Cal. Dec. 22, 2008) (“A removing defendant must exercise
due diligence to ascertain if other defendants have been served,
and simply checking if a proof of service has been filed with the
court is insufficient.”); Pianovski v. Laurel Motors, Inc., 924
F. Supp. 86, 87 (N.D. Ill. 1996) (deeming insufficient the
removing defendant’s phone call to the clerk and instruction to a
docketing employee and explaining that the removing defendant
should have taken the further step of attempting to contact the
co-defendant to determine whether it had been served); Sasser v.
Florida Pond Trucking, LLC, No. 1:16-CV-252-WKW-PWG, 2016 WL
3774125, at *6 (M.D. Ala. June 24, 2016), report and
recommendation adopted, 2016 WL 3769754 (M.D. Ala. July 14, 2016)
(concluding that the removing defendant’s due diligence requires
more than a mere check of state court records to see if proofs of
Removing Defendants believe this case supports a finding
that they acted with reasonable diligence. The Court disagrees.
Checking Ho‘ohiki once on the day of removal, without additional
efforts such as consulting the Fifth Circuit Court Clerk’s
office, does not compel a different outcome than in AGI.
service have been filed as to co-defendants);
Monterey Cty., No. C 08-05194 JW, 2009 WL 585880, at *3 (N.D.
Cal. Mar. 6, 2009) (finding a lack of due diligence where the
removing defendant called the court clerk to determine if proofs
of service had been filed as to co-defendants, was informed that
no proof of service had been filed for certain co-defendants, but
took no further steps to ascertain whether those co-defendants
had been served); Parker v. Johnny Tart Enters., Inc., 104 F.
Supp. 2d 581, 585 (M.D.N.C. 1999) (rejecting the removing
defendants’ “reliance on their search for and the absence of a
return of service for Defendant Blackstock in the state court
records prior to the filing of Defendants’ notice of removal” and
finding that “there is no authority within the Fourth Circuit
supporting the creation or application of an equitable exception
to the thirty-day time limit of 28 U.S.C. § 1446(b) based on
Other courts allow removing defendants to rely on the
state court docket for filed proofs of services.
Lopez v. BNSF Ry. Co., 614 F. Supp. 2d 1084, 1089 (E.D. Cal.
2007) (reasonable diligence found where the removing defendants
checked the state court docket to ascertain whether co-defendants
had been served prior to removal and concluding that the removing
defendants did not have a duty to contact the plaintiffs’ counsel
to investigate whether service had been effected upon co-
defendants); Laurie v. Nat’l R.R. Passenger Corp., No. CIV.A.
01-6145, 2001 WL 34377958, at *1 (E.D. Pa. Mar. 13, 2001) (“[T]he
better rule is that is that a defendant is required to obtain
consent only from those codefendants who it knew or should have
known” had been served, in the exercise of reasonable diligence –
i.e. repeatedly checking the docket, calling the office on more
than one occasion to determine whether a proof of service had
been filed); Milstead Supply Co. v. Cas. Ins. Co., 797 F. Supp.
569, 573 (W.D. Tex. 1992) (finding “that the exceptional
circumstances of this case justify the following holding[:] . . .
joinder in or consent to the removal petition must be
accomplished by only those defendants:
(1) who have been served;
and, (2) whom the removing defendant(s) actually knew or should
have known had been served.
The second requirement encompasses
the served defendants whom the removing defendant(s) actually
knew had been served.
This requirement also mandates that the
removing defendant(s) obtain the consent or joinder of the other
defendant(s) whom the removing defendant(s) should have been
aware of because of the constructive notice of the filing of the
return of service in the state court.
The constructive notice
element should only be applied to removing defendants who had a
reasonable time to become aware of the filing of such service and
had a reasonable time in which to obtain the consent or joinder
of such other defendants.”).
Removing Defendants rely on the foregoing three cases,
all of which have applied a lack of constructive notice exception
to the rule of unanimity.
Williams v. Int’l Gun-A-Rama, 416 Fed.
Appx. 97, 99 (2d Cir. 2011) (noting that Milstead Supply Co. v.
Casualty Insurance Co. “carved out an exception to the general
rule that co-defendants must consent to removal,” and identifying
Lopez v. BNSF Ry. Co. and Laurie v. Nat’l R.R. Passenger Corp. as
cases applying the exception).
The Court finds these cases to be
inapplicable and/or unpersuasive, but even if they were
controlling authority, they are distinguishable.
The Lopez court found that the removing defendants
“exercised reasonable diligence by checking the Kern County
Superior Court docket to ascertain whether or not other named
defendants had been served prior to filing their notice of
Lopez, 614 F. Supp. 2d. at 1089.
removing defendants in Lopez also contacted legal counsel for
Kern County, who was unaware of any service on the county.
Finally, the plaintiffs did not file proofs of service until the
day the notice of removal was filed.
In distinguishing a
case cited by the plaintiffs, Pianovski v. Laurel Motors, Inc.,
the court noted that there was no showing that the court clerk’s
office experienced delays accounted for in Pianovski.7
In Pianovski, it took three days for the state court
clerk to enter a file-stamped document in the computer and five
weeks to place it in the court filed. Pianovski, 924 F. Supp. at
Here, Removing Defendants did not contact HSBC or counsel
for HSBC; the proof of service was filed the day prior to
removal; and there was a delay between the filing of the proof of
service and docketing on Ho‘ohiki.8
In Laurie, the removing defendant not only checked the
docket repeatedly, but also “called the Office of Prothonotary on
more than one occasion to learn whether a proof of service had
been filed but not yet docketed.”
Laurie, 2001 WL 34377958, at
These actions, taken together, demonstrated reasonable
Removing Defendants could not satisfy Laurie’s
reasonable diligence standard with their single check of Ho‘ohiki
and communication with Mr. Rosen, who has no affiliation with
Milstead was decided in 1992, during which the Fifth
Circuit applied the first-served defendant rule9 and recognized
“that ‘exceptional circumstances’ might permit removal even when
a later-joined defendant petitions for removal more than 30 days
after the first defendant was served.”
Milstead, 797 F. Supp. at
572 (citing Brown v. Demco, Inc., 792 F.2d 478, 482 (5th Cir.
Because of this delay, it was incumbent upon Removing
Defendants to take additional steps to discover whether HSBC was
Pursuant to a 2011 amendment to 28 U.S.C. § 1446,
Congress adopted the last-served defendant rule.
Not only is the rationale behind the Milstead court’s
decision now inapplicable, factually, the “exceptional
circumstances” existing there are not presented here.
In Milstead, the return of service for the co-defendant
was filed approximately three hours prior to the notice of
removal on the last day removal could be effected under the
Id. at 570, 573.
Plaintiffs in this case filed
the proof of service re: HSBC more than 24 hours prior to removal
and Removing Defendants filed the Notice approximately two weeks
before the removal deadline.
As a result, Removing Defendants
were not confronted with the exigency facing the removing
defendant in Milstead.
Reasonable Diligence Requires More Than
Reference to the State Court Docket
This Court finds persuasive the line of district court
cases requiring greater efforts than reference to the state court
docket to establish diligence, and declines to adopt the lack of
constructive notice exception to the unanimity rule urged by
Section 1446(b)(2)(A) plainly requires the
consent of defendants who have been “properly joined and served.”
Contrary to Removing Defendants’ contentions, there is no
qualification that § 1446(b)(2)(A)’s requirement is only
triggered once a proof of service is posted on the electronic
Indeed, docketing of service-related documents, though
informative to defendants seeking removal, has no bearing on
whether a co-defendant has actually been served.
Defendants’ reliance on Ho‘ohiki as their exclusive source of
information regarding effectuation of service contravenes
statutory authority and case law.
The Court declines to conclude
that Removing Defendants could only be charged with knowledge of
HSBC’s service upon the docketing of the proof of service on
Establishing such a standard would undermine
§ 1446(b)(2)(A), as the need to obtain the consent of codefendants would turn on the docketing of service-related
documents, not actual service upon defendants.
complicating matters when relying on electronic dockets to obtain
requisite knowledge is the delay that can occur between filing
Here, for example, the proof of service re: HSBC
was filed at 12:14 p.m. on May 22, 2017, Mot., Decl. of James J.
Bickerton, Ex. B,10 but had yet to appear on Ho‘ohiki as of June
Opp’n, Kaiawe Decl. at ¶ 11.
The Court therefore
finds unavailing Removing Defendants’ contention that the absence
of a proof of service as to HSBC on Ho‘ohiki evidenced a lack of
service and relieved them of their obligation to obtain HSBC’s
The filed date and time are also reflected on Ho‘ohiki:
(last visited Aug. 23, 2017).
None of the parties provided information about when the
proof of service was ultimately posted on Ho‘ohiki.
consent in the removal.
Removing Defendants’ limited efforts to ascertain
whether HSBC was served do not constitute “reasonable diligence”.
From the time they were retained to represent Removing Defendants
on May 16, 2017 until removal on May 23, 2017, Removing
Defendants’ counsel made only two attempts to find out if HSBC
Removing Defendants could have called the Fifth
Circuit Court Clerk’s office on Kauai to ask if any proofs of
service had been filed.12
Their sole reliance on Ho‘ohiki is
questionable, inasmuch as they themselves had been served yet no
proofs of service regarding service upon them had been docketed
on Ho‘ohiki as of May 23, 2017.13
The Court believes that a
showing of reasonable diligence requires efforts beyond merely
checking Ho‘ohiki for proofs of service, as the timing in this
case demonstrates the shortcoming of relying exclusively on an
electronic docket that may not be updated with sufficient
frequency to accurately reflect the current state of the
The Court recognizes that where, as here, the state
court is located a neighbor island, reasonable diligence would
not require that counsel make an inquiry in person at the clerk’s
office of the respective court. If the First Circuit Court were
the relevant court, however, and counsel is located on Oahu, a
showing of diligence might require a personal visit to the
clerk’s office if other modes of inquiry are unsuccessful.
The Court lacks knowledge about the time it takes for
filed documents to be posted on Ho‘ohiki, and none of the
parties’ attorneys could provide information regarding the same.
Accordingly, Removing Defendants’
consultation of Ho‘ohiki, without more, does not demonstrate
Neither does Removing Defendants’ counsel’s
communication with Mr. Rosen establish diligence.
He was not
counsel of record, he knew nothing about this case, and the fact
that he previously represented HSBC in a different action does
not make him a source of information in this action.
fact that this May 17, 2017 inquiry yielded no information
concerning service upon HSBC, Removing Defendants did not take
any additional steps, aside from viewing Ho‘ohiki once, to
ascertain whether Plaintiffs served HSBC.
This is somewhat
troubling in view of § 1446(a)’s provision concerning compliance
with Federal Rule of Civil Procedure (“FRCP”) 11:
A defendant or defendants desiring to remove any
civil action from a State court shall file in the
district court of the United States for the
district and division within which such action is
pending a notice of removal signed pursuant to
Rule 11 of the Federal Rules of Civil Procedure
and containing a short and plain statement of the
grounds for removal, together with a copy of all
process, pleadings, and orders served upon such
defendant or defendants in such action.
28 U.S.C. § 1446(a).
FRCP 11(b) in turn provides that:
By presenting to the court a pleading, written
motion, or other paper . . . an attorney . . .
certifies that to the best of the person’s
knowledge, information, and belief, formed after
an inquiry reasonable under the circumstances: . .
. (3) the factual contentions have evidentiary
support or, if specifically so identified, will
likely have evidentiary support after a reasonable
opportunity for further investigation or
Fed. R. Civ. P. 11(b); Proctor, 584 F.3d at 1225 (quoting
§ 1446(a) and FRCP 11(a) & (b)’s requirements).
record before it, Removing Defendants’ averment that HSBC did not
appear to have been served lacked adequate evidentiary support
and the evidence in fact contradicts this representation.
Given the circumstances here, communication with
Plaintiffs’ counsel concerning service upon HSBC would have
probably prevented the issues that are the subject of this
The Court does not suggest that Removing Defendants
were duty-bound to consult Plaintiffs’ counsel, nor that such
communications would be fruitful in all cases.
But if Removing
Defendants made further inquiries with Plaintiffs’ counsel or
HSBC, even as late as May 23, 2017, they likely would have
learned that HSBC was served on May 1, 2017, and that the proof
of service was filed one day prior.
Even if these inquiries
proved unsuccessful, they would have factored favorably into the
“reasonable diligence” analysis.
Curiously, Removing Defendants elected to remove the
action well in advance of their June 6, 2017 deadline to do so.15
Removing Defendants could have also consulted HSBC
The Court discusses timing in greater detail below.
At the hearing, Removing Defendants’ counsel explained that the
case was expeditiously removed to facilitate the orderly
progression of the same.
However, the desire to move the case
along for the sake of filing a responsive pleading undermines any
claim of diligence because the rush to remove came at the expense
of satisfying statutory procedural requirements.
Defendants utilized the remainder of their removal window,
further inquiries and diligence would probably have revealed that
HSBC was served and they could have taken necessary steps to
obtain HSBC’s consent to removal.
Based on the foregoing analysis, the Court finds that
Removing Defendants were not reasonably diligent in ascertaining
whether HSBC was served prior to the removal of this action.16
Because HSBC was served prior to removal, Removing Defendants
were required to obtain HSBC’s consent to removal.
to do so renders the Notice defective and removal was therefore
Removing Defendants attempt to distinguish this case
from US Bank Nat’l Ass’n v. Taylor, CV 15-00018 DKW-KSC, 2015 WL
1057119 (D. Haw. March 10, 2015), noting the absence of the
multitude of defects presented in that case. Multiple bases for
remand existed in Taylor, but the removing defendant’s failure to
obtain the consent of her served co-defendant, standing alone,
would have compelled remand. Id. at *3. The legal standard
governing the consent of served co-defendants is fully applicable
here. Id. Removing Defendants focus on the presence of a proof
of service on the docket in Taylor, but for the reasons discussed
above, this distinction is immaterial. HSBC was served prior to
removal and Removing Defendants did not exercise reasonable
diligence to discover this critical fact.
HSBC’s Post-Removal Consent and Joinder is Untimely
Removing Defendants alternatively argue that HSBC
timely consented pursuant to § 1446(b)(2)(C) because this
provision does not impose a 30-day time limit to consent.
Section 1446(b)(2)(C) Does not Provide an Open-Ended
Opportunity to Consent to Removal
Generally, a later-served defendant has a right of
removal separate from that of an earlier-served defendant.
U.S.C. § 1446(b)(2); see also Destfino, 630 F.3d at 955-56
(adopting the later-served defendant rule shortly before its
codification in 2011, which provides that “each defendant is
entitled to thirty days to exercise his removal rights after
Under § 1446(b)(2)(B), “[e]ach defendant shall
have 30 days after receipt by or service on that defendant of the
initial pleading or summons described in [1446(b)(1)] to file the
notice of removal.”
28 U.S.C. § 1446(b)(2)(B).
1446(b)(2)(C) authorizes an earlier-served defendant to consent
to the notice of removal of a later-served defendant “even though
that earlier-served defendant did not previously initiate or
consent to removal.”
28 U.S.C. § 1446(b)(2)(C).
Relying exclusively on out-of-district/circuit
cases,17 Removing Defendants posit that because they are later-
The Court finds it unnecessary to discuss these cases
because they are neither binding nor persuasive and arguably
served Defendants, HSBC, as the earlier-served Defendant, is not
subject to a 30-day limitation to consent.
without merit for multiple reasons.
This argument is
First, Removing Defendants
consist of Wells Fargo, Martin, and Jergens, and Wells Fargo was
the first-served Defendant.
Second, even if Removing Defendants
were all served after HSBC, this would not exempt HSBC from the
strictures of § 1446.
Section 1446(b)(2)(C) merely permits an earlier-served
defendant to consent to a later-served defendant’s removal; it
does not provide an open-ended opportunity to consent to removal
at any time during the course of a case.
Zambrano v. New Mexico
Corr. Dep’t, No. 17-CV-459 WJ-KBM, 2017 WL 2628920, at *6 (D.N.M.
June 1, 2017) (“[T]here is no provision in § 1446(b)(2)(C) that
states a defendant may consent to a removal at any time after the
notice of removal is filed, and Defendants have not directed the
Court to any case law standing for the proposition that
conflict with Ninth Circuit law. It is noteworthy that they do
not stand for the proposition that § 1446(b)(2)(C) provides an
open-ended deadline to consent. See, e.g., Couzens v. Donohue,
854 F.3d 508, 515 (8th Cir. 2017) (declining to specify a time
limit to consent to removal § 1446(b)(2)(C), but finding
sufficient a consent filed 31 days after the filing of the notice
of removal and noting that the consenting party later submitted
an affidavit that the removing defendants had obtained its
consent prior to removal); Gaynor v. Miller, 205 F. Supp. 3d 935,
941 (E.D. Tenn. 2016) (finding that 2011 amendments to § 1446
“did not codify the requirement that earlier-served defendants
must consent to removal within thirty days of removal”).
§ 1446(b)(2)(C) authorizes a defendant to consent to removal at
any time when the defendant has not complied with the thirty-day
deadline contained in § 1446(b)(2)(B).”).
While § 1446(b)(2)(C)
does not include a time limit for earlier-served defendants to
consent to removals, the 30-day limitations found in other
subsections of § 1446 are instructive, particularly in view of
Ninth Circuit precedent and the strict procedural requirements
associated with removal.
Alston v. Wells Fargo Bank, Nat’l
Ass’n, No. CV TDC-17-1085, 2017 WL 2839629, at *2 (D. Md. June
29, 2017) (“Section 1446(b)(2)(C), however, does not explicitly
impose a timing requirement for obtaining the consent of
co-defendants to remove.
LPS reads this omission as implying an
open-ended deadline for satisfying the unanimity requirement.
But this reading chafes against the language in the broader
statute, which suggests that the deadlines to remove and to
secure consent are the same.”).
In adopting the later-served
defendant rule, now codified in § 1446(b)(2)(B), the Ninth
Circuit explained that the “rule doesn’t go so far as to give
already-served defendants a new thirty-day period to remove
whenever a new defendant is served, as that could give a
defendant more than the statutorily prescribed thirty days to
Destfino, 630 F.3d at 956 (concluding that a later-
served defendant timely removed because it did so within 30 days
from when it was served).
The Defective Notice was Not Timely Cured by HSBC’s
Consent and Joinder
Defects in removal notices may be cured within the 30-
day period permitted for joinder.
Prize Frize, 167 F.3d at 1266.
The failure to timely join all defendants is grounds for remand.
Plaintiffs argue that HSBC was required to consent to
removal by June 6, 2017, while Removing Defendants respond that
no time limitation exists.
Section 1446(b)(2)(C)’s authorization for earlierserved defendants to join in the notice of removal of laterserved defendant would allow HSBC to consent to the Notice, even
though it had not previously initiated or consented to removal.
28 U.S.C. § 1446(b)(2)(C).
In order to cure the defective
Notice, however, HSBC (the second-served Defendant) was required
to submit its consent within the 30-day statutory window for
Martin and Jensen (the last-served Defendants) to remove.
Because Martin and Jensen were served on May 7, 2017, their
removal window closed on June 6, 2017.
consent had to be filed by June 6, 2017.18
See, e.g., Rouege
Trucking, LLC v. Canales, No. CIV.A. 14-304-JJB, 2015 WL 127870,
Ironically, this is the day Plaintiffs’ counsel provided
Removing Defendants’ counsel with a copy of the file-stamped
proof of service re: HSBC following the parties’ planning
meeting. Opp’n, Kaiawe Decl. at ¶ 10. Therefore, even if
Removing Defendants had not taken any additional steps towards
ascertaining whether HSBC had been served since May 23, 2017,
they had the requisite knowledge to timely correct defects in the
at *4 (M.D. La. Jan. 7, 2015) (holding that a consent to removal
filed by an earlier-served defendant was timely because it was
within 30 days of the service of the last-served defendant);
Gibbs v. Ocwen Loan Servicing, LLC, No. 3:14-CV-1153-M-BN, 2014
WL 2767206, at *2 (N.D. Tex. June 18, 2014) (holding that consent
to removal under § 1446(b)(2)(C) must be filed within the
later-served defendant’s thirty-day removal period); Perez v.
Bank of Am., N.A., No. EP-13-CV-285-KC, 2013 WL 5970405, at *5
(W.D. Tex. Nov. 7, 2013) (“[E]arlier-served defendants [may] join
in removal by later- served defendants who remove within their
own individual statutory thirty-day removal period” established
by 28 U.S.C. § 1446(b).”) (second alteration in original)
(quotations and citation omitted); Zambrano, 2017 WL 2628920, at
*6 (“Under the last-served defendant rule, the rule of unanimity,
and 28 U.S.C. § 1446(b), Defendants were required to obtain
unanimous consent to removal from each served Defendant no later
than the date on which the last-served Defendants had to file a
notice of removal, in order for removal to be effective.”);
Alston, 2017 WL 2839629, at *3 (“[U]nder 28 U.S.C. § 1446(b)(2),
a removing defendant must secure the consent of other served
defendants by the time of the filing of the notice of removal, or
within 30 days of when the consenting defendant was first served,
whichever is later.”); Palmeira v. CIT Bank, Civil No. 17-00275
ACK-RLP, Doc. No. 26 at 8-9 (D. Haw. Aug. 10, 2017) (finding that
defects in the notice of removal “were required to be cured
within the thirty-day statutory window for removal, which began
when Defendant Colridge [(the last-served defendant)] was served
with the First Amended Complaint”).19
The Court acknowledges that this area of law is
unsettled and has been the subject of divergent interpretations.
However, to the extent there are any doubts concerning the
propriety of removal, they must be resolved in favor of remand.
By any standard, HSBC’s after-acquired consent and joinder, filed
July 12, 2017, fell well outside the 30-day period to cure
defects, thereby violating § 1446(b).
Prize Frize, 167 F.3d at
1266 (finding removal improper where the unanimity requirement
was not satisfied and the defendants did not cure the defect
within the 30-day period).
Even if the Court were to accept June
26, 2017 – the date that HSBC’s counsel informed Removing
Defendant’s counsel that HSBC consented to removal – as the date
HSBC joined in the removal, it would nevertheless be untimely.
This would be true even if the Court also determined that HSBC
had 30 days from the date the Notice was filed to cure the
Removing Defendants’ counsel addressed this case for the
first time at the hearing, in violation of Local Rule 7.8 (“A
party who intends to rely at a hearing on authorities not
included in either the brief or memorandum of law or in a letter
submitted at least four (4) days before a hearing should provide
to the court and opposing counsel copies of the authorities at
the earliest possible time prior to the hearing.”). She argued
that this case supports the retention of this action. Even a
cursory review of the case reveals that it supports remand.
Ninth Circuit precedent clearly establishes that remand
is appropriate when defects in removal notices are not cured
within the 30-day period prescribed by § 1446.
requirements are clear and the case law concerning the unanimity
requirement is well developed.
Given the Court’s obligation to
resolve any doubts about the propriety of removal in favor of
remanding the case to state court, remand is both appropriate and
See 28 U.S.C. § 1447(c).
III. The Belated Joinder Does not Preclude Remand
Removing Defendants lastly assert that assuming HSBC’s
consent was required, pursuant to Hyland v. Office of Housing &
Community Development, No. CV 15-00504 LEK-RLP, 2016 WL 899237
(D. Haw. Mar. 8, 2016), consent was timely given.
not stand for the proposition, nor do the cases upon which it
relies, that district courts should allow procedural defects to
be cured prior to the entry of judgment.
To do so would render
the requirements in § 1446 meaningless.
In pertinent part, the
Hyland court held:
However, the failure to obtain all defendants’
joinder or consent is a procedural defect that can
be cured prior to the entry of judgment. See
Destfino v. Reiswig, 630 F.3d 952, 956-57 (9th
Cir. 2011) (“If this is not true when the notice
of removal is filed, the district court may allow
the removing defendants to cure the defect by
obtaining joinder of all defendants prior to the
entry of judgment.” (citing Soliman v. Philip
Morris Inc., 311 F.3d 966, 970 (9th Cir. 2002)
(“[A] procedural defect existing at the time of
removal but cured prior to entry of judgment does
not warrant reversal and remand of the matter to
state court.” (alteration in original and internal
quotation marks omitted)))).
Ainakea’s joinder in the County Defendants’
memorandum in opposition to the Motion to Remand
is also a joinder in the Notice of Removal.
Further, in its joinder to the memorandum in
opposition, HAPI confirmed that it consented to
the removal. Thus, even assuming, arguendo, that
the removal was defective because the County
Defendants failed to obtain either the joinder or
consent of both Ainakea and HAPI, Defendants have
cured that defect. To the extent that the Motion
for Remand asks this Court to remand the instant
case based on the alleged unanimity defect, the
Motion for Remand is DENIED
Id. at **2-3.
The Court acknowledges the legitimacy and accuracy
of the aforementioned legal principles.
However, the cases cited
in Hyland require a closer examination for contextual purposes.
The Destfino court relied on Soliman v. Philip Morris Inc., 311
F.3d 966, 970-71 (9th Cir. 2002), for the principle that a
procedural defect that is cured prior to the entry of judgment
does not warrant reversal and remand of the action to state
The Soliman court in turn relied on Parrino v. FHP, Inc.,
146 F.3d 699, 703 (9th Cir. 1998), superseded by statute on other
grounds as recognized in Abrego, 443 F.3d at 681, for this
In Parrino, the Ninth Circuit held that “[u]nder
Caterpillar[, Inc. v. Lewis, 519 U.S. 61 (1996)] . . . a
procedural defect existing at the time of removal but cured prior
to the entry of judgment does not warrant reversal and remand of
the matter to state court.”
Notably, the Parrino court
explained that it did not
read Caterpillar to authorize district courts to
ignore the procedural requirements for removal; to
the contrary, we agree with Caterpillar that
“[t]he procedural requirements for removal remain
enforceable by the federal trial court judges to
whom those requirements are directly addressed’ .
. . [w]e understand Caterpillar merely to permit
the Court of Appeals to treat as cured a
procedural defect in the removal process corrected
before entry of judgment.”
Id. at 703 n.1 (emphasis added) (first alteration in original).
Relevant to these proceedings, one of the issues on appeal in
Parrino was the failure to satisfy procedural requirements for
removal; namely, the joinder by one of one of the defendants in
the removing defendant’s notice of removal nearly two months
after service of the complaint.
Id. at 703.
The court declined
to remand on procedural grounds because to do so would be an
Quoting Caterpillar, the court reasoned:
“To wipe out
the adjudication post-judgment, and return to state court a case
now satisfying all federal jurisdictional requirements, would
impose an exorbitant cost on our dual court system, a cost
incompatible with the fair and unprotracted administration of
Id. (quoting Caterpillar, 519 U.S. at 77) (quotations
The respondent in Caterpillar expressed concerns that
“if the final judgment against him is allowed to stand, ‘all of
the various procedural requirements for removal will become
Caterpillar, 519 U.S. at 77 (citation omitted).
The Supreme Court refused to indulge the respondent’s assumption
that “district courts generally will not comprehend, or will balk
at applying, the rules on removal Congress has prescribed.”
We are not here dealing with a case on appeal that has
been fully adjudicated through judgment, where correction of a
procedural defect is a mere formality.
This case is in its
earliest stages at the trial level and remand will have a limited
impact on the case, if at all.
This is the only motion pending
before the Court and no matters were adjudicated in state court
prior to removal.
Furthermore, the Court must uphold its
obligation, as recognized in both Caterpillar and Parrino, to
enforce the procedural requirements associated with removal.
view of Removing Defendant’s violation of the unanimity rule,
HSBC’s untimely joinder, and the strong presumption against
removal jurisdiction, this action must be remanded to state
When a federal court remands a case, it “may require
payment of just costs and any actual expenses, including attorney
fees, incurred as a result of the removal.”
The Supreme Court has stated that:
28 U.S.C. § 1447(c).
circumstances, courts may award attorney’s fees under § 1447(c)
only where the removing party lacked an objectively reasonable
basis for seeking removal.
Conversely, when an objectively
reasonable basis exists, fees should be denied.”
Franklin Capital Corp., 546 U.S. 132, 141 (2005) (citations
The district court retains discretion to determine
whether a given case presents unusual circumstances that warrant
a departure from this rule.
The Martin Court also
[t]he appropriate test for awarding fees under
§ 1447(c) should recognize the desire to deter
removals sought for the purpose of prolonging
litigation and imposing costs on the opposing
party, while not undermining Congress’ basic
decision to afford defendants a right to remove as
a general matter, when the statutory criteria are
Although the Court has concluded that remand is
necessary, it finds that Plaintiffs are not entitled to an award
of attorneys’ fees and costs under § 1447(c) because Removing
Defendants had an objectively reasonable basis for seeking
Sections 1332 and 1441 provided a basis for removal
notwithstanding the Notice’s procedural deficiency; that is, the
relevant case law did not clearly foreclose Removing Defendants’
basis for removal.
Moreover, the case law regarding certain
issues is unsettled and the Notice could have been timely amended
Plaintiffs did not request an award of expenses.
to cure the procedural defect following the removal of the
Accordingly, the Court recommends that the district
court decline to award fees or costs pursuant to § 1447(c).
For the reasons stated above, the Court HEREBY
RECOMMENDS that Plaintiffs’ Motion be GRANTED and that this
action be remanded to the Circuit Court of the Fifth Circuit,
State of Hawaii.
IT IS SO FOUND AND RECOMMENDED.
Honolulu, Hawaii, August 25, 2017.
Kevin S.C. Chang
United States Magistrate Judge
CIVIL NO. 17-00234 DKW-KSC; LEWIS, ET AL. V. HSBC BANK USA, N.A., ET AL.;
FINDINGS AND RECOMMENDATION TO GRANT PLAINTIFFS’ MOTION FOR AN ORDER OF REMAND
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?