Munoz v. Ekl, Williams & Provenzale LLC et al

Filing 13

WRITTEN Opinion entered by the Honorable Amy J. St. Eve on 4/15/2013: The Court grants Plaintiff's motion to remand 10 because Defendants have failed to establish that the Court has subject matter jurisdiction over the parties' contrac t dispute. See 28 U.S.C. § 1447(c). The Court, in its discretion, denies Mr. Munoz's request for the costs and fees under 28 U.S.C. § 1447(c). The Clerks Office is directed to remand this case to the Circuit Court of Cook County, Chancery Division, 13 CH 02553. [ For further details see written opinion.] Mailed notice (tg, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Amy J. St. Eve

CASE NUMBER

13 C 1454

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

4/15/2013

Munoz vs. Ekl, Williams & Provenzale LLC et al

DOCKET ENTRY TEXT

The Court grants Plaintiff's motion to remand [10] because Defendants have failed to establish that the Court
has subject matter jurisdiction over the parties’ contract dispute. See 28 U.S.C. § 1447(c). The Court, in its
discretion, denies Mr. Munoz’s request for the costs and fees under 28 U.S.C. § 1447(c). The Clerk’s Office
is directed to remand this case to the Circuit Court of Cook County, Chancery Division, 13 CH 02553.

O[ For further details see text below.]

Docketing to mail notices.

STATEMENT
On February 25, 2013, Defendants Ekl, Williams & Provenzale, LLC (the “Ekl firm”), and Terry A.
Ekl removed this contract dispute from the Circuit Court of Cook County, Chancery Division, asserting that
the Court has original jurisdiction over this lawsuit because Plaintiff Gustavo Munoz’s claims arise under 42
U.S.C. § 1988 and Federal Rule of Civil Procedure 54(d). See 28 U.S.C. §§ 1441(a), 1446. Before the Court
is Mr. Munoz’s motion to remand pursuant to 28 U.S.C. § 1447(c). For the following reasons, the Court
grants Mr. Munoz’s motion to remand because Defendants have failed to establish that the Court has subject
matter jurisdiction over the parties’ contract dispute. The Court, in its discretion, denies Mr. Munoz’s
request for the costs and fees under 28 U.S.C. § 1447(c).
BACKGROUND
In his state court complaint filed on January 28, 2013, Mr. Munoz alleges that he is an attorney who
agreed to represent a woman named Karolina Obrycka in a contemplated action against the City of Chicago
and a Chicago police officer arising out of an incident at a Chicago tavern in 2007. (R. 1-1, Compl. ¶ 1.) Mr.
Munoz further alleges that he brought in Defendants Terry Ekl and his law firm as co-counsel to jointly
represent Obrycka. (Id.) Mr. Munoz, Ekl and the Ekl law firm, and Obyrcka signed a joint contingent fee
agreement on January 28, 2007 that Mr. Munoz attaches to his state court complaint. The basis of Mr.
Munoz’s state court complaint is the 2007 joint contingent fee agreement, which discusses the parties’
agreement regarding statutory attorneys’ fees and contingent fees. (Id. ¶ 2.)
Courtroom Deputy
Initials:

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Obrycka filed her federal lawsuit on April 30, 2007, entitled Obrycka v. City of Chicago, 07 C 2372. On
November 13, 2012, a jury returned a verdict in favor of Obrycka and awarded her compensatory damages, which
the attorneys agreed to allow her to recover in full. After settlement discussions between the City of Chicago and
Ekl and his law firm, the Court entered an order awarding Ekl and his firm $1,676,500.00 in attorney’s fees, plus
$14,600.00 in related nontaxable expenses under 42 U.S.C. § 1988 and Federal Rule of Civil Procedure 54(d)(2),
and $108,900.00 in taxable costs pursuant to Rule 54(d)(1). Meanwhile, Mr. Munoz’s motion for attorneys’ fees
brought pursuant to 42 U.S.C. § 1988 related to his representation of Obrycka is pending before the Court given
the parties’ request for additional time to brief the issue. As such, the issues surrounding Defendants’ and Mr.
Munoz’s Section 1988 attorneys fees either have been or will be resolved by this Court. On the other hand, Mr.
Munoz’s state court complaint involves a declaratory judgment claim regarding the interpretation of the joint
contingent fee agreement, as well as a breach of fiduciary duty claim. In essence, Mr. Munoz claims that
Defendants failed to pay him any fees in breach of their joint contingent fee agreement.
LEGAL STANDARD
“Federal courts are courts of limited jurisdiction,” and “[t]he circumscribed nature of the federal
judiciary’s jurisdiction is a function of restrictions placed upon it by both the United States Constitution and
federal statutory law, both of which must authorize a federal court to hear a given type of case.” International
Union Pac. of Operating Eng’rs, Local 150, AFL-CIO v. Ward, 563 F.3d 276, 280 (7th Cir. 2009). “Defendants
may remove a civil action from state court to the federal district court located in the place where such action is
pending, as long as the federal district court had original jurisdiction over the case.” Yassan v. J.P. Morgan
Chase & Co., 708 F.3d 963, 968 (7th Cir. 2013) (internal quotation marks omitted); see also 28 U.S.C. § 1441(a).
In other words, a “case filed in state court may be removed to federal court only when the case originally could
have been filed in federal court.” Northeastern Rural Elec. Membership Corp. v. Wabash Valley Power Ass’n,
Inc., 707 F.3d 883, 890 (7th Cir. 2013). “The party seeking removal has the burden of establishing federal
jurisdiction, and federal courts should interpret the removal statute narrowly, resolving any doubt in favor of the
plaintiff’s choice of forum in state court.” Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 758 (7th Cir.
2009).
ANALYSIS
I.

Motion to Remand

Because the parties to the present lawsuit are all citizens of Illinois, diversity of citizenship is not present
pursuant to 28 U.S.C. § 1332, and thus “the propriety of removal depends on the existence of a federal question
that could confer jurisdiction under 28 U.S.C. § 1331 or another statutory grant of jurisdiction.” Northeastern
Rural Elec.,707 F.3d at 890. “It is well established that such a federal question must be apparent on the face of
the plaintiff’s well-pleaded complaint.” Id. As discussed above, Mr. Munoz’s state court complaint involves the
interpretation of the joint contingent agreement and a claim for breach of fiduciary duty — both subject to Illinois
law.
Nevertheless, Defendants argue that because the attorneys’ fees and costs — which are the subject of the
joint contingent fee agreement — relate to the underlying Obrycka litigation, the Court has subject matter
jurisdiction over the state law contract dispute. Put differently, Defendants argue that Mr. Munoz would have no
claim in the underlying state court lawsuit without his fee petition pending in the federal lawsuit. Defendants fail
to cite legal authority supporting their argument. Nevertheless, from Defendants’ arguments, it appears that they
believe this Court has “ancillary” jurisdiction over the parties’ contract dispute based on the Section 1988 fee

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petitions in the Obyrcka matter.1 The Supreme Court has “recognized that a federal court may exercise ancillary
jurisdiction ‘(1) to permit disposition by a single court of claims that are, in varying respects and degrees,
factually interdependent; and (2) to enable a court to function successfully, that is, to manage its proceedings,
vindicate its authority, and effectuate its decrees.’” Peacock v. Thomas, 516 U.S. 349, 354, 116 S.Ct. 862, 133
L.Ed.2d 817 (1996) (quoting Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 379-380, 114 S.Ct. 1673, 128
L.Ed.2d 391 (1994) (citations omitted)). As the Supreme Court further explains:
In a subsequent lawsuit involving claims with no independent basis for jurisdiction, a federal court
lacks the threshold jurisdictional power that exists when ancillary claims are asserted in the same
proceeding as the claims conferring federal jurisdiction. Consequently, claims alleged to be
factually interdependent with and, hence, ancillary to claims brought in an earlier federal lawsuit
will not support federal jurisdiction over a subsequent lawsuit. The basis of the doctrine of
ancillary jurisdiction is the practical need ‘to protect legal rights or effectively to resolve an entire,
logically entwined lawsuit.’ But once judgment was entered in the original [] suit, the ability to
resolve simultaneously factually intertwined issues vanished.
Peacock, 526 U.S. at 355 (internal citations omitted). Simply put, once the jury returned a verdict in favor of
Obrycka and the Court entered judgment on November 13, 2012, the Court was divested of subject matter
jurisdiction over any future disputes between the parties over which it may have ancillary jurisdiction that do not
have an independent basis for federal jurisdiction. See Kokkonen, 511 U.S. at 380-81; Shapo v. Engle, 463 F.3d
641, 645 (7th Cir. 2006). Because the substance of Mr. Munoz’s claim is for breach of contract and breach of
fiduciary duty, the only basis for federal jurisdiction is diversity of citizenship, which, as discussed, is not present
in this lawsuit. See Travelers Property Cas. v. Good, 689 F.3d 714, 717 (7th Cir. 2012) (“To invoke the diversity
jurisdiction of the federal courts, a party must establish both that diversity of citizenship is complete and that ‘the
matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.’”) (quoting 28 U.S.C.
§ 1332(a).
Last, Defendants’ bare-boned argument that Mr. Munoz purposely omitted his federal question claims
through “artful pleading” fails — not only because Defendants have not substantiated their argument with any
meaningful legal analysis — but also because Defendants cannot show that Mr. Munoz omitted “necessary
federal elements” from his state court claims. See Northeastern Rural Elec., 707 F.3d at 890 (“plaintiffs are
entitled to omit federal claims from their complaints so as to avoid federal jurisdiction, [but] they may not omit
necessary federal elements of an included claim.”). Therefore, the Court does not have subject matter jurisdiction
over the parties’ Illinois dispute and grants Mr. Munoz’s motion to remand.
II.

Request for Costs and Fees

Mr. Munoz also requests costs and attorneys’ fees pursuant to 28 U.S.C. § 1447(c), which provides that
“[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney
fees, incurred as a result of the removal.” See also MB Fin., N.A. v. Stevens, 678 F.3d 497, 498 (7th Cir. 2012)

1

Although Congress codified most of the common-law doctrine of ancillary jurisdiction
under 28 U.S.C. § 1367 as part of supplemental jurisdiction, Section 1367 did not affect common
law ancillary jurisdiction “over related proceedings that are technically separate from the initial
case that invoked federal subject matter jurisdiction. This form of jurisdiction developed in case
law as ‘ancillary’ or ‘ancillary enforcement’ jurisdiction.” See 13 Charles Alan Wright, Arthur
R. Miller & Edward H. Cooper, Federal Practice & Procedure § 3523.2 (3d ed. 2010) (emphasis
in original).
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(“Section 1447(c) authorizes an award of attorneys’ fees when the removal was unreasonable.”). In general,
when no “objectively reasonable basis” for removal exists, courts should award fees under Section 1447(c). See
Martin v. Franklin Capital Corp., 546 U.S. 132, 132, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005). The Martin Court
held that Section 1447(c) imposes neither a presumption in favor of remand fee awards nor against such fee
awards. See 546 U.S. at 138-39 (“The statutory language strikes us as more evenly balanced between a
pro-award and anti-award position ... we see nothing to persuade us that fees under § 1447(c) should either
usually be granted or usually be denied”). When deciding whether to award fees under Section 1447(c), “courts
should balance the policy objectives of the removal statute and its fee-shifting provision, protecting the right to
remove to federal court once certain criteria are met while deterring improper removals as a way to delay
litigation.” Micrometl Corp. v. Tranzact Tech., Inc., 656 F.3d 467, 470 (7th Cir. 2011). Whether to award costs
and fees under Section 1447(c) rests within the district court’s discretion. See Martin, 546 U.S. at 139; Fincher v.
South Bend Hous. Auth., 578 F.3d 567, 569 (7th Cir. 2009).
Here, there is no evidence in the record that Defendants removed this lawsuit as a way to delay litigation
or that their attempt at removal was objectively unreasonable. See Martin, 546 U.S. at 140-41; Lott v. Pfizer, Inc.,
492 F.3d 789, 793 (7th Cir. 2007). Although the Court recognizes Defendants’ desire to have the Court decide
their dispute because of the Court’s knowledge of the issues in Obyrcka, the Court simply does not have
jurisdiction to hear the parties’ contract dispute about their fees. Furthermore, the agreement at issue between
Mr. Munoz and Defendants was never before the Court in Obrycka or interpreted by the Court in Obrycka.
Therefore, the Court, in its discretion denies Mr. Munoz’s request for fees.

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