RoofLifters, LLC v. Nautilus Insurance Company

Filing 19

Enter MEMORANDUM, OPINION AND ORDER: For the reasons stated, the Court vacates its June 5, 2013 Order remanding this case to the Circuit Court of Cook County and, having retained jurisdiction over this case, denies as moot Rooflifters Motion Seeking Transmittal of Remand Order to State Court. Signed by the Honorable Virginia M. Kendall on 8/1/2013.Mailed notice(tsa, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ROOFLIFTERS, LLC
Plaintiff,
v.
NAUTILUS INSURANCE COMPANY
Defendant.

)
)
)
)
)
)
)
)

13 C 3251
Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER
In November 2012, Plaintiff Rooflifters, LLC filed a two-count Complaint in the Circuit
Court of Cook County, Chancery Division, seeking declaratory judgment and alleging breach of
contract against Nautilus Insurance Company. On April 30, 2013, Nautilus filed a Notice of
Removal to this Court based on diversity jurisdiction. On May 30, 2013, Rooflifters filed a
Motion to Remand on the basis that Nautilus’s Notice of Removal was not timely filed pursuant
to the federal removal statute, 28 U.S.C. § 1446. The Court granted Rooflifters’ Motion to
Remand, finding that the Notice of Removal was filed more than 30 days after Nautilus was
served with the pleadings and that those pleadings gave Nautilus sufficient “clues” that the case
may be removable under 28 U.S.C. § 1332 based on diversity of citizenship. The Court entered
an order remanding the case the same day but did not send a certified copy of the remand order
to the Circuit Court of Cook County.
After ruling on the motion, the Court struck the Motion hearing date previously
scheduled for June 5, 2012. Nevertheless, Counsel for Nautilus appeared before the Court on
June 5 seeking to respond to the Plaintiff’s Motion to Remand. Nautilus argued that its Notice of
Removal was timely filed because it received the information that formed the basis for removal

1

on April 8, 2013, less than thirty days before filing the Notice. The Court granted Nautilus’s oral
motion to respond and entered a full briefing schedule on July 9, 2013.

In the interim,

Rooflifters filed a Motion Seeking Transmittal of a Remand Order to State Court arguing that
this Court is barred from reconsidering its June 5 Order granting Rooflifters’ Motion to Remand.
For the reasons stated below, the Court vacates its previous Order remanding this case to the
Circuit Court of Cook County and denies as moot Rooflifters’ Motion Seeking Transmittal of the
Remand Order to State Court.
DISCUSSION
There are two issues presently before the Court: first, the Court must address the
threshold issue of whether it may reconsider its previous Order remanding the case to the Circuit
Court of Cook County; if so, the Court must then determine whether Nautilus’s Notice of
Removal was timely filed pursuant to 28 U.S.C. § 1446(b)(3), which allows a defendant, under
limited circumstances, to file its Notice of Removal after the 30-day period following service of
the complaint.
I.

The Court Maintains Jurisdiction to Reconsider its Previous Order Remanding the
Case to State Court
Ordinarily a district court has the inherent power to reconsider or vacate its own orders.

However, because of the rule that a federal court is divested of jurisdiction once a case has been
remanded, United States v. Rice, 327 U.S. 742, 749 (1946), remand orders are different. The
general rule prohibiting the review of remand orders is set forth in 28 U.S.C. § 1447, which
provides in pertinent part:
(c) If at any time before final judgment it appears that the case was
removed improvidently and without jurisdiction, the district court
shall remand the case, and may order the payment of just costs. A
certified copy of the remand order shall be mailed by its clerk to
2

the clerk of the State Court.
proceed with such case.

The State Court may thereupon

(d) An order remanding a case to the State Court from which it was
removed is not reviewable on appeal or otherwise …
28 U.S.C. § 1447(c)-(d).
Rooflifters argues that the Court, having already entered an order remanding the case to
state court, no longer has the power to reconsider its previous remand order. Although the
Seventh Circuit has not addressed the issue, the majority of courts have found that two things
must happen before a district court is divested of its jurisdiction to reconsider a remand order: (1)
the order of remand must be entered; and (2) a certified copy of the order must be, at the very
least, mailed to the state court. See Bryan v. BellSouth Comm’ns, Inc., 492 F.3d 231, 235 n.1 (4th
Cir. 2007) (“A remand is effective when the district court mails a certified copy of the remand
order to the state court … or, if the remand is based on the lack of subject matter jurisdiction,
when the remand order is entered.”); Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 225
(3d Cir. 1995) (“But the physical mailing of the certified copy [of the remand order] is the key
jurisdictional event to divest the district court of jurisdiction, because a remand order is not selfexecuting.”); Boone Coal and Timber Co. v. Polan, 787 F.2d 1056, 1060 (6th Cir. 1986) (The
federal court is completely divested of jurisdiction once it mails a certified copy of the order to
the clerk of the state court.”); Browning v. Navarro, 743 F.2d 1069, 1078 (5th Cir. 1984) (same);
Federal Deposit Ins. Corp. v. Santiago Plaza, 598 F.2d 634, 636 (1st Cir. 1979) (“[O]nce a
district court has decided to remand a case and has so notified the state court, the district judge is
without power to take any further action.”) (emphasis added); Bucy v. Nevada Const. Co., 125
F.2d 213, 217 (9th Cir. 1942) (district court could review and set aside its own erroneous remand
order before filing of certified copy of order in state court because remand order is not self-

3

executing); see also Pio v. General Nutrition Companies, Inc., 488 F.Supp.2d 714, 715 (N.D. Ill.
2007) (“[W]hen an order of remand is entered and a certified copy is mailed to the state court,
the district court is divested of further jurisdiction.”) (emphasis added); Cook v. J.C. Penny Co.,
Inc., 558 F.Supp. 78, 79 (N.D. Ia. 1983) (“However, the federal court is not completely divested
of jurisdiction to reconsider or vacate the order of remand until the order of remand has been
entered and a certified copy of the order has been mailed to the clerk of the state court …. [A]s
of this date, no such copy has been sent. Thus, this court has not been divested of jurisdiction
and may reconsider the order of remand.”) (citations omitted); 14 Wright, Miller & Cooper,
Federal Practice and Procedure 3739, 764–65 (“An order of remand ends the jurisdiction of the
federal court. The court is required to mail a certified copy of the order to the clerk of the state
court, and upon the state court’s receipt of this copy, the federal court is without power to vacate
the remand order, even if it is persuaded that the order was erroneous.”); cf. Seedman v. U.S.
Dist. Court for Cent. Dist. of California, 837 F.2d 413, 414 (9th Cir. 1988) (Bucy held only that a
court may correct an error before the order is certified to the state court. We stated in Bucy that
it was doubtful a court could vacate a remand order after certification.”).
The Court located one decision to the contrary. See Clayton v. Clayton, 85 C 9908, 1986
WL 12293, at *2 (N.D. Ill. Oct. 29, 1986) (holding that federal court no longer had jurisdiction
after entering order remanding case notwithstanding that no certified copy of the remand order
had been sent to the state court, finding that a district may not reconsider its order simply
because a “ministerial function” by the court clerk has not been performed). However, in light of
the overwhelming case law holding otherwise, the Court does not find Clayton persuasive in this
regard. Indeed the language § 1447 itself suggests that the mailing of the certified copy is not an
empty ministerial task but a substantive trigger that allows the state court to resume the case. See

4

28 U.S.C. § 1447(c) (“A certified copy of the remand order shall be mailed by its clerk to the
clerk of the State Court. The State Court may thereupon proceed with the case.”) (emphasis
added).
Rooflifters argues that any jurisdiction this Court retains after entering an Order of
Remand but before mailing a certified copy to the state court is merely a “formal jurisdiction”
that does not empower the Court to reconsider the Order. Rooflifters cites to no case, nor could
this Court locate any, suggesting that a so-called “formal jurisdiction”—essentially a
“jurisdictional limbo” because § 1447 also prohibits the state court from proceeding without a
certified copy—comes into being after a district court enters an order of remand but before the
state court receives a certified copy of the order. Rather, the plain language of § 1447 and the
overwhelming weight of legal precedent make clear that this Court may reconsider an order
remanding a case to state court at least until it mails a certified copy of the order to the clerk of
the state court. Accordingly, the Court may reconsider whether Nautilus’s April 30 Notice of
Removal was timely filed because a certified copy of the remand order has not been mailed.
II.

Nautilus’s Notice of Removal was Timely Filed
The federal removal statute provides that a defendant must file its notice of removal

within 30 days after service of the Complaint. 28 U.S.C. § 1446(b). If the removability of the
case is unclear from the face of the pleadings and attached documents, it is the defendant’s
obligation to promptly investigate whether the case may ultimately be removed. See Camacho v.
Satco, 12 C 1256, 2012 U.S. Dist. LEXIS 145588, at *2 (N.D. Ill. Oct. 4, 2012) (“As numerous
cases in this circuit have noted, complaints that provide a clue as to citizenship give rise to a
defendant’s duty to promptly inquire as to the plaintiff’s citizenship.”) (citing Takacs v. Great
Lakes Psychological Servs., Inc., No. 96 C 3130, 1996 WL 288636, at *4 (N.D. Ill. May 30,

5

1996), and Kanter & Eisenberg v. Madison Assocs., 602 F.Supp. 798, 801 (N.D. Ill. 1985))
(unavailable through Westlaw); see also Marrs v. Quickway Carriers, Inc., No. 06 C 1713, 2006
WL 2494746, at *2 (N.D. Ill. Aug. 23, 2006) (recognizing that “[r]esidence and citizenship are
not synonyms and that it is the latter that matters for the purposes of diversity jurisdiction” but
finding that “a defendant desiring removal has the duty to scrutinize the initial pleadings for any
basis for diversity jurisdiction, and, allegations of residency provide[] ample clues”) (quoting
Meyerson v. Harrah's E. Chi. Casino, 299 F.3d 616, 617 (7th Cir. 2002), and Roberson v. Orkin
Exterminating Co., Inc., 770 F.Supp. 1324, 1328 (N.D. Ind. 1991)). Under such circumstances, a
notice of removal may be filed within 30 days after the defendant receives “a copy of an
amended complaint, motion, order or other paper from which it may first be ascertained that the
case is one which is or has become removable.” 28 U.S.C. 1446(b)(3).
Nautilus was unable to remove this matter to federal court based on the pleadings and
attachments served upon it in November 2012. As the party invoking federal jurisdiction,
Nautilus bore the burden of demonstrating the requirements set forth in § 1322 were met at the
time it filed its Notice of Removal. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231,
237 (7th Cir. 1995) (“The party invoking federal jurisdiction bears the burden of establishing the
elements of jurisdiction.”) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)). For the
purposes of diversity jurisdiction, the citizenship of a limited liability company is the citizenship
of each of its members. Camico Mut. Ins. Co. v. Citizens Bank, 474 F.3d 989, 992 (7th Cir.
2007). Accordingly, where a plaintiff is an LLC, the defendant seeking to remove a state court
matter to federal court must identify each of the plaintiff’s members and their respective
citizenships in its Notice for Removal. Thomas v. Guardsmark, LLC, 487 F.3d 531, 534–35 (7th
Cir. 2007) (“[A]n LLC’s jurisdictional statement must identify the citizenship of each of its

6

members as of the date the complaint or notice of removal was filed, and, if those members have
members, the citizenship of those members as well.”). Indeed courts in this district have warned
against the filing of premature notices of removal based upon the mere possibility that diversity
jurisdiction may exist. See, e.g., F.H. Paschen, SN Nielsen & Assoc. v. Gillen, No. 12 C 179,
2012 WL 130125, at *3 (N.D. Ill. Jan. 17, 2012) (awarding attorney’s fees and costs to plaintiff
where defendant, despite the “well-established rule” that “the citizenship of a joint venture turns
on the citizenship of each of [the] member of the Joint Venture,” filed notice of removal alleging
only that “ ‘there is complete diversity of citizens in this case’ because Defendant is a citizen of
Wisconsin, and Plaintiffs are ‘an Illinois joint venture with its principle place of business’ in
Illinois” without stating the citizenship of each member of the joint venture); MTC Development
Group, LLC v. Lewis, No. 11 C 7062, 2011 WL 5868236, at *3 (N.D. Ill. Nov. 20, 2011)
(finding “defendants’ statement in their notice of removal that ‘the Complaint alleges that
Plaintiff MTC is a Delaware Limited Liability Company with its principal offices in Illinois’ …
essentially meaningless for jurisdictional purposes” and awarding attorney’s fees and costs to
plaintiff because defendants’ attempt to remove case without stating the citizenship of the LLC
members was “objectively unreasonable”).
In this case, the pleadings contained no information regarding the identity, much less the
citizenship, of any members of Rooflifters, LLC. However, by identifying Rooflifters as a
limited liability company based in Miami, Florida and chartered under Florida law, the
attachments to the pleadings provided Nautilus with “clues” to investigate the possibility of
removal. Armed with these clues, Nautilus immediately sought to obtain information regarding
the citizenship of the LLC members.

First, Nautilus consulted the Florida Division of

Corporations (“FDC”) website in an effort to ascertain the identity and citizenship of each

7

member of Rooflifters, LLC. (Pl. Resp., Ex. 1.) While the FDC listed a Mason Harris and
Martin Shiff as “managers” of the LLC, it said nothing of the LLC’s members. (Id.) After being
unable to deterime the citizenship of the LLC members through its own investigation, Nautilus
wrote to Rooflifters. On December 27, 2012, still within thirty days of service of the initial
complaint, Nautilus advised Rooflifters that it was investigating the potential for removal and
requested the names and addresses of each member of the LLC. (Id., Ex. 3.) Nautilus explained
that this information was necessary in order to establish diversity of citizenship. (Id.)
On January 3, 2013, after the expiration of the thirty-day period for filing a Notice of
Removal, Rooflifters responded to Nautilus’s request by providing a copy of the documentation
available on the FDC website, including Rooflifters’ annual report. (Id., Ex. 4.)

These

documents (which Nautilus had obtained previously through its own investigation) identified
Martin Shiff and Mason Harris as “managing members/managers” of Rooflifters, LLC. Nautilus
replied the following day and explained that the documentation provided did not appear to
identify all members of the LLC, nor did it identify the residential addresses of the “managing
members/managers.” (Id., Ex. 5.) Nautilus again requested a list of each member of Rooflifters,
LLC as well as each member’s residential address. (Id.) Rooflifters does not appear to have
responded to the request, prompting Nautilus to follow up on January 14, 2013. (Id., Ex. 6.)
Rooflifters responded to the follow-up request by stating that it did not understand what
information was being requested and asked for further explanation. (Id., Ex. 7.) In the same
communication, Rooflifters identified Mason Harris and “Rooflifters Holding Corp.” as
“owners” of Rooflifters, LLC. (Id.)
In an email dated January 29, 2013, Nautilus explained for the third time exactly what
information was being requested and why:

8

1. Please confirm the identity of all of the “members” of
Rooflifters, LLC. It is still unclear who the actual members of
the LLC are at this time, and this information is not available in
public records. In other words, are the only members Mr.
Harris and Rooflifters Holding Corp, based on being “owned”
by these two (does ownership, as you use this term equate to
being a member)? Is Mr. Shiff also a member of Rooflifters,
LLC? Are there any other members of Rooflifters, LLC? We
ask that you provide a list of all the members of Rooflifters,
LLC.
2. In the event that Rooflifters Holding Corp. is a “member”
of Rooflifters, LLC, we request that you provide us with the
state of incorporation and the principal place of business
for Rooflifters Holding Corp. As you are aware, for diversity
purposes, the citizenship of a corporation is determined by the
state of its incorporation and its principal place of business.
(Id., Ex. 8) (emphasis in orgininal).
On January 31, 2013, Rooflifters’ counsel responded by stating that the requested
information was “irrelevant” and not in its possession but added that it would seek to obtain the
information from his client. (Id., Ex. 9.) After receiving no further information for nearly three
weeks, Nautilus followed up on its request via email on February 20, 2013. (Id., Ex. 10.) Again,
Rooflifters’ counsel indicated that the requested information was irrelevant and not in his
possession. (Id.) Rooflifters did not respond to Nautilus’s request at any point thereafter.
Unable to obtain an answer to its straightforward inquiry for nearly two months, Nautilus
served discovery upon Rooflifters on March 6, 2013 in the state court action for the limited
purpose of ascertaining the identity and residence of each member of Rooflifters, LLC. (Id., Ex.
11.)

On April 8, 2013, over one month after Nautilus’s most-recent request, Rooflifters

responded to the discovery request by indicating that Rooflifters, LLC’s comprises two
members: Rooflifters Holding Corp. and Mason Harris. (Id., Ex. 12.) This was the first time
Nautilus was provided a comprehensive list of the identities and addresses of each member of

9

Rooflifters, LLC and the first time Rooflifters confirmed that Rooflifters Holding Corporation
was a member—as opposed to a mere “owner”—of Rooflifters, LLC. These responses also
revealed that Martin Shiff was not a member of Rooflifters, LLC as represented by Rooflifters on
January 3, 2013. On April 30, 2013, Nautilus filed its Notice of Removal with this Court.
Based on this record, the Court concludes that Rooflifters’ dilatory conduct in failing to
provide Nautilus with an answer to its straightforward jurisdictional inquiry delayed Nautilus’s
filing of its Notice of Removal. A “plaintiff cannot conceal facts necessary to determine whether
jurisdiction is secure or otherwise thwart the jurisdictional inquiry with impunity,” Micrometl
Corp. v. Tranzact Technologies, Inc., 656 F.3d 467, 470 (7th Cir. 2011) (citing BEM I, LLC v.
Anthropologie, Inc., 301 F.3d 548, 551 (7th Cir. 2002)). Indeed at least one district court in this
circuit has rejected a plaintiff’s motion to remand under nearly identical circumstances. See
Hernandez v. Schering Corporation, No. 05 C 870, 2005 WL 1126911 (N.D. Ill. May 5, 2005)
(notice of removal timely filed where complaint did not identify the citizenship of the plaintiff,
the plaintiff waited four months to respond to the defendant’s interrogatories seeking to admit
facts pertaining to the plaintiff’s citizenship, and defendant filed its notice of removal within 30
days of receiving interrogatory responses).

It is clear from the record that Nautilus scrutinized

the pleadings upon being served, diligently conducted its own independent investigation into the
possibility of removal, and timely followed up with Rooflifters after its investigation proved
unfruitful. Unable to obtain a meaningful response (and in some cases, any response) to its
numerous informal inquiries, Nautilus was ultimately forced to resort to serving formal
discovery to obtain the answer it needed to determine whether a Notice of Removal could be
filed. Rooflifters’ April 8, 2013 responses to Nautilus’s discovery requests constitute “other
paper” within the meaning of § 1446(b)(2)(C). See Hernandez, 2005 WL 1126911, at *2

10

(“Courts construe the ‘other paper’ requirement to include ‘papers that are part and parcel of the
State Court proceeding having their origin and existence by virtue of the State Court process,’
Gilardi v. Atchinson, Topeka and Santa Fe Railway Co., 189 F.Supp. 82, 85 (N.D. Ill. 1960), and
include such ‘papers’ as ‘discovery deposition,’ id. at 84, [and] ‘interrogatory answers,’
Roberson v. Orkin Exterminating Co., 770 F.Supp. 1324, 1328 (N.D. Ind. 1991) ….”). Because
Nautilus filed its Notice of Removal within thirty days of obtaining for the first time information
regarding the identity and citizenship of all members of Rooflifters, LLC, Nautilus’s Notice of
Removal is timely.
CONCLUSION AND ORDER
For the reasons stated, the Court vacates its June 5, 2013 Order remanding this case to the
Circuit Court of Cook County and, having retained jurisdiction over this case, denies as moot
Rooflifters’ Motion Seeking Transmittal of Remand Order to State Court.

________________________________________
Virginia M. Kendall
United States District Court Judge
Northern District of Illinois
Date: August 1, 2013

11