Dultra et al v. US Medical Home, Inc. et al
Filing
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MEMORANDUM Opinion and Order Signed by the Honorable John J. Tharp, Jr on 4/4/2014:Mailed notice(air, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
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Plaintiffs,
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v.
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US MEDICAL HOME, INC., a )
Delaware
corporation,
MICHAEL )
KESELICA and GRACE KULIK,
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Defendants/CounterPlaintiff.
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GLORIA DULTRA and MARYANNE
LASTA, individually and derivatively on
behalf of LEDMAN HEALTH CARE,
INC., an Illinois Corporation
No. 13 C 07598
Judge John J. Tharp, Jr.
MEMORANDUM OPINION AND ORDER
Plaintiff Ledman Health Corporation (“Ledman”) filed suit against US Medical Home,
Inc. (“US Medical Home”) in the Circuit Court of Kane County on September 26, 2012, seeking
the rescission of a stock purchase agreement and certain employment agreements. Compl. (Dkt.
18-1). Ledman later amended its complaint in state court and added Michael Keselica and Grace
Kulik as defendants. Am. Compl. (Dkt. 18-9). Keselica removed the case to this Court on
October 22, 2013, on the basis of diversity jurisdiction and with the consent of US Medical
Home. The plaintiffs seek to remand the case to the Circuit Court of Kane County pursuant to 28
U.S.C. § 1447(c). For the reasons discussed below, the Court denies the plaintiffs’ motion.
I.
BACKGROUND
The underlying facts of this lawsuit are hotly contested but not particularly relevant to the
motion before the Court. The procedural facts, which are highly relevant, are as follows:
After Ledman filed suit in state court, US Medical filed a motion to dismiss (Dkt. 18-3), a
counterclaim against Ledman seeking a declaratory judgment that the stock purchase agreement
was valid and enforceable (Dkt. 18-4), and a third-party complaint against Andrew Kolb,
Ledman’s former attorney (Dkt. 18-5).
On April 2, 2013, Gloria Dultra and Maryanne Lasta, Ledman shareholders, filed an
amended complaint on Ledman’s behalf for fraud, rescission, breach of contract, and other relief
against US Medical Home and two additional defendants, Michael Keselica and Grace Kulik.
Am. Compl. (Dkt. 18-9). The amended complaint alleged that Keselica and Kulik are, or were,
officers, representatives, or agents of US Medical. Id. ¶ 4. Filings in the state case and in this
Court identify Keselica as the “President and CEO” of US Medical Home.
On April 16, 2013, the plaintiffs were granted leave to appoint a special process server
and after several rounds of unsuccessful settlement negotiations, the plaintiffs filed a Motion for
Service by Special Order of the Court on September 24, 2013. Dkt. 18-10; Dkt. 18-20. The
plaintiffs explained in their remand motion that “despite diligent efforts … including multiple
searches and repeated attempts at service by a process server, Plaintiffs have been unable to
effect personal service upon Keselica ….” Dkt. 18-20 at 1. The plaintiffs add that US Medical
Home’s counsel would not indicate whether he would accept service on Keselica’s behalf. Id.
The plaintiffs do not report, nor do the exhibits attached to the plaintiffs’ motion to remand
reflect, that their motion for service was granted or that Keselica was ever served with the
amended complaint.
For his part, Keselica filed a Request for Service of Process on the same day as the
plaintiffs’ motion for service. In this odd motion, Keselica stated that he had been added as a
defendant in the plaintiffs’ amended complaint, that a special process server had been appointed
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to serve him, and that the plaintiffs had nevertheless failed to serve him. The plaintiffs, Keselica
suggested, were somehow “abusing process” and he requested an order requiring them to serve
him with the amended complaint. Dkt. 18-21 at 1-2. So far as the state court docket reflects, no
order was entered with respect to Keselica’s motion for service.
About four weeks later, on October 18, 2013, Keselica filed a Notice of Removal to this
Court, asserting that the parties are completely diverse and the amount in controversy exceeds
$75,000. Dkt. 1 ¶¶ 5-7.1 He attached to the notice US Medical Home’s Consent to Removal,
which Keselica signed as the company’s president and CEO. Dkt. 18-23.
On November 19, 2013, the plaintiffs filed a Joint Motion to Remand (Dkt. 18), which is
now before this Court.
II.
DISCUSSION
Section 1446(b)(1) of Title 28 sets forth the procedures governing removal of an action
from state to federal court. It states, in relevant part:
The notice of removal of a civil action or proceeding shall be filed
within 30 days after the receipt by the defendant, through service
or otherwise, of a copy of the initial pleading … or within 30 days
after the service of summons upon the defendant if such initial
pleading has then been filed in court and is not required to be
served on the defendant, whichever period is shorter.
Keselica, as the party seeking to invoke federal jurisdiction, bears the burden of demonstrating
that removal is proper. See Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529 (7th Cir. 2004).
A. The 30-Day Time Limit for Removal
1
The plaintiffs do not dispute Keselica’s contentions that complete diversity of
citizenship exists and that the amount in controversy exceeds $75,000.
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Keselica asserts that his notice of removal was timely because he was never formally
served in state court and so a 30-day clock for removal was never triggered. Def. Resp. (Dkt. 21)
at 6-7. Keselica submitted a sworn declaration with his removal notice stating that he had sought
service of process on September 25, 2013 because the plaintiffs “never attempted service” of the
amended complaint and that he had “yet to receive anything from the Circuit Court for Kane
County … or Counsel for Plaintiff, regarding my Request for Service of Process ….” Dkt. 4 ¶¶ 3,
4. He adds that he picked October 24, 2013 to file a notice of removal in this Court because it
was twenty-two days after he sought formal service in state court; during that time, Keselica
waited for formal service, but he ultimately decided to remove. Def. Resp. at 7.
The plaintiffs contend that “personal service on Michael Keselica was not required for
the 30-day time limitation to begin as to him. Rather, Keselica only needed to have obtained a
copy of the pleading.” Mot. to Remand (Dkt. 18) at 9. The plaintiffs add that because, in their
view, Keselica received the initial complaint and the amended complaint (naming Keselica as a
defendant) no later than December 18, 2012, or September 5, 2013, respectively, Keselica was
subject to the 30-day limit from at least one of those two dates. Id. at 8.2 By not removing the
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The plaintiffs maintain that December 18, 2012, is the latest date on which Keselica
could have received the initial state court complaint because on that date he signed an affidavit in
support of US Medical’s motion to dismiss and swore “under oath that he was US Medical’s
President and Chief Executive Officer.” Mot. to Remand at 8. Keselica, however, was not named
as a defendant until the April 2, 2013, amended complaint. As to that complaint, the plaintiffs
contend that September 5, 2013, is the critical date because that is when Keselica “on behalf of
US Medical, reviewed, answered and signed a sworn verification for US Medical’s” answer to
requests to admit. Id. at 9. The plaintiffs add that “[i]t is disingenuous for Keselica, who admits
that he has been acting as US Medical’s representative throughout this entire litigation, to claim
that, while he was aware of the April 2, 2013 amended complaint in his capacity as US
Medical’s President and Chief Executive Officer, he was somehow simultaneously unaware that
the April 2, 2013 Amended Complaint named him individually as a defendant merely because he
had managed to avoid service.” Id. But whether Keselica was aware of the complaint is, as will
be seen below, irrelevant to the question of the timeliness of his removal.
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case until October 18, 2013, Keselica’s removal, the plaintiffs assert, was untimely. The
plaintiffs add that Keselica removed when he did to avoid a court order for new counsel for US
Medical to appear after the company’s previous counsel withdrew. Pls.’ Reply (Dkt. 25) at 4-5.
Keselica’s notice of removal was timely. He filed his notice on October 18, 2013, but he
was never formally served with a summons, so the 30-day clock never began to run.3 Formal
service is required to trigger the 30-day clock, as the Supreme Court held 15 years ago in
Murphy Brothers v. Michetti Pipe Stringing, 526 U.S. 344 (1999). In Murphy, the Supreme Court
rejected what had been known as the “receipt rule,” by which the 30-day removal clock could be
triggered when a defendant merely received the amended complaint. 526 U.S. 344, 347 (1999).
The Supreme Court instead read the removal statute “in light of a bedrock principle: An
individual or entity named as a defendant is not obliged to engage in litigation unless notified of
the action, and brought under a court’s authority, by formal process.” Id. The Court held:
[A] named defendant’s time to remove is triggered by
simultaneous service of the summons and complaint, or receipt of
the complaint, ‘through service or otherwise,’ after and apart from
service of the summons, but not by mere receipt of the complaint
unattended by any formal service.
Id. at 348. In other words, the 30-day removal period does not begin to run until a defendant is
formally served with the complaint. Id. See also, e.g., Save-A-Life Found., Inc. v. Heimlich, 601
F. Supp. 2d 1005, 1010 (N.D. Ill. 2009) (relying on Murphy to find that defendant’s notice of
removal was timely because “the time for removal is not triggered until a defendant has been
served with a copy of the summons”).4 In Illinois, service of a summons requires leaving a copy
3
The plaintiffs essentially admit that Keselica was never formally served by arguing that
service was not required to start the 30-day clock. See Jt. Mot. to Rem. at 9 (“personal service on
Michael Keselica was not required for the 30-day time limitation to begin as to him.”).
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See also, e.g., Phoenix Container, LP ex rel. Samarah v. Sokoloff, 83 F. Supp. 2d 928,
931 (N.D. Ill. 2000) (noting that “formal service” under Murphy is service that complies with a
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of the summons with the defendant personally or at the defendant’s usual place of abode with a
family member or another resident, subject to certain conditions. 735 ILCS 5/2-203(a) (“Service
on individuals”). Keselica may have received the initial complaint and the amended complaint,
and very well may have read them and even participated in the litigation on behalf of US
Medical Home, but “mere receipt … unattended by any formal service” is insufficient to start the
30-day removal clock. Those documents were served on US Medical, not on Keselica. When
Keselica filed his notice of removal, he was therefore timely under 28 U.S.C. § 1446(b).5
The plaintiffs’ arguments that Keselica is attempting to delay proceedings by removing
the case after it had been pending in state court for more than a year are, in light of Murphy, not
relevant, as section 1446(b)(1) does not give courts authority to override the 30-day removal
period. In any event, it was the plaintiffs who failed to include Keselica in their original
complaint, and then opted to amend their complaint to add Keselica as a defendant, and it was
the plaintiffs who failed to serve him in a timely fashion. If the removal has delayed the
plaintiffs’ efforts to obtain relief, they have only themselves to blame—the plaintiffs wanted
Keselica in the case and now he is. Their complaints that they were unable to serve Keselica are
both unpersuasive, particularly given what they describe as his active role in the state court
litigation on behalf of US Medical Home, and moot.6
state’s technical service of process rules, “that is, the same sort of service that would trigger
other responsive acts.”); Collins v. Pontikes, 447 F. Supp. 2d 895, 899 (N.D. Ill. 2006) (30-day
removal clock began to run on date defendant is served with both summons and complaint).
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Further, nothing in Section 1446(b)(1) suggests that a defendant must receive formal
service before removing the case. In other words, Keselica’s removal was not premature because
Section 1446(b)(1) sets forth the outer limit, and not the inner limit, for filing a notice of
removal. See, e.g., In re Pradaxa, MDL No. 2385, 2013 WL 656822, at *2 (S.D. Ill. Feb. 22,
2013).
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In removing the case, the Court deems Keselica to have waived formal service of
process.
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A final note on this point. The Supreme Court’s opinion in Murphy is clearly controlling
as to the question of the timeliness of Keselica’s removal of this case. The plaintiffs have argued
that Keselica’s mere receipt of the complaint unattended by formal service on him triggers the
30-day removal clock; the Supreme Court has squarely held that it does not. The plaintiffs,
however, failed to cite Murphy in their motion to remand. Even more troubling, the plaintiffs
failed to address the case in their reply brief, after the defendants had discussed the case in their
opposition to the remand motion. A knowing failure to disclose controlling authority constitutes
a violation of the Illinois Supreme Court Rules of Professional Conduct (Rule 3.3(a)(2): “A
lawyer shall not knowingly … fail to disclose to the tribunal legal authority in the controlling
jurisdiction known to the lawyer to be directly adverse to the position of the client and not
disclosed by opposing counsel”); see also Gross v. Town of Cicero, Ill., 619 F.3d 697, 703 (7th
Cir. 2010) (citation omitted) (“Failing to cite adverse controlling authority makes an argument
frivolous. Not only that, but it is ‘imprudent and unprofessional’ … We expect more from
attorneys who appear before us.”). This Court similarly expects more from counsel. Even if the
failure to cite Murphy was not intentional, it was inexcusable.
B. One-Year Limitation of 28 U.S.C. § 1446(c)
The plaintiffs also argue that Keselica’s notice of removal is untimely because it was
filed more than one year after the commencement of the lawsuit on September 26, 2012. In
advancing this argument, the plaintiffs misread 28 U.S.C. § 1446(c), which states that “[a] case
may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by section
1332 more than 1 year after commencement of the action …” Section (b)(3) pertains to situations
when the “case stated by the initial pleading is not removable.” The point is that the one-year
limitation in Section (c) applies only to cases that were “not removable” based on the “initial
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pleading.” See Price v. Wyeth Holdings Corp., 505 F.3d 624, 631 n.6 (7th Cir. 2007) (“The
clause containing the one-year bar is part of the paragraph specifically addressing the time limits
for cases that are not initially removable ….”). Given that the original state court complaint—
filed on September 26, 2012—was initially removable on the basis of diversity jurisdiction,7 the
one-year bar under Section 1446(c) does not apply. Keselica’s notice of removal is therefore
timely.
*
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For the reasons set forth above, the plaintiffs’ Joint Motion to Remand [18] is denied. A
status hearing is set for April 17, 2014, at 9:00 a.m.
Entered: April 4, 2014
____________________________________
John J. Tharp, Jr.
United States District Judge
7
The original state court complaint alleged that the sole plaintiff, Ledman Health Care,
was an Illinois corporation with its “principal address” in Geneva, Illinois and that the original
sole defendant, US Medical Home, was a Delaware corporation with its “principal address” in
Providence, Rhode Island. Complaint (Dkt. 18-1) ¶¶ 1, 2. US Medical’s failure to remove the
case originally, moreover, does not bar its ability to consent to the removal initiated by Keselica.
See § 1446(b)(2)(C).
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