Futrell et al v. Davidson

Filing 7

MEMORANDUM OPINION by Senior Judge Thomas B. Russell on 7/27/2012. IT IS HEREBY ORDERED that this case is REMANDED to the Circuit Court of Cumberland County, Kentucky, and this matter is to be STRICKEN from the Court's docket. cc: Counsel, Cumberland Circuit Court (CDF)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
BOWLING GREEN DIVISION
CASE NO. 1:12-CV-39
GILBERT FUTRELL and
FUOCO, LLC

PLAINTIFFS

v.
THE ESTATE OF JAMES R. DAVIDSON, deceased,
through its personal representative,
MICHAEL DAVIDSON

DEFENDANT

MEMORANDUM OPINION
The Defendant moves the Court to dismiss this action pursuant to Federal Rule of Civil
Procedure 12(b)(6). Def.’s Mot. Dismiss, Docket Number (“DN”) 4.

The Plaintiffs have

responded. Pls.’ Resp., DN 6. Briefed by both parties, this matter is now ripe for adjudication.
Because the Court lacks subject-matter jurisdiction the Defendant’s motion to dismiss will not be
addressed. Instead, this case is REMANDED to the Circuit Court of Cumberland County,
Kentucky.
I.
As developed at this nascent stage, the relevant facts are as follows. The decedent, James
Davidson (“decedent”), died intestate in Cumberland County, Kentucky on May 15, 2011. The
decedent’s son, Michael Davidson (“Defendant” or “personal representative”), was appointed
administrator of the estate by the Probate Division of the Cumberland County District Court on
June 27, 2011.

On December 21, 2011, the Plaintiffs, Gilbert Futrell and FUOCO, LLC

(“Plaintiffs”) submitted a written proof of claim against the decedent’s estate to the personal
representative.1 The proof of claim alleged that the decedent was liable to the Plaintiffs for an

1

In accordance with Kentucky law, the Plaintiffs had to submit the written proof of claim in order to preserve it
against the decedent’s estate. See KRS §§ 396.011(1), 396.015(1).

1

“unliquidated amount of special damages” arising out of a previously commenced state court
case. Proof of Claim, DN 4-1, ¶ 5. The present case is only properly understood in light of the
facts underlying the pending state court action.
At the time of his death certain corporations owned by the decedent had been involved in
a prolonged civil litigation in state court.

The state court granted the Plaintiffs summary

judgment against the decedent’s corporations in late 2003 or early 2004. On May 25, 2005, the
Plaintiffs amended their state court pleadings to include individual capacity claims against the
decedent that were similar to those previously filed against his corporations. The Plaintiffs
brought these claims in an attempt to pierce the corporate veil and collect against the decedent in
his individual capacity. Although summary judgment was granted to the Plaintiffs against the
corporations, the individual capacity claims asserted against the decedent have not been resolved
or otherwise reduced to a judgment. The individual capacity claims remaining pending in the
underlying state court action.
The written proof of claim submitted against the decedent’s estate by the Plaintiffs
asserted that the decedent was liable to the Plaintiffs for the individual capacity claims pending
in state court. The claim was submitted to the personal representative within sixty days of his
appointment. On December 28, 2011, the personal representative notified the Plaintiffs that their
proof of claim was disallowed. See Notice of Disallowance, DN 1-1, p. 6. That notice also
stated that the “claim is barred unless the claimant commences an action against the personal
representative not later than sixty (60) days after the mailing of this notice.” Id. On February
24, 2012, the Plaintiffs filed a new civil action in Cumberland County Circuit Court against the
personal representative for the amount of the disallowed claim. Thereafter, on March 21, 2012,
the personal representative removed this action to federal court based solely on diversity

2

jurisdiction found in 28 U.S.C. § 1332. Notice of Removal, DN 1, ¶ 5. The Plaintiffs are
citizens of North Carolina. Id. at ¶ 2. The personal representative and the decedent are citizens
of Kentucky. Id. at ¶ 3.
II.
A case “otherwise removable solely on the basis of [diversity jurisdiction found in 28
U.S.C § 1332(a)] may not be removed if any of the parties in interest properly joined and served
as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2).
This is commonly known as the “forum defendant rule” and can be stated in simpler terms:
where a defendant has been sued in a court of the state where he or she is a citizen, the defendant
may not remove to federal court solely on the basis of diversity. Any attempt to remove by the
defendant in such a situation must be remanded for lack of subject-matter jurisdiction.2
“The question of subject matter jurisdiction may be raised at any time, whether at the
suggestion of the parties or sua sponte by the court.” Lexington-Fayette Urban Cnty. Gov't Civ.
Serv. Comm'n v. Overstreet, 115 F. App’x 813, 816 (6th Cir. 2004) (citing Von Dunser v.
Aronoff, 915 F.2d 1071, 1074 (6th Cir. 1990)). Although the issue has not been addressed by the
Sixth Circuit, courts in this district treat the forum defendant rule as jurisdictional issue rather
than a procedural one. See Regions Bank v. Am. Justice Sch. of Law, Inc., No. 5:08-CV-134-M,
2009 U.S. Dist. LEXIS 26718, at *17 (W.D. Ky. March 30, 2009) (“[T]he Court finds that the
forum defendant rule is jurisdictional and that it has an obligation to raise the removal defect sua
sponte.”); Wooten v. Greenview Hosp., No. 1:10-CV-00034-TBR, 2010 U.S. Dist. LEXIS 41673,
at *8-11 (W.D. Ky. April 28, 2010) (same). Accordingly, the Court has the authority to address

2

One exception should be acknowledged. In Grubbs v. Gen. Elec. Credit Corp., 405 U.S. 699 (1972), the Supreme
Court held that when a case is improperly removed but is tried to judgment on the merits without objection, a party
waives his right to later raise the issue of lack of subject-matter jurisdiction at the time of removal. The Grubbs
exception is not at issue in this case because there has been no judgment on the merits. Indeed, this case has only
been in federal court for a few weeks and discovery has not commenced.

3

jurisdictional issues even if they were not raised by the parties. See United States v. Ruiz, 536
U.S. 622, 628 (2002) (“A federal court always has jurisdiction to determine its own
jurisdiction.”).
III.
The Plaintiffs have not raised the forum defendant rule, but because it raises a
jurisdictional issue, the Court does so sua sponte. In the present case, application of the rule is
straightforward and beyond controversy. The personal representative has admitted that both he
and the decedent are citizens and residents of Cumberland County, Kentucky.

Notice of

Removal, DN 1, ¶ 3. Furthermore, he acknowledges that the Plaintiffs are citizens and residents
of Davidson County, North Carolina. Id. at ¶ 2. Additionally, there is no dispute that the
Plaintiffs’ original state court complaint was filed in the Cumberland County Circuit Court. Id.
at ¶ 1. Therefore, it is clear that the personal representative and the decedent’s estate were sued
in a court of the state where they are citizens. Under such circumstances, 28 U.S.C. § 1441(b)(2)
prohibits them from removing to federal court solely on the basis of diversity.
The logic behind the forum defendant rule is well-founded and reasonable. “In diversity
cases, removal jurisdiction was designed to protect nonresident defendants from any perceived
prejudice or preference of the state court regarding the resident plaintiffs.” 16 James Wm.
Moore, Moore's Federal Practice, § 107.03 (3d ed. 2012). Where a defendant is sued in his or
her state of citizenship, “it makes no sense to allow an in-state defendant to take advantage of
removal.” Id. § 107.14[2][e][i]. “The forum defendant rule reflects the notion that there is no
concern about favoritism by local courts towards a nonresident plaintiff, so there is no need to
protect a resident defendant by allowing resort to federal court.” Davenport v. Toyota Motor
Sales, USA, Inc., No. 09-CV-532-JPG, 2009 U.S. Dist. LEXIS 116287, at *6 (S.D. Ill. Dec. 14,

4

2009) (citation omitted).

Simply put, the prejudices and preferences justifying removal

jurisdiction are not present in situations, like the one at bar, where the defendant is sued in his or
her state of citizenship.
CONCLUSION
The Defendant’s sole ground for removal was diversity of citizenship. Removal was
improper, however, because the Defendant was sued in a court of the state where he is a citizen.
Under the terms of the forum defendant rule the Court lacks jurisdiction to hear this case.
Because the case was improperly removed,
IT IS HEREBY ORDERED that this case is REMANDED to the Circuit Court of
Cumberland County, Kentucky, and this matter is to be STRICKEN from the Court’s docket.

July 27, 2012

5