Pike County, Mississippi v. Aries Building Systems, LLC et al

Filing 15

ORDER denying 2 Motion to Remand; denying 8 Motion to Remand. Signed by Honorable David C. Bramlette, III on 5/3/2017 (EB)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
PIKE COUNTY, MISSISSIPPI

PLAINTIFF

v.

CIVIL ACTION NO. 5:17-cv-17-DCB-MTP

ARIES BUILDING SYSTEMS, LLC
AND CMS CONSULTANTS, LLC

DEFENDANTS

ORDER AND OPINION
This cause is before the Court on plaintiff Pike County,
Mississippi (“Pike County”)’s Motion to Remand (docket entry 2),
defendant CMS Consultants, LLC (“CMS”)’s Objection to Removal and
Joinder in Motion to Remand (docket entry 8).

Having carefully

considered the motions, responses, and applicable law, and being
otherwise fully informed in the premises, the Court finds as
follows:
I. Background
This case is one in a series of litigation arising out of the
construction

of

a

workforce

housing

facility

in

the

Gateway

Industrial Park at Fernwood in Pike County, Mississippi.1

On July

25, 2014, defendants CMS and Aries entered into a contract for the
construction

of

the

“workers’

lodge,”

and

pursuant

to

that

The parties are currently involved in multiple cases pending in state
and federal court in connection with this project. See CMS Consultants, LLC v.
Aries Building Systems, LLC, Cause No. 57-2015-0301 (with Pike County,
Mississippi as Intervener); City of McComb v. Aries Building Systems, LLC, Cause
No. 57-2016-0056-WS; In the Matter of the Enlargement of the Boundaries of the
City of McComb, Miss., Cause No. 57-2015-0220; see also Aries Building Systems,
LLC v. Pike County Board of Supervisors & City of McComb, Cause No. 5:16-cv16-DCB-MTP.
1

1

contract, CMS claims to have provided goods and services to Aries
in the amount of $1,529,862.33. Doc. 1-1, p.2.

According to CMS,

Aries has paid only $715,016.03, leaving an unpaid balance of
$814,846.30. Id.

CMS filed a construction and materialman’s lien

on the property in the amount of $282,632.44, which it seeks to
enforce in a separate state court action filed in the Chancery
Court of Pike County.2 Id.
Prior to the filing of the CMS lien, Pike County executed and
delivered a Warranty Deed conveying a 40-acre tract of property
located within the Gateway Industrial Park to Aries. Id.

The

Warranty Deed provided that Pike County would have the option to
repurchase the 40-acre tract in the event that Aries failed to
comply with certain conditions set forth in the agreement.
County

alleges

that

Aries

has

defaulted

on

its

Pike

contractual

obligations and claims that the County is entitled to repurchase
the property for the original purchase price of $480,000. Id.
On January 25, 2017, Pike County filed its Complaint for Leave
to Interplead, for Specific Performance, and for General Relief in
the Chancery Court of Pike County, Mississippi.

Pike County’s

Complaint seeks interpleader in the amount of $480,000 to avoid
the possibility of multiple liability which could result from an
adverse determination regarding the amount owed by Aries under the

See CMS Consultants, LLC v. Aries Building Systems, LLC, Cause No. 572015-0301. Pike County moved to intervene in the state court action.
2

2

CMS contract.

The Complaint also requests an order compelling

Aries to comply with the County’s right to repurchase the 40-acre
tract, along with an order canceling the CMS construction lien and
directing Aries to pay CMS the amount owed.
Aries filed its Notice of Removal on February 3, 2017. See
Doc. 1.

Pike County filed a motion to remand on February 23, 2017,

and CMS filed an Objection to Removal and Joinder in Motion to
Remand shortly thereafter on March 16, 2017. See Docs. 2, 8.
II. Discussion
Under 28 U.S.C. § 1441(a), “any civil action brought in a
State court of which the district courts of the United States have
original jurisdiction, may be removed . . . to the district court
of the United States for the district and division embracing the
place where such action is pending.”

The removing party bears the

burden of showing that federal jurisdiction exists and that removal
was proper. Manguno v. Prudential Prop. & Cas. Ins. Co. 276 F.3d
720, 723 (5th Cir. 2002).
federalism

concerns,

the

Because removal implicates significant
removal

statute

is

to

be

strictly

construed, and any doubts or ambiguities are resolved in favor of
remand. Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008).
A. Removal Procedure
Pike County moves to remand under 28 U.S.C. § 1447(c), arguing
that removal was procedurally defective because defendant CMS did
not join in or consent to Aries’s Notice of Removal.
3

The rule of

unanimity, as codified by 28 U.S.C. § 1446(b)(2)(A), requires that
“when a civil action is removed solely under section 1441(a), all
defendants who have been properly joined and served must join in
or consent to the removal of the action.” When multiple defendants
are involved, each defendant “shall have 30 days after receipt by
or service on that defendant of the initial pleading or summons
... to file the notice of removal.” 28 U.S.C. § 1446(b)(2)(B);
Andrews v. Miss. Farm Bureau Cas. Ins. Co., 187 F. Supp. 3d 749,
755 (S.D. Miss. 2016) (recognizing a shift from the Fifth Circuit’s
traditional first-served defendant rule following a 2011 amendment
to 28 U.S.C. § 1446); but see Faulkner v. Miss. Dept. of Human
Services, 2016 WL 3661521 (S.D. Miss. July 5, 2016) (citing the
traditional first-served defendant rule).

Failure to obtain the

consent of all served defendants within the removal period renders
removal procedurally defective.

Doe v. Kerwood, 969 F.2d 165,

167, 169 (5th Cir. 1992); see Harden v. Field Memorial Community
Hosp., 516 F. Supp. 2d 600, 607 (S.D. Miss. 2007) (“district courts
have no power to overlook procedural errors relating to the notice
of removal”); Spillers v. Tillman, 959 F. Supp. 364, 368 (S.D.
Miss. 1997) (“defective removal procedure is a proper ground for
remand”).
When discussing the rule of unanimity, the Fifth Circuit has
held that consent to removal is not required from: (1) improperly
or fraudulently joined parties, see Jernigan v. Ashland Oil Inc.,
4

989

F.2d

812

(5th

Cir.

2003);

(2)

nominal

or

unnecessary

defendants, see Farias v. Bexar Co. Bd. of Trustees for Mental
Health Mental Retardation Services, 925 F.2d 866 (5th Cir. 1991);
and (3) defendants who have not been served by the time of removal,
see Jones v. Houston Indep. Sch. Dist., 979 F.2d 1004, 1007 (5th
Cir. 1992).
2011).

Jones v. Watts, 2011 WL 2160915 (S.D. Miss. June 1,

Relying on the first and third articulated exceptions to

the rule, Aries maintains that CMS’s consent is unnecessary because
the defendant was not properly joined or served.
As

to

misplaced.

improper

joinder,

Aries’s

argument

appears

to

be

Improper joinder functions as a narrow exception to

the rule of complete diversity. Campbell v. Stone Ins., Inc., 509
F.3d 665, 669 (5th Cir. 2007). To establish improper joinder, the
removing party, must show either: “(1) actual fraud in the pleading
of jurisdictional facts, or (2) inability of the plaintiff to
establish a cause of action against the non-diverse party in state
court.” Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003).

Aries

appears to take the second approach, arguing that Pike County’s
interpleader action must fail because CMS’s underlying state court
claim is without hope of success.

Aries claims that CMS was joined

in this action for the sole purpose of defeating diversity, but
the defendant has not alleged, nor do the facts suggest, that CMS
is a non-diverse party whose presence would defeat diversity.

As

the Fifth Circuit observed in dicta in Smallwood v. Illinois Cent.
5

R. Co., 385 F.3d 568 (5th Cir. 2004), “a claim of improper joinder
is by definition directed toward the joinder of an in-state party.”
The Court is unconvinced that the improper joinder analysis is
relevant absent some non-diverse party.

Nevertheless, the Court

need not reach the issue, as it appears that CMS’s consent to
removal was unnecessary under the unserved defendant exception.
As to the unserved defendant rule, Aries argues that removal
was procedurally proper because CMS has not been served in this
case.

“Defendants . . . who are unserved when the removal petition

is filed need not join in it.” Getty Oil, 841 F.2d at 1261, n.9;
see Hanks v. Porter, 2012 WL 5512332 (S.D. Miss. Nov. 14, 2012)
(finding that a defendant’s unilateral removal was acceptable
because “at the time there were no other served defendants required
to consent to removal”); Tilley v. Tisdale, 914 F. Supp. 2d 846,
850 (E.D. Tex. 2012) (“a defendant who has not been properly served
need not consent to removal”).

Aries removed the case on February

3, 2017, and the parties agree that defendant CMS was not served
with

process

prior

to

removal.

It

appears

that

Pike

County

attempted service on CMS via certified mail, but service was
unsuccessful. See Doc. 13-1.

Since CMS was not served, Aries’s

Notice of Removal is not procedurally defective based on CMS’s
failure to join the petition. See Williams ex rel. Williams v.
Illinois Central R.R. Co., 1994 WL 1890829, *1 (N.D. Miss. Oct.
11,

1994)

(“[a]

defendant

is

not
6

obliged

to

wait

until

all

codefendants are served before removing an action to federal
court”). Therefore, the Court declines to remand based on CMS’s
lack of consent.
As an unserved defendant, CMS is not obliged to engage in the
litigation or consent to removal absent formal service. See Murphy
Bros., Inc., 526 U.S. at 348.

Nevertheless, CMS has voluntarily

joined in the plaintiff’s motion to remand after receiving actual
notice of Aries’s removal.3

It is well-settled that each served

defendant has a right to veto removal by refusing consent. See 28
U.S.C. § 1448; Getty Oil, 841 F.2d at 1263 (noting that a defendant
served after removal “may still either accept the removal or
exercise its right to choose the state forum by making a motion to
remand”); see also Bonadeo v. Lujan, 2009 WL 1324119 (D.N.M. April
30, 2009); Diversy, Inc. v. Maxwell, 798 F. Supp. 2d 1004, 1007
(E.D. Wis. 2011) (“each unserved defendant retains the right to
veto the removal by moving to remand once he is served with process
and makes an appearance in the case”). But the Court is unaware of
any authority which extends this veto right to unserved defendants.
When

addressing

a

defendant’s

right

to

defeat

otherwise

proper removal by a co-defendant, the United States District Court

The record indicates that CMS filed an answer to the Complaint in state
court on February 7, 2017, wherein the defendant failed to raise any Rule 12(b)
defenses as to jurisdiction or service of process. Doc. 13-2. While it appears
that CMS attempted to waive any defect in service in state court, the case had
already been removed to federal court at the time CMS’s state court answer was
filed. To date, CMS’s motion to remand is the only appearance CMS has entered
in federal court.
3

7

for the Northern District of Illinois rejected the notion that
defendants have an “absolute veto power” over removals. See Schmude
v. Sheahan, 198 F. Supp. 2d 964, 968 (N.D. Ill. 2002).

In Schmude,

the administrator of a deceased prisoner’s estate brought a § 1983
claim against the county sheriff and deputies in state court.

The

sheriff, who was the only served defendant at the time, removed
the action to federal court, and five months after removal, one
deputy filed a motion to remand based on the rule of unanimity.
In

denying

the

co-defendant’s

motion

as

untimely,

the

court

observed that “consent of all defendants is not a jurisdictional
requirement, [but rather] a procedural prerequisite for removal,
and is limited to those defendants that have been served with
process.” Id. at 967-68. The Court finds Schmude to be instructive
insofar as it provides that “defendants have the right to resist
removal within the limits designated in the removal statute.” Id.
at 968.
Section 1448 of the removal statute provides the mechanism by
which a plaintiff may serve defendants after the case has been
removed to federal court, and “[t]his section shall not deprive
any defendant upon whom process is served after removal of his
right to move to remand the case.” 28 U.S.C. § 1448 (emphasis
added). While the plain language of the statute clearly recognizes
a later-served defendant’s right to veto removal, the statute is
silent as to defendants, like CMS, who have not yet been served.
8

Pike County may serve the defendant pursuant to 28 U.S.C. § 1448,
and assuming CMS is timely served, the defendant will presumably
retain its right to object to removal and remand to state court.
At this time, however, the Court finds that CMS’s objection to
removal is premature.

As an unserved defendant, CMS’s consent was

not necessary for removal; therefore, Aries’s removal is not
procedurally defective based on the rule of unanimity.

Pike

County’s motion and CMS’s joinder therein shall be denied.
B. Diversity Jurisdiction
Although Pike County has not asserted any jurisdictional
challenge in its motion, the Court may raise the issue of federal
subject matter jurisdiction sua sponte at any point during the
proceeding. PAI ATM Services, L.L.C. v. PFG-ATMS, LLC, 2012 WL
12884584 (S.D. Miss. July 9, 2012).

Aries removed this case based

on the Court’s diversity jurisdiction under 28 U.S.C. § 1332(a),
which requires complete diversity of citizenship and an amount in
controversy exceeding $75,000, exclusive interest and costs.

In

light of the $480,000 stake alleged in Pike County’s Complaint,
the Court is satisfied that the amount in controversy requirement
is met here.

The citizenship of the defendants, however, remains

unclear.
When federal jurisdiction is premised on diversity, the party
asserting

diversity

jurisdiction

must

“distinctly

and

affirmatively” allege the citizenship of the parties. Howery v.
9

Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001).

Both

defendants in this case are limited liability companies. For
diversity purposes, the citizenship of a limited liability company
(“LLC”) is determined by the citizenship of all of its members.
Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1081 (5th Cir.
2008).

The record before the Court contains no information about

the identity or citizenship of any members of Aries or CMS.
Aries’s Notice of Removal alleges that “no [d]efendant is a
resident citizen of Mississippi” and “there is complete diversity
of citizenship of the parties.” Doc. 1, ¶¶ 2, 3.

While the removal

notice lacks any other allegations as to citizenship, Pike County’s
motion to remand states that “CMS Consultants, LLC is a Louisiana
limited liability corporation” and “Aries Building Systems, LLC is
a Texas limited liability corporation.” Doc. 3, ¶¶ 2, 3.

The

plaintiff’s Complaint similarly describes CMS as a “Louisiana
corporation [] whose address is 709 Aurora Avenue, Suite C,
Metairie, Louisiana” and Aries as a “Texas limited liability
corporation, organized under the laws of the State of Texas.” Doc.
1-1, p. 3.

Aries has also provided an unofficial document from

the Mississippi Secretary of State’s office identifying CMS as a
dissolved

Mississippi

corporation

with

a

principal

place

of

business in Louisiana. See Doc. 9-7. Though the record suggests
that the parties may be diverse, the Court is unable to conclude
that complete diversity exists based on the evidence.
10

Aries has failed to carry its burden of establishing complete
diversity,

and

without

more,

“the

Court

cannot

presume

the

existence of federal jurisdiction.” Ditcharo v. Wal-Mart Stores
East, LP, 2015 WL 7078761, *4 (S.D. Miss. Nov. 13, 2015) (remanding
to state court based on
citizenship of

defendants’ failure to disclose the

limited partnership’s members);

see

Settlement

Funding, LLC v. Rapid Settlements, Limited, ---F.3d----, 2017 WL
1088275 (5th Cir. 2017) (noting that “a party seeking to establish
diversity jurisdiction must specifically allege the citizenship of
every

member

of

every

LLC

or

partnership

involved

in

a

litigation”); Fontan v. Mucciolo, 2010 WL 1528508 (S.D. Miss. April
14, 2010) (finding that a removal notice, which made no mention of
defendant LLC’s members, was insufficient to establish diversity
jurisdiction).
Although Aries’s Notice of Removal is defective for failing
to

allege

the

citizenship

of

the

defendants’

members,

this

technical defect is one which may be cured by an amendment under
28 U.S.C. § 1653. See Whitmire v. Victus Ltd., 212 F.3d 885, 888
(5th Cir. 2000); Kirby v. Bank of America, 2010 WL 114201, *4 (S.D.
Miss. Jan. 7, 2010) (allowing an amendment to allege defendants’
state of incorporation and principal place of business). Section
1653 provides that “defective allegations of jurisdiction may be
amended, upon terms, in the trial or appellate courts.” 28 U.S.C.
§ 1653.

Completely new grounds for removal jurisdiction may not
11

be added through an amendment, but “the notice may be amended []
to set out more specifically the grounds that have already been
stated, albeit imperfectly, in the original notice.” Davis v. Life
Investors Ins. Co. of Am., Inc., 214 F. Supp. 2d 691, 694 (S.D.
Miss. 2002) (quoting Charles A. Wright, Arthur R. Miller & Edward
H. Cooper, Federal Practice and Procedure § 3733, at 358-61 (3d
ed. 1998)). Aries shall therefore be permitted to amend its Notice
of

Removal

to

clarify

the

jurisdictional

facts

necessary

to

establish complete diversity within ten (10) days of the entry of
this Order.
Accordingly,
IT IS HEREBY ORDERED AND ADJUDGED that Pike County’s Motion
to Remand (docket entry 2) is DENIED;
FURTHER ORDERED that defendant CMS’s Objection to Removal and
Joinder in Motion to Remand (docket entry 8) is DENIED;
FURTHER ORDERED that defendant Aries has ten (10) days from
the entry of this Order to amend its Notice of Removal in order to
clarify the jurisdictional facts necessary to establish diversity
jurisdiction.

Failure

to

cure

the

defective

jurisdictional

allegations within the stated time period may result in an order
remanding the case.

12

SO ORDERED AND ADJUDGED, this the 3rd day of May, 2017.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

13