Ossello et al v. Swift Rock Financial, Inc. et al
ORDER adopting Findings and Recommendations re 48 Findings and Recommendations.; granting 14 Motion to Remand. IT IS ORDERED that Judge Lynch's Findings and Recommendations are ADOPTED IN FULL and this case is REMANDED to the Second Judicial District for the State of Montana. Signed by Judge Dana L. Christensen on 10/26/2017. (ELL)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
SUSAN M. OSSELLO, ROBERT G.
DRUMMOND, Chapter 13 Trustee,
JESSE and HEATHER DIBBLEE,
TODD and BARBARA FISHER,
MARY ALICE HILDERBRAND, and
SWIFT ROCK FINANCIAL, INC.,
d/b/a World Law Debt; ORION
PROCESSING, LLC, d/b/a World Law
Processing; WORLD LAW DEBT
SERVICES, LLC; WORLD LAW
PROCESSING, LLC; GLOBAL
CLIENT SOLUTIONS, LLC; GLOBAL
HOLDINGS, LLC; BRADLEY
HASKINS; ROBERT MERRICK; and
United States Magistrate Judge Jeremiah C. Lynch entered Findings and
Recommendations in this case on July 27, 2017, recommending that Plaintiffs'
Motion to Remand (Doc. 14) be granted. (Doc. 48 at 16.) Defendants Global
Client Solutions, LLC, Global Holdings, LLC, Robert Merrick, and Michael
Hendrix (collectively "Global Defendants") timely filed an objection and are
therefore entitled to de novo review of the specified findings and
recommendations to which they have objected. 28 U.S.C. § 636(b)(1 ). The
portions of the findings and recommendations not specifically objected to will be
reviewed for clear error. 28 U.S.C. § 636(b )(1 )(A); McDonnell Douglas Corp. v.
Commodore Bus. Mach., Inc., 656 F.2d 1309, 1313 (9th Cir. 1981). Clear error
exists if the Court is left with a "definite and firm conviction that a mistake has
been committed." United States v. Syrax, 235 F.3d 422, 427 (9th Cir. 2000)
(citations omitted). For the reasons stated below, Judge Lynch's Findings and
Recommendations are adopted in full.
In September 2013, Discover Bank brought a collection action against
Plaintiff Susan Ossello ("Ossello") in Montana district court. In June 2014,
Ossello filed a third-party complaint against Global Client Solutions, Swift Rock
Financial, Inc., and Orion Processing, LLC, alleging generally that the entities had
"used deceptive and fraudulent representations to solicit her participation in an
illegal debt settlement plan" and asserting several state law claims. Global Client
Solutions, LLC v. Ossello, 367 P.3d 361, 364 (2016); (Doc. 1-1). Swift Rock and
Orion Processing failed to appear in the case, and in August 2014 the state court
entered an order granting Ossello's motion for default. (Doc. 1-2.)
In the meantime, Global Client Solutions appeared in the action and filed a
motion to compel arbitration. The Montana district court denied the motion and
Discover Bank appealed. In July 2015, while that appeal was still pending, Bank
of America instituted a separate collection action against Ossello in state court. In
October 2015, Ossello filed a third-party complaint against Global Defendants,
Swift Rock, Bradley Haskins, World Law Debt Services, LLC, and World Law
Processing. Swift Rock, Haskins, and the World Law entities never entered an
In March 2016, the Montana Supreme Court issued a decision affirming the
state court's order denying the motion to compel arbitration. Global Client
Solutions, 367 P.3d 361. After the Montana Supreme Court's decision in Global
Client Solutions, the state court consolidated Discover Bank and Bank of
America's collection actions and Ossello's third-party actions. (Doc. 1-8.) In late
2016, Discover Bank and Bank of America settled their claims against Ossello.
On December 13, 2016, Discover Bank and Bank of America were dismissed from
the consolidation action, leaving Ossello's consolidated third-party action against
Global Defendants and the various non-appearing defendants. (Docs. 1-9; 1-1 O; 111.)
Approximately two months later, Ossello moved for leave to file an
Amended Complaint. The state court granted Ossello's motion, and on March 14,
201 7, Ossello filed an Amended Complaint naming seven new Plaintiffs. (Docs.
1-13; 1-14.) The Amended Complaint asserts state law claims on behalf of
Ossello and each new Plaintiff for violation of the Montana Consumer Debt
Management Services Act; violation of the Montana Consumer Protection Act;
fraudulent misrepresentation and deceit; negligent misrepresentation; illegality,
unconscionability, and impermissible contract of adhesion; unjust enrichment;
unauthorized practice of law; and civil conspiracy. (Doc. 1-14.)
On March 24, 2017, Global Defendants filed a notice of removal invoking
this Court's diversity jurisdiction. (Doc. 1.) Plaintiffs filed a motion to remand
pursuant to 28 U.S.C. § 1447(c) on the grounds that (1) Global Defendants were
third party defendants in the state court action and have no right to remove; (2) the
notice of removal was untimely; and (3) Global Defendants did not obtain consent
from all defendants prior to removal.
Under 28 U.S.C. § 1441(a), any "state-court action that originally could
have been filed in federal court may be removed to federal court by the
defendant." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The "removal
statute is strictly construed, and any doubt about the right of removal requires
resolution in favor of remand." Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d
1241, 1244 (9th Cir. 2009) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.
1992)). There is a strong presumption against removal jurisdiction, which means
that the defendant always bears the burden of establishing that removal is proper.
Gaus, 980 F .2d at 566. The removing party must show both that there are grounds
for federal jurisdiction and that it complied with the procedural requirements for
removal. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988).
Remand may be ordered based upon defects in the removal procedure. 28 U.S.C.
The procedure for removing a case from state to federal court is set forth in
28 U.S.C. § 1446 which provides two thirty-day periods during which a case may
be removed to federal court. First,§ 1446(b)(l) permits a defendant to file a
notice of removal within thirty days of defendant's receipt "of a copy of the initial
pleading setting forth the claim for relief upon which such action or proceeding is
based." Second, § 1446(b)(3) provides that "if the case stated by the initial
pleading is not removable," a defendant may file notice of removal within thirty
days of defendant's receipt "of a copy of an amended pleading, motion, order or
other paper from which it may first be ascertained that the case is one which is or
has become removable." However, removal under§ 1446(b)(3) based upon
diversity jurisdiction may not occur "more than 1 year after commencement of the
action," unless the plaintiff acted in bad faith in order to prevent removal. 28
U.S.C. § 1446(c). 1 "Commencement" for purposes of removal "refers to when the
action was initiated in state court, according to state procedures." Bush v.
Cheaptickets, Inc., 425 F.3d 683, 688 (9th Cir. 2005).
Judge Lynch looked to Mont. Code Ann.§ 27-2-102(1)(b) which states that
"an action is commenced when the complaint is filed." The parties accepted for
purposes of discussion that Ossello's third-party complaints were the initial
pleadings which commenced the action against Global Defendants in June 2014
and October 2015, respectively. (Doc. 48 at 9.) Ossello filed an Amended
Complaint naming seven new Plaintiffs on March 14, 2017. (Docs. 1-13; 1-14.)
Global Defendants filed notice of removal on March 24, 2017. (Doc 1.) Global
Defendants did not contest that they filed notice of removal more than one year
after Ossello filed her third-party complaints. Instead, Global Defendants argued
that the addition of new plaintiffs in the Amended Complaint effectively
commenced the action anew for purposes of§ 1446(b) and restarted the one-year
Global Defendants have not asserted that Plaintiffs acted in bad faith and Judge Lynch
found no evidence that they did. (Doc. 48 at 13.) Accordingly, this exception is not discussed.
clock in § 1446(c). (Doc. 48 at 9-10.) Defendants argued that when the claims
asserted by new plaintiffs do not relate back to the original complaint, they
effectively commence a new action. (Id. at 13-14.) Therefore, Global Defendants
urge that the March 24, 2017, notice of removal was well within the thirty-day and
one-year time limits of§ 1446.
Recognizing that the Ninth Circuit has not yet considered the issue and that
the federal district courts to have considered the question have reached different
results, Judge Lynch found that the plain terms of the statute do not support
finding that a case commences anew each time "a new plaintiff is joined." (Doc.
48 at 12 (quoting US Airways, Inc. v. PMA Capital Ins. Co., 340 F. Supp. 2d 699,
707 n. 12 (E.D. Va. 2004).) Judge Lynch found that the plain language of§
1446(b) did not speak in terms of specific claims but only of "commencement of
the action." Further, Judge Lynch found that "regardless of the relation back
doctrine," there is no authority under Montana law to support the notion that an
action "commences" whenever a new plaintiff is added by the amendment of a
complaint. (Doc. 48 at 14.) Accordingly, Judge Lynch concluded that to apply
the relation back doctrine to determine whether new plaintiffs claims commence a
new action would "circumvent the plain language of§ 1446(b)." Since Global
Defendants filed their notice of removal over one year after Ossello filed her third-7-
party complaints, Judge Lynch found that removal was time-barred and
recommended that the case be remanded to state court. (Doc. 48 at 14, 16.)
Global Defendants object to this specific finding and recommendation.
(Doc. 51 at 10-11.) Because a state court will not have occasion to address
removal directly, Global Defendants assert that the question must be resolved by
analogy to commencement as interpreted by Montana's statute of limitations law.
(Id. at 11-12.) Global Defendants assert that Judge Lynch cut his analysis short
by applying a "bright-line" commencement rule after interpreting the language of
Mont. Code Ann.§ 27-2-102(1)(b) without delving into the entirety ofMontana's
statute of limitations law. (Id. at 12-13.) Global Defendants cite to and explain
numerous Montana statute of limitations cases as support for their contention that,
Distilled down, Montana law holds: the general rule that filing of a
case constitutes commencement is subject to an exception that actions
by or against later added parties are commenced when the party is
added; and this exception is subject to further exceptions such as the
relation-back doctrine or an on-going tort. Thus, in the case of a later
added party, if no exception applies then the action is commenced
when the party is added.
(Id. at 16-17.) Accordingly, Global Defendants urge that there is not a "rigid
rule" of commencement in Montana and that the relation back doctrine applies in
support of removal in this case. (Doc. 48 at 17.)
The Court is not convinced by Global Defendants' insistence that
"commencement" as interpreted by Montana's statute of limitations law is relevant
in this matter. As Plaintiffs correctly point out, the underlying purpose of statute
of limitations law is to ensure that defendants "have notice of the claims against
them, an opportunity to prepare a reasonable defense, and are not subject to undue
prejudice." (Doc. 52 at 20 (citing Walstad v. Norwest Bank, 783 P.2d 1325, 1327
(Mont. 1989).) Conversely, as the Supreme Court has noted, the one-year
limitation on removal was promulgated to "reduce the opportunity for removal
after substantial progress has been made in state court." Caterpillar Inc. v. Lewis,
519 U.S. 61, 75 n. 12 (1996) (quoting H.R. REP. No. 100-889, at 72 (1988)). The
one-year limitation "addresses problems that arise from a change of parties as an
action progresses toward trial in state court." H.R. Rep. No. 100-889, at 72
(1988). As the Supreme Court has indicated,
In a case not originally removable, a defendant who receives a
pleading or other paper indicating the postcommencement satisfaction
of federal jurisdictional requirements-for example, by reason of the
dismissal of a nondiverse party-may remove the case to federal
court within 30 days of receiving such information. No case,
however, may be removed from state to federal court based on
diversity of citizenship more than 1 year after commencement of the
Lewis, 519 U.S. at 68-69 (citations and quotations omitted). The Ninth Circuit
has determined that the one-year limitation only applies in the situation where the
case was "not originally removable." Ritchey v. Upjohn Drug Co., 139 F.3d 1313,
1317 (9th Cir. 1998) (citing Lewis., 519 U.S. at 75). The one-year limitation was
intended to remedy "the anomalous situation where a change in the parties late in
the litigation allows a party to remove for the first time." Ariel Land Owners, Inc.
v. Dring, 351F.3d611, 615 (3d Cir. 2003).
In this light, Montana statute of limitations law is neither analogous nor
relevant. To entertain Global Defendants' argument that commencement may
occur later if the new plaintiffs claims do not relate back to the original complaint
would subvert the underlying policy behind the one-year limitation on removal by
allowing the later-development of diversity jurisdiction to become grounds for
removal. Further, as Judge Lynch concluded, such an interpretation would
"circumvent the plain language of§ 1446(b), which speaks not in terms of specific
claims, but in terms of the 'commencement of the action."' (Doc. 48 at 14.) To
disregard the plain language of the Montana Rule of Civil Procedure and the plain
language of§ 1446 by treating the Amended Complaint as the "commencement of
the action" would cause "unreasonable waste of judicial resources" which is what
§ 1446 was intended to prevent. Harris v. Bankers Life and Cas. Co., 425 F.3d
689, 697 (9th Cir. 2005). Further, such an interpretation strays too far from the
strict construction given the removal statute. See Williams, 482 U.S. at 392.
Montana Rule of Civil Procedure 3-entitled "Commencing An Action"provides that "a civil action is commenced by filing a complaint with the court."
In this case, Judge Lynch correctly concluded that the action commenced when
Ossello filed her third-party complaints in 2014 and 2015, 2 well over a year before
Global Defendants' notice of removal in 2017. Because the notice of removal was
filed over one year from the commencement of the action, it was untimely under §
1446(c)(l). (Doc. 48 at 13.) Accordingly, this Court agrees with Judge Lynch
that Global Defendants' notice of removal was untimely and the case will be
As an additional matter, if the Court were to have "any doubts" concerning
the remand issue, Global Defendants request the Court to "deny remand without
prejudice and certify this matter for interlocutory appeal and permit application to
the Ninth Circuit to appeal the Court's order." (Doc. 51 at 27.) This request is
contrary to established law. As the Ninth Circuit has stated, "any doubt about the
Since the time of filing of both the original creditor plaintiffs' complaints in 2013 and
2015 and the filing of Ossello's third-party complaints in 2014 and 2015 are well over one year
from Global Defendants' notice ofremoval in 2017, the same result is reached regardless of the
date used. For the sake of convenience, the Court will treat the filing of Ossello's third-party
complaints as the initial pleadings.
Because the Court does not find Global Defendants' statute of limitations analogy
relevant, the Court need not address whether the new Plaintiffs' claims relate back to Ossello's
original claims against Global Defendants.
right of removal requires resolution in favor of remand." Moore-Thomas, 553
F .3d at 1244. If there was any doubt, the Court should remand the case, not deny
remand. Moreover, 28 U.S.C. § 1447(d) provides that "an order remanding a case
to the State court from which it was removed is not reviewable on appeal or
otherwise." Therefore, the Court will not certify this issue for interlocutory appeal
pursuant to 28 U.S.C. § 1292(b).
Lastly, Judge Lynch also recommended that Plaintiffs' request for attorney
fees and costs should be denied. (Doc. 48 at 15-16.) No party objects to this
specific finding and recommendation. Reviewing for clear error, this Court agrees
with Judge Lynch's analysis and conclusion that attorney's fees and costs were not
warranted because Global Defendants had an "objectively reasonable basis for
seeking removal." (Id. at 15 (quoting Martin v. Franklin Capital Corp., 546 U.S.
132, 141 (2005).)
Accordingly, IT IS ORDERED that Judge Lynch's Findings and
Recommendations (Doc. 48) are ADOPTED IN FULL and this case is
REMANDED to the Second Judicial District for the State of Montana.
2-'1.U,..day of October, 2017.
Dana L. Christensen, Chief Judge
United States District Court
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