Nguyen et al v. American Express Company et al

Filing 19

OPINION: re: 4 MOTION to Remand to State Court New York Supreme, New York County. filed by Pierre-Jean Nguyen, SCCSS, LP, Huracan Capital, LLC. The Plaintiffs' motion to remand the case to State Court is granted in light of AmEx's failure to timely file the Notice of Removal pursuant to 28 U.S.C. § 1446 and to obtain consent from all defendants party to the action, as required by § 1446(b)(2)(A). (Signed by Judge Robert W. Sweet on 10/13/2017) (js)

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. ' UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------x PIE RRE -JEAN NGUYEN, HURACAN CAP I TAL , LLC, and SCCSS , LP Plaintiffs, I 1 7 Civ. 4153 OPINI ON -againstAMERICAN EXPRESS COMPANY , AMERICAN EXPRESS CENT UR I ON BANK, STUDIO OTTO NYC , INC., and PASQUALE DE ST EFANO , Defendants. -------------------------------------x A P P E A RA N C E S : II c. ,= .~~-~~= ·s= \J ,. ;:::u=s= , · .,D= Attorneys for Plaintiffs ROBINSON McDONALD & CANNA LLP 61 Broadway, Suite 1415 New York, NY 10006 By: Brett G. Canna , Esq. Attorneys for Defendants STROOCK & STROOCK & LAVAN LLP 180 Maiden Lane New York, NY 10038 By: Raymond A. Garcia, Esq. 1, ·· or'l'vn.. 1.l:'..H o • ... ,. ·!\··T \\ I! 1 l\ ELECI'RONICALLY FILED\ I DOC#: f DATE FILED: 161 l (Q\ (J :· Sweet , D . J . Plaintiffs Pierre - Jean Nguyen ("Nguyen"), Huracan Capital, LLC ("Huracan" ) , and SCCS , LP ("SCCS") (co llectively the "Plaintiffs" ) have moved pursuant to 28 U. S . C. § 1447(c) to remand this action against American Express Company and American Express Centurion Bank (collectively "AmEx" or the "Defendants") to the Supreme Court of the State of New York , New York County (the "State Court"). Plaintiffs also seek an award for costs , expenses , and attorneys ' fees incurred because of removal . Based on the facts and conclusions set forth below, the motion of the Plaintiff is granted, and the acti on is remanded to the State Court . The Plaintiffs' motion f o r costs , expenses , and attorneys ' I. fees is denied . Prior Proceedings Plaintiff initiated this action by ~ iling a Summons and Verified Complaint with the State Court on April 14 , 2017 , bringing claims against Studio Otto NYC , Inc. and Pasquale De Stefano (the "Other Defendants " ) and AmEx invo lving a series of transactions f o r the sale of luxury leather goods t o taling $785 , 000. 1 On April 21, 2017, after filing the Summons and Verified Complaint with the State Court , Plaintiffs' counsel forwarded by email a copy of the Summons and Verified Complaint to AmEx's in-house counsel . See Pls .' Br. Ex. 2 . The email provided in relevant part: . I have attached a copy of the Summons and Complaint that were filed in connection with Mr. Nguyen's claims . Please l et me know if you will accept service on behalf of the AmEx Defendants. I will not take any further action on the matter, including service of process , until I hear back from you . Id., at 1 . Plaintiffs ' counsel did not receive a reply to this email . On April 26 , 20 1 7 , Plaintiffs' counsel sent a follow-up email to AmEx's in-house counsel , stating in relevant part : I am following up on my last emai l regarding accepting service of process . . Please let me know if you will accept service of process on behalf of the AmEx defendants by the end of the week . If I do not hear from you , I will being [sic] the process of serving the documents on all defendants next week . Id. Ex . 3 , at 1. W hin one hour , AmEx's in - house it counsel replied with the following: I am authorized to accept service on behalf of American Express pursuant to a 60 day waiver of service . Please let me know if you are amenable to the waiver of service and I will have it signed when I return to the office tomorrow. Id . Ex. 4, at 1. Plaintiff's counsel responded to this email within one hour , providing: 2 You can send me a copy of the form of waiver tomorrow when you get back for me to look at. But, this is in NY State Court , so we may want to do a stipulation . I assume you are asking for 60 days to respond to the Complaint (wh i ch I do not see as a problem) . We can discuss further when you are back in the off ice tomorrow . Id. A f ormal stipulation (the "Stipu lation" ) memorializing the agreement concerning acceptance of service and AmEx's two-month time period to respond to the Verified Complaint was electronically filed by counsel for AmEx in State Court on May 3 , 2017 . Id. Ex. 5. The Stipulation provides that AmEx "her eby accept service of the Summons and Verified Complaint in [this case ] and waive any defense based upon service of process." Id. The Stipulation also provides that "Defendants[ '] time to respond with respect to the Summons and Verified Complaint has been extended up to and including June 27 , 2017." Id. On June 2 , 2017 , AmEx filed a Notice of Removal (the "Notice of Removal") pursuant to 28 U.S.C. §§ 1331, 1441, and 1446 and the action was removed to this Court. See Notice of Removal, ECF No. 1. The instant motion to remand was heard and marked fully submitted on December June 30 , 2017 . 3 II. The Motion to Remand is Granted The Plaintiffs' motion to remand the case to State Court is granted in light of AmEx's failure to timely file the Notice of Removal pursuant to 28 U.S.C . § 1446 and to obtain consent from all defendants party to the action, as required by § 1446(b)(2)(A) . a. AmEx Failed to Timely File the Notioe of Removal The parties dispute whether AmEx filed its notice of removal in a timely fashion. Under 28 U. S . C . ~ 1446(b) (1) , a "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 setting forth the claim for relief upon which such action or proceeding is based ." The defendants shoulder the burden of establishing whether removal was proper, see Hodges v. Demchuk , 866 F. Supp . 730, 732 (S . D. N.Y . 1994); see also R . G. Barry Corp . v. Mushroom Makers , Inc . , 612 F . 2d 651 , 655 (2d Cir . 1979) ("the burden falls squarely upon the removing party to establish its right to a federal forum by competent proof") , and the 30 - day deadline to 4 file removal is "rigorously" enforced. See Somlyo v. J. Lu - Rob Enters . , Inc ., 932 F.2d 1043 , 1046 (2d Cir . 1991). A defendant ' s failure to file within this 30 day period requires remand back to state court . See Brooklyn Hosp . Center v. Diversified Info . Techs ., 133 F . Supp . 2d 197 , 200 (E . D. N. Y. 2001) . As a genera l matter , district courts must "construe t he removal statute narrowly , resolving any doubts against removability . " Lupo v . Human Affairs Int ' l Inc ., 28 F . 3d 269 , 274 (2d Cir . 1994). ArnEx filed its Notice of Removal on uune 2 , 2017 , less than thirty days following the entrance of the Stipulation on May 3 , 2017 , but more than thirty days after the parties engaged in email correspondence on Apr il 26 , 2017 . The Pla i ntiffs contend that the Apr i l 26 , 2017 email agreement between counsels was a valid stipulation in which ArnEx acknowledged and accepted the April 26 , 2017 serv i ce of the Summons and Verified Complaint . Pls. ' Reply Br. 3 . Plaintiffs further argue that ArnEx accepted service on April 26 , 2017 " as no later service was made or attempted on ArnEx ." Id . ArnEx argues that the April 26, 2017 email communications did not constitute a final binding agreement because the part i es had no intention of being bound pr i or to the execution of t h e St i pulation on May 3 , 2017 . Defs .' Br . 4 - 6 . Interestingly , ArnEx apparently asserts that the Stipulation was effective as of April 26 , 2017 with regard to 5 their requested 60 day waiver of service (as evidenced by the language that "Defendants['] . time to respond with respect to the Summons and Verified Complaint has been extended up to and including June 27, 2017," Pls.' Br. Ex. 5 ) , but as of May 3, 2017 with regard to the date of service at issue here. Accordingly, in this case, the parties disagree as to I whether a binding contract was formed by the April 26, 2017 emails between counsels for Plaintiffs and AmEx. This Court therefore must determine, under New York law, whether a contract was formed by way of the April 26, 2017 email exchange, and if so, whether that contract is enforceable. Under New York law, courts distinguish "between a 'preliminary agreement contingent on and not intended to be binding absent formal documentation,' which is not enforceable, and a 'binding agreement that is nevertheless to be further documented,' which is enforceable with or with o ut the formal documentation." Kowalchuk v. Stroup, Dep' t 2009) 61 A.D.3d 118, 123 (1st (quoting Hostcentric Tech., Inc. v. Republic Thunderbolt, LLC, 2005 WL 1377853, at *5 (S.D.N.Y. 2005)). "The former is established by a showing that a party made an explicit reservation that there would be no contract un J il the full formal document is completed and executed." Id. However, "the 6 mere fact that the parties intended to draft f~rmal [] papers is not alone enough to imply an intent not to be mound except by a fully executed document." Id. Trolman v. (emphasis in ori~inal); see also Trolman, Glaser & Lichtman, P.C., 114 A.D.3d 617, (1st Dep't. 2014) simply because execute formal 618 (An "agreement [is] not rendered ineffective . it stated that the parties would promptly [] papers.") (internal citations omitted). Here, neither party made any reserva t ion in the email communication that there would be no agreement until the Stipulation was formalized. Indeed, in response to AmEx counsel's email that she is "authorized to accept service on behalf of American Express pursuant to a 60 day waiver of service," Plaintiffs' counsel responded "I ass r me you are asking for 60 days to respond to the Complaint (which I do not see as a problem)." See Pls.' Br. Ex. 4. Absent any language suggesting that the agreement was contingent on other factors, the April 26, 2017 email communications demonstrate a binding agreement, effective as of that date. Moreover, the language of the Stipulation itself strongly suggests that AmEx accepted service on April 26, 2017. Regarding the 60 day waiver of service raised by AmEx's counsel, the Stipulation provides that AmEx's "time to :rrespond with 7 -I respect to the Summons and Verified Complaint las been extended up to and including June 27, 2017." See Pls.' Br. Ex. 5. Curiously, this date is 60 days from April 26, 2017 - not from May 3, 2017. AmEx appears to want to have its ~ ake and eat it too by suggesting that the dates of acceptance of service and waiver of service are different, even though b ©th ar o se from the same email communications. Thus, in light of this Court's duty to "resolv[e] any doubts against removability," see Lupo, 28 F.3 i at 274, and because AmEx did not timely file its notice of removal, this case is remanded to State Court. b. AmEx Failed to Obtain Written Consent From All Defendants for Proper Removal Additionally, the Plaintiffs' assert that this action must be remanded due to AmEx's failure to obta l n written consent for removal from the Other Defendants pursuant to Section 1446 (b) (2) (A) (the "Unanimity Rule" or the "Rule"). The Unanimity Rule provides that "when a civil act l on is removed solely under section 144l(a), all defendants wJ o have been properly joined and served must join in or con , ent to the removal of the action." See 28 U.S.C. 8 § 1446(b) (2) (A); see also Wright & Miller, 14B Fed . Prac . & Proc. Juris. 3d § 3723 cardinal rule is that . all defendants mus t ("[A] join in the notice of removal ." ) . Moreover , a defendant ca f not cure such a defect by belatedly submitting written consent from co defendants as "the time for consent has l ong passed." Metropolitan Transp . Authority v . U. S . Fidelity & Guar . Co ., No. 14 Civ. 9059 (PAE), 2015 WL 17300 67 , at *5 (S . D. N.Y. 20 15). Indeed, "[ c ] ourts have very little discretion - if any - to forgive a failure to comp ly with the rule of unanimity ." Bank of Am . v . Angona, No . 14 - CV - 1643 (JG) , 20 14 WL 1515559 , at *3 (E . D. N.Y . 2014) . The Plaintiffs argue that AmEx's fai l ure to obtain consent from the Other Defendants violates the Unanimity Rule and requires this Court to remand the case . AmEx contends that this action is excepted from the Unanimity Rule. Specifically, AmEx argues that§ 1441(c) creates a carve - out to the Rule by providing that a defendant need not seek consent to remove where the action consists of a claim supported by this Court's original jurisdiction and a state law claim not supported by supplemental jurisdiction . See id. § 1441(c) (2). AmEx contends that this Court does not have supplemental jurisdiction ove r the Plaintiffs' state law claims against the co-defendants, so AmEx 9 was not required to obta i n consent from the co-defendants prior t o removal . The parties do not dispute that ArnEx did not obtain consent from the co - defendants prior to filing for removal. Thus, whether the law requires this case be remanded turns on whether there is supplemental jurisdiction over the s tate law claims. See Caro v . Bank of Am ., N . A ., No . 5 :1 4CV38 , 2014 WL 2818672 , at *3 (N.D . W. Va. June 23 , 2014) (finding that the Unanimity Rule continues to hold full force where a state law claim comes within the court ' s supplemental also Brooks v . Fogli o , No. 13-2504 *5 , (D . N. J . July 2 , 2013) ju~isdiction); see (JEI/JS) , 2 b13 WL 3354430 , at (holding that when the court has supp l emental jurisdiction over an action "the exception to the unanimity rule provided in§ 1441(c) does not apply"). A district court has "supplemental jurisdiction over all c laims that are so related to claims in the action within [the court ' s] original jurisdiction that they form part of the same case or controversy . ." 28 U. S . C. § 1367(a). Federal-law and state-law claims form part of the same case or controversy where they "'derive from a common nucleus of operative fact ' and are 'such that [a plaint if f] wou l d ordinarily r e expected to try them all in one judicial proceeding .'" Carnegie-Mellon Univ . v . 10 Cohill , 484 U. S . 343 , 349 (1988) Gibbs , 383 U.S. 715 , 725 (1966) (quoting United Mine Workers v . (alteration in original)). "This is so even if the state law c l aim is asserted k gainst a party different from the one named in the federal claim ." Briarpatch Ltd ., L . P. v . Phoenix Pictures , Inc ., 373 F . 3d 296 , 308 (2d Cir . 2004) . Here, the underlying action involves a series of transactions for the sa l e of goods totaling $785 , 000 . The Plaintiffs attempted to purchase certain luxury l eather goods from the Other Defendants us i ng charge cards issued by AmEx . Once the Plaintiffs did not receive the order J d goods from the Ot her Defendants , they reported this to AmEx to dispute the charges . AmEx refused to reverse the disputed charges on the Plaintiffs ' charge card accounts and in stituted co llecti on efforts against the Plaintiffs . In light of this , th e Plaint i ffs brought a federal c l aim aga i nst AmEx for vio l at i on of th e Fair Credit Billing Act , as wel l as state law claims for breach of contra ct and violation of New York General Business Law § 349 against AmEx and breach of contract and fraud claims against the Other Defendants . These facts establish that the f ede t al and state I claims arise out of the same common nucleus of operative fact 11 --- - - - - - - - - - - - - the series of underlying transactions. The Plaintiffs' individual claims against each defendant are b©und to share I over lapping facts. Indeed, if it is determined that the contract between the Plaintiffs and the Othe r Defendant ~ was fulfilled and the goods were delivered, then all c laims t ay be resolved on this determination. Further, it is reasonable that the Plaintiffs brought this single action against A.mEx and the Other Defendants in the name of judicial economy as l11 the claims depart fr om the same factual scenario. Thus, because this Court has original question jurisdict i on over the Plaintiffs' federal law l laims and supplemental jurisdiction over all of the Plai~tiff's c l a ims, the exception to the Unanimity Rule dols not state law apply. See I Bank of Am., 2014 WL 2818672 , at *4. According l y, because AmEx did not obtain consent from the co -defendants to remove this action to f ederal cou rt, the case is remanded J o State Court. I I III. The Plaintiffs' Request for Attorneys' is Denied The Plaintiffs seek an award of costs and attorneys' f ees in curred as a result o f AmEx's improper r J moval of this action . Under 28 U.S.C. § 1447(c), a district l ou rt remanding an action to state court "may iequire payment of just costs and any 12 actual expenses , including attorney fees , i ncurred as a resu l t of the removal ." 28 U. S . C. § 1447(c) . " Absent unusual I circumstances , courts may award attorney ' s fees under§ 1447(c) only where the removing party lacks an ob j ective l y reasonab l e basis for seeking removal ." Martin v . Franklin Capital Corp ., 546 U.S . 132 , 141 (2005) . " A basis for removal is ' objective l y reasonable ' i f the remov in g party had a co l orarole argument that remova l was proper. " In re Standard & Poor ' s Rating Agency Litig ., 23 F . Supp . 3d 378 , 407 (S . D. N.Y . 2014 ) . "I n practice , if lack of jurisdiction was not obvious f r om the face of the removal petition and no other unusua l circumstances obtain , a court ca n not conclude t h a t an objective l y reas l nable basis was lacking . " Little Rest Twelve , Inc . v. Visan , 829 F . Supp . 2d 242 , 245 (S . D. N.Y . 201 1 ) (citation omitted) . Although AmEx fa il ed to time l y f il e its not i ce of removal within the 30 day deadline , it was not objectively unreasonable for AmEx to believe that the c l ock for filing the Notice of Removal began to run as of the da t e of the forma l Stipulation . Moreover , it was not objective l y t nreasonab l e for AmEx to in fer that t he c l aims against t he Ot h er Defendants were not supported by supplemental jurisdiction . Accordingly , AmEx did not lack an "objective l y reasonable " basis for seeking removal , so an award of costs and attorneys ' 13 fees to the t ' Plaintiffs' is not appropriate. See Kuperstein v . Hoffman- Laroche, Inc ., 457 F. Supp . 2d 467 , 472 (S . D.N j Y. 2006) ("The mere fact that the defendant fails to carry hi$ burden does not of itself require an award of costs to the pla l ntiff ." ) . IV. Conclusion The Plaintiffs ' motion is granted an! the action is remanded to the State Court . It is so ordered. New York, NY October /j , 2017 I ROBERT W. 1WEET U.S . D .J. 14

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