PARACLETE AERO, INC. et al v. PROTECTIVE PRODUCTS ENTERPRISES, LLC

Filing 24

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE JOE L. WEBSTER on 11/18/2013; that Plaintiff's motion (Docket Entry 18 ) be GRANTED and this action be remanded to the General Court of Justice, Superior Court Division, in Hoke County, North Carolina for further proceedings. RECOMMENDED that Plaintiffs' request for costs, expenses, and attorney fees be DENIED. (Sheets, Jamie)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
PARACLETE AERO, Inc.,
Corpotation, et â1.,

a

North Carohna

)
)
)

Plaintiffs,
V

PROTECTIVE PRODUCTS ENTE,RPRISES,
LLC, a Delawate Limited Liability Company, as
Successot by Merget to Protective Ptoducts
Enterprises, Inc., and as Assignee of Mine
Safety Appliances Company,

1,:1,3CY325

)

)
)

Defendant and
Third-Party Plaintiff,
V

MINE SAFETY APPLIANCES COMP,A.NY,
Third-Patty

)
)
)
)
)
)

D e fendant.

)
)
)
)
)
)
)
)
)

MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This matter is before the Court on Plaintiffs Paraclete Aeto, Inc. ("Paraclete"), XPX

Armor & Equipment, Inc. ("XPX") and Timothy B. D'Annunzio's (D'Annunzio")
(collectively "Plaintiffs") motion to temand this action to state court pursuant to 28 U.S.C.
SS

1446 and 1.447. (Docket Entry

18.) Defendant Protective Products

Enterpdses, LLC

("PPE") has filed a response in opposition to this motion. pocket F;ntty 20.) Fot the
reasons stated hetein, the Court

will recommend Plaintiffs' motion be gtanted and this

action be temanded

to the

General Court of Justice, Superiot Coutt Division,

in

Hoke

County, Notth Catoltna.

I.

PROCEDURAL BACKGROUND
Pataclete commenced this action against PPE1

in the Genetal Coutt of Justice,

Supetior Coutt Division, in Hoke County, North Caroltna on or about September
(Compl., Docket Entry

17

, 2012.

2.) PPE filed a lesponse to the Complaint on January 22, 201.3.

(Docket Entry 1,-2.) Shottly thereaftet, PPE fìled a thitd-patty Complaint against ThirdParty Defendant Mine Safety Appliances Company

("MSA"). pocket Entry 1-3.) On

March 19,201,3,ParacIete filed its motion to amend Complaint. (Docket Entry 1-5.) With
consent

of all parties, the motion was granted and two additional Plaintiffs, XPX and

D'Annunzio, were added. pocket Entry 1-6.) On Apdl 18, 201,3, PPE filed a notice of
temoval2 pursuant to 28 U.S.C. SS 1332, 7441,, and 1,446. (Docket Entry

the pending motion to remand on Apdl 29, 2013. (Docket Entry
response on May 22,2013. (Docket

II.

Enty

1.) Pataclete fìled

18.) PPE filed its

20.)

FACTUAL BACKGROUND
In its original Complaint,Pataclete alleged state law claims against PPE fot bteach of

contract, unfair and deceptive tade ptactices, and pietcing the cotpotate

veil.

(Jae Compl.,

Docket Entty 2.) Panclete is a cotporation engaged in the business oÍ manufacturing and
selling military grade
assets

^rmol

(Id. n

5.)

Pataclete, along with its founder, D'Annunzio, sold

to MSA and enteted non-competitive covenants with MSA in 2006. (Id. ffi

1 Pataclete

voluntarily dismissed Defendant Sun Capital Partners, Inc. ftom this action on
November 7,201.3. (See State Court Mot. to Am. Compl, fl 2, Docket Entry 9.)
2 MSA consented to removal. (Jea Consent to Notice of Removal, Docket Entry 1-8.)
2

6-7.)

Paraclete also leased its stotage faclhty to MSA pursuant to a lease agreement. (Id. 1[ 8.) In

September 201.1,, MSA assigned the lease

to PPE who occupied the property for

the

temainder of the lease. (1d.ffi|73,17.) Pataclete's breach of contract claim alleges that PPE
bteached sevetal ptovisions

of the lease: (1) PPE left HV'\C chillers non-operaronal; (2)

PPE failed to noti$r Pataclete of a leaking toof; (3) PPE maliciously severed numerous
power cables; (4) PPE caused a hole to be left in the floor; (5) PPE failed to p^y utility and
electtic bills; and (6) PPE left trash at the leased property. (Id.I18.)
Paraclete also allege

d a claim fot unfait and deceptive trade practices against PPE.

Qd. 1l1l 25-30.) Paraclete claims that the actions concerning the breach

intentional, and were "undettaken

fot the sole pwpose of

of the lease were

smothering fParaclete] and

D'Annunzio's financial ability to compete with IPPE]." (Id. n 27 .) Lastly, Paraclete asserted

a third claim of telief to pierce the corporate veil of Sun Capital Partners, an original
defendant in this matter, as controlling member of PPE. (Id.llll31-34.)
Paraclete's amended Complaint added

two additional plaintiffs, D'Annunzio and

XPX3. D'Annunzio is the foundet of Paraclete and XPX.

(See

Am. Compl.

fl

1, Ex. A,

Docket Ettt y 1,9-3.) Under the claim for unfair and deceptive trade ptactices, Paraclete also
added factual allegations indicating that PPE "knew at the time

it

breached its Lease with

fParaclete] that Plaintiff D'Annunzio had te-entered, thtough Plaintiff XPX, the business

of

manufacturing and selling military gtade armor and telated products" a¡d that PPE "knew

Plaintiff D'Annunzio and Plaintiff XPX intended to use the Leased Premises to compete

with Defendant PPE, LLC and that the use of such a factllrr¡ would be a competitive
¡ The cause of action to pietce the corporate veil against former Defendant
Inc. is not alleged in the Amended Complaint.
õ

J

Sun Capital Partners,

advantage

for Plaintiff D'Annunzio and Plaintiff XPX in competing with Defendant PPE."

(1d.ff|26-27

a tesult

.) Pataclete sought to amend its Complaint to add this additional information

of documents produced in discovery.

(State Court Mot.

to Am. Compl. tffl

as

7-8,

Docket Entry 9.)

III.

DISCUSSION

Plaintiffs seek an otdet temanding this action

to the General Coutt of Justice,

Superior Cout Division, in Hoke County, Notth Caroltna. Plaintiffs contend that PPE's
notice of temoval was filed Apdl 18,201,3,203 days aftet service of the odginal Complaint
and fails to meet the 30-day removal tequirement pursuant to 28 U.S.C. S 1446. (Pls.' Mot.

to Remand at2,Docket Entry 18.) To the extent PPE assetts that the thirty-day temoval
period began to run aftet receipt of the amended Complaint, Plaintiffs argue that "both
complete divetsity and the amount

in

controversy were readily

^ppaLrent

in the initial

Complaint served on PPE on September 27,201.2." (Pls.' Mem. in Sup. of Mot. to Remand

at4-5, Docket Entry 19.) In tesponse to the motion, PPE contends that its temoval dghts
wete tevived based upon the addition of Plaintiffs XPX and D'Annunzio, and the new
factual allegations

in suppott of the claim fot unfair and deceptive ttade ptactices. (Def.'s

Mem. in Opp. to Pls.'Mot. to Remand at 6, DocketBntty 20.)

1,. Removal Procedures

The general tequitements fot temoval are outlined in 28 U.S.C.

I

Aa1,@). The

temoval statute provides in televant part:

(u) [A]ry civil action btought in a stâte court of which the disttict coutts of
the United States have otiginal judsdiction, may be temoved by the defendant
or the defendants, to the district court of the United States for the district and
division embtacing the place where such action is pending.
4

28 U.S.C.

I

Ua1,@). The patty seeking temoval beats the burden of establishing fedetal

judsdiction. Malcahryu.ColømbiaOrganicChenlCo., lnc.,29F.3d1,48,

"In

1.51

(4thCir.

1994).

detetmining whethet the temoving party sustained its butden, the court must strictly

construe the temoval statute and resolve all doubts against removal." (Miller u. Marlin, Civ.

A. No. C-87-226-G,1,987 WL 46753

xl (1\4.D.N.C. July 20,1,987)

Gas Corþ. u. Sheeß,313 U.S. 100, 108-09

(1,9a\;

see

also Batler u,

(quoting Shamrock Oil dv

Pol,ë,592F.2d 1.293,1296 (5th

ck.1,e7e).
Pursuant to 28 U.S,C. 111446, [t]he notice of removal . . . shall be filed within 30 days

aftet the receipt by the defendant . . . of a copy of the initial pleading setting fotth the claim

for relief upon which such action ot proceeding is based . . .

."

28 U.S.C. T 1446(bX1).

Section 1446þ) futther states:

the case stated by the initial pleading is not removable, a notice of temoval
may be filed within thirty days after receipt by the defendant, through service
ot otherwise, of a copy of an amended pleading, motion, ordet or other p^pen
from which it may ftst be ascertained that the case is one which is or has
become temovable.

[]f

28 U.S.C.

I

1446(bX3). Some courts have recogntzed a nantow exception to the thirty-day

limitation which allows removal of a civil action beyond the thitty-day limitation in

cases

whete "the complaint is amended so sabstantialþ as to altet the character of the action and
constitute essentially a new lawsuit." Johnson u. Heablein lnc.,227 F.3d 236,241, (5th
2000) (emphasis added);

¡ee

al¡o lI/il¡on u. Intercollegiatt (BU Ten)

Conference

Athletic Ass'n, 668

F.2d 962,965 (7th Cu. 1,982), ært. denied 459 U.S. 831, (1,982), (quoting Fletcher

u.

U.S. 408, 410 (1886)) ("The courts . . . have tead into the statute an exception

5

Ct.

Hanlet,

1.1.6

fot the case

where the plaintiff files an amended complaint that so changes the nature of his action as to
constitute 'substantially a new suit begun that day."')

The policy considerations behind the cteation of the "tevival exception" ate relevant
to courts tecogntzine this narrow exception. InIY/ilson, the court stated:

The purpose of the 30-day limitation is trvofold: to deprive the defendant of
the undeserved tactical advantage that he would have if he could wait and see
how he was faring in state court befote deciding whether to remove the case to
another court system; and to prevent the delay and waste of resoutces involved
in starting a case over in a second couft after significant pfoceedings, extending
over months ot even years, ffiãy have taken place in the fitst court. These
considetations might be ovetbotne in a case where a plainttf.f, seeking to
mislead the defendant about the true natute of his suit and thereby dissuade
him ftom removing it, included in his initial complaint fìled in state court an
inconsequential but removable fedetal count unlikely to induce temoval and
then, aftet the time fot temoval had passed without action by the defendant,
amended the complaint to add the ftue and weighty federal grounds that he
had been holding back.
ll/ihon, 668 at 965. "Mindful of these considetations, courts have limited tevival to cases in

which the amended complaint so radicalþ alters the basic chatacter of the litigation that
denying the defendant the right to removal would be patentþ anfair." Miller,1987 WL 46753

at x3 (emphasis added); MG Bldg. Materials, Ltd.

u. Paltchex,

Inc,, 841 F. Supp. 2d 140,748

CW.D.N.Y. 201,2) (upplyt"g "revival exception" and denying remand whete the cause of
action "motphed into a class action, potentially involving thousands of class membets across

the country, while the damage claims þrew] to a whopping $15 billion, an increase of ovet
nine million petcent."); CraigFood Indøs., Inc. u. Taco Time Int'1, Lnc.,469 F. Srrpp. 51,6,521'

Q.

rJt^h1,979) (amended complaint "stated a clakn arising undet fedetal law, theteby providing

a new basis for removal" although the case was otiginally temovable undet diversity
jurisdiction.); Braød u. Transþ. Seru. Co. of lllinois,445 F.3d 801, 806 (5th Cit. 2006) (removal

6

dght revived after adding new defendant since "the addition of the new defendant
commences the lawsuit as to it.")

2. Analvsis
PPE argues that the addition of D'Anntnzio, particulatly in light of his political
stâtus, and his company XPX "Itas radically alteted the litigation, from a garden-vatiety lease

dispute to an unfair competition claim by a prominent community figure claiming damage to
his local business." (Def.'s Mem. in Opp. to Pls.' Mot. to Remand at

4.) Howevet) review

of the record reveals that a tadtcal alteraion in this mattet has simply not occurred

^

as a

tesult

of the addition of two new plaintiffs and additional factual allegations to Plaintiffs' unfatr
and deceptive ttade ptactices claim. PPE addressed concerns

of the possibility of

local

ptejudice ftom the courts based upon involvement of D'Annunzio and his company. The

original Complaint, however, indicated that D'Annunzio was the foundet and owner of
Paraclete (the otiginal Plaintiff)

.

(See

Compl. T 7.) Although not named as a plaintiff in the

action at that time, PPE could have simply dispelled any concerns of local ptejudice by
temoving the action within thirty days of service of the odginal Complaint.

In sum, the amended complaint

alleges the same claims as the odginal complaint: the

claim fot bteach of contract and claim fot :ur:^fat and deceptive ttade practices wete both
alleged

in the original Complaint. The additional allegations

supplement facts alrcady

present in the original Complaint. Substantial alteraions have not occurred to "constitute
new lawsuit." Johnson, 227 F.3d at 241,;

¡ee also

Ko@nski

u.

a

Jacknn,326 F. Snpp. 2d704,707

(E.D.N.C. 2004) (remanding case where plaintifPs new complaint "in substance was only

a

continuation of the ptevious action, without change."); Doe u, Florida Int'/ Uniu. Bd. of Trastees,

7

464 F. S,rpp. 2d 1,259, 1,262 (5.D. Fla. 2006) (remanding case whete the

plaintiffs original

and amended complaint "contain the same essential allegation."); Tumer u. Mine Softtl
Appliances Co., CIY.A.01-0325,2001

\ØL 456351 at x3 (E.D. La. Apr.27,2001) (coutt

concluded that the "revival exception" did not apply where "the

core of the lawsait

still fatose]

ftom fdecedent's] exposure to asbestos" even though patties wete substituted, a defendant
was added, and new claims wete included in the amended complaint.); Talþ
Gou't Enplolees Lacal 3148,00-CV-76640G), 2001

u.

Am. Fed'n of

ìøL 253034 x*2 F.D.N.Y. Mar.9,2001)

("fA]mendments to the complaint did not add any new claims at all; r^thet, they removed

a

preexisting state law clam.");I-,oaisianaFarvtBareaa Ca¡. Irus. Co. u. MichelinTire CorP.,207 F.
Sopp. 2d 524,526 (À{.D. La. 2002) ("The mete addition

of [new] plaintiff does not in and of

itself ttansform the chanctet of the action.")

PPE points to the factors in Miller to support its argument fot tevival. This court
consideted the following factots:

(1) the extent to which the additional claims ate based on newly discovered
facts, as opposed to facts contained in the odginal complaint; (2) the extent to
which the case has ptoceeded at the state level; (3) the extent to which statelaw is embedded or dominant in the claims and defenses in the case; (4) the
inctease in potential liability occasioned by the additional claims; (5)
indications that plaintiff intentionally sought to mislead the defendant into
waiving its right to removal; and (6) whethet the additional claims provide a
new basis for removal, such as the addition of a federal claim to a case that
was initially removable based only on divetsity jwisdiction.
Miller, 1987 WL 46753 at

x3. As PPE

previously tecognized, this case involves temoval

under federal question rather than diversity judsdictiona. Thetefote, the factots ín Miller are

+ After weighing the factots, the Court n Miiler gtanted the plaintrffls motion to remand because
"plaintiffs amended claims [relied] on the same basic facts as were contained in the original
complaint." Miller,1987 \øL 46753 at*5.
8

not squarely applicable in this case. To the extent they ate, such factots weigh in favot of
temand.

As to the frst, fouth and sixth factots sutrounding additional claims, Plaintiffs'
amended Complaint added no new claims and temoved one previous cause

of action. The

new factual allegations addressed the claim fot unfait and deceptive trade ptactices which
was already present in the original Complaint. These additions wete based upon infotmation
learned through discovery.

'{.dding

such allegations does not change the natute of this claim,

Futhermore, Plaintiffs' monetary damages remain consistent with the odginal Complaint
such that potential liability has not incteased as a tesult of the amendments. With tegard to

the second factot concerning proceedings at the state level, minimal action appears to have
occurred at the state court level; howevet, discovery had begun. As

to the third

factot,

Plaintiffs' amended Complaint assetts all state-law claims, "which, ideally, should be decided

by the state court." Id. at

*4.

Lastly, thete ate no indications that Plaintiffs intentionally

sought to mislead PPE into waiving its

rþht to temoval.

After consideration of all relevant factors, the Court concludes that this matter

has

not been so substantially altered as to justify reviving PPE's tight of removal. The Miller
factors favor temand and there is nothing in the amended Complaint that tadically changes
the undedying issues here. Certainly the policy considerations applied hete support PPE's
argument that
see how

it did not attempt to employ a tacttcal advantage ovet Plaintiffs in waiting to

it would fak tn state court. Nor have significant delays occutred as a tesult of PPE's

temoval of this case to federal court. Nonetheless, the Coutt finds that the facts present
here do not suggestthat sab¡tantial alteration has occutted which would essentially constitute a

9

new lawsuit against PPE. The Court concludes that PPE failed to tìmely fìle a notice of

removal and therefore recommends Plaintiffs' motion be granted and this action be
remanded to the Genetal Court of Justice, Supedor Coutt Division, in Hoke County, Notth
Caroltna fot futthet proceedings.

3. Plaintiffs'Request

for Costs, Expenses & Attotne)¡

Fees

Pursuant to 28 U.S.C. $ 1aa7(c) , "lu]n order temanding the case may tequite payment

of just costs and any actual expenses, including attorney

fees, incutred as a tesult

of

the

removal." To grant award costs, the coutt must find that PPE "acted in bad faith in
removing the case from state court." Phillip:
826 (E.D. Va. 2008);

see also

(4th Cir. 1987); Parker

u. BJ's ll/holesale

Clab,Inc.,591 F. S,rpp. 2d 822,

ITT Indas. Credit Co. u. Darango Crushert Inc.,832F.2d 307,308

u. Johnryt

Tart Enterprises, Inc., 104 F. Srrpp. 2d 581',585 (iVI.D.N.C.

1,999). Although the Court recofiunends remand

in this matter, there is no evidence that

PPE acted in bad faith in asserting grounds for removal. Thus, within its disctetion, the
Coutt recommends that Plaintiffs' request for costs, expenses, and attotney fees be denied.

IV.

CONCLUSION

For the reasons stated above, IT IS RECOMMENDED that PlaintifPs motion
(Docket Enfty 18) be GRANTED and this action be temanded to the Genetal
Justice, Superior Coutt Division, in Hoke County,

FURTHERMORE,

Notth Caroltna for furthet

IT IS RECOMMENDED that that Plaintiffs'

expenses, and attotney fees be

Cout of

proceedings.

Íequest

for

DENIED.

L

Novembet 18,2013
Dutham, North Catoltna

$tntes

10

Stebater

htagistrr*Judp

costs,