Hall v. Hillen

Filing 7

ORDER denying 5 Motion to Remand. Signed by District Judge Martin Reidinger on 3/4/2014. (khm)

THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 2:13-cv-00042-MR-DLH

CHRISTOPHER G. HALL,

)
)
Plaintiff,
)
)
vs.
)
)
WALTER R. HILLEN,
)
)
Defendant.
)
_______________________________ )

MEMORANDUM OF
DECISION AND ORDER

THIS MATTER is before the Court on Plaintiff’s Motion to Remand.
[Doc. 5]. The Defendant Walter R. Hillen opposes the Plaintiff’s Motion.
[Doc. 6].
I.

FACTUAL AND PROCEDURAL BACKGROUND
On July 29, 2013, the Plaintiff filed this action in the Macon County

General Court of Justice, Superior Court Division, against Defendant
Walter R. Hillen, asserting claims for personal injury, pain and suffering,
and lost wages arising from a motor vehicle accident which occurred in
Franklin, Macon County, North Carolina. [Complaint, Doc. 5-6].

The Complaint was properly served on the Defendant on August 5,
2013. [Doc. 5-17]. On August 21, 2013, the Defendant filed a motion
seeking an extension of time to file an answer, which the state court
granted, thereby extending the Defendant’s deadline for responding to
October 4, 2013. [Doc. 5-7]. On September 4, 2013, the Plaintiff served
the Defendant with Interrogatories and a Request for Production. [Doc. 58]. The Defendant sought an extension of time to answer such discovery
requests, which was granted. [Doc. 5-9].
On October 1, 2013, counsel for the Defendant emailed Plaintiff’s
counsel to inquire as to the amount of damages being sought.

While

awaiting the Plaintiff’s response, on October 7, 2013, the Defendant served
an Answer [Doc. 5-10], along with an Offer of Judgment [Doc. 5-11], and
Interrogatories and a Request for Production on the Plaintiff [Doc. 5-12].
The Macon County Superior Court issued a Notice of Tentative Trial
Schedule on October 16, 2013 [Doc. 5-13], and a Designation of Mediator
was filed in the case on October 30, 2013 [Doc. 5-14].
On November 4, 2013, Defendant served Answers to Plaintiff’s
Interrogatories and Request for Production. [Doc. 5-16]. On that same
day, Plaintiff’s counsel responded to Defendant’s counsel inquiry of
October 1, 2013 with a settlement demand of $175,000.00. [Doc. 5-15].
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Thereafter, on November 13, 2013, Defendant filed a Petition for Removal
to the United States District Court for the Western District of North Carolina,
based on the existence of diversity jurisdiction.1 [Doc. 1].
II.

DISCUSSION
A defendant may remove a civil action from state court where the

action is one “of which the district courts of the United States have original
jurisdiction.” 28 U.S.C. § 1441(a). Federal courts have original jurisdiction
of civil actions between citizens of different states, where the amount in
controversy exceeds $75,000 and there exists complete diversity between
all plaintiffs and all defendants.

28 U.S.C. § 1332.

Since removal

jurisdiction is not favored, the Court must “construe it strictly in light of the
federalism concerns inherent in that form of federal jurisdiction,”
“resolv[ing] all doubts in favor of remand.”

In re Blackwater Sec.

Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006); Mulcahey v. Columbia
Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). The burden is on
the party seeking removal to demonstrate that federal jurisdiction is proper.
Id.

1

The Complaint alleges that the Plaintiff is a citizen and resident of North Carolina, and
that the Defendant is a citizen and resident of Mississippi. [Doc. 1-2].
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A.

Thirty Day Provision For Removal

The Court first addresses the issue regarding the timing of the filing of
the removal by the Defendant in this action. Generally, a notice of removal
of a civil action must be filed within thirty days of receipt by the defendant of
the initial pleading. See 28 U.S.C. § 1446(b)(2). If, however, the grounds
for removal are not ascertainable from the initial pleading, the defendant
has thirty days from “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,” as long as no more than one year
has passed from the date of the initial pleading in a diversity case. 28
U.S.C. §§ 1446(b)(3), (c).
The Court is not required to investigate the defendant’s subjective
knowledge regarding the discovery of grounds for removal, as such a
determination “could degenerate into a mini-trial regarding who knew what
and when.” Lovern v. General Motors Corp., 121 F.3d 160, 162 (4th Cir.
1997). Instead, the Court “can rely on the face of the initial pleading and on
the documents exchanged in the case by the parties to determine when
defendant had notice of grounds for removal, requiring that those grounds
be apparent within the four corners of the initial pleading or other
subsequent paper.” Id.
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“Generally, the amount specified in the complaint will determine
whether the jurisdictional amount is satisfied for purposes of removal.”
Bartnikowski v. NVR, Inc., 307 F. App’x 730, 734 (4th Cir. 2009). In North
Carolina, however, “a plaintiff can plead for judgment in excess of a certain
dollar amount, . . . making it difficult to determine the exact amount in
controversy” from the initial pleading. Id. Such is the case here where the
Plaintiff, in accord with the ordinary practice in North Carolina state courts,
merely alleges that his damages are in excess of $10,000.00. Id.
The Plaintiff asserts that the Defendant had knowledge of the fact
that the amount in controversy exceeded $75,000.00 prior to the litigation
even being filed.

In so arguing, the Plaintiff relies on the numerous

communications, including Plaintiff’s policy limit demand, which occurred
between Plaintiff’s counsel and Defendant’s insurance adjuster prior to
defense counsel becoming involved in April 2013.

Such pre-litigation

conduct, however, has been deemed not to be an “other paper” providing
notice within the meaning of 28 U.S.C. § 1446(b).

See Chapman v.

Powermatic, Inc., 969 F.2d 160 (5th Cir. 1992); see also Saberton v. Sears
Roebuck and Co., 392 F. Supp. 2d 1358 (M.D. Fla. 2005); see also Jade
East Towers Developers v. Nationwide Mut. Ins. Co., 936 F. Supp. 890
(N.D. Fla. 1996).

To hold otherwise would be to engage in the
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unnecessary analysis regarding the Defendant’s subjective knowledge that
the Fourth Circuit has explicitly discouraged. See Lovern, 121 F.3d at 162.
The Plaintiff’s Complaint, in accordance with North Carolina pleading
standards, simply states that “Plaintiff has sustained personal injuries and
damages, in a sum in excess of Ten Thousand and 00/100 Dollars
($10,000.00).” [Doc. 1-2]. Plaintiff’s pre-litigation demand letter was not
referenced in any way in his Complaint to the Defendant or in any
subsequent papers. [Doc. 1-2]. Indeed, it was not until November 4, 2013
when the Plaintiff provided a statement of monetary relief sought indicating
an amount greater than $75,000.00, that the Defendant had sufficient
record information to ascertain that the case was removable to this Court.
Such a response to a request for a statement of monetary relief qualifies as
an “other paper.” See Lee Elec. Constr., Inc. v. Eagle Elec., LLC, No.
1:03CV00065, 2003 WL 21369256, at *3 (M.D.N.C. June 10, 2003). The
Defendant’s Notice of Removal, which was filed only nine days after this
notice, was therefore timely.
B.

Waiver by Intent to Remain in State Court

The Court next addresses the Plaintiff’s contention that the
Defendant’s advancement of this action in state court amounts to a waiver
of his right to remove the action to federal court.
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A defendant can waive his right to removal “by demonstrating a ‘clear
and unequivocal’ intent to remain in state court.” Grubb v. Donegal Mut.
Ins. Co., 935 F.2d 57, 59 (4th Cir. 1991) (quoting Rothner v. City of
Chicago, 879 F.2d 1402, 1415 (7th Cir. 1989)). The Court must use a
“factual and objective inquiry” to determine the defendant’s intent.

Id.,

Grubb, 935 F.2d at 59 (quoting Rothner, 879 F.2d at 1408). To preserve
the “values of judicial economy, fairness, convenience, and comity,” district
courts retain the authority to remand in “extreme situations.” Grubb, 935
F.2d at 59.
Such “extreme situations” have been found to exist where a
defendant has taken “substantial defensive action in the state court” prior to
removal. Aqualon Co. v. Mac. Equip., 149 F.3d 262, 264 (4th Cir. 1998).
The filing of a voluntary counterclaim or cross claim has been found to
constitute substantial defensive action. See Sood v. Advanced Computer
Techniques Corp., 308 F. Supp. 239 (E.D. Va. 1969); see also Baldwin v.
Perdue, Inc., 451 F. Supp. 373 (E.D. Va. 1978).

Further, where a

defendant had allowed the litigation to have “already substantially
progressed” in state court with substantial discovery, a scheduled trial, and
motion practice, over a period of almost three years was found to constitute
waiver, indicating that removal would have significant interference upon the
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case. See Korzinski v. Jackson, 326 F. Supp. 2d. 704 (E.D.N.C. 2004).
Waiver was not found, however, in a case in which the defendant took part
in a summary judgment hearing after the case became removable by the
dismissal of a non-diverse party. See Grubb, 935 F.2d at 57.
At the outset, the Court notes that this action was in the early stages
of litigation in state court when it was removed to this Court. While the
Defendant had answered the Complaint, his Answer asserted no
counterclaims or cross claims.

[Doc. 1-2 at 8-11].

Thus, this case is

distinguishable from those cases in which waiver was found based on the
assertion of voluntary counterclaims or cross claims. See Sood, 308 F.
Supp. at 239; see also Baldwin, 451 F. Supp. at 373.
At the time of his Answer, the Defendant promptly requested a
statement of monetary relief from the Plaintiff pursuant to N.C. R. Civ. P.
Rule 8(a)(2).

When the Defendant was informed that the amount in

controversy exceeded $75,000.00 on November 4, 2013, he acted
promptly within nine days to remove this action. Although the Defendant’s
Offer for Judgment could arguably be viewed as indicating intent to resolve
the case in state court since it stipulated to the state court exercising its
jurisdiction, such Offer was served on October 7, 2013 for $20,001.00, an
amount substantially lower than the necessary amount in controversy for a
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federal case based upon diversity jurisdiction.

See 28 U.S.C. § 1332.

Further, the Offer for Judgment was served well before the Defendant was
advised that the amount in controversy was in fact in excess of $75,000.00.
Because the Defendant had no knowledge that removal was even possible
when he took these actions, the Court concludes that such conduct does
not demonstrate a clear and unequivocal intent to remain in state court.
In the four months between the filing of the Complaint and the
removal of the action, the Defendant had answered the Complaint; the
parties had both engaged in discovery; the parties had communicated
regarding the damages being sought; the Defendant had served an Offer of
Judgment; the parties had a tentative trial schedule and had agreed upon a
Designation of Mediator.

None of these actions, however, constitute

“substantial defensive action” indicative of a “‘clear and unequivocal’ intent
to remain in state court”; rather, these were expected procedural steps
which were taken prior to the revelation of the knowledge of possible
grounds of removal. Aqualon, 149 F.3d at 264; Grubb, 935 F.2d at 59.
Further, the Macon County Superior Court had not yet made any
dispositive rulings in this case.

Since the Defendant acted quickly to

remove this case after he was informed of the amount in controversy and
since the case was still in its early stages of litigation without any
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“substantial defensive action[s]” filed by the Defendant, the Court
concludes that the Defendant did not waive his right to remove this action.
III.

CONCLUSION
Upon careful consideration of the arguments of both parties in this

case, the Court concludes that the Defendant removed this case in a timely
manner well within the thirty-day allowance period from when the
Defendant first received notice of the grounds of removal for this case.
Further, the Court concludes that the Defendant did not demonstrate clear
and unequivocal intent to remain in state court, and thus did not waive his
right to removal. For these reasons, the Court concludes that this case has
been properly removed, with federal jurisdiction existing. Accordingly, the
Plaintiff’s Motion to Remand is denied.
ORDER
IT IS, THEREFORE ORDERED that the Plaintiff’s Motion to Remand
[Doc. 5] is DENIED.
Signed: March 4, 2014

IT IS SO ORDERED.

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