Zipline Logistics, LLC v. Powers & Stinson, Inc. et al

Filing 34

ORDER ADOPTING REPORT AND RECOMMENDATIONS and remanding this case to the Franklin County Court of Common Pleas. Signed by Judge Gregory L. Frost on 9/2/2015. (kk)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
ZIPLINE LOGISTICS, LLC
Plaintiff,

Case No. 2:15-00693
JUDGE GREGORY L. FROST
Magistrate Judge Terence P. Kemp

v.
POWERS & STINSON, INC., et al.,
Defendants.

OPINION AND ORDER
This matter is before the Court for consideration of the Magistrate Judge’s Report and
Recommendation dated July 21, 2015 (“R&R”), Plaintiff’s objection thereto (ECF No. 31), and
Defendants Donald McKnatt and Powers & Stinson, Inc.’s response to Plaintiff’s objection (ECF
No. 33). For the reasons that follow, the Court AFFIRMS AND ADOPTS the R&R and
REMANDS this case to the Franklin County Court of Common Pleas.
I.

BACKGROUND

This case involves claims for breach of contract and fraud. Plaintiff (an Ohio entity) sued
Powers & Stinson, Inc. (a Tennessee corporation) and Powers & Stinson, Inc. (a Mississippi
corporation) (collectively, “P&S”), James Annestedt (an individual residing in Mississippi),
Complexity, Inc. (an Illinois corporation) (“Complexity”), Argo Logistics Inc. LLC (a Texas
company), and Donald McKnatt (an individual residing in Missisippi) in the Franklin County
Court of Common Pleas.
Nearly one year later, on February 23, 2015, P&S filed a notice of removal with this
Court. Defendant McKnatt (together with P&S, “Removing Defendants”) filed his own notice of
removal shortly thereafter. Removing Defendants asserted that removal was proper pursuant to

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28 U.S.C. § 1332 because the amount in controversy exceeds $75,000 and the parties are citizens
of different states.
Plaintiff filed two motions to remand this action to state court. In those filings, Plaintiff
argued that removal was inappropriate because, inter alia, all defendants did not consent to the
same. Plaintiff noted that Complexity did not consent to removal.
In response, Removing Defendants argued that Complexity’s consent is not required
because “Complexity cannot be found using reasonable diligence.” (ECF No. 21, at PAGEID #
1009.) Removing Defendants stated:
Defendant Complexity has not participated in this litigation in any meaningful
way. Powers, as its assignee for the purpose of collecting a debt, agreed to
indemnify Complexity. Affidavit of Russell E. Fox, ¶ 7. Since the litigation
began, Powers contacted Complexity in order to get the information necessary to
respond to discovery. Id. at ¶ 8. Complexity’s responses were filed on June 11,
2014. Neither Powers nor counsel for Powers and Complexity has been able to
contact Complexity since June 2014. Id. at ¶ 9. Complexity has Powers’ contact
information and has failed to correspond with Powers since June 2014. Id. at ¶
10. According to the Illinois Secretary of State’s website, Complexity was
involuntarily dissolved on January 10, 2015. Given Complexity’s failure to
contact Powers since June, 2014 and Powers’ inability to locate any officers of
Complexity, Complexity’s inability to consent is excused.
(Id.)
The Magistrate Judge addressed the parties’ arguments and issued a recommendation to
the Court. In the R&R, the Magistrate Judge agreed with Plaintiff that unanimity was required
for removal. The Magistrate Judge recommended that the Court grant Plaintiff’s motion and
remand this case to the Franklin County Court of Common Pleas. Removing Defendants do not
object to this conclusion.
Instead, the sole issue before the Court involves the Magistrate Judge’s recommendation
that the Court deny Plaintiff’s request for attorney fees. The Magistrate Judge acknowledged in
the R&R that, in certain cases involving remand, a court may award attorney fees and costs

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“incurred as a result of removal.” 28 U.S.C. § 1447(c). The Magistrate Judge stated: “the
decision to award such fees turns on the reasonableness of the removal . . . [a]bsent unusual
circumstances, courts may award attorney’s fees under § 1447(c) only where the removing party
lacked an objectively reasonable basis for seeking removal.” (ECF No. 29, at PAGEID # 1098
(quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).) Because the Magistrate
Judge found “that no unusual circumstances exist in this case and [Removing Defendants] had an
objectively reasonable basis for removing this case to federal court, the Court will recommend
that [Plaintiff’s] motion be denied to the extent that it seeks an award of attorney’s fees.” (Id.)
Plaintiff objects to this portion of the R&R. The Court considers that objection below.
II.

DISCUSSION
A. Standard of Review

Where, as here, a magistrate judge issues a report and recommendation on a
nondispositive matter, “[t]he district judge in the case must consider timely objections and
modify or set aside any part of the order that is clearly erroneous or contrary to law.” Fed. R.
Civ. P. 72(a); 28 U.S.C. §636(b)(1)(A). Pursuant to this standard, “the Court must ‘provide
considerable deference to the determinations made by the magistrate judge.’ ” Easterling v. 2d
Dist. Ct. of App., No. 3:13-cv-106, 2013 WL 3872080, at *1 (S.D. Ohio July 25, 2013) (quoting
Moran v. Svete, C–3–05–072, 2012 WL 1142929, at *1 (S.D. Ohio Apr. 4, 2012)).

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B. Analysis
Plaintiff objects to the Magistrate Judge’s conclusion that Removing Defendants had an
objectively reasonable basis for removing this case to federal court. Plaintiff offers three reasons
in support of its position: (1) that Removing Defendants failed to set forth any case law in
support of their argument, (2) that Removing Defendants mischaracterized the record by arguing
that Complexity had not participated in the litigation in any meaningful way when, in fact,
Complexity had filed a motion to dismiss and an answer, and (3) that Defendant McKnatt’s
notice of removal did not address Plaintiff’s pending arguments regarding unanimity.
None of the proffered reasons show that the Magistrate Judge’s conclusion is clearly
erroneous or contrary to law. The fact that an argument is novel does not necessarily mean it is
unreasonable and, as the Magistrate Judge noted, courts in other jurisdictions have discussed the
concept of a unanimity exception when one defendant is a defunct entity or is unreachable.
Regarding the second point, the parties may debate whether Complexity “meaningfully”
participated in the litigation by joining the other defendants in an answer and a motion to dismiss
filed several months before the removal, but that debate does not render Removing Defendants’
argument unreasonable. And finally, the Court finds the argument regarding Defendant
McKnatt’s notice of removal irrelevant to this issue. Neither these facts nor Plaintiff’s passing
reference to alleged stall tactics reveal a clear error or a legal flaw in the R&R.
The Court reaches the same conclusion regarding Plaintiff’s cited case law. Given the
fact-specific inquiry that the “objectively reasonable” standard entails, the cited cases do not
contradict the Magistrate Judge’s recommendation or suggest that the same is contrary to law.

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III.

CONCLUSION

For the foregoing reasons, the Court OVERRULES Plaintiff’s objection (ECF No. 31),
ADOPTS AND AFFIRMS the R&R (ECF No. 29), and REMANDS this case to the Franklin
County Court of Common Pleas. The Clerk is DIRECTED to remove this case from the docket
records of the United States District Court for the Southern District of Ohio, Eastern Division.
IT IS SO ORDERED.
/s/ Gregory L. Frost_______________
GREGORY L. FROST
UNITED STATES DISTRICT JUDGE

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