Scotiabank de Puerto Rico et al v. Sanchez-Castro
Filing
20
OPINION AND ORDER re 14 Motion to Remand to State Court. Plaintiff BPPR's motion to remand is GRANTED and these consolidated actions are REMANDED to the Puerto Rico Court of First Instance, Bayamon Superior Division for further proceedings. BPPR will provide the Court with a memorandum of costs and expenses by January 20, 2017. Signed by Judge Francisco A. Besosa on 01/05/2017. (brc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
SCOTIABANK OF PUERTO RICO,
Plaintiff,
v.
Civil No. 16-1026 (FAB)
JOSE C. SANCHEZ-CASTRO,
Defendant.
BANCO POPULAR DE PUERTO RICO,
Re:
Removal of Consolidated
Cases
Plaintiff,
v.
D CD2010-2896
D CD2010-3120
JOSE C. SANCHEZ-CASTRO,
Defendant.
OPINION AND ORDER
BESOSA, District Judge.
Pending before the Court is plaintiff Banco Popular de Puerto
Rico (“BPPR”)’s motion seeking remand of these consolidated actions
to the Puerto Rico Court of First Instance, Bayamon Superior
Division, as well as reimbursement of costs, attorney fees and
expenses pursuant to 28 U.S.C. §1447(c).
(Docket No. 14.)
Having
considered the motion, defendant’s notice of removal and his
opposition,
(Docket
Nos.
1
&
15),
and BPPR’s
reply,
(Docket
No. 18), the Court GRANTS the motion and REMANDS these cases to the
Commonwealth court.
Civil No. 16-1026 (FAB)
2
I.
BACKGROUND
In August and September 2010, Doral Bank (“Doral”) brought two
separate foreclosure actions - DCD2010-2896 and DCD2010-3120 against defendant Jose C. Sanchez-Castro (“Sanchez”).
Nos.
8-2
&
8-4.)
Those
actions
were
filed
in,
(Docket
and
were
subsequently consolidated by, the Puerto Rico Court of First
Instance, Bayamon Superior Division. Id. At some point during the
proceedings, Sanchez discovered that the mortgage notes originally
held by Doral had been assigned or transferred to Scotiabank of
Puerto Rico (“Scotiabank”) and BPPR, who were later substituted as
plaintiffs in the consolidated actions. (Docket No. 1 at pp. 2-3.)
Following these party substitutions, Doral became insolvent and the
Federal Deposit Insurance Corporation (“FDIC”) was appointed as
receiver for the failed bank.
Id. at p. 2; Docket No. 14 at p. 1.
After Doral had been placed in receivership, defendant Sanchez
allegedly asked the FDIC to provide information regarding the
assignment of the mortgage notes, a request that was rebuffed.
(Docket No. 1 at pp. 2-3.)
He also filed a claim with the FDIC
alleging that Doral had engaged in certain wrongful activity.
Id.
When the FDIC disallowed his claim, Sanchez filed a separate
lawsuit in this district - Case No. 3:15-cv-03075 (ADC) - pursuant
to 12 U.S.C. §1821(d)(6).
(Docket No. 15 at pp. 3-4.)
That suit
names the FDIC, Doral, BPPR, Scotiabank, and two Puerto Rico law
firms as defendants.
See Civil No. 15-3075, Docket No. 1.
Civil No. 16-1026 (FAB)
3
On January 5, 2016, defendant Sanchez removed the consolidated
foreclosure actions to this Court, asserting that removal was
appropriate so that those two actions could be further consolidated
with Case No. 3:15-cv-03075 (ADC).
(Docket No. 1 at p. 4.)
On
March 14, 2016, BPPR moved the Court to remand the consolidated
cases to the Commonwealth court, (Docket No. 14), a request that
Sanchez opposed, (Docket No. 15).
II.
A.
DISCUSSION
Sanchez’s Removal of the Consolidated Foreclosure Actions
1.
Legal Standard
Removal of an action to federal court is governed by the
removal statute, 28 U.S.C. § 1441, which provides, in relevant
part,
that
defendants
may
remove
to
the
appropriate
federal
district court “any civil action brought in a State court of which
the
district
jurisdiction.”
courts
of
the
United
28 U.S.C. § 1441(a).
States
have
original
“The propriety of removal
thus depends on whether the case originally could have been filed
in federal court.” City of Chicago v. Int’l Coll. of Surgeons, 522
U.S. 156, 163 (1997); see also Long v. Bando Mfg. of Am., Inc., 201
F.3d 754, 757 (6th Cir. 2000) (“In order to invoke the district
court’s removal jurisdiction, a defendant must show that the
district
court
has
original
jurisdiction
over
the
action.”)
Original jurisdiction in the district court exists pursuant to 28
U.S.C. § 1331 where a federal question - i.e., a claim “arising
Civil No. 16-1026 (FAB)
4
under the Constitution, laws, or treaties of the United States” is raised in the plaintiff’s complaint, or where there is complete
diversity of citizenship among the parties pursuant to 28 U.S.C.
§ 1332. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S.
546, 552 (2005).
For cases in which the FDIC is involved as a
party, original jurisdiction lies in the federal courts on the
basis
of
federal
question
jurisdiction.
See
12
U.S.C.
§ 1819(b)(2)(A).
When a dispute over removal jurisdiction arises, it is
the removing defendant’s burden to show that removal was proper.
See Fayard v. Northeast Vehicle Servs., LLC, 533 F.3d 42, 48 (1st
Cir. 2008); Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4
(1st
Cir.
1999).
The
removal
statute
should
be
“strictly
construed” against removal, and any doubts about the propriety of
removal should be resolved against the party seeking removal of an
action.
Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32
(2002); see also, Rossello–Gonzalez v. Calderon–Serra, 398 F.3d 1,
11 (1st Cir. 2004); Danca, 185 F.3d at 4; Shamrock Oil & Gas Corp.
v. Sheets, 313 U.S. 100, 108–09 (1941).
“If at any time before
final judgment it appears that the district court lacks subject
matter jurisdiction [over a removed case], the case shall be
remanded.”
28 U.S.C. § 1447(c).
Civil No. 16-1026 (FAB)
2.
5
Analysis
In his notice of removal, defendant Sanchez states that,
“[a]lthough the case as stated in the initial pleadings before
state court was not removable, post-judgment proceedings have
brought the case within the scope of the District Court’s original
jurisdiction.”
(Docket No. 1 at p. 1.)
Sanchez fails, however, to
subsequently unpack this argument in a clear and coherent manner.
As best the Court can tell, the gravamen of his claim is that
removal has become appropriate in light of his initiation of a
separate - but related - federal lawsuit in this district, Case
No. 3:15-cv-03075 (ADC).
because
“[a]ll
parties
Indeed, Sanchez ultimately posits that,
in
the
case
to
be
removed
are
named
defendants in that [federal] case,” removal for the sake of further
consolidation is proper.
(Docket No. 1 at pp. 3-4); see also
Docket No. 15 at p. 6 (asserting that the “state cases, which have
the same issues of law and fact and involve the same parties,
should be consolidated with this Honorable Court.”)
Conspicuously absent from both his notice of removal and
his
opposition
to
BPPR’s
motion
to
remand,
however,
is
any
discussion fleshing out the specific legal basis for the Court’s
original
subject
matter
foreclosure actions.
citizenship
or
the
jurisdiction
over
the
consolidated
Sanchez does not mention either diversity of
existence
of
a
federal question
in those
Civil No. 16-1026 (FAB)
actions.1
Rather
jurisdiction,
6
than
Sanchez
examining
simply
these
emphasizes,
bases
as
of
original
justification
for
removal, the relationship - in terms of both subject matter and
parties
-
between
the
state
foreclosure
cases
and
No. 3:15-cv-03075 (ADC) currently pending in this district.
Case
The
factual connections between those proceedings do not, however,
establish the Court’s original jurisdiction over the consolidated
foreclosure actions.
At best, these connections provide the Court
with a potential basis to exercise supplemental jurisdiction over
the consolidated cases.
1
It is not at all clear, however, that the
Sanchez’s opposition offers a perfunctory and incidental almost offhanded - allusion to 12 U.S.C. § 1819(b)(2)(A) (“section
1819”), which provides a grant of federal subject matter
jurisdiction to “all suits of a civil nature at common law or in
equity to which the [FDIC], in any capacity, is a party . . . .”
12 U.S.C. § 1819(b)(2)(A); see Docket No. 15 at p. 5. His brief,
however, neither focuses on, nor directly invokes the applicability
of, that specific statutory provision as a basis for the Court’s
original jurisdiction. The Court is not convinced, in any case,
that section 1819 applies to the consolidated Commonwealth actions
in order to justify their removal to this district. As Sanchez
himself acknowledges, the mortgage notes originally held by Doral
have since been assigned to other entities: Scotiabank and BPPR.
This transfer - and the resulting substitution of the failed bank
as a plaintiff - effectively removed the FDIC as receiver from the
consolidated actions. Section 1819, therefore, no longer bestows
upon the federal courts original jurisdiction over those cases.
See, e.g., Mill Investments, Inc. v. Brooks Woolen Co., 797 F.
Supp. 49, 52 (D. Me. 1992) (Noting the elimination of the court’s
original jurisdiction pursuant to section 1819 where the
substitution of a failed bank by a third party terminated the
FDIC’s involvement as receiver in a foreclosure action); New Rock
Asset Partners, L.P. v. Preferred Entity Advancements, Inc., 101
F.3d 1492, 1502-04 (3d Cir. 1996) (holding that original federal
jurisdiction is no longer supported pursuant to section 1819 where
the FDIC has been divested of any interest in the property at
issue).
Civil No. 16-1026 (FAB)
7
supplemental jurisdiction statute - 28 U.S.C. § 1367 - constitutes
an independent source of jurisdiction for removal.
Although the
First Circuit Court of Appeals has yet to directly address whether
supplemental jurisdiction on its own can justify removal of a state
court action, the general consensus among courts to have considered
the issue is that it cannot.
See, e.g., Zewe v. Law Firm of Adams
& Reese, 852 F. Supp. 516, 520 (E.D.La. 1993) (holding that “a
district
court
does
not
have
supplemental
jurisdiction
under
28 U.S.C. § 1367 to entertain the merits of claims in a state court
suit which was removed without original jurisdiction.
In this
situation, a remand is mandated under 28 U.S.C. § 1447(c).”); In re
Estate of Tabas, 879 F.Supp. 464, 467 (E.D.Pa. 1995) (finding that
the supplemental jurisdiction statute “is not . . . an independent
source of removal jurisdiction,” and therefore “does not allow a
party to remove an otherwise unremovable action to federal court
for consolidation with a related federal action.”); Ahearn v.
Charter Twp. of Bloomfield, 100 F.3d 451, 456 (6th Cir. 1996) (“The
supplemental-jurisdiction statute is not a source of original
subject-matter jurisdiction, and a removal petition therefore may
not
base
su b j e c t -matter
jurisdiction
on
the
supplemental-jurisdiction statute, even if the action which a
defendant seeks to remove is related to another action over which
the federal district court already has subject-matter jurisdiction,
and even if removal would be efficient.”) (internal citations
Civil No. 16-1026 (FAB)
8
omitted); Fabricius v. Freeman, 466 F.2d 689, 693 (7th Cir. 1972)
(“That a related case was pending in federal court was not in
itself sufficient grounds for removal under 28 U.S.C. § 1441.”);
Energy Mgmt. Servs., LLC v. City of Alexandria, 739 F.3d 255, 260
(5th Cir. 2014); Motion Control Corp. v. SICK, Inc., 354 F.3d 702,
706 (8th Cir. 2003); see also Syngenta, 537 U.S. at 34 (“Ancillary
jurisdiction . . . cannot provide the original jurisdiction that
petitioners
must
show
in order
to
qualify for
removal under
§ 1441.”); 29A Fed. Proc., L. Ed. § 69:3 (2010) (“The original
jurisdiction
requirement
is
an
absolute
prerequisite to removal jurisdiction.
and
nonwaivable
A district court is not
endowed with jurisdiction to hear a case on removal merely because
. . . a related case is pending in the federal court.”) (footnote
omitted).
Because defendant Sanchez has failed to carry his burden
of showing that original - and not merely supplemental - subject
matter jurisdiction over the consolidated foreclosure actions lies
in the federal courts, removal of those actions to this district is
Civil No. 16-1026 (FAB)
inappropriate.2
9
Accordingly, BPPR’s motion requesting the remand
of those consolidated cases to the Commonwealth court is properly
GRANTED.3
2
Sanchez maintains that removal is proper because he complied
with the applicable requirements of 28 U.S.C. § 1446 merely by
providing a notice of removal that included “a short and plain
statement of the grounds” for his request. See Docket No. 15 at
p. 2. This claim, however, obtusely ignores the fundamental legal
reality that the grounds asserted in the notice cannot simply be
any ground that Sanchez unilaterally decides is sufficient to
justify removal. Those grounds must instead relate to the court’s
original subject matter jurisdiction over the consolidated
foreclosure actions.
Because Sanchez fails to develop those
grounds expressly in either his notice of removal or his opposition
brief, his request to remove the Commonwealth cases to this
district is inherently deficient.
3
In his opposition brief, defendant Sanchez also argues that
BPPR’s motion to remand should be denied because it is time-barred.
(Docket No. 15 at pp. 1-2.) Sanchez maintains that, pursuant to
28 U.S.C. § 1447(c), BPPR was required to file its motion to remand
within 30 days after Sanchez filed his notice of removal with the
Court. Id. This argument, however, misses the mark.
As BPPR
correctly points out in its reply brief, the 30-day limitations
period contained in section 1447 applies only to motions seeking
remand “on the basis of any defect other than lack of subject
matter jurisdiction.” 28 U.S.C. § 1447(c) (emphasis supplied). In
other words, it applies only to procedural defects in the notice of
removal, not to jurisdictional ones.
See, e.g., Samaan v. St.
Joseph Hosp., 670 F.3d 21, 27-28 (1st Cir. 2012) (distinguishing
between procedural defects in removal, which can be waived by
plaintiffs pursuant to 28 U.S.C. § 1447(c), and jurisdictional
defects, which cannot). Because BPPR’s motion to remand challenges
the Court’s subject matter jurisdiction over the consolidated
foreclosure actions, it is not subject to the 30-day limitations
period.
Sanchez therefore errs in attacking the motion as
untimely.
Civil No. 16-1026 (FAB)
B.
10
BPPR’s Request for Reimbursement of Costs and Expenses
The Court must now address plaintiff BPPR’s argument that it
is entitled to reimbursement of costs and expenses incurred as a
result of Sanchez’s removal attempt.
1.
Legal Standard
As the United States Supreme Court has noted, “[t]he
process of removing a case to federal court and then having it
remanded back to state court delays resolution of the case, imposes
additional costs on both parties, and wastes judicial resources.”
Martin v. Franklin Capital Corp., 546 U.S. 132, 140 (2005).
Thus,
an order remanding a removed case to state court “may require
payment of just costs and any actual expenses, including attorney
fees, incurred as a result of the removal.”
28 U.S.C. 1447(c).
An
award of fees pursuant to section 1447(c) is committed to the sound
discretion of the district court, and there is neither a strong
presumption in favor of awarding fees on remand, nor a strong bias
against fee awards.
See Martin, 546 U.S. at 138-39 (noting the
district court’s discretion and that there is “nothing to . . .
[suggest] that fees under § 1447(c) should either usually be
granted or usually be denied.”)
Given that there is “no heavy
congressional thumb on either side of the scales” when it comes to
the reimbursement or denial of costs and fees, “the standard for
awarding fees should turn on the reasonableness of the removal.”
Id. at 139-41.
Consequently, “[a]bsent unusual circumstances,
Civil No. 16-1026 (FAB)
11
courts may award attorneys’ fees under § 1447(c) only where the
removing party lacked an objectively reasonable basis for seeking
removal.”
Id. at 141.
In other words, “when an objectively
reasonable basis exists, fees should be denied.”
2.
Id.
Analysis
Plaintiff BPPR argues that Sanchez’s removal of the
consolidated foreclosure actions from the Commonwealth court was
“frivolous” because he “lacked any objectively reasonable basis for
seeking removal under the Court’s federal question jurisdiction.”
(Docket No. 14 at p. 4.)
BPPR therefore asserts that Sanchez
should “be ordered to pay costs, expenses and attorney’s fees
pursuant to 28 U.S.C. § 1447(c).”
Id.
The Court agrees.
As discussed above, Sanchez failed to present any valid
justification for removal of the consolidated foreclosure cases.
Although his notice of removal declares that developments in the
proceedings have conferred original subject matter jurisdiction on
the federal courts, his filings with the Court ultimately do
nothing to substantiate this specific, necessary claim.
Rather,
his notice of removal and opposition to BPPR’s request for remand
focus primarily on his commencement of Case No. 3:15-cv-03075 (ADC)
and the alleged need to consolidate the Commonwealth foreclosure
actions
with
that
pending
federal
suit
based
on
the
close
relationship between them. While it is true that this relationship
might permit the Court to exercise supplemental jurisdiction over
Civil No. 16-1026 (FAB)
12
the consolidated actions, a minimal amount of research on Sanchez’s
part would have revealed to him that supplemental jurisdiction
generally does not constitute an independent grounds for removal
jurisdiction.
In light of this fact, the Court finds that Sanchez
lacked an objectively reasonable basis to seek removal of the
foreclosure actions. Accordingly, BPPR’s request for reimbursement
of reasonable costs, expenses, and attorneys’ fees pursuant to
28 U.S.C. §1447(c) is appropriately GRANTED.
III.
CONCLUSION
Plaintiff BPPR’s motion to remand (Docket No. 14) is GRANTED
and these consolidated actions are REMANDED to the Puerto Rico
Court of First Instance, Bayamon Superior Division for further
proceedings.
The Clerk of the Court shall, pursuant to 28 U.S.C.
§1447(c), mail a certified copy of this Order to the Clerk of the
aforementioned Commonwealth court.
Defendant Sanchez is also ordered to pay the reasonable costs
and actual expenses, including attorneys’ fees, incurred by BPPR as
a result of his improper removal attempt.
The Court retains
jurisdiction in this matter for the sole purpose of determining the
amount of fees and costs to be awarded.
BPPR will provide the
Court with a memorandum of those costs and expenses by January 20,
2017.
This
memorandum
should
set
forth
the
following:
(1) date(s), (2) service(s) rendered, (3) hourly rate, (4) hours
expended, and (5) any information, where appropriate, as to other
Civil No. 16-1026 (FAB)
13
factors which might assist the Court in determining the dollar
amount of the fee and costs to be allowed.
IT IS SO ORDERED.
San Juan, Puerto Rico, January 5, 2017.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
United States District Judge
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