Schwartz v. Harang et al

Filing 25

MEMORANDUM AND ORDER Plaintiffs Motion to Strike [Doc. # 9] is DENIED. It is furtherORDERED that Plaintiffs Motion to Remand [Doc. # 7] is GRANTED. Plaintiffs case is REMANDED to the 157th Judicial District Court of Harris County, Texas. It is furtherORDERED that Plaintiffs Motion for Preliminary Injunction Hearing [Doc. # 14] is DENIED as MOOT.[(Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
NEWTON B. SCHWARTZ, SR.,
INDIVIDUALLY AND AS
TRUSTEE FOR THE KEMPER,
QUEEN & SCHWARTZ, JR. TRUST,
Plaintiff,
v.
JACK WARREN HARANG, et al.,
Defendants.

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CIVIL ACTION NO. H-13-0038

MEMORANDUM AND ORDER
Plaintiff Newton B. Schwartz, Sr. (“Plaintiff”) filed this suit in the 157th
Judicial District Court of Harris County, Texas, on November 29, 2012, raising a
variety of claims, including breach of contract, fraud, and negligence, regarding
alleged debts due to him individually and the trust he represents. See Citation [Doc.
# 1], Exh. 1, at 1; Original Petition [Doc. # 1], Exh. 1, at 4-5. Defendants removed the
case to federal court on January 4, 2013. See Notice of Removal [Doc. # 1]. The case
is before the Court on three motions filed by Plaintiff, a Motion to Remand [Doc. #
7], a Motion to Strike [Doc. # 9], and a Motion for Preliminary Injunction Hearing
[Doc. # 14].

Defendants Jack W. Harang APLC and Jack Warren Harang

(collectively, “Defendants”) filed a Response [Doc. # 12] to these Motions. Plaintiff

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filed a Reply [Doc. # 13] and two Supplemental Responses [Docs. # 15, # 24].1 The
Court has carefully reviewed the record, the parties’ arguments, and the applicable
law, and concludes the Motion to Strike should be denied, the Motion to Remand
should be granted, and the Motion for Preliminary Injunction Hearing should be
denied as moot.
I.

ALLEGED PROCEDURAL DEFECTS TO REMOVAL
A.

Signatures on Notice of Removal and Certificate of Service

Plaintiff argues that the removal was procedurally defective because
Defendants’ attorney was required to personally sign Defendants’ Notice of Removal
[Doc. # 1] and Certificate of Service [Doc. # 6], and did not do so. See Motion to
Remand, at 1-10; Motion to Strike, at 1-4. Plaintiff asserts that electronic signatures
do not satisfy Federal Rule of Civil Procedure 11(a) and, as a result, Defendants’
Notice of Removal and Certificate of Service are deficient. See Motion to Remand,
at 7-10; Motion to Strike, at 2-3.
Plaintiff relies on Becker v. Montgomery, 532 U.S. 757, 764-65 (2001), to
support his arguments. See Motion to Remand, at 7-10; Motion to Strike, at 2-3. This

1

Plaintiff asserts his Motion to Remand has been pending for three months. See First
Supplemental Memorandum of Law [Doc. # 15], at 1 (filed March 21, 2013). This
is untrue. Plaintiff filed his Motion on January 28, 2013, and the Motion became ripe
on February 22, 2013.

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reliance is unavailing. In Becker, a pro se inmate signed his notice of appeal by
typing his name. Becker, 532 U.S. at 763. Although the Supreme Court focused on
whether the inmate was allowed under Rule 11(a) to cure his failure to sign his notice
of appeal after the time to give notice of appeal had passed, the Supreme Court also
addressed in dicta whether an electronic signature could satisfy Rule 11(a). The
Supreme Court explained that “[w]e do not doubt that the signature requirement can
be adjusted to keep pace with technological advances.” Id. Accordingly, it concluded
that a district court could set rules to allow for electronic signatures but that electronic
signatures would not be allowed under Rule 11(a) without such rules. Id. at 764.
Becker’s signature did not fit within the district court’s rules.
Consistent with the dicta in Becker, Federal Rule of Civil Procedure 5(d)(3)
states that “[a] court may, by local rule, allow papers to be filed, signed, or verified
by electronic means that are consistent with any technical standards established by the
Judicial Conference of the United States.” The procedures of the United States
District Court for the Southern District of Texas require an individual who has an
account with the Electronic Filing System to file all pleadings and documents for a
civil case electronically. See Administrative Procedures for Electronic Filing in Civil
and Criminal Cases, issued January 1, 2007, § 1(B)(1).
procedures:

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According to these

The user log-in and password required to submit documents to the
Electronic Filing System serve as the Filing User’s signature on all
electronic documents filed with the Court. They also serve as a signature
for the purposes of Fed. R. Civ. P. 11, the Federal Rules of Criminal
Procedure, the Local Rules of this Court, and any other purpose for
which a signature is required in connection with court proceedings.
Id. § 8(A). “The Filing User under whose log-in and password the document is
submitted must include an ‘s/’ and the Filing User’s typed name in the space where
the signature would otherwise appear.” Id.
Counsel for Defendants filed the Notice of Removal and Certificate of Service
through the electronic filing system. Each document contains at least one signature
with “s/” and defense counsel’s typed name. These signatures are sufficient under the
procedures of the United States District Court for the Southern District of Texas and,
therefore, are sufficient under Rule 11(a). Plaintiff’s Motion to Strike is denied, and
the Motion to Remand is denied to the extent it is based on the insufficiency of
defense counsel’s signature.
B.

Timeliness of Motion to Remand

Plaintiff argues that Defendants’ Notice of Removal [Doc. # 1], filed January
4, 2013, is untimely because he served Defendants on November 29, 2013 via email.
See Motion to Remand, at 10 (citing Nov. 29, 2012 Email [Doc. # 7], Exh. 6; Nov. 30,
2012 Email [Doc. # 7], Exh. 7). More specifically, Plaintiff emailed an unsigned and

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unfiled copy of the Original Petition to defense counsel and his paralegal on
November 29, 2012. See Nov. 29, 2012 Email [Doc. # 7].2 On November 30, 2012,
Plaintiff also mailed to Defense counsel, his paralegal, and his secretary a copy of an
order from the 157th Judicial District of Harris County, Texas, granting a temporary
restraining order. See Nov. 30, 2012 Email [Doc. # 7], Exh. 7.
Defendants were served in person on December 5, 2012. See Receipt of Service
Jack W. Harang [Doc. # 7], Exh. 8; Receipt of Service Jack W. Harang APLC [Doc.
# 7], Exh. 9; see also Motion for Remand, at 12.
A notice of removal must be filed within 30 days after the defendant is served
with the initial pleading. 28 U.S.C. § 1446(b)(1). The Supreme Court has held that
“a named defendant’s time to remove is triggered by simultaneous service of the
summons and complaint, or receipt of the complaint, ‘through service or otherwise,’
after and apart from service of the summons, but not by mere receipt of the complaint
unattended by any formal service.” Murphy Bros., Inc. v. Michetti Pipe Stringing Inc.,
2

Furthermore, before emailing defense counsel the version of the Original Petition
filed on November 29, 2012, Plaintiff emailed counsel for Defendants five different
versions of his Original Petition. See Aug. 16, 2012 Email [Doc. # 7], Exh. 1; Aug.
24, 2012 Email [Doc. # 7], Exh. 2; Aug. 25, 2012 Email [Doc. # 7], Exh. 3; Nov. 27,
2012 Email [Doc. # 7], Exh. 4; Nov. 28, 2012 Email [Doc. # 7], Exh. 5. The August
24, 2012 Email stated that “the attached is being filed on Tuesday [August 28, 2012]
at 8:00 a.m.” Aug. 24, 2012 Email, at 1. No petition was filed on August 28, 2012.
Likewise, the November 28, 2012 Email stated that the petition would be filed at noon
that day. Nov. 28, 2012 Email, at 1. The Original Petition was not filed until
November 29, 2012.

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526 U.S. 344, 347-48 (1999). The Supreme Court of Texas has also held that receipt
of a copy of a pleading or a paper referring to a suit is not the same as service. Wilson
v. Dunn, 800 S.W.2d 833, 837 (Tex. 1990). “Absent service, waiver, or citation, mere
knowledge of a pending suit does not place any duty on a defendant to act.” Id.
In Texas court, a citation can be served by either “delivering to the defendant,
in person . . .” or “mailing to the defendant by registered or certified mail, return
receipt requested . . .” a copy of the citation with the petition attached. TEX. R. CIV.
P. 106(a). Under Texas Rule of Civil Procedure 106(b), other means of service may
be used if the plaintiff submits an affidavit showing that service cannot be effectuated
by the means set forth in Texas Rule of Civil Procedure 106(a) and the state court
grants a motion allowing another form of service. TEX. R. CIV. P. 106(b); see also
State Farm Fire & Cas. Co. v. Costley, 868 S.W.2d 298, 299 (Tex. 1993); Wilson, 800
S.W.2d at 836 (citations omitted).
In the current case, no affidavit or motion showing difficulty making proper
service was filed. Plaintiff therefore could only serve Defendants under the Texas
Rules of Civil Procedure through personal delivery or registered or certified mail.
Service is not achieved by emailing an unsigned, unfiled copy of the original petition
to defense counsel and his paralegal. Further, failure to deliver the citation defeats
Plaintiff’s argument that he made legally cognizable service. See TEX. R. CIV. P. 57,

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106. Accordingly, Plaintiff made service on Defendants on December 5, 2012. The
Court concludes that Defendants’ Notice of Removal was timely filed on January 4,
2013.
II.

DIVERSITY JURISDICTION
A.

Legal Standard

While the United States Constitution requires only minimal diversity for federal
courts to have subject matter jurisdiction in cases that lack a federal question, U.S.
CONST. art. III, § 2, cl. 1; see Jones v. Petty-Ray Geophysical Geosource, Inc., 954
F.2d 1061, 1064 n.3 (5th Cir. 1992) (citing State Farm Fire & Cas. Co. v. Tashire,
386 U.S. 523, 530 (1967)), Congress has imposed a higher threshold. Under 28
U.S.C. § 1332, there must be complete diversity and at least $75,000 in controversy.
28 U.S.C. § 1332; McLaughlin v. Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004).
In order for there to be complete diversity, all persons and entities on one side of the
controversy must be citizens of states different from all persons and entities on the
other side of the controversy. McLaughlin, 376 F.3d at 353; Harrison v. Prather, 404
F.2d 267, 272 (5th Cir. 1968) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267
(1806)).

“[D]oubts regarding whether removal jurisdiction is proper should be

resolved against federal jurisdiction.” Acuna v. Brown & Root Inc., 200 F.3d 335, 339
(5th Cir. 2000) (citation omitted). The Court “must presume that a suit lies outside

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[its] limited jurisdiction, and the burden of establishing federal jurisdiction rests on
the party seeking the federal forum.” Howery v. Allstate Ins. Co., 243 F.3d 912, 916
(5th Cir. 2001) (citations omitted). Thus, Defendants have the burden to demonstrate
there is complete diversity.
B.

Analysis

Defendants have not met their burden to prove that the Court has diversity
subject matter jurisdiction. It is undisputed that Plaintiff is a citizen of Texas. See
Notice of Removal, at 3; Original Petition, at 2. Defendants removed this case from
Texas state court and therefore have the burden to establish they are not Texas citizens
and thus there is complete diversity of citizenship. See Howery, 243 F.3d at 916.
Plaintiff has provided evidence that Defendant Jack Warren Harang (“Harang”)
is a Texas citizen for the purpose of diversity jurisdiction. See Driver’s License
Information for Jack Warren Harang [Doc. # 7], Exh. 15 (record Texas Driver’s
license in Harang’s name obtained on January 8, 2013); Original Petition in Harang
v. Delta Moving Servs., LTD. [Doc. # 7], Exh. 16, at 1 (Original Petition filed May 27,
2010, in Harris County, Texas, alleging that Harang’s residency was Texas); Childress
County Appraisal [Doc. # 7], Exh. 19, at 1-7 (appraisals obtained on January 18, 2013,
for two pieces of property in Childress County, Texas, owned by Harang); Affidavit
of Jack Warren Harang [Doc. # 7], Exh. 24 (stating that Harang was a resident of

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Texas on October 15, 2010); Village at West University Receipt [Doc. # 7], Exh. 26
(water bill paid by Harang on January 3, 2011, for an apartment in Houston, Texas);
LexisNexis Records for Jack Warren Harang [Doc. # 7], Exh. 18, at 13-15 (listing,
inter alia, that Harang is registered to vote in Texas, has a current Texas driver’s
license, and has sporting licenses that list either Louisiana, Texas, or Alabama as his
home states); Unsworn Letter from Chad V. Bonnani [Doc. # 24], Exh.1 (explaining
that a trust, not Harang, owns the property associated with Harang in Vermont).
In response, Defendants have submitted a copy of Harang’s Vermont Driver’s
license and an Affidavit notarized in Louisiana in which Harang states that he is a
resident of Vermont. See February 16, 2013 Affidavit of Jack Warren Harang [Doc.
# 11], at 9; Vermont Driver’s Licence of Jack Warren Harang [Doc. # 12], Exh. A.
Defendants have demonstrated there is a fact issue but have failed to meet their burden
of persuasion to establish Harang’s citizenship is not Texas for diversity purposes.3

Further, Plaintiff has submitted LexisNexis Records suggesting that “Jack W.
Harang, APLC” is incorporated in Texas and has its principal place of business in
Texas. See LexisNexis Records for Jack W. Harang [Doc. # 7], Exh. 18, at 33-34, 38.
Defendants counter with a Corporate Disclosure Statement dated January 4, 2013, that
3

Indeed, the weight of the evidence on this disputed issue suggests that Harang is a
citizen of Texas.

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counsel drafted and attached to the Notice of Removal stating that Jack W. Harang,
APLC is a Louisiana corporation with its principal place of business in Louisiana.
Corporate Disclosure Statement [Doc. #1], Exh. C. Defendants have provided no
documentary support for the Corporate Disclosure Statement. While Defendants may
have created a fact issue on the citizenship of Jack W. Harang, APLC, Defendants’
proof is insufficient to meet their burden to show the entity is not a Texas citizen for
diversity purposes.
Accordingly, Defendants have not demonstrated by a preponderance of the
evidence that complete diversity exists.

The Court thus lacks subject matter

jurisdiction, see Howery, 243 F.3d at 916, and remands this case to state court.
III.

CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that Plaintiff’s Motion to Strike [Doc. # 9] is DENIED. It is

further
ORDERED that Plaintiff’s Motion to Remand [Doc. # 7] is GRANTED.
Plaintiff’s case is REMANDED to the 157th Judicial District Court of Harris County,
Texas. It is further
ORDERED that Plaintiff’s Motion for Preliminary Injunction Hearing [Doc.
# 14] is DENIED as MOOT.

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SIGNED at Houston, Texas, this 10th day of April, 2013.

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