Perkumpulan Investor Crisis Center Dressel WBG v. Sherer et al

Filing 17

MEMORANDUM DECISION AND ORDER granting 4 Motion to Remand - CASE CLOSED. Perkumpulan shall file a separate motion for and proof of costs and attorneys fees within 14 days of this order. Signed by Judge David Nuffer on 6/5/13 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
PERKUMPULAN INVESTOR CRISIS
CENTER DRESSEL-WBG,
Plaintiff,
v.
MINING CLAIMS LOCATED IN THE
FAIRBANKS RECORDING DISTRICT,
FOURTH JUDICIAL DISTRICT, STATE OF
ALASKA, MORE PARTICULARLY
IDENTIFIED AS MINING M 3-1 ET AL.
in rem Defendants,

MEMORANDUM DECISION AND
ORDER TO REMAND FOR IMPROPER
REMOVAL AND LACK OF SUBJECT
MATTER JURISDICTION
Case No. 2:12-cv-00952-DN
District Judge David Nuffer

JARED SHERER and MICHELLE SHERER,
Removal Petitioners.

This is an in rem case concerning mining claims. Perkumpulan Investor Crisis Center
Dressel-WBG (Perkumpulan) originally filed this action in the Superior Court of Alaska, Fourth
Judicial District at Fairbanks (the Alaska Court), and Jared and Michelle Sherer (the Sherers)
removed it to this court. 1 Perkumpulan filed a Motion to Remand 2 this action to the Alaska
Court on the basis of improper removal and a lack of subject matter jurisdiction. 3 Furthermore,
Perkumpulan requests an award of costs and expenses for improper removal, including its full
attorneys’ fees pursuant to 28 U.S.C. § 1447(c). 4 The Sherers have since filed a motion to

1

Notice of Removal, docket no. 1, filed Oct. 11, 2012.

2

Docket no. 4, filed Nov. 2, 2012.

3

Id. at 2.

4

Id.

withdraw their removal. 5 Perkumpulan filed a partial objection to Sherer’s withdrawal, 6 asking
that the case be remanded only after Perkumpulan’s costs and fees are awarded and paid. 7

BACKGROUND
Perkumpulan is an organization of Indonesian investors allegedly defrauded in a Ponzi
scheme that Perkumpulan alleges was managed for several years by Michelle Sherer and her
husband Donald Sherer. 8 Perkumpulan is the assignee of the fraud claims of 3,481 investors,
claiming losses of nearly $100 million which formed the basis for a RICO suit in the United
States District Court for the Western District of Washington (the Washington Suit). 9
Through the Washington Suit, Perkumpulan discovered the existence of mining claims,
real property, and related assets in Alaska that had allegedly been purchased by stolen funds
from the Ponzi scheme and which the Sherer family had allegedly attempted to personally
retain. 10 To reach those assets, Perkumpulan initiated an in rem action in the Alaska Court on
September 20, 2012. 11 On October 11, 2012, the Sherers filed a Notice of Removal 12 pursuant to
28 U.S.C. §§ 1441 and 1446. Perkumpulan subsequently moved to remand on November 2,
2012. On March 19, 2013, defendants filed a motion to withdraw the removal “after considering
and researching the arguments set forth by Plaintiff in its opposition.” 13 Perkumpulan filed a
5

Withdrawal of Removal of Action, docket no. 14, filed Mar. 19, 2013.

6

Partial Objection to “Withdrawal of Removal of Action” (Objection to Withdrawal), docket no. 15, filed Mar. 20,
2013.
7

Id. at 4.

8

Memorandum in Support of Motion to Remand (Memorandum in Support) at 2, docket no. 5, filed Nov. 2, 2012.

9

Id.

10

Id.

11

See Alaska Court Records, http://www.courtrecords.alaska.gov/eservices/?x=gZIZTfXYZUjtHPaMuKHPtg.

12

Docket no. 1, filed Oct. 11, 2012.

13

Withdrawal of Removal of Action at 1.

2

partial objection to the withdrawal on March 20, 2013, requesting that “this case be remanded to
Alaska State Court only after (1) the determination of the Plaintiff’s attorney’s fees, costs, and
expenses and (2) the actual payment of said fees, costs and expenses by the Sherers.” 14
The Sherers removed the case to this court as pro se litigants, although Michelle Sherer
and her husband Donald Sherer are represented in the Washington suit by two different law
offices; 15 Jared Sherer assisted Utah attorney David Turcotte in transferring a number of mining
claims in question in this case; 16 Jared Sherer’s affidavit displays a level of understanding and
ability with the legal system; 17 and Perkumpulan states that Donald Sherer is a disbarred
attorney. 18
ANALYSIS
Defendant’s Notice of Removal states that the action was removed pursuant to 28 U.S.C.
§§ 1441 and 1446. 19 However, Section 1441 clearly states that “any civil action brought in a
State court . . . may be removed by the defendant or the defendants, to the district court of the
United States for the district and division embracing the place where such action is pending.” 20
Section 1446 states that “A defendant or defendants desiring to remove any civil action from a
State court shall file in the district court of the United States for the district and division within
which such action is pending a notice of removal.” 21 Because Utah and Alaska are distinct and
separate federal districts, removal to this court is plainly outside the statute and clearly improper.
14

Objection to Withdrawal at 4.

15

Memorandum in Support at 3.

16

See Affidavit of Jared Sherer in Support of Opposition to Motion to Remand, docket no. 8-1, filed Nov. 16, 2012.

17

Id.

18

Memorandum in Support at 3. The Utah Bar website has record of a disbarred attorney named Donald R. Sherer.

19

Notice of Removal at 1.

20

28 U.S.C. § 1441(a) (emphasis added).

21

28 U.S.C. § 1446(a) (emphasis added).

3

Furthermore, in order for removal to be proper, this court must have original jurisdiction
over the action brought in the state court. 22 Jurisdiction “must be disclosed upon the face of the
complaint, unaided by the answer or by the petition for removal.” 23 The 10th Circuit has
broadened the analysis, at least for diversity jurisdiction, to find the court’s jurisdiction on the
face of either the petition or the removal notice. 24 However, no facts or claims in the complaint
support subject-matter jurisdiction. The Notice of Removal references 28 U.S.C. §§ 1441 and
1446, but the Sherers only argue the merits of their case, and never establish an argument for this
court’s jurisdiction. Indeed, there is no basis presented for subject-matter jurisdiction, even if the
removal to this specific district had been proper.
Moreover, all defendants “must join in or consent to the removal of the action.” 25
Because the right of removal is held jointly by all defendants, a removal notice by less than all
defendants is procedurally defective. 26 There is no indication that Jared and Michelle Sherer
constitute all of the parties who should be deemed defendants in the case. Specifically, this is an
in rem case against mining claims in Alaska and not against the Sherers. In the Alaska Court, the
Sherers are listed as Non-Party Participants. 27 Furthermore, the Sherers’ petition does not join
all the mining claims before this court. In fact, PADRM Gold Mine, LLC filed an answer in the
in rem action in the Alaska court on October 22, 2012, 28 eleven days after the Sherers purported

22

28 U.S.C. § 1441(a).

23

Gully v. First Nat’l Bank in Meridian, 299 U.S. 109, 113 (1936). See also Ardison v. Villa, 248 F.2d 226, 227
(10th Cir. 1957).
24

Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995).

25

28 U.S.C. § 1446(b)(2)(A). See also Akin v. Ashland Chem. Co., 156 F.3d 1030, 1034–35 (10th Cir.1998).

26

Cornwall v. Robinson, 654 F.2d 685, 686 (10th Cir. 1981).

27

See Alaska Superior Court, Docket Information,
http://www.courtrecords.alaska.gov/eservices/?x=mrG6bFDhSOvXbf4ppxuB9RCLna4DdoDRD15LzbCE5wnggvB
0sy4kUD*VoOXoYaTupdd5i8a2PTBEZf0rTUMgzA (last visited June 5, 2013).
28

Answer to Complaint In Rem, docket no. 5-1, filed Nov. 2, 2012.

4

to remove the case to this court. Not only were less than all required parties involved in
removing the case, but the case has continued on in the Alaska Court without the presence of the
Sherers. 29 Clearly, because not all potential defendants joined in the removal, it is improper.
In opposition to remand, the Sherers argue that this court should retain the case because
of public policy reasons in the interest of justice. This is a venue and forum non conveniens
argument. 30 The Sherers also offer the hypothetical that they could have removed to federal
court in Alaska, and then sought transfer to this district pursuant to 28 U.S.C. 1406(a). 31 This
argument fails because the district court in Alaska could not have transferred to this court
because transfers are limited to a district that would properly have original jurisdiction, 32 and
what is more, the defendants did not choose that procedure. Finally, the defendants ask that the
court use its “sua sponte powers” to retain the case “in the interests of justice.” 33 The court has
no power to act without subject-matter jurisdiction.
Perkumpulan asks the court to award “the costs and expenses of this motion including
reasonable attorneys’ fees.” 34 This court does have jurisdiction to award costs and fees when
remanding improperly removed cases. 35 Perkumpulan alleges that removal was made “in bad
faith, to seek to impede Plaintiff from pursuing rights of its members.” 36 Perkumpulan states
that Pia, Anderson, Dorius, Reynard & Moss, LLC (PADRM), the firm that has represented the

29

See Alaska Superior Court, Docket Information.

30

Opposition to Motion to Remand and for Attorneys’ Fees (Memorandum in Opposition) at 3, docket no. 8, filed
Nov. 16, 2012.
31

Id. at 4–5.

32

See 28 U.S.C. § 1441(a).

33

Memorandum in Opposition at 5–6.

34

Memorandum in Support at 9.

35

28 U.S.C. § 1447(c).

36

Id.

5

Sherers, took title to patented mining claims in Alaska through an affiliate, PADRM Gold Mine,
LLC. 37 According to Perkumpulan, these mining claims were paid for with proceeds of the
Ponzi Scheme and fraudulently conveyed to PADRM Gold Mine. 38 PADRM Gold Mine filed
several motions in the Alaska case on March 12, 2013, and Perkumpulan’s Alaska counsel
responded that there was a stay on motions in Alaska, the Alaska court having no jurisdiction
because of the removal. 39 In response, counsel for PADRM Gold Mine, LLC wrote that after the
Sherers and PADRM discussed the removal, the Sherers would withdraw their removal petition,
eliminating the stay of motions in the Alaska case. 40
In requesting costs and attorneys’ fees, Perkumpulan relies on the United States Supreme
Court test outlined by Chief Justice Roberts in Martin v. Franklin Capital Corporation:
The 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. . . . The appropriate test for awarding fees under § 1447(c) should
recognize the desire to deter removals sought for the purpose of prolonging litigation and
imposing costs on the opposing party. . . .
In light of these “large objectives,” the standard for awarding fees should turn on
the reasonableness of the removal. Absent unusual circumstances, courts may award
attorney's fees under § 1447(c) only where the removing party lacked an objectively
reasonable basis for seeking removal. Conversely, when an objectively reasonable basis
exists, fees should be denied. In applying this rule, district courts retain discretion to
consider whether unusual circumstances warrant a departure from the rule in a given
case. . . . When a court exercises its discretion in this manner, however, its reasons for
departing from the general rule should be “faithful to the purposes” of awarding fees
under § 1447(c). 41
Under this test, the defendants lack an objectively reasonable basis for seeking removal.
As discussed above, the Sherers removed an in rem action against mining claims in Alaska to the

37

Objection to Withdrawal at 1.

38

Id.

39

Id. at 2. See also Jason Weiner letter, docket no. 15-1, filed Mar. 20, 2013.

40

Objection to Withdrawal at 2.

41

Martin v. Franklin Capital Corp., 546 U.S. 132, 140–41 (2005) (internal citations omitted).

6

wrong court in a separate and far-off federal district. Jurisdiction in this court is clearly absent.
Furthermore, even if all these important deficiencies were not present, all the defendants did not
join in removal. The case has continued in the Alaska Court regardless of the Sherers’s removal
to this court, and the Sherers have actively participated in the Alaska proceedings by filing an
Answer on April 8, 2013, during the pendency of the motions in this court. It is clear that the
defendants lacked an objectively reasonable basis for seeking removal, and have since
disregarded the proceedings in this court by participating in the Alaska Court.
The Sherers request the court “consider the inexperience of the undersigned Pro Se
parties.” 42 Perkumpulan argues that Sherers’ refusal to hire an attorney should not insulate them
from a fee award. This is especially true in this case where Donald Sherer (husband of Michelle
Sherer and father of Jared Sherer) is a former attorney, and Michelle Sherer is represented by
counsel in the Washington suit, including counsel located in Salt Lake City. 43 Furthermore, all
of the Sherers pleadings before this court have been lengthy and well formed, distinguishing
them from average pro se filings. The Sherers even originally opposed remand and strategically
briefed their opposition on the grounds of public policy and justice despite a lack of jurisdiction.
The Sherers have proven obvious experience and capability within the law. Therefore, the court
does not afford the defendant’s any pro se insulation, regardless of the availability of or refusal
to hire counsel.
Several circuits have held that district courts retain jurisdiction over the parties for
purposes of the fee award continuing after remand, 44 although the Tenth Circuit is silent.
42

Opposition to Partial Objection to “Withdrawal of Action” and Request for Attorneys’ Fees and Costs at 5, docket
no. 16, filed Mar. 25, 2013.
43

Memorandum in Support at 8–9.

44

See Moore v. Permanente Med. Group, Inc., 981 F.2d 443, 448 (9th Cir. 1992) (district court retains jurisdiction
to award fees after remand); Bryant v. Britt, 420 F.3d 161, 165 (2d Cir. 2005) (holding that “a district court has
jurisdiction to resolve a motion for fees and costs under § 1447(c) after a remand order has issued”);

7

“It is well established that a federal court may consider collateral issues after the
action is no longer pending. For example, district courts may award costs after an
action is dismissed for lack of jurisdiction. This court has indicated that motions
for costs or attorney's fees are independent proceedings supplemental to the
original proceeding and not a request for modification of the original decree.
Thus, even years after the entry of a judgment on the merits a federal court could
consider an award of counsel fees.” 45
This fee award is collateral to the decision to remand, and therefore this court retains jurisdiction
over the parties for purposes of the fee award, separate from and continuing after the remand of
this action to the Alaska Court.
ORDER
IT IS HEREBY ORDERED that Perkumpulan’s Motion to Remand 46 is GRANTED.
IT IS FURTHER ORDERED THAT Perkumpulan’s request for costs and attorneys’ fees
are GRANTED in that:
1. Perkumpulan shall file a separate motion for and proof of costs and attorney’s fees
within 14 days of this Order.
2. Sherers may respond within 14 days of the filing of Perkumpulan’s motion and proof
of costs and attorneys’ fees.
Signed June 5, 2013.
BY THE COURT

________________________________________
District Judge David Nuffer
Testing Serv., 99 F.3d 1253, 1260 (3d Cir. 1996 (holding that district courts have broad discretion in fee awards
under 28 U.S.C. § 1447(c)); Stallworth v. Greater Cleveland Reg. Transit Auth., 105 F.3d 252, 254–57 (6th Cir.
1997) (holding that a district court may make an award of attorney’s fees and costs in a separate order after issuing a
remand order); and Wisconsin v. Hotline Indus., Inc., 236 F.3d 363, 365–68 (7th Cir. 2000) (holding that a district
court retains jurisdiction to consider collateral matters after remand, and attorneys’ fees may be awarded under a
separate order, even when remand is based on the defendant’s voluntary stipulation).
45

Cooter & Gell v. Hartmarx, 496 U.S. 384, 395–96 (1990) (upholding Rule 11 sanctions imposed after the plaintiff
voluntarily dismissed the action).

46

Docket no. 4, filed Nov. 2, 2012.

8