Herod v. Fisher & Son Company, Inc.
Filing
22
MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 11/15/12. (tdai, )
IN THE UNITED
FOR THE
STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
Richmond Division
EDWARD HEROD,
Plaintiff,
Civil Action No.
v.
3:12cv712
FISHER & SON COMPANY,
INC., et al.,
Defendants.
MEMORANDUM OPINION
This matter
is before the Court on Plaintiff Edward Herod's
MOTION TO REMAND (Docket No. 6) and DEFENDANT FISHER & SON COMPANY,
INC'S MOTION FOR LEAVE TO AMEND ITS NOTICE OF REMOVAL (Docket No.
10.)
For the reasons set forth herein,
PLAINTIFF EDWARD HEROD'S
MOTION TO REMAND (Docket No. 6) will be denied and DEFENDANT FISHER
& SON COMPANY, INC'S MOTION FOR LEAVE TO AMEND ITS NOTICE OF REMOVAL
(Docket No.
10)
will be denied as moot.
PROCEDURAL BACKGROUND
On September 28, 2011, Edward Herod ("Herod") filed a Warrant
in Debt against Fisher & Son Co. , Inc. {"Fisher & Son") in the General
District Court for the City of Richmond, Virginia, alleging that
Fisher & Son had failed to make an installment payment pursuant to
a contract between the parties ("Herod I").
Herod lost.
Herod I was tried and
Then, Herod filed a de novo appeal to the Circuit Court
for the City of Richmond ("Circuit Court").
The appeal is pending.
Approximately one year later, on September 14, 2012, Herod filed
another action against Fisher & Son, this time in the Circuit Court,
seeking
recovery
of
the
subsequent
twelve
months'
worth
of
installment payments ("Herod II"). Herod also simultaneously filed
a
Motion
to Consolidate
Herod
II
with
Herod
I.
Fisher & Son, rather than responding to the second complaint or
responding to the Motion to Consolidate, filed its Notice of Removal
with this Court on the basis of diversity jurisdiction.
In pleading
its grounds for removal, Fisher & Son alleged:
corporation
4.
Fisher
& Son
is
a
incorporated
in Pennsylvania,
having
its
principal place of business in Pennsylvania.
For purposes of diversity jurisdiction, Fisher
&
Son
is
therefore
Pennsylvania.
Virginia.
considered
a
citizen
of
Fisher & Son is not a citizen of
5.
According
to
his
allegations,
Plaintiff is a citizen of Virginia.
(Compl. 5
1.)
Thus, complete diversity of citizenship
exists for purposes of 28 U.S.C. § 1332.
(Notice of Removal SI^T 4-5, Docket No. I.)1
The original Complaint
for Herod II contains the following allegations concerning the
citizenship of the parties:
1.
Herod is a Virginia resident residing
in the County of Henrico, Virginia.
2.
Upon information and belief, Fisher
is a corporation operating under the laws of the
Commonwealth of Pennsylvania. At all times
relevant to this suit,
Fisher is and was
registered to transact business within the
Commonwealth of Virginia.
Fisher & Son also plead that the amount in controversy exceeds
$75,000, and Herod does not argue that this allegation was
insufficient.
2
(Compl. flfl 1-2.)
Herod argues that the Notice of Removal
is
insufficient to
establish that diversity jurisdiction existed both at the time of the
Notice of
Removal
Complaint
(hereinafter
requirement").
remand of the
and at
the time of
referred
to
the filing of the initial
as
the
"double
designation
Says Herod, that defect is fatal, and necessitates
case to the
state court.
LEGAL
STANDARD
Federal law allows for removal, by a defendant, of "any civil
action brought in a State court of which the district courts of the
United States have original jurisdiction."
28 U.S.C. § 1441 (a) .
To
effectuate removal, the defendant must file "a notice of removal .
. . containing a short and plain statement of the grounds for removal,
together with a copy of all process, pleadings, and orders served upon
such defendant ... in such action."
28 U.S.C. § 1446(a).
Because
of the "significant federalism concerns implicated" by the removal
of an action from state court, federal courts must strictly construe
removal statutes.
Lontz v. Tharp, 413 F.3d 435, 440 (4th Cir. 2005)
(quoting Md. Stadium Auth. v. Ellerbe Becket Inc., 407 F.3d 255, 260
{4th Cir. 2005))
(internal quotation marks omitted).
The party
seeking removal carries the burden of demonstrating jurisdiction.
Id. at 439 (quoting Mulcahey v. Columbia Organic Chems. Co., 29 F.3d
148,
151 (4th Cir.
1994)).
ANALYSIS
Herod argues that, because the Complaint uses the word "is" to
describe the citizenship of the parties,
(see Notice of Removal SISI
4-5, Docket No. 1), it establishes only that the citizenship of the
parties was diverse at the time of the filing of the Notice of Removal,
and therefore does not satisfy the double designation requirement.
Herod further argues that such a defect is "fatal" to the Notice of
Removal.
In support of his argument, Herod cites Hubbard v. Tripp, 611
F. Supp. 895 (E.D. Va. 1985), and Outdoor World Corp. v. Calvert, 618
F. Supp.
446
(E.D.
Va.
1985).
In Hubbard,
the court stated that
" [T]here is a long line of authorities supporting the proposition that
when diversity of citizenship is a basis of removal jurisdiction, it
must exist both at the time the original action is filed in the state
court and at the time the removal is sought."
Hubbard, 611 F. Supp.
at 896 {alteration in original) (quoting 14A Charles Alan Wright et
al., Federal Practice and Procedure, Jurisdiction 2d § 3723 (1985))
(internal quotation marks omitted) .
Calvert, decided several months
after Hubbard, simply reaffirms Hubbard's reasoning.
618 F. Supp.
A.
See Calvert,
at 448.
Relevant Pleading Standard
Fisher & Son opposes the Motion to Remand on several grounds.
First, Fisher & Son argues that federal law no longer requires a notice
of removal to satisfy the double designation requirement.
4
This
argument is premised on the fact that § 1446(a) was amended in 1988,
three years after Hubbard and Calvert.
that
this
amendment
was
Fisher & Son takes the view
interpreted by
the
Fourth Circuit,
in
Ellenburg v. Spartan Motor Chassis, Inc., to replace the old "code
pleading" standard of the pre-1988 version of § 1446(a)
with a
standard that permits "general allegations of citizenship" to suffice
to establish party diversity.
Ellenburg,
519
F.3d
192,
(Def .'s Opp. 3, Docket No. 9) (citing
200
(4th
Cir.
2008)).
Fisher
&
Son
misinterprets Ellenburg on this point.
The
issue
in
Ellenburg
was
whether
the
defendant
had
sufficiently alleged that the amount in controversy was in excess of
$75,000, an issue raised sua sponte by the district court.
at 194.
519 F.3d
The plaintiff had alleged that:
The value of the matter in dispute in this case,
upon information and belief, exceeds the sum of
Seventy Five Thousand and No/100 ($75,000)
Dollars, exclusive of interest and costs, as it
appears from the allegations contained in
Plaintiff's Complaint.
Defendants' counsel
believes in good faith that the amount in
controversy in this case meets and exceeds the
$75,000
limit
required
for
diversity
jurisdiction.
Id.
at 195.
The district
court
remanded,
holding
that this
allegation was "without more, . . . inadequate to establish that the
amount
in controversy exceeds
(quoting
Ellenburg
v.
Tom
the
jurisdictional amount."
Johnson
Camping
Ctr.,
Inc.,
Id.
No.
8:06-cv-1606, 2006 WL 1576701, at *3 (D.S.C. May 31, 2006)) (internal
quotation marks omitted).
On appeal,2 the Fourth Circuit held that
the district court should not have raised the issue of a procedural
defect sua sponte, and also that the pleading was "sufficient as a
matter of law to allege subject matter jurisdiction."
Id. at 199.
In reversing the district court, the Court of Appeals explained
that the amendment to § 1446(a) was for the purpose of establishing
pleading requirements for notices of removal that were "deliberately
parallel to the requirements for notice pleading found in" Fed. R.
Civ.
P. 8(a).
Id.
Accordingly,
[I]t was inappropriate for the district court to
have required a removing party's notice of
removal to meet a higher pleading standard than
the one imposed on a plaintiff in drafting an
just as a
initial complaint.
Therefore,
plaintiff's complaint sufficiently establishes
diversity jurisdiction if it alleges that the
parties are of diverse citizenship and that
"[t]he matter in controversy exceeds .
[$75,000]," so too does a removing party's
notice
of
removal
sufficiently
establish
jurisdictional grounds for removal by making
jurisdictional allegations in the same manner.
Ellenburg, 519 F.3d at 200 (second alteration in original) (emphasis
added) (internal citations omitted) .
to have
abolished the
Thus, Ellenburg cannot be said
double designation requirement.
Rather,
2 Although remand orders are generally unreviewable, see 28 U.S.C.
§ 1447 (d) , the Fourth Circuit found that it had jurisdiction to review
this case.
that,
Ellenburg, 519 F.3d at 196.
because the
district
court
The Fourth Circuit reasoned
only held that
the
amount
in
controversy was not sufficiently plead, and not that it was not
actually met, the district court must have dismissed because it found
the removal notice defective.
Id.
The Fourth Circuit further
reasoned that under § 1447(c), a district court was not authorized
to raise a procedural defect sua sponte,
therefore reviewable.
Id.
at
197.
6
and that the matter was
Ellenburg merely establishes the standard by which removal notices
must be reviewed,
i.e., the same standard used to review initial
pleadings.3
B.
Incorporation
Of
Allegations
In
The
Original
State
Court
the
double
Complaint
Fisher
& Son
additionally argue
that,
even
if
designation standard applies, it has met that standard because the
Notice of Removal incorporated by reference the allegations made in
the Herod II state court Complaint.
Herod argues that Fisher & Son
cannot rely on the allegations of the state Complaint, and must make
the requisite jurisdictional pleadings anew in the Notice of Removal.
While
Fisher
&
Son's
arguments
in
support
of
its
position
are
unconvincing, 4 the cases cited by Herod himself undermine his
3 One district court in this circuit has cited, with approval, the
double designation standard of Hubbard and Calvert since the Fourth
Circuit's holding in Ellenburg.
See Strudnick v. Whitney, Civ. No.
AMD 09-6, 2009 WL 1564177, at *1 (D. Md. May 28, 2009).
4 Fisher & Son makes three separate arguments that an original state
court complaint, at least in this case, if not in all cases, should
be reviewed for jurisdictional allegations.
First, Fisher & Son cites Chaudharyv. Stevens, No. 3:05-cv-382,
2005 U.S. Dist. LEXIS 27447 (E.D. Va. Aug. 9, 2005), for the
proposition that courts review the complaint, and not just the removal
notice, for sufficient grounds for removal.
(Def.'s Opp. 2, Docket
No. 9) (quoting Chaudhary, 2005 U.S. Dist. LEXIS 27447, at *8 ("[T]he
grounds must be apparent within the four corners of the initial
pleading.") (internal quotation mark omitted)).
This argument,
however, misapprehends Chaudhary which, to begin, was a federal
question case, and not a diversity case.
See Chaudhary, 2005 U.S.
Dist. LEXIS 27447, at *l-2.
More importantly, the Chaudhary court
was analyzing when a defendant is put on sufficient notice that a
federal question exists such that the thirty-day remand time limit
would begin to run.
Id. at *6 ("In determining when a removing party
was put on sufficient notice for removal, a court may rely on the face
7
position, and, in fact, establish that the Court should look to the
state Complaint for any "missing" jurisdictional allegations.
One of the principal cases on which Herod relies for his argument
that
a
defendant
is
required
requirement is Hubbard.
deciding to remand the
to
meet
the
double
designation
Herod has overlooked the fact that, in
case
for failure to
satisfy the double
designation requirement, the court in Hubbard noted that "[n]either
the complaint filed in State court nor the petition filed in this Court
specifies the citizenship of either defendant or plaintiff as of the
time of the filing of the complaint."
(emphasis added) .
Hubbard, 611 F. Supp. at 896
The court therefore acknowledged that it reviewed
both the face of the notice of removal filed in that case and the state
of the initial pleading on the documents exchanged in the case by the
parties, but the grounds must be apparent within the four corners of
the initial pleading or subsequent paper." (internal quotation marks
omitted)).
Chaudhary, therefore, is inapposite to the question
posed here.
Second, Fisher & Son argues that the allegations about the
parties'
citizenship
in
the
Complaint
were
"specifically
incorporated in paragraph 5 of the Notice [of Removal]."
(Def.'s
Opp. 4, Docket No. 9.) Paragraph 5 of the Notice of Removal, however,
only cites to paragraph 1 of the Complaint, which only contains
allegations concerning Herod's citizenship as of the time of the
Complaint, and not Fisher & Son's. Thus, even if the Court accepted
this argument, there is still no allegation specifically incorporated
by reference into the Notice of Removal concerning the citizenship
of Fisher & Son at the time of the Complaint.
Finally, Fisher & Son argues that its factual allegations were
sufficient "because it used the language of Form 7(a), which
demonstrates the correct form for a statement of jurisdiction."
(Def.'s Opp. 6, Docket No. 9.)
Form 7(a), however, merely
demonstrates the correct form for a statement of jurisdiction in a
complaint submitted to federal court based on diversity jurisdiction.
This pleading form, therefore, would only be sufficient if the factual
allegations necessary to remove a case were identical to those to
Complaint before finding that the removal was defective.
Herod's other principal case, Calvert, does not hold otherwise.
While the court there did not explicitly mention that it had reviewed
the
face
of
the
original
state
Complaint
in
determining
that
"Defendant failed to aver the citizenship of either party as of the
time
the
suit
was
filed
in
State
court,"
the
court
in Calvert
explicitly noted, in holding that remand was required that, "having
fully reconsidered the issues, I adhere to the view I expressed in
Hubbard."
Herod
Calvert,
cites
requirement
for
the
remains
proposition.
618 F. Supp. at 447-48.
proposition
valid
cites
that
Every other case that
the
Hubbard
double
as
designation
support
for
that
See, e.g., Traeger Grills E., LLC v. Traeger Pellets
Grills, LLC, No. 3:ll-cv-536, 2011 WL 5439330, at *3 (D. Or. Nov. 9,
2011)
(citing
Hubbard);
Awasthi
v.
Infosys
Techs.
Ltd.,
No.
C-10-0783, 2010 WL 2077161, at *7 (N.D. Cal. May 21, 2010) (finding
complete diversity did not exist and citing Hubbard) ; Strudnick, 2009
WL 1564177, at *1 (quoting Hubbard) ; Schlegel v. Bank of Am., N.A.,
No. 3:07-cv-22, 2007 WL 1244567, at *1 (W.D. Va. Apr. 27, 2007) (citing
Hubbard).
That authority and common sense teach that a court can look to
the state court Complaint to find any jurisdictional allegations
missing from the face of a Notice of Removal.
Otherwise, the Court
plead a diversity case in federal court in the first instance.
As
discussed above, however, more is required of a notice of remand.
9
would elevate form over substance.
state
Complaint
and
the
Notice
Here, taken in combination, the
of
Removal
satisfy
the
double
designation requirement, and thus Herod's Motion to Remand must be
denied.5
CONCULSION
For the foregoing reasons, Herod's MOTION TO REMAND (Docket No.
6) will be denied and DEFENDANT FISHER & SON COMPANY, INC'S MOTION
FOR LEAVE TO AMEND ITS NOTICE OF REMOVAL (Docket No. 10) will be denied
as
moot.
It
is
so ORDERED.
Is/
£lS
Robert E. Payne
Senior United States District Judge
Richmond, Virginia
Date: November /> , 2012
5 It thus is unnecessary to decide the motion for leave to amend the
Notice of Removal and it will be denied as moot.
10
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