United States District Court, W.D. Kentucky
Decided December 1, 2014
For Boston Finance Group, Plaintiff, Counter Defendant: Robert E. Maclin, III, LEAD ATTORNEY, Masten Childers, III, McBrayer, McGinnis, Leslie & Kirkland, PLLC - Lexington, Lexington, KY.
For Nelson E. Clemmens, Defendant: Casey L. Hinkle, David S. Kaplan, LEAD ATTORNEYS, Adam K. Spease, Miller Wells PLLC - Louisville, Louisville, KY.
For Nelson E. Clemmens, Counter Claimant: Casey L. Hinkle, David S. Kaplan, LEAD ATTORNEYS, Miller Wells PLLC - Louisville, Louisville, KY.
MEMORANDUM OPINION AND ORDER
John G. Heyburn, II, Senior United States District Judge.
This is a motion to remand arising out of a somewhat unusual procedural posture. Boston Finance Group sued Nelson E. Clemmens in Oldham County Circuit Court to collect a debt on a personal line of credit. On November 26, 2013, the state court granted summary judgment in favor of Boston Finance. Clemmens did not appeal. Some seven months later, Clemmens filed a motion with the state court requesting leave to file counterclaims against Boston Finance. After a hearing, the state court ordered supplemental briefing on the issue of whether the state court had jurisdiction to consider Clemmens's counterclaims. Boston Finance opposed the motion for leave, claiming that under the Kentucky Rules of Civil Procedure, the court could not allow a counterclaim more than ten days after the entry of judgment. Nevertheless, the state court allowed the motion for leave and Clemmens filed his counterclaims. Boston Finance, as Plaintiff/Counterclaim Defendant, has now removed to federal court asserting diversity jurisdiction. Clemmens moved to remand and requested costs.
Boston Finance, as the party seeking removal, bears the burden of establishing its statutory authority to remove. Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 405 (6th Cir. 2007). " [T]he states' important interest in the independence of their courts require[s] strict construction of the removal statutes." First Nat'l Bank of Pulaski v. Curry, 301 F.3d 456, 462 (6th Cir. 2002). As such, " [a]ll doubts as to the propriety of removal are resolved in favor of remand." Smith, 505 F.3d at 405.
This case hinges on 28 U.S.C. § 1441(a), which provides: " any civil action brought in a State court . . . may be removed by the defendant or the defendants " if the federal court would have original jurisdiction over it. 28 U.S.C. § 1441(a) (2012) (emphasis added). The Sixth Circuit has said that this language should " be interpreted narrowly, to refer to defendants in the traditional sense of parties against whom the [original] plaintiff asserts claims." Curry, 301 F.3d at 462-63. " As the statutory language makes plain, only 'the defendant or the defendants' may remove under § 1441(a)." Id. at 461. Moreover, the Supreme Court long ago said that Congress intended to preclude removal by a plaintiff, based on a defendant's counterclaim, by specifically referring to " defendant or defendants." Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). The Court held: " We can find no basis for saying that Congress, by omitting from the present statute all reference to 'plaintiffs,' intended to save a right of removal to some plaintiffs and not to others." Id. at 108. Quite simply, courts have held for over 70 years that " a counterclaim . . . defendant is not a 'defendant' who may remove the action to federal court." In re Mort. Elec. Registration Sys., Inc., 680 F.3d 849, 853 (6th Cir. 2012) (citing Shamrock, 313 U.S. at104-08).
Boston Finance was plainly a counterclaim defendant in the state court action. After Clemmens moved for leave to file its counterclaims in state court, Boston Finance made the same argument it has now presented to this Court--the state court lacked jurisdiction over the case under the Kentucky Rules of Civil Procedure because more than ten days had passed since the state court entered summary judgment. The state court held otherwise. When Boston Finance sought to remove this case, then, the state court had specifically determined that Boston Finance was a counterclaim defendant. Under the plain language of the removal statute and over 70 years of Supreme Court precedent, Boston Finance would be without authority to remove this case.
The procedural posture here may seem extraordinary, but the Court finds no basis to treat Boston Finance as a defendant with the power to remove. Courts in other jurisdictions have confronted similar issues and refused to allow a party other than the initial defendant to remove. In Green Tree Financial Corp. v. Arndt, 72 F.Supp.2d 1278 (D. Kan. 1999), the original plaintiff and counterclaim defendant (" Green Tree" ) sought to ...