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HILL v. CITICORP

August 21, 1992

RAYMOND W. HILL and MAINHURRY, LTD., Plaintiffs, against CITICORP, CITIBANK, N.A., RICHARD BRADDOCK, DAVID GIBSON and JOHN INGRAHAM, Defendants.

Carter


The opinion of the court was delivered by: ROBERT L. CARTER

CARTER, District Judge

 This case, involving allegations of fraud and breach of fiduciary duty under New York law in connection with a loan from defendants to plaintiffs, was filed in New York Supreme Court in September, 1991. After certain preliminary motions and discovery disputes in the state forum, defendants removed to this court on July 7, 1992. Now before the court is plaintiff's motion to remand the case to state court.

 Defendants removed the case pursuant to 12 U.S.C. § 632, which allows removal of matters involving international banking "at any time before the trial thereof." Plaintiffs do not dispute that this case is covered by section 632; instead they make several arguments that defendants' removal petition was untimely and that the equities of the case favor remand.

 I.

 First, plaintiffs assert that the thirty-day time period within which removal petitions must be filed pursuant to the general removal statute, 28 U.S.C. § 1446, is also applicable to removal petitions filed under 12 U.S.C. § 632, and that under this standard defendants' removal petition was untimely. Section 632 provides:

 Notwithstanding any other provision of law, . . . any defendant in any [action involving international banking] may, at any time before the trial thereof, remove such suits from a State court into the district court of the United States for the district following the procedure for the removal of causes otherwise provided by law.

 12 U.S.C. § 632. Plaintiffs argue that the thirty-day period set forth in section 1446 is imported into section 632 by the phrase "following the procedure for the removal of causes otherwise provided by law." In support of this position, plaintiffs cite Ponce Fed. Bank, FSB v. Instituto Medico Del Norte, Inc., 643 F. Supp. 424 (D.P.R.), appeal denied, 808 F.2d 1513 (1st Cir. 1986) and Dibidale of Louisiana, Inc. v. First Nat. Bank of Houma, 1991 U.S. Dist. LEXIS 3599, 1991 WL 40326 (E.D. La. March 21, 1991).

 Despite these cases, the court is not convinced that the thirty-day limitation from section 1446 should be incorporated by reference into the removal provisions of section 632. First, the plaintiffs' argument was considered and rejected by this court in Libra Bank Limited v. Banco Nacional de Costa Rica, No. 81 Civ. 7624, slip op. (S.D.N.Y. 1981) (Motley, J.), rev'd on other grounds, 676 F.2d 47 (2d Cir. 1982). Second, the other cases considering the propriety of removal under section 632 have all assumed that the statute authorizes, as its terms suggest, removal at any time prior to trial, without any limitation imported from section 1446. See Magel v. Federal Reserve Bank of Philadelphia, 776 F. Supp. 200, 202 (E.D. Pa. 1991); Manas y Pineiro v. Chase Manhattan Bank, N.A., 443 F. Supp. 418, 420 (S.D.N.Y. 1978) (Owen, J.); Aktiebolaget Svenska Handelsbanken v. Chase National Bank, 69 F. Supp. 833 (S.D.N.Y. 1947) (Rifkind, J.). Finally, the time limit set forth in section 632, "before the trial," would be rendered almost meaningless if the thirty-day limit from section 1446 were incorporated. Accordingly, the court holds that section 632 does not incorporate by reference the thirty-day time limit set forth in section 1446.

 II.

 Plaintiffs' second argument for remand is that even under the terms of section 632 without the thirty-day limitation, defendants' removal petition was untimely because it was filed after trial activity had taken place in state court.

 The Supreme Court has stated that "we think it clear that Congress did not intend, by the expression 'before trial,' to allow a party to experiment on his case in the State court, and, if he met with unexpected difficulties, stop the proceedings, and take his suit to another tribunal." Removal Cases, 100 U.S. 457, 473, 25 L. Ed. 593 (1879). "He must make his election before he goes to trial or hearing on the merits." Jifkins v. Sweetzer, 102 U.S. 177, 179, 26 L. Ed. 129 (1880); see also Manas y Pineiro, supra, 443 F. Supp. at 420.

 However, "the defect of untimeliness in removal cases in not jurisdictional, but merely 'modal and formal.'" Manas y Pineiro, supra, 443 F. Supp. at 421 (citing Ayers v. Watson, 113 U.S. 594, 598, 28 L. Ed. 1093, 5 S. Ct. 641 (1885)). Therefore, it is within the discretion of the court to determine whether the case has proceeded too far in the state court.

 This discretion is guided, however, by the few cases that have addressed the question of when a "trial" has commenced in state court for the purposes of section 632. While the cases are sparse, they nevertheless agree on the standard: substantive activity addressed to the merits of the case in state court constitutes the commencement of a trial, while procedural motions do not. See Magel, supra, 776 F. Supp. at 202 (removal from state court under section 632 was held proper where "defendant had only submitted preliminary objections to the plaintiff's complaint before petitioning for removal into the district court."); Manas y Pineiro, supra, 443 F. Supp. at 420 (case remanded to state court where summary judgment motion was argued and decided in state court ...


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