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GALLAGHER v. DONALD

October 15, 1992

CHRISTOPHER F. GALLAGHER, INTERNATIONAL MARINE INVESTORS AND MANAGEMENT CORPORATION and APPLEJACK FARM, INC., Plaintiffs, against NORMAN H. DONALD, III, CHARLES W. FLYNN and STEPHEN J. DERADDO, Defendants.


The opinion of the court was delivered by: VINCENT L. BRODERICK

 VINCENT L. BRODERICK, U.S.D.J.

 I

 Plaintiffs moved, initially by ex parte order to show cause with the conceded purpose of blocking then-pending discovery, to remand this litigation involving common law fraud, securities, and RICO claims.

 The motion to remand is based on (a) asserted defectiveness and untimeliness of the notice of removal, including late consent of one defendant, and (b) nonremovability of the securities law claims under 15 USC 77v(a) combined with asserted lack of separate and independent character of the RICO claims under 28 USC 1441(c). Plaintiffs also seek sanctions.

 The motions are denied.

 II

 Under 28 USC 1446(b), the 30 day period allowed for removal is measured from the time of receipt by defendant of "the initial pleading setting forth the claim for relief upon which such action or proceeding is based. . ." The term "pleading," of course, may embrace a document not so labelled if it performs the same function. Universal Motors Group v. Wilkerson, 674 F. Supp. 1108 (S.D.N.Y. 1987). Where a defendant cannot "intelligently ascertain removability," E.E. Howell Co. v. Underwriters Laboratories, 596 F. Supp. 1517 (E.D.N.Y. 1984), the time to remove under 28 USC 1446(b) does not begin to run. As indicated in Schrader v. Royal Caribbean Cruise Line, 952 F.2d 1008, 1013 (8th Cir. 1991): " . . . the doctrine of equitable estoppel has been applied to prevent a defendant from relying on a limitations bar if that defendant contributed to confusion . . ."

 Plaintiffs initially served on January 30, 1991 so-called "hip pocket" summonses without a complaint, permitted by NYCPLR 305 and 3012, accompanied by a "Notice of Causes of Action" describing the claims involved.

 The Notice of Causes of Action was quite detailed, but included a statement on the first page that ". . . this notice is not intended to be a pleading."

 Where plaintiffs themselves have specific characterized the paper as "not intended to be a pleading," they cannot successfully argue that it can be translated into one under 28 USC 1446(b), or that the defendants could "intelligently ascertain removability" where the document on its face appears to negative its role as the pleading mentioned in that section. To permit advantage to be obtained through use of such a now-you-see-it-now-you-don't pleading/nonpleading would invite parties to seek to benefit by manufacturing artificial distinctions as traps for the unwary, and would be contrary to the objectives of Rule 1 of the Federal Rules of Civil Procedure.

 Plaintiffs apparently never served a complaint on the defendant DeRaddo as far as the court has been informed to date, having instead made an application in state court for a default judgment based upon his nonresponse to the "hip pocket" summons. The complaint was, however, served on the other defendants on February 19, 1992. For present purposes, I shall assume that DeRaddo received a copy of the complaint on February 19, 1992.

 Defendant Donald filed a Notice of Removal on February 26, 1992, the defendant Flynn filed a Notice of Removal on February 28, 1992, and the defendant DeRaddo filed a Notice of Removal on March 5, 1992. Thus, notices by all defendants were timely filed since the statutory 30 day period began to run on February 19, 1992 when the complaint (so designated) was served.

 Even if January 30, 1992, when the "hip pocket" summonses were served, was deemed to be the trigger date which started the removal period running, remand would not be justified. Where all defendants have opted for removal, tardiness by one in joining the chorus does not invalidate the removal if confusion has caused the delay (clearly the case here) and if no prejudice was caused. Here even if there had been late joinder, plaintiffs would not have been prejudiced. *fn1"

 In such a situation removal was upheld in Belasco v. W.K.P. Wilson & Sons, 833 F.2d 277, 282 (11th Cir. 1987): ". . . the ends of justice and judicial efficiency are best served by treating the removal petition as if it had been amended to include Wilson. See 28 U.S.C. § 1653 ('Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.'); Fed.R.Civ.P. 15(a) ("Leave [to amend] shall be freely given when justice so requires."

 Plaintiffs further claim that removal was frustrated by technical deficiencies in defendants' papers. They allege that the identification of defendant Flynn's attorneys in the Notice was incorrect; this is immaterial since the ...


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