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CODAPRO CORP. v. WILSON

February 14, 1998

CODAPRO CORP., Plaintiff, against ROBERT C. WILSON, EURO SCOTIA FUNDING LIMITED, EURO SCOTIA FUNDING (U.S.A.), INC., EURO SCOTIA GROUP LIMITED, EURO SCOTIA FUNDING (BARBADOS) LIMITED, EURO AMERICAN INSURANCE CO. LTD., DEBENTURE GUARANTY CORPORATION, VERONICA CANINO WILSON, SAMUEL L. BOYD, DOUGLAS MCCLAIN, DEBORAH MCCLAIN, DONALD EDEL, EDWARD NICHOLAS CANINO, GARY LONG, ROBERT CARTER DYE, PETER DALE, DIETER WICKI, and JAMES GARRO, Defendants.


The opinion of the court was delivered by: SPATT

 SPATT, District Judge:

 There are three motions presently before the Court: (1) the motion of the defendant Samuel L. Boyd ("Boyd") to dismiss the complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure; (2) the motion of the plaintiff, Codapro Corporation ("Codapro" or the "plaintiff") to remand the case to New York State Supreme Court, pursuant to 28 U.S.C. Section 1447(c); and (3) Boyd's conditional motion for additional discovery on the plaintiff's remand motion, in the event the Court is inclined to grant it. "Because the motion for remand [and Boyd's related request for discovery] go[] directly to the Court's power to adjudicate this dispute," [the Court] will address it first." Nordlicht v. New York Telephone Co., 617 F. Supp. 220, 222 (S.D.N.Y. 1985), aff'd on other grounds, 799 F.2d 859 (2d Cir. 1986). "Only if the court determines that removal was proper, and, conversely, that remand is not required, will it proceed to consider [Boyd's] motion to dismiss . . . ." Town of Moreau, et al. v. New York State Dept. of Environmental Conservation, et al., 1997 U.S. Dist. LEXIS 6519, 96 Civ. 983, 1997 WL 243258, at *1 (N.D.N.Y. May 5, 1997)(citing Vippolis v. Village of Haverstraw, 1989 U.S. Dist. LEXIS 11014, 87 Civ. 4855, 1989 WL 11063, at *2 [S.D.N.Y. Sept. 18, 1989]).

 I. BACKGROUND

 On April 18, 1997, Codapro, a New York corporation in the computer software business, instituted this action against the eighteen defendants by filing a summons and complaint in the Supreme Court of the State of New York, Suffolk County. The complaint alleged that in 1993, the Euro Scotia Group Limited, an interconnected web of transnational corporations controlled and owned by the defendant Robert C. Wilson, promised to provide Codapro with $ 18 million in financing for Codapro's planned business expansion through a public offering of EuroBonds. Codapro contended that Robert Wilson controls and is the beneficial owner of the following, interrelated corporations, which participated in the deal with Codapro: Euro Scotia Funding Limited, Euro Scotia Group Limited, Euro Scotia Funding (U.S.A.), Inc., Euro Scotia Funding (Barbados) Ltd., Euro American Insurance Co. Ltd., and Debenture Guaranty Corporation. The complaint also alleged that the defendants Veronica Canino Wilson, Douglas McClain, Deborah McClain, Donald Edel, Edward Nicholas Canino, Gary Long, Robert Carter Dye, Peter Dale, Dieter Wicki, and James Garro were either directors, employees or representatives of the various Euro Scotia Group companies, who participated in the deal. Codapro claimed that the defendant Boyd, who is an attorney admitted to practice in the State of Texas and appears pro se in this matter, participated in the deal by transferring funds from his attorney trust account to Codapro on behalf of the Euro Scotia Group.

 According to Codapro, it acted in reliance on this deal with the defendants by moving into new and larger office space, hired new employees, entered into expensive advertising contracts and trade shows, purchased new office furniture and equipment, expanded its research and development activities, and began developing a national dealer network. However, Codapro asserted, the defendants never caused a public offering of EuroBonds or provided the promised $ 18 million in financing, causing Codapro to sustain $ 8 million in damages. Codapro's complaint raised causes of action sounding in common law fraud and promissory estoppel.

 On July 29, 1997, the case was removed to this Court pursuant to a Notice of Removal filed by a single defendant, Boyd. While the Notice stated that it was filed "on behalf" of all the defendants who were served in the action, only Boyd signed it. Since then, none of the other defendants have filed anything with the Court indicating that they join in the removal, and none have entered a notice of appearance.

 In papers filed on August 21, 1997, Boyd moved for dismissal based on lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Codapro did not serve opposition papers. Instead, Codapro filed a motion to remand the matter to State court on the ground that removal was improper because none of the defendants aside from Boyd expressly consented to removal. In further support of the remand application, Codapro supplied the Court with an affidavit from the defendant Donald Edel stating that he objects to the removal.

 In his opposition to Codapro's motion for remand, Boyd annexes letters, ostensibly written to Boyd by defendants Robert C. Wilson, Edel, Long, Deborah McClain, Douglas McClain, Veronica Wilson, and Dye, which indicate their "Request and Consent to Removal to Federal Court." The letter "by" Robert Wilson purports to approve of removal on behalf of all five Euro Scotia companies and the Debenture Guaranty Corporation. Judging by the similarity of these letters, which contain identical contents, typeface and overall appearance, all were prepared by the same individual -- perhaps by Boyd. Also, Boyd supplies a letter that he wrote to "Ken Nunley, Esq.," which states, "Thank you for your kind assistance in connection with our removal of the Suffolk County state court case to the United States District Court. I have confirmed with you that Ed Canino approves the removal . . ." However, "Ken Nunley" has not filed a notice of appearance on defendant Canino's behalf in this matter. There is no letter to Boyd from defendant Edward Canino. None of the defendants filed any papers in this Court indicating their consent to the removal. In fact, as noted above, none of the defendants have filed a notice of appearance with the Court.

 After filing his opposition papers, Boyd moved for a stay of the Court's ruling on Codapro's motion to remand and for an order granting discovery limited to the circumstances surrounding Edel's affidavit which, Boyd contends, was "probably" the result of Codapro's "coercion."

 II. DISCUSSION

 A. Remand

 Removing a case from state to federal court pursuant to 28 U.S.C. Section 1446, defendants are required to file the notice of removal "within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based." 28 U.S.C. ยง 1446(b). "Subsection 1447(c) authorizes a remand on the basis of any defect in removal procedure or because the district court lacks subject matter jurisdiction." LaFarge Coppee v. Venezolana De Cementos, S.A.C.A., 31 F.3d 70, 72 (2d Cir. 1994)(internal quotations and citations omitted).

 "There are several well-established principles governing the propriety of removal petitions under Section 1446, which the court must keep in mind here." Town of Moreau, et al. v. New York State Dept. of Environmental Conservation, et al., 1997 U.S. Dist. LEXIS 6519, 96 Civ. 983, 1997 WL 243258, at *1 (N.D.N.Y. 1997)(internal quotations and citation omitted). First, "removal jurisdiction must be strictly construed, both because the federal courts are courts of limited jurisdiction and because removal of a case implicates significant federalism concerns." In re NASDAQ Market Makers Antitrust Litigation, 929 F. Supp. 174, 178 (S.D.N.Y. 1996) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109, 61 S. Ct. 868, 872, 85 L. Ed. 1214 [1941])("Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined."); State of New York v. Lutheran Center for the Aging, Inc., 957 F. Supp. 393, 1997 WL 80019, at *4 (E.D.N.Y. 1997)("Removal statutes are to be strictly construed[.]"). Thus, "all doubts should be resolved in favor of remand." Leslie v. Banctec Service Corp., 928 F. Supp. 341, 347 (S.D.N.Y. 1996)(internal ...


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