United States District Court, Western District of New York
July 1, 2003
WILLIAM F. SAVINO, AS CO-RECEIVER OF RICHARD MUTO, ET AL., PLAINTIFF, VS. DELMER C. GOWING, III, ESQ. AND DELMER C. GOWING, III, P.A., DEFENDANTS.
The opinion of the court was delivered by: John T. Elfvin, Senior District Judge
MEMORANDUM and ORDER*fn1
This action was removed from the New York State Supreme Court, County of Erie, on March 3, 2003. Savino was appointed as a Co-Receiver in a state court action — Ciura v. Muto.*fn2 As such, Savino filed suit on behalf of Richard Muto and related entities against defendants (collectively "Gowing") by filing a Summons with Notice*fn3 on November 27, 2002, which was served on defendants on January 9, 2003 and December 18, 2002 respectively.*fn4 Savino filed a Complaint on February 7, 2003, which was mailed to Delmer C. Gowing, III, Esq. that same day. After removing the action to federal court on March 3, Gowing filed several motions on March 19, including (1) a motion to dismiss for lack of personal jurisdiction and (2), as alternate relief, a motion for change of venue to the Southern District of Florida.
On March 21 Savino filed a motion to remand on the ground that the action had been untimely removed. Oral argument was heard June 20. For the reasons set forth below, plaintiff's motion for remand will be granted, defendants' motion to dismiss will be denied as moot and defendants' motion to transfer will be denied as moot.
As noted, three motions are currently pending. The parties dispute the order in which these motions should be addressed. This Court finds that questions of subject-matter jurisdiction should ordinarily be addressed first, but that it has some discretion in the matter. See Cantor Fitzgerald, L.P. v. Peaslee, 88 F.3d 152, 155-156 (2d Cir. 1996).*fn5 Indeed, the Second Circuit Court of Appeals has noted that, "[c]ustomarily, a federal court first resolves any doubts about its jurisdiction over the subject matter of a case before reaching the merits or otherwise disposing of the case." Id. at 155. Cantor Fitzgerald also holds that, in "exercising its discretion as to which question to consider first, a court should be convinced that the challenge to the court's subject-matter jurisdiction is not easily resolved and that the alternative ground is considerably less difficult to decide." Ibid. Furthermore, when "the alternative ground is one of state law, such as personal jurisdiction, `federalism concerns' may `tip the scales in favor' of first deciding the question of subject-matter jurisdiction, especially if the state law issue is not easily resolved." Ibid. (citations omitted). Consequently, this Court has the discretion to decide what motion to address first but that, all else equal, it should first address plaintiff's motion to remand.
Applying Cantor Fitzgerald here, this Court finds that the subject matter question — i.e., whether defendants timely removed this action — is easier to address than the personal jurisdiction issue, which presents a more fact-intensive analysis. This Court thus will first address plaintiff's motion to remand. Turning to the merits of such motion to remand pursuant to 28 U.S.C. § 1446(b), plaintiff contends that removal was untimely made because it was effected more than thirty days after "receipt by the defendant" of the Summons with Notice.
Savino served the Summons with Notice on the individual Gowing on January 9, 2003 and on his firm on December 18, 2002. Defendants, however, contend that the Summons with Notice*fn6 did not contain all the information necessary to determine whether this action was removable.
In resolving these arguments, this Court must address the Second Circuit Court of Appeals' decision in Whitaker v. Am. Telecasting, Inc., 261 F.3d 196 (2001). Whitaker holds that "a summons with notice may serve as an initial pleading under section 1446(b) *** [where it] enables the defendant to intelligently ascertain removability from the face of such pleading, so that in its petition for removal[, the] defendant can make a short and plain statement of the grounds for removal as required [by] 28 U.S.C. § 1446(a)." Id. at 205-206 (internal quotations omitted).
Consequently, the Summons with Notice constituted an initial pleading that started the clock for removal purposes if it contained sufficient information for Gowing to have been able to file a notice of removal.
Defendants removed this action on the basis of diversity jurisdiction. The face of the Summons with Notice contained all the necessary facts to support defendants' removal petition because it demonstrated complete diversity between Savino (New York) and defendants (Florida). Ibid. Indeed, the Summons with Notice lists Savino's New York address,*fn7 the nature of the action, the relief sought and the sum due in case of default. See N.Y.C.P.L.R. § 305(b).*fn8 Consequently, plaintiff's Summons with Notice is an "initial pleading" within the meaning of section 1446(b).
Accordingly, defendants' removal was untimely and defective because it was not effected within thirty days "after receipt by the defendant[s]." 28 U.S.C. § 1446(b).*fn9 Moreover, Savino has complied with 28 U.S.C. § 1447(c).
Nonetheless, defendants contend that the Notice with Summons did not list the addresses of either (1) the entities for whom Savino is a Co-Receiver or (2) his Co-Receiver(s).*fn10 Such, however, is of no consequence. First, only the citizenship of a receiver is relevant; the citizenship of the persons or entities in receivership are not relevant for purposes of diversity jurisdiction.*fn11 Second, Savino is the sole plaintiff and his citizenship is thus determinative for purposes of diversity jurisdiction. See 13B Charles Alan Wright et al., Federal Practice & Procedure § 3606, at 418 (2d ed. 1984) (citing Osborn v. United States Bank, 22 U.S. (9 Wheat.) 738, 856 (1824) for the proposition that diversity "jurisdiction is neither given nor ousted by the relative situation of the parties concerned in interest, but by the relative situation of the parties named on the record") (emphasis added).*fn12 Likewise here. Savino's Co-Receiver is not a party to this action, nor is he required to be.*fn13
Inasmuch as this Court finds removal to be defective, this Court will remand this action to the New York Supreme Court, County of Erie, and will not address defendants' motions to dismiss or for change of venue. Nonetheless, defendants raised colorable arguments and this Court will thus deny Savino's request for attorney's fees.
Accordingly, it is hereby ORDERED that plaintiff's motion for remand is granted, that plaintiff's request for attorneys' fees is denied, that defendants' motion to dismiss is denied as moot, that defendants' motion for change of venue is denied as moot, that this action is remanded to the New York Supreme Court, County of Erie, and that the Clerk of this Court shall close this case in this Court.
*fn2 The Ciura action involved claims against Muto for alleged financial misdeeds.
*fn3 See N.Y.C.P.L.R. § 305(b) (setting forth the conditions under which a plaintiff may initiate suit in state court by a summons and notice rather than by a complaint).
*fn4 Gowing asserts that his firm was served with the Summons and Notice on December 5, 2002 and that he was served on January 3, 2003. See Defs.' Mem. in Opp., at 1. The discrepancy in the dates of service is, however, inconsequential for purposes of the present motion.
*fn5 See also Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 586-588 (1999) ("If personal jurisdiction raises `difficult questions of [state] law,' and subject-matter jurisdiction is resolved `as eas[ily]' as personal jurisdiction, a district court will ordinarily conclude that `federalism concerns tip the scales in favor of initially ruling on the motion to remand. *** The federal design allows leeway for sensitive judgments of this sort. *** In such cases, both expedition and sensitivity to state courts' coequal stature should impel the federal court to dispose of [the subject-matter] issue first."); Codarpo Corp. v. Wilson, 997 F. Supp. 322, 323-327 (E.D.N.Y. 1998) (granting motion for remand and declining to consider motion to dismiss for lack of personal jurisdiction); Town of Moreau v. State Dep't of Envt'l Conservation, 1997 WL 243258, at *1 (N.D.N.Y. 1997) ("Because the motion for remand goes directly to the Court's power to adjudicate this dispute, [the court] will address it first.") (internal quotations omitted). This Court's decision on this point would have been greatly facilitated had either party cited to either Ruhrgas or Cantor Fitzgerald.
*fn6 Although both defendants were served with a Summons with Notice, this Court will address them as one document inasmuch as they provide the same information.
*fn7 This case is thus distinguishable from Whitaker, which involved a Summons with Notice that did not list all of the defendants' addresses. Whitaker, at 206.
*fn8 Defendants' Notice of Removal — which purports to treat the Complaint as the "initial pleading" that started the removal clock — sets forth diversity jurisdiction as the basis for removal. The basis for removal set forth in the Notice of Removal, however, contains no information that was not contained in the Summons with Notice. Accordingly, defendants' argument that the Summons with Notice did not contain adequate information that would have enabled them to file a notice of removal is disingenuous. In any event, such argument is erroneous as a matter of law.
*fn9 See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-109 (1941) (holding that removal statutes must be strictly construed); Somlyo v. J. Lu-Rob Enters., Inc., 932 F.2d 1043, 1046 (2d Cir. 1991) ("courts construe the removal statute narrowly, resolving any doubts against removability"). Savino states in his Reply memorandum that he was unable — "after exhaustive searching" — to find a case cited by Gowing. Pl.'s Reply Mem., at 2 n. 1. Although Gowing erroneously cited a case entitled Powers v. Chesapeake & O.R. Co., 151 U.S. 673 (1898), such was easily findable. See Powers v. Chesapeake & Ohio Ry. Co., 169 U.S. 92 (1898).
*fn10 Savino's Co-Receiver is a New York resident who would not defeat diversity jurisdiction in any event.
*fn11 See Mitchell v. Maurer, 293 U.S. 237, 242 (1937). Although defendants cite to Mitchell in their brief, they also suggest that the citizenship of the entities for whom Savino serves as a Co-Receiver are also relevant for purposes of diversity. See Defs.' Mem. in Opp., at 5. In any event, the citizenship of the entities for whom Savino serves as a Co-Receiver is not relevant for purposes of diversity jurisdiction. Mitchell, at 242; see also Clarkson Co., Ltd. v. Shaheen, 544 F.2d 624, 628 (2d Cir. 1976) ("[T]he general common law rule [is] that courts will look to the citizenship of a trustee, receiver, administrator, or other representative, and not the party which he represents, in determining diversity jurisdiction.").
*fn12 See also Lilly v. Sisk, 1999 WL 370060, at *1 (W.D.Va. 1999) ("The rule in federal court is that the citizenship of the named plaintiffs need [sic] be diverse from that of defendants") (emphasis added).
*fn13 See Jefferson v. Ametek, Inc., 86 F.R.D. 425, 426 (D.Md. 1980) (noting that diversity existed if the insured was the sole plaintiff but that diversity would have been destroyed had the insurer and the insured sued as co-plaintiffs); Id. at 426-428 (discussing Osborn and finding that diversity existed even where insurer was named as a "use plaintiff"). Moreover, this Court finds that a co-receiver may prosecute an action as the sole plaintiff based on policy considerations that favor a presumption that a plaintiff is the master of the complaint. Indeed, this policy consideration is demonstrated by the deference accorded a plaintiff's choice of forum, law and parties. Cf. Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 70 (2d Cir. 2003) ("It is familiar law that a plaintiff's choice of forum is entitled to substantial deference."); NYSEG v. N.Y. Independent Sys. Operator, Inc., 2001 WL 34084006, at *2 (N.D.N.Y. 2001) ("Under the well-pled complaint rule, plaintiff is the master of the complaint and is free to avoid federal jurisdiction by relying exclusively on state law even where federal claims are also available."); Jefferson, at 426.