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ALLSTATE INSURANCE COMPANY v. ZHIGUN

January 29, 2004.

ALLSTATE INSURANCE COMPANY, NATIONAL-BEN FRANKLIN INSURANCE COMPANY OF ILLINOIS, THE CONTINENTAL INSURANCE COMPANY, FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, BUCKEYE UNION INSURANCE COMPANY, GLEN FALLS INSURANCE COMPANY, and BOSTON OLD COLONY INSURANCE CO, Plaintiffs, -against- GARRI ZHIGUN, VIRENDRA BHAREL, M.D., MIRON FAYNGERSH, M.D., GENNADY FINKELBERG a/k/a GENA FINKELBERG, GENNADY KISELMAN, STEVE ZELTSER a/k/a VLADISLAV ZELTSER, YAKOV MELMAN a/k/a JACK MELMAN, KONSTANTIN MARKEVICK, ANATOLI POPILEVSKY, ROMAN POPILEVSKY, ALEXANDER VAYNER, ZAKHAR VOLOZIN, LEONID TYLMAN, PACIFIC MEDICAL, P.C., ESSENTIAL MEDICAL SERVICES, P.C., COMPLETE MEDICAL OF NEW YORK, P.C, BIOTECH SURGICAL SUPPLIES, INC., TRANS MEDICAL SUPPLIES, INC., MEDTCH MEDICAL SUPPLIES, INC., FOSTER MEDICAL EQUIPMENT & SUPPLIES, INC., CERTIFIED HEALTH PRODUCTS, INC., ORTHO MED DISTRIBUTORS, INC., UMBER MEDICAL DISTRIBUTORS, INC., MED CARE PRODUCTS, INC., RODNEY HAWKINS, QUENTIN HAWKINS, JOHN DOES 1 THROUGH 20, JANE DOES 1 THROUGH 20, ABC CORPORATIONS 1 THROUGH 20, AND XYZ CORPORATIONS 1 THROUGH 20. Defendants


The opinion of the court was delivered by: SIDNEY STEIN, District Judge

OPINION & ORDER

Four defendants have removed this action from New York Supreme Court, New York County, to the United States District Court of the Southern District of New York pursuant to 28 U.S.C. § 1441(a). However, because all defendants over whom the state court had acquired jurisdiction did not join in the notice of removal, this action is remanded to the state court in which it was originally filed. Page 2

I. Background

  This action was filed in Supreme Court, New York County, on November 20, 2003. Plaintiff insurance companies allege that defendants violated the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, 1962(c) & (d) and 1964(c), and New York statutes and common law, and seek relief from fifty-five named and unnamed individual defendants and fifty-one named and unnamed corporate defendants. In general, the complaint alleges that defendants engaged in schemes to submit false claims to the insurance companies.

  On the last day of 2003, four defendants — Miron Fayngersh, M.D., Pacific Medical, P.C., Jack Melman and Konstantin Markevich — petitioned for removal of the state action to this Court pursuant to 28 U.S.C. § 1441 (a) on the grounds that the RICO claims in the complaint are federal questions, and therefore this Court has original jurisdiction over the complaint because it is a "civil action[] arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331.

  In their notice of removal, those four defendants represented that the removal was timely because it was made within thirty days of their receipt of the summons and complaint, as required by 28 U.S.C. § 1446(b). (Def.'s Not. Removal, p. 3). They did not represent whether the other defendants who had been served with process had consented to removal. As of December 31, 2003, when defendants filed the notice of removal, eighteen defendants had been served with the Summons and Complaint in this action. (Pl.'s Mem. Supp. Remand, Exh. 1, "Affidavits of Service").

  On January 12, 2004, this Court ordered the removing defendants to show cause why this action should not be remanded to the state court based on their failure to comply Page 3 with the statutory requirements of 28 U.S.C. § 1447(c) in preparing the notice of removal. Oral argument was heard on that motion on January 20, 2004.

  At that argument, counsel for the removing defendants stated that he had spoken with plaintiffs' counsel prior to removing this action and was informed by him that other defendants, in addition to the removing defendants, had been served in the state court with process. (See Trans. Oral Arg., Jan. 20, 2004, p. 5-8).

 II. Discussion

  A. Removal Generally

  Pursuant to 28 U.S.C. § 1441, a civil action initially filed in state court may be removed by the defendant to the federal district court embracing the place where the state court action is pending if the district court has original subject matter jurisdiction over the plaintiff's claim. See Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269, 271 (2d Cir. 1994).*fn1

  The procedures governing a removal pursuant to 28 U.S.C. § 1441 are set forth in 28 U.S.C. § 1446 and 1447. Section 1446 requires a defendant to take certain steps in order to remove an action properly, and section 1447 grants any federal district court presiding over a removed action discretion to remand that action if the statutory prerequisites of section 1446 have not been met as follows:

  "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. . . ." Page 4

 Thus, the district court has thirty days from the date of the filing of the notice of removal to remand the action for a defect ...


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