The opinion of the court was delivered by: RICHARD HOLWELL, District Judge
MEMORANDUM OPINION AND ORDER
This action arises out of the alleged failure to pay a
promissory note owed by defendants Phoenix Hotel Associates, Ltd.
("PHAL"), Condor Investment Group ("Condor"), Phoenix Hotel
Associates ("PHA") and Central & Adams Management Co. ("Central &
Adams") (collectively "defendants") to Phoenix Global Ventures,
LLC ("Phoenix Global"). PHAL, Condor and PHA filed a notice of
removal from state court pursuant to 28 U.S.C. § 1441. Phoenix
Global now moves to remand this action back to state court
pursuant to 28 U.S.C. § 1447. For the reasons set forth below,
the Court grants Phoenix Global's motion and remands this action
to state court.
Plaintiff Phoenix Global is a Connecticut limited liability
corporation with two members who reside in New York. (Aff. of
Michael Milea ¶ 3.) PHAL is a California partnership that
includes three general partners Condor, PHA, and Central &
Adams and has its principal place of business located in
Arizona. (Pl.'s Mem. in Supp. of Mot. to Remand at 2.) Condor is a Delaware corporation with its
principal place of business in Arizona; PHA is a Nevada
corporation with its principal place of business in Arizona; and
Central & Adams is a California corporation with its principal
place of business also in California. (Id.)
Defendants executed a note on November 17, 1999, originally
promising to pay $12,000,000 to Reciprocal Capital Services.
(Defs.' Notice of Removal, Ex. A at 1.) Reciprocal Capital
Services then assigned the rights, title, interest and payments
owed thereunder to Phoenix Global on September 24, 2003, in an
agreement signed by defendants, Phoenix Global and Reciprocal
Capital. (Id., Ex. B at 2; Affirmation of John P. Gulino, Ex. 2
at 2.) Phoenix Global alleges that defendants failed to make the
payments due on the promissory note, and that on February 27,
2004, plaintiff sent notice of default, as well as the
acceleration of the debt, to each defendant by certified mail.
(Aff. of Michael Milea ¶ 4.)
On May 11, 2004, Phoenix Global initiated a lawsuit against
defendants to recover $15,600,000 owed on the note in the Supreme
Court of the State of New York, County of New York in an action
entitled Phoenix Global Ventures, LLC v. Phoenix Hotel
Associates, Ltd., Condor Investment Group, Phoenix Hotel
Associates Limited, and Central & Adams Mgmt. Co., Index No.
107236/04. (Id. at 1.) In so doing, Phoenix Global served
Condor and Central & Adams a Summons of Notice of Motion for
Summary Judgment in Lieu of Complaint on May 21, 2004.
(Affirmation of John P. Gulino ¶ 2.) The remaining defendants
were served through their authorized and registered agents by
June 1, 2004. (Id.) PHAL, Condor and PHA then filed a notice of removal on June 25,
2004, seeking to remove the action from state court to the United
States District Court of the Southern District of New York
pursuant to the federal removal statute, 28 U.S.C. § 1441, and
the federal diversity statute, 28 U.S.C. § 1332. In response,
Phoenix Global's counsel, John P. Gulino ("Gulino"), prepared a
motion to remand back to state court, which he alleges was ready
to serve and file on July 25, 2004 a day before the motion was
due. (Reply Affirmation of John P. Gulino ¶ 3.)
Unfortunately, Gulino had never been involved in a case using
the electronic case filing ("ECF") system and was therefore "not
familiar with the computer procedures involved." (Id.) As such,
he was "wholly ignorant of the process or procedures" of using
the ECF system. (Id.) Upon obtaining the passwords and programs
in a timely manner, Gulino nevertheless discovered that the
exhibits accompanying the prepared motion to remand were
unacceptable for filing. (Id.) In effect, Gulino alleges, the
"program that scanned the exhibits and converted [them] to [PDF]
format created files much too large." (Id.)
By the end of the afternoon on July 26, 2004, Gulino was
"assured that all the files had been accepted and the motion was
filed" before leaving his office. (Id.) However, although the
ECF system had accepted all of the documents, it ultimately
rejected the filing because an unacceptable hearing date had been
entered. (Id.) Gulino did not discover this error until the
next morning, at which point he entered a valid date into the
system and the documents were accepted on July 27, 2004. (Id.)
Presently, the threshold issue is whether defendants properly
removed this action from state court to federal court. The
secondary issue is whether Phoenix Global waived its right to remand this action to state court by filing its
motion to remand in an untimely fashion. The Court now turns to
the merits of these questions.
A civil action initially brought in state court may be removed
by the defendant to federal court, provided that the "district
courts of the United States have original jurisdiction."
238 U.S.C. § 1441(a). In order for "removal to be considered proper,
the removing party must demonstrate that this Court is endowed
with the requisite subject matter jurisdiction." Frontier
Insurance Co. v. MTN Owner Trust, 111 F. Supp. 2d 376, 378
(S.D.N.Y. 2000) (citation omitted). Indeed, it is well settled
that "the party seeking to preserve the district court's removal
jurisdiction, typically the defendant, not the party moving for
remand to state court, typically the plaintiff," bears the burden
of showing that removal is appropriate in the first instance.
Charles Alan Wright, Arthur R. Miller, Edward H. Cooper, Federal
Practice and Procedure, § 3739 at 424 (3d Ed. 1998); Ryan v. Dow
Chemical Corp., 781 F. Supp. 934, 939 (E.D.N.Y. 1992). Moreover,
removal statutes are to be "strictly construed." State of N.Y.
v. Lutheran Center for Aging, Inc., 957 F. Supp. 393, 397
(E.D.N.Y. 1997) (citing cases). If there is any doubt as to
whether removal is appropriate, the case should be remanded.
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