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PHOENIX GLOBAL VENTURES, LLC v. PHOENIX HOTEL ASSOCIATES

October 19, 2004.

PHOENIX GLOBAL VENTURES, LLC, Plaintiff,
v.
PHOENIX HOTEL ASSOCIATES, LTD., CONDOR INVESTMENT GROUP, PHOENIX HOTEL ASSOCIATES, and CENTRAL & ADAMS MANAGEMENT CO., Defendants.



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.

FACTS

  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.

  DISCUSSION

  I. Motion to Remand

  A. Standard of Review

  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. Wilds v. United Parcel Service, Inc., 262 F. Supp. ...


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