United States District Court, S.D. New York
For Ritchie Capital Management, L.L.C., Ritchie Capital Management, Ltd., Ritchie Special Credit Investments, Ltd., Rhone Holdings II, Ltd., Yorkville Investment I, L.L.C., Ritchie Capital Structure Arbitrage Trading, Ltd., Plaintiffs: James T Kim, LEAD ATTORNEY, Cole Schotz Meisel Forman & Leonard, Pa, Hackensack, NJ; Jed Matthew Weiss, LEAD ATTORNEY, Cole, Schotz, Meisel, Forman & Leonard, P.A (NYC), New York, NY; Leonel V. Leyva, Cole Schotz Meisel Forman & Leonard, P.A. (NJ), Hackensack, NJ.
For General Electric Capital Corporation, Defendant: Miles Norman Ruthberg, Roger G. Schwartz, LEAD ATTORNEY, Tyler Ulrich Nims, Latham & Watkins LLP (NY), New York, NY; Robert John Malionek, LEAD ATTORNEY, Latham & Watkins, LLP, New York, NY; Sean M. Berkowitz, LEAD ATTORNEY, PRO HAC VICE, Latham & Watkins LLP, Chicago, IL.
OPINION & ORDER
PAUL A. ENGELMAYER, United States District Judge.
Pending before the Court are two motions: (1) a motion by Ritchie Capital Management, LLC and its five fellow plaintiffs (collectively, " Ritchie" ) to remand this case to state court, on the ground that defendant General Electric Capital Corporation's
(" GECC" ) notice of removal was untimely; and (2) GECC's motion for a stay of this action until its pending motion for the transfer and consolidation of this case with others is resolved by the Judicial Panel on Multidistrict Litigation (" JPML" ). For the reasons that follow, the Court denies Ritchie's motion for remand, and otherwise grants GECC's motion for a stay pending the resolution of GECC's motion before the JPML.
I. Factual and Procedural Background
In or around 2000, GECC had a brief lending relationship with two entities affiliated with Thomas Petters. Dkt. 8, Ex. A. In 2008, Ritchie invested with Petters and allegedly lost $157 million. Dkt. 1, Ex. A. In 2009, Petters was convicted of committing a $3.65 billion Ponzi scheme and sentenced to 50 years' imprisonment. See United States v. Thomas J. Petters, No. 08 Cr. 364 (RHK) (AJB) (D. Minn.); see generally U.S. Dept. of Justice News Release, " Tom Petters sentenced to 50 years in federal prison for orchestrating $3.7 billion Ponzi scheme," Apr. 8, 2010, available at http://www.justice.gov/usao/mn/econ/econ0413.pdf (last visited January 13, 2015).
On September 23, 2014, Ritchie filed suit against GECC in New York State Supreme Court in Manhattan, initiating the suit by means of a Summons with Notice. Dkt. 1, Ex. A. Ritchie alleged that GECC had discovered Petters' Ponzi scheme in 2000, but had chosen not to disclose the fraud in order " to insure that GECC would be paid" back. Id. Ritchie alleged that by 2002, GECC had " ma[d]e a large profit" from its business with Petters, and thereafter allowed Petters to " use GECC's recommendation" and reputation in order " to victimize many more lenders, including [Ritchie] in February 2008." Id. Ritchie sought at least $157 million in damages from GECC. Id. Its causes of action, all under state law, include conspiracy to defraud and aiding and abetting Petters' fraud. Id.
On September 25, 2014, GECC was served with Ritchie's Summons with Notice. Dkt. 16, Ex. B. Under 28 U.S.C. § 1446(b)(1), a party has 30 days to remove a case from state court to federal court. Although, as reviewed below, the parties disagree whether the 30-day clock for measuring the removal deadline began to run on the date of service, they agree that, if it did, under the Rules of Civil Procedure, the 30th day after September 25, 2014 was Monday, October 27, 2014.
For purposes of diversity jurisdiction, GECC is a citizen of Delaware and Connecticut. Dkt. 24, at 5. The citizenship of the six plaintiffs, however, was not disclosed in the Summons with Notice. See Dkt. 1, Ex. A. Two are LLCs, which have the citizenship of each of their members. Handelsman v. Bedford Vill. Assocs. Ltd. P'ship, 213 F.3d 48, 51-52 (2d Cir. 2000).
In the month after the Summons with Notice was served, GECC repeatedly asked Ritchie's attorneys to disclose their clients' citizenship. Dkt. 25, Exs. B, C, D, E, F, G, I, J, K. GECC sought Ritchie's citizenship by email on at least four different occasions (October 8, 2014; October 15, 2014; October 23, 2014; and October 28, 2014); GECC also requested Ritchie's citizenship telephonically several times (October 8, 2014; October 27, 2014; October 28, 2014). Each time, Ritchie's counsel responded not by answering the question, but by stating that it would check with its clients and " get back to you." See, e.g., id. Exs. C, E, G. In an October 27, 2014 email, GECC's attorney also asked Ritchie's attorney to " confirm that the date of service of the Summons with Notice was 9/29/14." Id. Ex. I. Ritchie's attorney replied that " I believe that is the correct date, but I will double check and confirm." Id. Ex. J.
On October 28, 2014, Ritchie's attorney informed GECC telephonically that (1) Ritchie was not a citizen of Connecticut or Delaware, and (2) the correct date of service was actually September 25, not September 29, 2014. Dkt. 25.
The next day--October 29, 2014--GECC filed its notice of removal. Dkt. 1. The notice recited two grounds for removal: (1) diversity of citizenship, and (2) that the action is " related to" two bankruptcy proceedings currently ongoing in federal court. Id.
On November 14, 2014, GECC filed a motion with the JPML, seeking the transfer and consolidation of four actions pursuant to 28 U.S.C. § 1407. See Dkt. 7. As GECC explained, Ritchie's suit against GECC is the fourth suit filed against GECC arising out of its relationship with Petters' affiliates. Each suit alleges that GECC discovered Petters' Ponzi scheme but agreed with Petters not to disclose it in exchange for repayment of GECC's existing loans to Petters. See Dkt. 8, Ex. A (citing Mukamal v. Gen. Elec. Capital Corp. (In re Palm Beach Finance Partners, L.P.), No. 9:12-ap-01979 (Bankr. S.D. Fla.); Gecker v. Gen. Elec. Capital Corp., No. 14 Civ. 08447 (N.D.Ill.); Greenpond South, LLC v. Gen. Elec. Capital Corp., No. 14 Civ. 01214 (D. Minn.)). Ritchie has opposed GECC's motion for consolidation and transfer. Dkt. 22, at 1. The JPML next meets on January 29, 2015. Dkt. 10, at 9.
On November 24, 2014, GECC moved this Court for a stay of all pretrial proceedings until the JPML rules on GECC's consolidation motion. See Dkt. 8-10.
On November 26, 2014, Ritchie moved for remand to state court. See Dkt. 14-16. Ritchie acknowledged that the case meets the requirements of diversity jurisdiction, in that the parties are diverse and the amount in controversy exceeds $75,000. However, Ritchie argued, GECC's removal was untimely because it came 32 days after GECC had been served, ...