United States District Court, S.D. New York
MEMORANDUM OPINION AND ORDER
ABRAMS, UNITED STATES DISTRICT JUDGE.
Anna Nocelli and Guido Nocelli filed this action in the
Supreme Court of New York. Defendant Kaiser Gypsum Company,
Inc. ("Kaiser") removed the action to federal court
on the grounds of diversity jurisdiction. Before the Court is
Plaintiffs' motion to remand. For the reasons that
follow, Plaintiffs' motion is GRANTED.
November 29, 2016, Plaintiffs, both citizens of New York,
filed this action in the Supreme Court of New York alleging
eleven causes of action related to Plaintiff Anna
Nocelli's alleged asbestos-related disease. The initial
complaint named defendants, including Union Carbide
Corporation, that were citizens of New York. Plaintiffs
allege they were legally barred from naming Kaiser as a
defendant in the initial complaint because Kaiser filed for
Chapter 11 bankruptcy protection in the Bankruptcy Court for
the Western District of North Carolina two months before
Plaintiffs filed the action, leading to an automatic
bankruptcy stay pursuant to 11 U.S.C. § 362.
See Voluntary Petition for Non-Individuals Filing
for Bankruptcy, In re Kaiser Gypsum Company, Inc.,
No. 16-31602 (JCW) (Bankr. W.D. N.C. Sept. 30, 2016). But for
Kaiser's pending bankruptcy petition, Plaintiffs allege
they would have named Kaiser as a defendant in the case from
August 9, 2018, the Bankruptcy Court issued an order lifting
the automatic stay as to certain asbestos-related personal
injury claims. See Order Lifting the Automatic Stay
Pursuant to 11 U.S.C. § 362 as to Certain Asbestos
Personal Injury Claims, In re Kaiser Gypsum Company,
Inc., No. 16-31602 (JCW) (Bankr. W.D. N.C. Aug. 9,
2018). The order set an effective date of October 29, 2018.
Id. at 3.
interim, Plaintiffs engaged in settlement negotiations with
the defendants named in the initial complaint. On the eve of
the October 9, 2018 trial, Plaintiffs resolved their claims
against the initial defendants. On October 9, 2018, the
Supreme Court of New York marked the case
"disposed" and "settled before trial."
Dkt. 8 Exs. D, E. The parties, however, never filed a
stipulation or proposed order discontinuing the action
against the initial defendants.
November 1, 2018, three days after the effective date of the
order lifting the bankruptcy stay, Plaintiffs filed a Third
Amended Complaint in the Supreme Court of New York naming
Kaiser. Kaiser was incorporated in North Carolina and
maintains its principal place of business in California. On
January 31, 2019, Plaintiffs served Kaiser with the Third
Amended Complaint. On March 1, 2019, Kaiser removed the
action to federal court on the grounds of diversity
jurisdiction. On March 22, 2019, Plaintiffs filed the instant
motion to remand.
party seeking removal bears the burden of showing that
federal jurisdiction is proper." Montefiore Med.
Ctr. v. Teamsters Local 272, 642 F.3d 321, 327 (2d Cir.
2011). "Where, as here, jurisdiction is asserted by a
defendant in a removal petition, it follows that the
defendant has the burden of establishing that removal is
proper." United Food & Commercial Workers
Union, Local 919, AFL-CIO v, CenterMark Props, Meriden
Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994).
"[R]emoval statutes are to be strictly construed against
removal and all doubts should be resolved in favor of
remand." Am. Standard, Inc. v. Oakfahco, Inc.,
498 F.Supp.2d 711, 715 (S.D.N.Y. 2007) (citations omitted):
see also Shamrock Oil & Gas Corp. v. Sheets, 313
U.S. 100, 108-09 (1941). This principle ensures "respect
for the independence of state courts." Hill v. Delta
Int'l Mack Corp., 386 F.Supp.2d 427, 429 (S.D.N.Y.
2005) (citations omitted).
civil action brought in a State court of which the district
courts of the United States have original jurisdiction, may
be removed by the defendant or the defendants, to the
district court of the United States for the district and
division embracing the place where such action is
pending." 28 U.S.C. § 1441(a). "A civil action
otherwise removable solely on the basis of [diversity
jurisdiction pursuant to 28 U.S.C. § 1332] may not be
removed if any of the parties in interest properly joined and
served as defendants is a citizen of the State in which such
action is brought." 28 U.S.C. § 1441(b)(2).
the case stated by the initial pleading is not
removable" because of the involvement of a non-diverse
defendant but later becomes removable, the removal statute
provides for two discrete time requirements. 28 U.S.C. §
1446(b)(3). First, the notice of removal must be filed
"within thirty days after receipt by the defendant,
through service or otherwise, of a copy of an amended
pleading, motion, order or other paper from which it may
first be ascertained that the case is one which is or has
become removable." Id. The parties do not
dispute that Kaiser complied with this first requirement.
Second, "[a] case may not be removed ... on the basis of
[diversity jurisdiction] more than 1 year after commencement
of the action, unless the district court finds that the
plaintiff has acted in bad faith in order to prevent a
defendant from removing the action." 28 U.S.C. §
1446(c)(1). Congress introduced this "bad faith"
exception to the one-year limit on removal of diversity cases
in 2011 to clarify that the one-year limit on removal is
procedural, not jurisdictional, and therefore does not act as
an absolute bar on removal. See Federal Courts
Jurisdiction and Venue Clarification Act of 2011, Pub.
L. No. 112-63, 125 Stat. 758 (2011); H.R.Rep. No. 112-10 at
15; see also Ehrenreich v. Black, 994 F.Supp.2d 284,
288 (E.D.N.Y. 2014).
argue that remand is warranted for two reasons. First,
Plaintiffs argue that removal was untimely under 28 U.S.C.
§ 1446(c)(1) because Kaiser filed its notice of removal
more than one year after the commencement of the action even
though Plaintiffs did not act in bad faith to prevent Kaiser
from removing the action. Second, Plaintiffs argue that removal
is improper under 28 U.S.C. § 1441(b)(2) because
complete diversity does not exist between the parties in
response, Kaiser argues first that Plaintiffs did act in bad
faith to prevent removal by naming Kaiser as a defendant in
their Third Amended Complaint after settling their claims
against all non-diverse defendants. Second, Kaiser argues
that the bankruptcy stay tolled the one-year time limit under
28 U.S.C. § 1446(c)(1). Finally, Kaiser argues that this
Court has diversity jurisdiction over the action ...