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Palmeira v. Cit Bank, N.A.

United States District Court, D. Hawaii

August 10, 2017

AURALEE J. PALMEIRA AND ADELE PALMEIRA-SHINN, Plaintiffs,
v.
CIT BANK, N.A., f/k/a ONEWEST BANK, FSB; FEDERAL HOME LOAN MORTGAGE CORPORATION; KALEI B. COLRIDGE; and DOE DEFENDANTS 1-50, Defendants.

          FINDINGS AND RECOMMENDATION TO GRANT PLAINTIFFS' MOTION FOR AN ORDER OF REMAND [1]

          Richard L. Puglisi United States Magistrate Judge.

         Before the Court is Plaintiffs' Motion for an Order of Remand, filed on July 7, 2017 (“Motion”). ECF No. 21. Defendant Kalei B. Colridge filed her Opposition on July 21, 2017. ECF No. 23. Defendants CIT Bank, N.A., f/k/a Onewest Bank N.A., f/k/a Onewest Bank, FSB and Federal Home Loan Mortgage Corporation (collectively the “Mortgagee Defendants”) filed a Joinder in Defendant Colridge's Opposition on July 21, 2017. ECF No. 24.

         Plaintiffs filed their Reply on August 4, 2017. ECF No. 25. The Court found this matter suitable for disposition without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawaii. ECF No. 22. After carefully reviewing the submissions of the parties and the relevant legal authority, the Court FINDS that this case was not properly removed. Accordingly, the Court RECOMMENDS that the district court GRANT Plaintiffs' Motion.

         BACKGROUND

         Plaintiffs initially filed this action on June 30, 2016, in the Circuit Court of the Fifth Circuit, State of Hawaii. See ECF No. 1 ¶1. The Mortgagee Defendants were served with Plaintiffs' First Amended Complaint on September 27, 2016. ECF No. 7 at 3. The Mortgagee Defendants filed their Answer on October 17, 2016. Id. Defendant Colridge was served with the First Amended Complaint on May 23, 2017. ECF No. 1 ¶ 15.

         Defendant Colridge filed her Notice of Removal based on diversity jurisdiction on June 9, 2017, seventeen days after she was served. Id. ¶ 13. In the Notice of Removal, Defendant Colridge states that the Mortgagee Defendants were served and answered the First Amended Complaint in 2016. Id. ¶¶ 3, 16. The Notice of Removal, signed only by Defendant Colridge's counsel, does not state that the Mortgagee Defendants consent to removal or join in the removal. Id. On June 26, 2017, thirty-four days after Defendant Colridge was served, the Mortgagee Defendants filed a Consent to and Joinder in Defendant Kalei B. Colridge's Notice of Removal (“Consent”). See ECF No. 7. In that Consent, the Mortgagee Defendants state that counsel for Defendant Colridge sought and obtained the Mortgagee Defendants' counsel's verbal consent by telephone to remove this case on June 7, 2017. Id. at 3; ECF No. 7-1 ¶ 4. On June 27, 2017, Defendant Colridge filed a “Supplement” to her Notice of Removal stating that removal was timely because the Mortgagee Defendants gave verbal consent to removal to counsel for Defendant Colridge and the Mortgagee Defendants' Consent was filed within thirty days of the Notice of Removal. See ECF No. 11. The present Motion followed.

         DISCUSSION

         Any civil action filed in state court over which the federal courts have original jurisdiction may be removed to federal court by the defendants. See 28 U.S.C. § 1441(a). As noted above, Defendant Colridge's Notice of Removal states that this court has original jurisdiction based on diversity. See ECF No. 1. “The removal statute is strictly construed, and any doubt about the right of removal requires resolution in favor of remand.” Moore-Thomas v. Alaska Airlines, Inc., 552 F.3d 1241, 1244 (9th Cir. 2009); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.”). The defendant who invokes the federal court's removal jurisdiction has the burden of establishing that removal was proper. Washington v. Chimei Innolux Corp., 659 F.3d 842, 847 (9th Cir. 2011).

         Section 1446 provides that the notice of removal shall be filed within 30 days after receipt by the defendant of the initial pleading or, if the case is not initially removable, within 30 days after receipt by the defendant of a copy of a paper from which it may first be ascertained that the case is removable. See 28 U.S.C. § 1446(b)(1)-(3). The Ninth Circuit has held that Section 1446's “time limit is mandatory and a timely objection to a late petition will defeat removal.” Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir. 1980); Smith v. Mylan Inc., 761 F.3d 1042, 1045 (9th Cir. 2014); Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136, 1142 n.4 (9th Cir. 2013).

         Additionally, under the “rule of unanimity, ” all defendants who have been properly joined and served must join in or consent to the removal of the action. Id. § 1446(b)(2)(A). If a later-served defendant files a notice of removal, the earlier-served defendants may consent to the removal even though they did not seek or consent to removal. Id. § 1446(b)(2)(C). The Ninth Circuit has held that “where fewer than all the defendants have joined in a removal action, the removing party has the burden under section 1446(a) to explain affirmatively the absence of any co-defendants in the notice for removal.” Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1266 (9th Cir. 1999) (emphasis added) (superseded by statute on other grounds as recognized by Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 681 (9th Cir. 2006) (noting that the judicially-created rule of unanimity applied by the Ninth Circuit no longer applied to the removal of class actions pursuant to 28 U.S.C. § 1453(b))).

         1. Defendant Colridge's Notice of Removal Was Procedurally Defective Because it Failed to Explain the Absence of the Mortgagee Defendants' Consent or Joinder.

         Although Defendant Colridge's Notice of Removal was filed within 30 days after she was served with the First Amended Complaint, there is no dispute that Defendant Colridge's Notice of Removal does not state that the Mortgagee Defendants consent to or join in the removal. See ECF No. 1. As noted above, “all defendants who have been properly joined and served must join in or consent to the removal of the action.” 28 U.S.C. § 1446(b)(2) (A); Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208, 1224 (9th Cir. 2009) (“In a case involving multiple defendants, all defendants must join in a removal petition.” (citation omitted)). Additionally, in the Ninth Circuit, the removing defendant “has the burden to explain affirmatively the absence of any co-defendants in the notice for removal.” Prize Frize, Inc., 167 F.3d at 1266. Defendant Colridge's Notice of Removal is silent as to the Mortgagee Defendants' absence. See ECF No. 1. The fact that the Mortgagee Defendants provided verbal consent to removal to Defendant Colridge's counsel is of no effect because that consent was not reflected in the Notice of Removal. Although the Ninth Circuit has held that the removing defendant's written averment in the notice that all defendants consent to removal is sufficient, see Proctor, 584 F.3d at 1225, there is no authority for Defendant Colridge's argument that verbal consent that is not reflected in the written notice is sufficient. Because Defendant Colridge failed to affirmatively explain the absence of the co-defendants in the Notice of Removal, the Notice of Removal was procedurally defective.

         Defendant Colridge also appears to argue that the Ninth Circuit's requirement that the removing defendant has the burden to affirmatively explain the co-defendant's absence in the notice of removal articulated in Prize Frize, Inc. is no longer applicable because that case was decided before the rule of unanimity was codified by Section 1446(b)(2)(A) in 2011. See ECF No. 23 at 12. The Court rejects this argument. Since 2011, district courts in this circuit have routinely held that a notice of removal that fails to affirmatively explain the absence of the co-defendants is deficient and subject to remand. See, e.g., Chandler v. Whiting Oil and Gas Co., No. CV16161BLGSPWTJC, 2017 WL 3131108, at *3-*5 (D. Mont. June 19, 2017), report and recommendation adopted, No. CV 16-161-BLG-SPW, 2017 WL 3172752 (D. Mont. July 24, 2017) (holding that a defendant's notice of removal was defective because it failed to affirmatively explain a co-defendant's absence in the notice for removal); Pioneer Asset Inv. Ltd. v. Arlie & Co., No. CV 15-00387 ACK-KSC, 2015 WL 9665667, at *2 (D. Haw. Dec. 14, 2015), report and recommendation adopted, No. CV 15-00387-ACK-KSC, 2016 WL 70445 (D. Haw. Jan. 5, 2016) (rejecting the removing defendant's argument that its representation about the co-defendant's anticipated consent was sufficient); Allen v. Wells Fargo Bank NA, No. CV-14-08176-PCT-DLR, 2014 WL 11497805, at *2 (D. Ariz. Nov. 14, 2014) (“Wells Fargo failed to affirmatively allege and explain the absence of its co-defendant in the removal notice, which itself constitutes a procedural defect that subjects the action to remand.”); Idaho v. Friends of Weiser River Trail, Inc., No. 1:12-CV-00456-EJL, 2013 WL 2338240, at *2 (D. Idaho May 28, 2013) (holding that because the removing defendant failed to provide an explanation of the co-defendants' absence in the notice of removal, the notice was procedurally defective). The Court finds that Defendant Colridge's Notice of Removal was procedurally deficient because it did not contain an affirmative explanation of the Mortgagee Defendant's absence.

         2. Neither the Mortgagee Defendants' Consent, filed on June 26, 2017, nor Defendant Colridge's Supplement, filed onJune 27, ...


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