United States District Court, D. Hawaii
PAUL W. LEWIS; CONNIE K. LEWIS, Plaintiffs,
HSBC BANK USA, N.A.; MICHAEL JAMES MARTIN; COLLEEN ANN JERGENS; WELLS FARGO BANK, N.A.; DOE DEFENDANTS 1-50, Defendants.
FINDINGS AND RECOMMENDATION TO GRANT PLAINTIFFS'
MOTION FOR AN ORDER OF REMAND
S.C. Chang, United States Magistrate Judge
the Court is Plaintiffs Paul and Connie Lewis'
(collectively “Plaintiffs”) Motion for an Order
of Remand, filed June 22, 2017. Defendants Wells Fargo Bank
N.A. (“Wells Fargo”), Michael James Martin
(“Martin”), and Colleen Ann Jergens
(“Jergens”) (collectively “Removing
Defendants”) filed an Opposition on July 31, 2017,
which Defendant HSBC Bank USA, N.A.
(“HSBC”) joined. On August 7, 2017, Plaintiffs
filed a Reply.
matter came on for hearing on August 21, 2017. John Perkin,
Esq., appeared on behalf of Plaintiffs; Summer Kaiawe, Esq.,
and Michael Bird, Esq., appeared on behalf of Removing
Defendants; and Blaine Rogers, Esq., appeared on behalf of
HSBC. After careful consideration of the parties'
submissions, the record, the applicable law, and the
arguments of counsel, the Court HEREBY RECOMMENDS that
Plaintiffs' Motion be GRANTED for the reasons set forth
February 8, 2017, Plaintiffs commenced this action against
Defendants in the Circuit Court of the Fifth Circuit, State
of Hawaii. Plaintiffs filed a First Amended Complaint
(“FAC”) on February 15, 2017.
Fargo was served with the FAC on April 27, 2017. Martin and
Jergens were served on May 7, 2017.
23, 2017, Defendants removed the action on the basis of
diversity jurisdiction. Notice of Removal
(“Notice”) at ¶ 10. Included in the Notice
was the following averment:
Based upon a review of the public docket for the State Court
Action accessed on Ho‘ohiki on May 24, 2017,
return of service as to HSBC has been filed. Upon information
and belief, it does not appear that HSBC has been served with
the FAC. As a result, HSBC's consent to removal is not
Id. at ¶ 8.
22, 2017, Plaintiffs filed the instant Motion.
12, 2017, HSBC filed a Consent and Joinder in the Notice. In
the Consent and Joinder, HSBC represented that its counsel
informed removing defense counsel on June 26, 2017 that it
consented to removal of the action.
seek remand of this action to state court. They argue that
the Notice is defective because HSBC failed to timely consent
to and join in the removal, and the time for doing so has
expired. Removing Defendants respond that HSBC's consent
was not required because they were unaware that HSBC had been
served when they removed this action, and that consent was
timely given subsequent to removal. In addition, Removing
Defendants contend that even if HSBC's consent was
untimely, Plaintiffs have failed to establish
Removal Was Procedurally Defective
Defendants removed the instant case on the basis of diversity
of citizenship. Under 28 U.S.C. § 1441, a defendant may
remove a civil action brought in a state court to federal
district court if the district court has original
jurisdiction. Abrego Abrego v. The Dow Chemical Co.,
443 F.3d 676, 679-80 (9th Cir. 2006). “Removal . . .
statutes are ‘strictly construed, ' and a
‘defendant seeking removal has the burden to establish
that removal is proper and any doubt is resolved against
removability.'” Hawaii ex rel. Louie v.
HSBC Bank Nevada, N.A., 761 F.3d 1027, 1034
(9th Cir. 2014) (quoting Luther v. Countrywide Home Loans
Serv. LP, 533 F.3d 1031, 1034 (9th Cir.2008));
Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252
(9th Cir. 2006); California ex rel. Lockyer v. Dynegy,
Inc., 375 F.3d 831, 838 (9th Cir. 2004).
is a strong presumption against removal jurisdiction, which
“means that the defendant always has the burden of
establishing that removal is proper, ' and that the court
resolves all ambiguity in favor of remand to state
court.” Hunter v. Philip Morris USA, 582 F.3d
1039, 1042 (9th Cir. 2009) (quoting Gaus v. Miles,
Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam));
California ex rel. Lockyer, 375 F.3d at 838
(“[T]he burden of establishing federal jurisdiction
falls to the party invoking the statute.”);
Durham, 445 F.3d at 1252 (Courts resolve any doubts
about the propriety of removal in favor of remanding the case
to state court). Courts should presume that a case lies
outside the limited jurisdiction of the federal courts.
Hunter, 582 F.3d at 1042.
as the rule of unanimity, 28 U.S.C. § 1446(b)(2)(A)
requires “all defendants who have been properly joined
and served [to] join in or consent to the removal of the
action.” 28 U.S.C. § 1446(b)(2)(A); Destfino
v. Reiswig, 630 F.3d 952, 956 (9th Cir. 2011) (citations
omitted); Proctor v. Vishay Intertechnology Inc.,
584 F.3d 1208, 1224 (9th Cir. 2009) (“In a case
involving multiple defendants, ‘[a]ll defendants must
join in a removal petition.'”) (citation omitted)
(alteration in original). Excepted from this rule are
nominal, fraudulently joined or unknown defendants,
Emrich v. Touche Ross & Co., 846 F.2d 1190, 1193
n.1 (9th Cir. 1988); Abrego, 443 F.3d at 680
(citation omitted), and defendants that have not been
properly served in the state court action. Salveson v.
Western States Bankcard Ass'n, 731 F.2d 1423, 1429
(9th Cir. 1984), overruled on other grounds by Ethridge
v. Harbor House Rest., 861 F.2d 1389 (9th Cir. 1988). A
defendant's failure to join is fatal under § 1446.
See Pressman v. Meridian Mortgage Co., 334 F.Supp.2d
1236, 1240-41 (D. Haw. 2004) (citing Hewitt v. City of
Stanton, 798 F.2d 1230, 1232-33 (9th Cir. 1986));
Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d
1261, 1266 (9th Cir. 1999), overruled on other grounds by
Abrego, 443 F.3d at 670 (“[T]he failure to adhere
to the unanimity rule is dispositive.”).
fewer than all defendants join in removal, the removing party
has the burden, under § 1446(a), of affirmatively
explaining the absence of the non-joining defendant(s) in the
notice of removal. Prize Frize, 167 F.3d at 1266
(finding the removal notice insufficient where it stated that
the defendants believed that many, rather than all, of the
non-consenting defendants were not properly served). Insofar
as HSBC was served on May 1, 2017, removing Defendants were
required to obtain HSBC's consent prior to removing the
action, and their failure to do so renders the Notice
Removing Defendants Failed to Obtain HSBC's Consent
or Joinder in the Notice
Defendants argue that they were not required to obtain
HSBC's consent because it was not a “[k]nown
[p]roperly [s]erved and [j]oined [d]efendant at the [t]ime of
[r]emoval, ” Opp'n at 7, as no proof of service was
posted on Ho‘ohiki at the time of removal.
Id., Decl. of Summer H. Kaiawe (“Kaiawe
Decl.”), Ex. A (reflecting no proof of service for HSBC
in the case document list on May 23, 2017). They further
contend that they were reasonably diligent in their effort to
ascertain whether HSBC had been served, and in any event,
that they properly explained HSBC's absence in the
Notice. Presently at issue is not whether they explained
HSBC's absence, but whether, prior to removal, they
exercised reasonable diligence in attempting to ascertain the
status of service upon HSBC.
Removing Defendants Failed to Exercise Reasonable
support their assertion of diligence, Removing Defendants
submit that 1) they reviewed Ho‘ohiki on May 23, 2017,
prior to filing the Notice, and no proofs of service were on
the document list and 2) on May 17, 2017, they contacted
David Rosen, Esq., who represented HSBC in another action,
but Mr. Rosen was unaware of this action. After considering
the record before it, the Court is unpersuaded that Removing
Defendants' efforts constitute reasonable diligence in
authority exists regarding the extent of a removing
defendant's duty to ascertain whether co-defendants have
been served at the time the notice of removal is filed.
However, many courts require the consent of served
co-defendants, regardless of the filing of proofs of service,
and they find that diligence is lacking when removing
defendants merely check the state court record for proofs of
service as to co-defendants. See, e.g.,
Barbera v. WMC Mortg. Corp., No. C 08-02677 SBA,
2009 WL 742843, at *2 (N.D. Cal. Mar. 18, 2009) (“[T]he
obligation to join all defendants is based on whether the
defendant actually has been served, not on the subjective
knowledge of the removing party.”); Career Network,
Inc. v. Wot Servs., Ltd., No.6:10-CV-1826-ORL-31, 2011
WL 397906, at *2 (M.D. Fla. Feb. 3, 2011) (holding that
because service was effected prior to removal, a
co-defendant's consent to the removal was required even
though the proofs of service were not filed prior to
removal); AGI Pub., Inc. v. HR Staffing, Inc., No.
1:12-CV-00879-AWI, 2012 WL 3260519, at *6 (E.D. Cal. Aug. 8,
2012) (finding a lack of diligence sufficient to excuse the
removing defendant's failure to join its co-defendants
where the removing defendant 1) had knowledge that one
defendant had been served prior to removal and 2) checked the
docket once, eight days prior to removal, but did not recheck
or consult the state court clerk's office); Orozco v.
EquiFirst Corp., No. CVC08-8064PA(CWX), 2008 WL 5412364,
at *1 (C.D. Cal. Dec. 22, 2008) (“A removing defendant
must exercise due diligence to ascertain if other defendants
have been served, and simply checking if a proof of service
has been filed with the court is insufficient.”);
Pianovski v. Laurel Motors, Inc., 924 F.Supp. 86, 87
(N.D. Ill. 1996) (deeming insufficient the removing
defendant's phone call to the clerk and instruction to a
docketing employee and explaining that the removing defendant
should have taken the further step of attempting to contact
the co-defendant to determine whether it had been served);
Sasser v. Florida Pond Trucking, LLC, No.
1:16-CV-252-WKW-PWG, 2016 WL 3774125, at *6 (M.D. Ala. June
24, 2016), report and recommendation adopted, 2016
WL 3769754 (M.D. Ala. July 14, 2016) (concluding that the
removing defendant's due diligence requires more than a
mere check of state court records to see if proofs of service
have been filed as to co-defendants); Beltran v. Monterey
Cty., No. C 08-05194 JW, 2009 WL 585880, at *3 (N.D.
Cal. Mar. 6, 2009) (finding a lack of due diligence where the
removing defendant called the court clerk to determine if
proofs of service had been filed as to co-defendants, was
informed that no proof of service had been filed for certain
co-defendants, but took no further steps to ascertain whether
those co-defendants had been served); Parker v. Johnny
Tart Enters., Inc., 104 F.Supp.2d 581, 585 (M.D. N.C.
1999) (rejecting the removing defendants' “reliance
on their search for and the absence of a return of service
for Defendant Blackstock in the state court records prior to
the filing of Defendants' notice of removal” and
finding that “there is no authority within the Fourth
Circuit supporting the creation or application of an
equitable exception to the thirty-day time limit of 28 U.S.C.
§ 1446(b) based on ‘exceptional
courts allow removing defendants to rely on the state court
docket for filed proofs of services. See,
e.g., Lopez v. BNSF Ry. Co., 614 F.Supp.2d
1084, 1089 (E.D. Cal. 2007) (reasonable diligence found where
the removing defendants checked the state court docket to
ascertain whether co-defendants had been served prior to
removal and concluding that the removing defendants did not
have a duty to contact the plaintiffs' counsel to
investigate whether service had been effected upon co-
defendants); Laurie v. Nat'l R.R. Passenger
Corp., No. CIV.A. 01-6145, 2001 WL 34377958, at *1 (E.D.
Pa. Mar. 13, 2001) (“[T]he better rule is that is that
a defendant is required to obtain consent only from those
codefendants who it knew or should have known” had been
served, in the exercise of reasonable diligence - i.e.
repeatedly checking the docket, calling the office on more
than one occasion to determine whether a proof of service had
been filed); Milstead Supply Co. v. Cas. Ins. Co.,
797 F.Supp. 569, 573 (W.D. Tex. 1992) (finding “that
the exceptional circumstances of this case justify the
following holding[:] . . . joinder in or consent to the
removal petition must be accomplished by only those
defendants: (1) who have been served; and, (2) whom the
removing defendant(s) actually knew or should have known had
been served. The second requirement encompasses the served
defendants whom the removing defendant(s) actually knew had
been served. This requirement also mandates that the removing
defendant(s) obtain the consent or joinder of the other
defendant(s) whom the removing defendant(s) should have been
aware of because of the constructive notice of the filing of
the return of service in the state court. The constructive
notice element should only be applied to removing defendants
who had a reasonable time to become aware of the filing of
such service and had a reasonable time in which to obtain the
consent or joinder of such other defendants.”).
Defendants rely on the foregoing three cases, all of which
have applied a lack of constructive notice exception to the
rule of unanimity. Williams v. Int'l Gun-A-Rama,
416 Fed.Appx. 97, 99 (2d Cir. 2011) (noting that Milstead
Supply Co. v. Casualty Insurance Co. “carved out
an exception to the general rule that co-defendants must
consent to removal, ” and identifying Lopez v. BNSF
Ry. Co. and Laurie v. Nat'l R.R. Passenger
Corp. as cases applying the exception). The Court finds
these cases to be inapplicable and/or unpersuasive, but even
if they were controlling authority, they are distinguishable.
Lopez court found that the removing defendants
“exercised reasonable diligence by checking the Kern
County Superior Court docket to ascertain whether or not
other named defendants had been served prior to filing their
notice of removal.” Lopez, 614 F.Supp. 2d. at
1089. However, the removing defendants in Lopez also
contacted legal counsel for Kern County, who was unaware of
any service on the county. Id. Finally, the
plaintiffs did not file proofs of service until the day the
notice of removal was filed. Id. In distinguishing a
case cited by the plaintiffs, Pianovski v. Laurel Motors,
Inc., the court noted that there was no showing that the
court clerk's office experienced delays accounted for in
Pianovski. Id. at 1089. Here, Removing
Defendants did not contact HSBC or counsel for HSBC; the
proof of service was filed the day prior to removal; and
there was a delay between the filing of the proof of service
and docketing on Ho‘ohiki.
Laurie, the removing defendant not only checked the
docket repeatedly, but also “called the Office of
Prothonotary on more than one occasion to learn whether a
proof of service had been filed but not yet docketed.”
Laurie, 2001 WL 34377958, at *1. These actions,
taken together, demonstrated reasonable diligence.
Id. Removing Defendants could not satisfy
Laurie's reasonable diligence standard ...