MADELINE HUGHES HAIKALA, District Judge.
This lawsuit began as a fairly straight-forward state court ejectment action between WGB, LLC and Philip and Jennie Bowling. After some motion practice, the Bowlings filed a "counterclaim" against three new parties: U.S. Bank National Association, as trustee for loan asset-backed certificates, series 2007-SP2, Litton Loan Servicing, LP, and Ocwen Loan Servicing, LLC. (Doc. 1-1, pp. 110-114). The new defendants removed the entire action to federal court on the basis of federal question jurisdiction, relying on claims that the Bowlings asserted against the new defendants under four federal statutes. (Doc. 1, p. 2).
The Bowlings ask the Court to remand this entire action to the Birmingham Division of the Circuit Court of Jefferson County, Alabama. (Doc. 9, p. 1). They argue that U.S. Bank, Litton, and Ocwen do not have statutory authority to remove the action under 28 U.S.C. § 1441(a). According to the Bowlings, only original defendants may exercise the statutory power of removal under § 1441. (Doc. 9). WGB argues that the Court should remand the entire action pursuant to § 1441(c) because the Bowlings' claims against the new defendants are not separate and independent from WGB's ejectment claim against the Bowlings, and WGB's ejectment claim is nonremoveable.
Neither remand argument persuades the Court. Binding precedent in this circuit undermines the Bowlings' argument, and Congress's recent deletion of the phrase "separate and independent" from § 1441(c) derails WGB's position. Therefore, as discussed in greater detail below, the Court severs WGB's ejectment action against the Bowlings from the Bowlings' federal and state law claims against the new defendants and remands WGB's ejectment action to the Circuit Court of Jefferson County, Alabama (Birmingham Division). The Court retains jurisdiction over the Bowlings' claims against the new defendants and certifies this order for interlocutory appellate review.
A remand motion compels a federal district court to determine whether it may exercise jurisdiction over an action that a plaintiff initiated in state court. 28 U.S.C. § 1447. "In removal cases, the burden is on the party who sought removal to demonstrate that federal jurisdiction exists." Friedman v. New York Life Ins. Co., 410 F.3d 1350, 1353 (11th Cir.2005) (citation omitted). "Because removal jurisdiction raises significant federalism concerns," a district court must resolve all doubts about jurisdiction in favor of remand to state court. City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 (11th Cir.2012) (citations omitted); see also Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir.1999) ("[F]ederal courts are directed to construe removal statutes strictly ... [A]ll doubts about jurisdiction should be resolved in favor of remand to state court."). Therefore, in this case, the removing parties —
On November 19, 2012, WGB, LLC sued Philip F. Bowling and Jennie Bowling in the Circuit Court of Jefferson County, Alabama, Birmingham Division. (Doc. 1, p. 2).
Six months later, on September 9, 2013, the Bowlings filed an "Answer and Counterclaim." (Doc. 1-1, p. 110). In their "counterclaim," the Bowlings asserted claims against three new parties: U.S. Bank National Association, Litton Loan Servicing, LP, and Ocwen Loan Servicing, LLC. (Doc. 1-1, p. 114). The "counterclaim" consists of eleven state law counts and four federal law counts. With respect to the federal law claims, the Bowlings contend that the new defendants violated the Truth in Lending Act ("TILA") and Regulation Z, 12 C.F.R. § 226.1 et seq.; the Real Estate Settlement Procedures Act ("RESPA"); the Fair Credit Reporting Act ("FCRA"); and the Fair Debt Collection Practices Act ("FDCPA"). (Doc. 1-1, pp. 116-129). Each count pertains to the servicing of the mortgage on the Bowlings' property and the foreclosure sale relating to that property. (Doc. 1-1, pp. 115-16; see also Doc. 1-1, pp. 30-34).
U.S. Bank, Litton and Ocwen contend that they were served with the "Answer and Counterclaim" on September 13, 2013. (Doc. 1, p. 2). On October 10, 2013, the new defendants removed the entire action to federal court on the basis of federal question jurisdiction. (Doc. 1, pp. 1, 3). The Bowlings filed their motion to remand on November 6, 2013. (Doc. 9). The new defendants filed a brief in opposition to the motion to remand. (Doc. 10). Initially, WGB did not weigh in on the jurisdictional issue.
After studying the record and the briefs relating to the Bowlings' remand motion, the Court issued an order in which it provided some initial jurisdictional analysis and noted that the Bowlings and the new defendants had overlooked an important issue in their jurisdictional analysis, namely Congress's recent amendment to § 1441(c) in the Federal Courts Jurisdiction
On this record, the Court decides the Bowlings' motion to remand.
A defendant's "`right of removal is statutory.'" Ware v. Fleetboston Financial Corp., 180 Fed.Appx. 59, 61 (11th Cir. 2006) (quoting Edwards v. E.I. Du Pont De Nemours & Co., 183 F.2d 165 (5th Cir.1950)). The removal statute, 28 U.S.C. § 1441, begins with a general provision, § 1441(a). Section 1441(a) states:
28 U.S.C. § 1441(a).
The Bowlings assert that "third party and counter defendants cannot remove" under § 1441(a). (Doc. 9, p. 3). Citing Moore's Federal Practice, the Bowlings argue, "[a]s used in Section 1441(a) of the general removal statute, the word `defendant' is defined as the original plaintiff's defendant." (Doc. 9, pp. 3-4). Under the Bowlings' theory, the Court effectively must insert the word "original" before the words "defendant" and "defendants" in § 1441(a) and must remand this entire action to state court because the Bowlings could not have removed WGB's state court ejectment action to federal court.
The Bowlings regard § 1441(a) as the operative mechanism in § 1441 and suggest that § 1441(a) limits the operation of subsections § 1441(b) through § 1441(f). Under settled rules of statutory construction, this interpretation of § 1441 is backwards. The principle of ejusdem generis provides that "`[g]eneral language of a statutory provision, although broad enough
Like § 1441(b)(2), § 1441(c) refines § 1441(a), and § 1441(c) provides a vehicle for newly added defendants to remove an action that satisfies § 1441(c)'s criteria. Carl Heck Engineers, Inc. v. Lafourche Parish Police Jury, 622 F.2d 133 (5th Cir.1980). Section 1441(c) applies to removal of "a civil action" that "includes [] a claim arising under the Constitution, laws, or treaties of the United States (within the meaning of section 1331 of this title), and [] a claim not within the original or supplemental jurisdiction of the district court or a claim that has been made nonremovable by statute." 28 U.S.C. § 1441(c)(1)(A)(B). When an action includes claims that are removable under § 1331 and nonremovable claims, § 1441(c) provides that "the entire action may be removed if the action would have been removable without the inclusion of the" nonremovable claim. 28 U.S.C. § 1441(c)(1)(B). Thus, under § 1441(c), when an original state court defendant files claims against new defendants, and one or more of those claims supplies a basis for federal question jurisdiction, the new defendants may remove the entire action to federal court even though the action contains claims that otherwise would be nonremovable.
Though decided under an earlier version of § 1441(c), Carl Heck, a case that is binding in this circuit, supports the Court's conclusion.
Id. at 135.
In affirming the district court's decision under § 1441(c), the Fifth Circuit Court of Appeals acknowledged that "the decisions are in conflict as to a third party defendant's right to remove a controversy under section 1441(c);" however, the Court found that the cases that "have permitted removal on the basis of a third party claim where a separate and independent controversy is stated" present "the more rational view" of the right of newly added parties to remove under section 1441(c). Carl Heck, 622 F.2d at 135. The Court of Appeals observed, "the language of [section 1441] does not require only those causes of action joined by the original plaintiff to form the basis of removal. If the third party complaint states a separate and independent claim which if sued upon alone could have been brought properly in federal court, there should be no bar to removal." Id. at 136.
Nearly two decades after it decided Carl Heck, the Fifth Circuit held in Bd. of Regents of Univ. of Tex. System v. Walker, 142 F.3d 813 (5th Cir.1998), cert. denied 525 U.S. 1102, 119 S.Ct. 865, 142 L.Ed.2d 768 (1999), that a newly added counter-defendant could remove an action to federal court under § 1441(c) when the new defendant would have been able to remove the § 1983 claim against him had he been sued alone. Id. at 816. The Walker decision is not binding in this circuit because the Fifth Circuit issued the opinion after September 30, 1981, but the Court finds the Fifth Circuit's reasoning persuasive. Although subsequent revisions of § 1441(c) now prohibit a removal like the one in Carl Heck because Congress has excluded from the operation of § 1441(c) cases in which original federal jurisdiction is based upon diversity jurisdiction under 28 U.S.C. § 1332, the Fifth Circuit's rationale for permitting a newly added defendant to remove a civil action to federal court under § 1441(c) remains valid and binding in the Eleventh Circuit.
WGB acknowledges this point; the Bowlings disagree. The Bowlings argue that the United States Supreme Court's decision in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826, 122 S.Ct. 1889, 153 L.Ed.2d 13 (2002), dealt a fatal blow to Carl Heck. (Doc. 9, pp. 4-5). The procedural posture of Holmes Group distinguishes it from Carl Heck, leaving the rationale of Carl Heck undisturbed in cases such as the one before the Court.
Holmes Group filed an action in federal court in which the company asked the district court to declare that Holmes Group's products did not infringe on Vornado Air's trade dress. Vornado Air, the original defendant, filed a compulsory counterclaim against Holmes Group for patent infringement. Holmes Group, 535 U.S. at 828, 122 S.Ct. 1889. The district court found in favor of Holmes Group. On appeal, the Federal Circuit vacated the district court's decision and remanded the case, instructing the district court to consider a new decision that post-dated the district court's judgment. Id. at 829, 122 S.Ct. 1889. The Supreme Court "granted
The Supreme Court began its jurisdictional analysis with a summary of the well-pleaded complaint rule. The Court explained, "[a]s `appropriately adapted to § 1338(a),'" the jurisdictional statute at issue in Holmes Group, "the well-pleaded-complaint rule provides that whether a case `arises under' patent law `must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration,'" and that complaint, "must `establis[h] either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law....'" Holmes Group, 535 U.S. at 828, 122 S.Ct. 1889 (quoting Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 809, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988)). Because it was undisputed that the plaintiff's complaint did not contain a claim arising under federal patent law, the Supreme Court held that the district court did not have jurisdiction over the case.
The Supreme Court rejected the notion that Vornado Air's patent law counterclaim could provide a basis for federal jurisdiction: "a counterclaim — which appears as part of the defendant's answer, not as part of the plaintiff's complaint — cannot serve as the basis for `arising under' jurisdiction." Holmes Group, 535 U.S. at 831, 122 S.Ct. 1889. To hold otherwise, the Supreme Court opined, would "contravene the [following] longstanding policies underlying our precedents":
535 U.S. at 831-32, 122 S.Ct. 1889. Thus, the Supreme Court found that original jurisdiction cannot be based on a federal claim that appears in an original defendant's counterclaim against an original plaintiff. By extension, under § 1441(a), an original defendant may not remove an action based on a federal claim that appears in the original defendant's counterclaim against the original plaintiff. Franchise Tax Bd. v. Constr. Laborers Vacation Trust for S. Calif., 463 U.S. 1, 10 n. 9, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) ("The well-pleaded complaint rule applies to the original jurisdiction
Holmes Group neither explicitly nor implicitly overruled Carl Heck because Carl Heck did not involve removal by an original defendant. The district and appellate courts in Carl Heck examined the question that the Bowlings' remand motion presents to this Court: when an original defendant adds new defendants to an action, may the new defendants exercise the statutory right of removal, even though the original plaintiff's claims against the original defendant are not removable? Section 1441(c)(1)(B) supplies the answer: the new defendants may remove the entire action "if the action would have been removable without the inclusion of the" nonremovable claim. Applying § 1441(c)(1)(B) to the pending action, if the Court disregards the nonremovable claim — WGB's ejectment claim against the Bowlings — the balance of the action is removable. Indeed, all parties concede that if the Bowlings had opted to sue U.S. Bank, Litton and Ocwen in a separate state court action and had pursued the fifteen counts that the Bowlings currently assert against the new defendants, U.S. Bank, Litton and Ocwen could have removed that action to federal court, invoking the Court's original jurisdiction over the Bowlings' federal law claims and asking the Court to exercise supplemental jurisdiction over the Bowlings' state law claims. 28 U.S.C. §§ 1331, 1367.
Because the new defendants could remove the Bowlings' claims against them in the absence of WGB's ejectment claim, the new defendants may remove the entire action pursuant to the plain language of § 1441(c)(1)(B). Section 1441(c)(2) dictates that upon removal, the Court "shall sever from the action all" nonremovable claims "and shall remand the severed claims to the State court from which the action was removed." 28 U.S.C. § 1441(c)(2) (emphasis added); see F.D.I.C. ex rel. Colonial Bank v. Banc of America Funding Corp., 2013 WL 3968017, *2 (M.D.Ala. Aug. 1, 2013) ("If § 1441(c) does anything clearly, it is to require the severance and remand of nonremovable claims.").
WGB urges the Court to remand the entire action, not just the ejectment action. The company reasons that because the Court must remand WGB's claims against
Here is the rub: when it revised § 1441(c) in the Federal Courts Jurisdiction & Venue Clarification Act of 2011, Congress deleted the phrase "separate and independent" from § 1441(c). On January 5, 2012, § 1441(c) began, "Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed...." Ariail Drug Co., Inc. v. Recomm Intern. Display, Inc., 122 F.3d 930, 934 n. 7 (11th Cir.1997). On January 6, 2012, the day that the Clarification Act went into effect, § 1441(c) provided (and still provides):
28 U.S.C. § 1441(c). The phrase "separate and independent" disappeared from § 1441(c) when Congress revised the statute. As the United States Supreme Court held in another context, "[g]iven this clear language, it would be improper to conclude that what Congress omitted from the statute is nevertheless within its scope." University of Texas Southwestern Medical Center v. Nassar, ___ U.S. ___, 133 S.Ct. 2517, 2528, 186 L.Ed.2d 503 (2013). Under settled rules of statutory construction, the Court finds that Congress's elimination of the phrase "separate and independent" from § 1441(c) was not a hollow exercise.
The Court in F.D.I.C. v. Banc of America Securities, LLC, reached the same conclusion. 2012 WL 2904310 (D.Nev. July 16, 2012). Noting that the FDIC "spill[ed] much ink analyzing the previous version of the removal statute," the court held that "Congress's amendment of the previous iteration of [§ 1441(c)], and choice to remove the `separate and independent' language that the previous version [of the statute] employed" rendered the FDIC's arguments moot. Id. at *2. The court recognized that "`[w]hen Congress acts to amend a statute, [courts] presume it intends its amendment to have real and substantial effect.'" Id. (quoting Stone v. INS, 514 U.S. 386, 397, 115 S.Ct. 1537, 131 L.Ed.2d 465 (1995)).
The FDIC court acknowledged the parties' concerns about "the curious outcome
Id.
Mirroring the arguments in FDIC, WGB and the Bowlings express concern about the inefficiency and impracticality of the simultaneous litigation of WGB's ejectment action in state court and the Bowlings' federal and state law claims in federal court. All parties recognize that the Bowlings' claims against the new defendants are intertwined with WGB's ejectment action because the Bowlings' claims against the new defendants are designed to defeat WGB's ejectment action by undoing the foreclosure on the Bowlings' home. (See, e.g., Doc. 9, p. 12; Doc. 1-1, p. 130). In theory, the state court ejectment proceedings and the federal court wrongful foreclosure proceedings regarding the Bowlings' property potentially could proceed concurrently; however, on a party's motion, the state court could, for example, stay WGB's state court proceedings against the Bowlings until the Bowlings resolve their claims in federal court. Thus, though some amount of inefficiency may be unavoidable, the courts have available to them tools that they may use to allocate responsibility for resolving the matters pertaining to the foreclosure at issue without wasting time or resources.
More importantly, Congress seems to have decided that it is willing to sacrifice efficiency in exchange for preserving a defendant's statutory right to remove a case to federal court. House Report 112-10 concerning the Clarification Act states:
2011 WL 484052, *11-12 (citations omitted).
Through its revision of § 1441(c), Congress endeavored not only to preserve a defendant's right to remove federal law claims but also to protect well-established limits on federal jurisdiction. Congress accomplished the latter purpose by making remand of nonremovable state court claims mandatory. In doing so, Congress coincidentally addressed the policy concerns that animated the Supreme Court's decision in Holmes Group. Mandatory remand of nonremovable claims preserves the original plaintiff's choice of forum in a case such as this. Mandatory remand of nonremovable claims also assures that a defendant's removal under § 1441(c) does not expand the class of removable cases. Holmes Group, 535 U.S. at 831-32, 122 S.Ct. 1889.
Thus, though simultaneous litigation of WGB's ejectment action in state court and the Bowlings' federal and state law claims against their lender and the mortgage servicing companies in federal court may prove somewhat inefficient, this Court joins the FDIC court in concluding that the Court would violate well-settled rules of statutory construction if it were to ignore Congress's elimination of the "separate and independent" requirement from § 1441(c) for the sake of convenience and expediency. Therefore, the Court rejects WGB's request that the Court remand this entire lawsuit to state court. (Doc. 23, p. 8).
Accordingly, this Court SEVERS WGB's ejectment action against the Bowlings'
Pursuant to 28 U.S.C. § 1292(b), the Court finds that this order "involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order [would] materially advance the ultimate termination of the [federal] litigation" if the Eleventh Circuit Court of Appeals were to disagree with this Court's interpretation of the current iteration of § 1441(c).
28 U.S.C. § 1331. Section 1332(a)(1) provides, in part:
28 U.S.C. § 1332.
28 U.S.C. § 1367(a).
Id. at 1314-15, nn. 5-6 (referring to Reed v. Heil Co., 206 F.3d 1055 (11th Cir.2000)).
