VIRGINIA EMERSON HOPKINS, District Judge.
This civil action was originally filed in the Circuit Court of Blount County, Alabama, on July 9, 2013. (Doc. 1-1 at 2). In the complaint, the plaintiff, Deutsche Bank National Trust Company ("Deutsche Bank"), sued Christopher Baxter, Vickie Baxter, and Anthony Baxter "to recover possession of [certain] real property" located in Blount County, Alabama. (Doc. 1-1 at 2). Thereafter, Christopher and Vickie Baxter ("the Baxters"), filed, in state court, an "Answer and Counterclaim." (Doc. 1-1 at 33). In addition to answering the claim brought by Deutsche Bank, the document sets out a counterclaim against the plaintiff and two new parties to the action, namely Mortgage Electronic Registration Systems, Inc. ("MERS"), and Wells Fargo Bank, N.A. d/b/a America's Servicing Company ("Wells Fargo"). (Doc. 1-1 at 39).
Against Deutsche Bank, the counterclaim alleges respondeat superior (Count One), joint venture liability (Count Two), unjust enrichment (Count Four
On July 9, 2013, Wells Fargo, alone,
"Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute."
"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); Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir.2001).
Parker v. Brown, 570 F.Supp. 640, 642 (D.C.Ohio, 1983)
Sierminski v. Transouth Financial Corp., 216 F.3d 945, 949 (11th Cir.2000).
Title 42 U.S.C. § 1441 governs the removal of civil actions. In this case, Wells Fargo seeks to remove on the basis of both sections 1441(a) and (c). (Doc. 1 at 3, 6). Those sections provide:
28 U.S.C.A. § 1441(a), (c) (emphasis in original).
In this case, the notice of removal states that this court has original, federal question jurisdiction over this claim pursuant to 28 U.S.C. § 1331, which provides: "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C.A. § 1331. The federal question which is the basis for this assertion appears only in the counterclaim.
Wells Fargo refers to itself as a "third-party defendant," despite the fact that it was added to this case via a counterclaim. (Doc. 1 at 4-7; doc. 11 at 3-6). The Baxters argue that Wells Fargo is a counterclaim defendant only. Because Wells Fargo relies upon binding precedent applicable only to third-party defendants, the court must decide this issue. The court notes that, in doing so, the "`[l]egal characterizations of a party's status as stated in a complaint are not controlling; rather the Court must look at the factual allegations ... to determine a party's proper status. Furthermore, in determining the removing parties' proper characterization, federal law controls.'" Karp v. Am. Law Enforcement Network, LLC, CA 11-0449-CG-C, 2011 WL 6963254 (S.D.Ala. Nov. 18, 2011) report and recommendation adopted, CIV.A. 11-449-CG-C, 2012 WL 38161 (S.D.Ala. Jan. 6, 2012) (quoting Palisades Collections LLC v. Shorts, Civil Action No. 5:07CV098, 2008 WL 249083, at *3 (N.D.W.Va. Jan. 29, 2008) (citations and internal quotations omitted; alteration to original)); see also Chicago, Rock Island & Pacific R.R. v. Stude, 346 U.S. 574, 579-80, 74 S.Ct. 290, 98 L.Ed. 317 (1954) ("For the purpose of removal, the federal law determines who is plaintiff and who is defendant.").
Fed.R.Civ.P. 13(a) and (b) allows counterclaims against "any opposing party." Even though Wells Fargo and MERS were not "opposing parties" before the counterclaim was filed (since they were not parties to the case), the Federal Rules allow for the joinder of new parties under Rules 19 and 20 via a counterclaim. See Fed.R.Civ.P. 13(h). By contrast, third-party defendants can only be joined if the claim is by the defendant (third-party plaintiff) against someone "who is or may be liable to it for all or part of the plaintiff's claim against [it]." Fed.R.Civ.P. 14(a)(1). In United States v. Olavarrieta, 812 F.2d 640, 643 (11th Cir.1987), the Eleventh Circuit wrote:
Olavarrieta, 812 F.2d at 643 (emphasis added).
Wells Fargo admits that this is not an indemnity claim, citing this new claim's "separate and distinct nature." (Doc. 11 at 5) ("In fact, Deutsche Bank could dismiss its claims against [d]efendants and their claims against Wells Fargo would remain pending."). Accordingly, Wells Fargo can only be a counterclaim defendant. See Bear Lumber Co., Inc. v. Headley, CIV.A. 2:08CV841-MHT, 2009 WL 2448161 (M.D.Ala. Aug. 10, 2009) (in the removal context, using a similar analysis to determine that third-party complaint was inappropriate); MWS, Inc. v. Knight Technical Servs. Inc., 3:12-CV-354-WKW, 2012 WL 3435043 (M.D.Ala. Aug. 14, 2012) (same).
Under Section 1441(a), the Supreme Court has been clear that "whether a case is one arising under the Constitution or a law or treaty of the United States, in the sense of the jurisdictional statute, must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation or avoidance of defenses which it is thought the defendant may interpose." Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914). In other words, under Section 1441(a), "determining whether a particular case arises under federal law turns on" what is contained within the "well-pleaded complaint." Aetna Health Inc. v. Davila, 542 U.S. 200, 207, 124 S.Ct. 2488, 2494, 159 L.Ed.2d 312 (2004). In Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831, 122 S.Ct. 1889, 1894, 153 L.Ed.2d 13 (2002), the Court stated that "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." See also, Vaden v. Discover Bank, 556 U.S. 49, 66, 129 S.Ct. 1262, 1276, 173 L.Ed.2d 206 (2009) ("[A] counterclaim ... does not provide a key capable of opening a federal court's door."). Wells Fargo could not remove the case under Section 1441(a).
Although the Eleventh Circuit has not addressed precisely this issue, the old Fifth Circuit did issue a related opinion on third-party removal under Section 1441(c) in Carl Heck Engineers, Inc. v. Lafourche Parish Police Jury, 622 F.2d 133 (5th Cir.1980).
Since Carl Heck remains good law in the Eleventh Circuit, were this a third-party defendant removal, the issue would be already be decided. However, since this is a counterclaim defendant removal, the Court
More than a decade after it decided Carl Heck, the Fifth Circuit, now separate from the Eleventh Circuit, extended its holding to counterclaim defendants. State of Tex. By and Through Bd. of Regents of University of Texas System v. Walker, 142 F.3d 813, 816 (5th Cir.1998) ("If the rationale of Carl Heck correctly affords third-party defendants the opportunity of § 1441(c) removal to federal court, to which they could have removed when sued alone, then that rationale protects [a counterclaim defendant]."). Some district courts in this circuit have followed the Fifth Circuit's example in Walker and have similarly extended the holding in Carl Heck. See, e.g., Mace Sec. Intern., Inc. v. Odierna, No. 08-60778-CIV, 2008 WL 3851839, *4 (S.D.Fla. Aug. 14, 2008) (finding the Fifth Circuit's decision in Walker to be persuasive and extending Carl Heck to include counterclaim defendant removals); North Star Capital Acquisitions, LLC v. Krig, Nos. 3:07CV264J32MCR, 3:07CV265J32TEM, 3:07CV266J32MCR 2007 WL 3522425, *1 n. 3 (M.D.Fla. Nov. 15, 2007) ("Unlike Carl Heck, Walker is not binding in the Eleventh Circuit. However, the Walker holding to allow removal by counterclaim defendants is simply a natural extension of the Carl Heck rule by which this Court is bound."). Other district courts in this circuit have rejected such an extension. See, Citibank (S. Dakota), N.A. v. Duncan, 209-CV-868-WKW WO, 2010 WL 379869 at *2 (M.D.Ala. Jan. 25, 2010) ("Although Carl Heck is binding authority as to removals by third-party defendants, Walker is not.... The Eleventh Circuit has yet to decide whether § 1441(c) encompasses removals by counter-defendants, and given the divisiveness among other courts as to the underlying conclusion reached in Carl Heck, the court is persuaded that the better course is to remand, rather than to guess what this circuit might hold if presented with the unsettled issue of whether Carl Heck should be extended to removals by counter-defendant."); Karp, 2011 WL 6963254 ("counter-defendants lack the authority to remove this matter pursuant to section 1441(c) and Carl Heck" does not apply) (emphasis supplied in original); Chevy Chase Bank, F.S.B. v. Carrington, 6:09-CV-2132ORL31GJK, 2010 WL 1854123 at *1 & *3 (M.D. Fla. May 10, 2010) (same as applied to cross-claim defendants).
Outside of the Fifth Circuit, Carl Heck has been almost universally disagreed with in the more than twenty years since the opinion was issued. See, e.g., First Nat. Bank of Pulaski v. Curry, 301 F.3d 456, 465 (6th Cir.2002) ("Given the language of the statute and the rule that removal statutes are to be construed narrowly, we reject the view that `joined,' as used in § 1441(c), should be interpreted broadly and conclude instead that it should be interpreted narrowly to apply only to claims joined by the plaintiff in the original state court action."); Lewis v. Windsor Door Co., 926 F.2d 729, 733 (8th Cir.1991) ("We do not, however, believe § 1441(c) was intended to effect removal of a suit, not otherwise within federal jurisdiction, because of the introduction of a third-party claim. Removal on such basis is too much akin to the tail wagging the dog."); Andrews v. Elec. Motor Sys., Inc., 767 F.Supp. 853, 855 (S.D.Ohio 1991) ("Moreover, this Court agrees that permitting another party to defeat the plaintiffs' choice of forum based upon the fortuitous addition of a removable third party claim would be `too much akin to the tail wagging the dog.'") (citing 1A MOORE'S FEDERAL PRACTICE ¶ 0.167[10]); Elkhart Coop. Equity Exch. v. Day, 716 F.Supp. 1384,
The Fifth Circuit's decision in Walker seems to be a natural extension of the reasoning in Carl Heck, but the overwhelming weight of authority, while not binding, suggests that Carl Heck was an aberration. Given the recent developments in jurisprudence involving Section 1441(c), the court finds it unlikely that the Eleventh Circuit would extend Carl Heck to include counterclaim defendants. This is especially true where, as here, the underlying claims have not been severed, as was the circumstance in Carl Heck.
Therefore, the court declines Wells Fargo's invitation to extend Carl Heck to counterclaim defendants. Instead, in finding that Carl Heck should not be extended in this manner, the Court sides with the majority of other courts across the country that have found that Section 1441(c) does not permit removal for counterclaim defendants.
Based on the foregoing, the court determines that Wells Fargo improperly removed this case. Accordingly, subject matter jurisdiction does not exist and the motion to remand is