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The Gates at Williams-Brice Condominium Association v. Quality Built, LLC

United States District Court, D. South Carolina, Columbia Division

September 7, 2016

The Gates at Williams-Brice Condominium Association and Katherine Swinson, individually, and on behalf of all others similarly situated, Plaintiffs,
Quality Built, LLC, and Coast to Coast Engineering Services, Inc. d/b/a/ Criterium Engineers, Defendants.


          CAMERON MCGOWAN CURRIE Senior United States District Judge.

         This matter is before the court on Plaintiffs' motion to remand and for an award of attorneys' fees. ECF No. 19. Plaintiffs argue removal was improper for a variety of procedural reasons including (1) the “consent” to removal filed by Defendant Quality Built, LLC (“Quality Built” or “Quality Built, LLC”) is defective because it includes a reservation of a right to move for remand, (2) Quality Built's purported consent is untimely because it was filed more than thirty days after Defendant Coast to Coast Engineering Services, Inc. d/b/a Criterium Engineers (“Criterium”) was served with the Complaint, and (3) removal is time-barred by 18 U.S.C. § 1446's one-year limitation on removal of diversity actions.[1]

         For the reasons set forth, below, the court grants the motion to remand on the first two grounds (inadequate and untimely consent). The court addresses but reaches no conclusion as to the third ground (application of Section 1446's one-year limitation). Finally, because Criterium did not act unreasonably in removing the action, the court denies Plaintiffs' request for fees.


         Through this action, Plaintiffs seek recovery for Defendants' alleged failure to ensure quality control in the construction of a 158 unit condominium complex. The matter was originally filed in state court in December 2013. The complaint named a single Defendant, Quality Built, which entity was served in January 2014. ECF No. 9-1. The original complaint did not specifically allege an amount in controversy, though it did allege widespread damage resulting from water penetration and “spalling” in the condominium complex and sought punitive damages under one cause of action. Id. ¶¶ 13-15, 41.

         Quality Built did not remove the matter from state court. Its counsel, instead, wrote Plaintiffs' counsel in late January 2014 asking Plaintiffs to dismiss the action with prejudice because the party to the contract at issue was “, ” not Quality Built, LLC. ECF No. 19-2 (letter dated January 28, 2014). Defense counsel explained that Quality Built, LLC had purchased “substantially all of the assets of . . . free and clear of all Claims (except for specified Assumed Liabilities)” and described as a “California corporation and debtor-in-possession[.]” Id.

         Plaintiffs declined the invitation to dismiss the action but do not appear to have taken more than minimal action to advance the state-court litigation until October 29, 2015. See ECF No. 19-1 at 2, 3 (discussing background and indicating no activity other than service of one set of discovery with the complaint between the time of service and October 29, 2015). On that date, twenty-two months after the initial complaint was filed, Plaintiffs' counsel wrote Quality Built's counsel stating Plaintiffs would move for default judgment if no answer was filed by November 6, 2015. ECF No. 19-4.

         The following day, Plaintiffs moved to amend the complaint to add Criterium as a Defendant and assert a successor liability theory against Quality Built. ECF No. 19-5 (motion to amend filed October 30, 2015).[2] The motion to amend remained open for some time and was ultimately resolved by consent on or about May 16, 2016. The amended complaint was filed shortly thereafter, on May 19, 2016, and served on Criterium on May 24, 2016. Thus, the matter had been pending in the state court for nearly two and a half years at the point Criterium was brought into the action. ECF No.1 ¶¶ 2, 3. In the interim, on November 24, 2015, Quality Built, LLC filed an answer to the original complaint. ECF No. 9-2 (Answer filed November 24, 2015); ECF No. 19-1 at 3, 4 (discussing background).

         Criterium filed a Notice of Removal on June 17, 2016, less than thirty days after it was first served. ECF No. 1. The notice of removal relied on diversity as the basis for subject matter jurisdiction. Criterium filed a motion to dismiss concurrently with the Notice of Removal. ECF No. 4.

         Criterium's Notice of Removal addressed citizenship by providing places of “incorporation” and listing principal places of business for both Defendants despite one being a limited liability company (“LLC”). ECF No. 1 ¶¶ 6, 7. The removal papers did not address whether Quality Built consented to the removal.

         On June 20, 2016, the court entered a docket text order noting deficiencies in the allegations necessary to support subject matter jurisdiction. That order read, in relevant part, as follows:

TEXT ORDER: The jurisdictional allegations of the removal papers are deficient in that they fail to provide information necessary to determine the citizenship of Quality Built, LLC. Citizenship of a limited liability company is determined by the citizenship of ALL of its members (and, as necessary, citizenship of each member's upstream members or partners), not the state of formation and principal place of business. The removing party shall be allowed until June 24, 2016, to file a supplemental jurisdictional statement curing this deficiency. Failure to do so will result in remand.

         ECF No. 6 (emphasis added). On June 23, 2016, Criterium filed a supplemental jurisdictional statement addressing the identity and citizenship of Quality Built's members. ECF No. 7.[3]

         On June 24, 2016, Quality Built filed a document stating it “joins/concurs in the Notice of Removal” filed by Criterium. ECF No. 9. This document also included the following statements: “Quality Built, LLC . . . consents to removal of the above-entitled cause of action . . . as if [it] had executed the Notice of Removal as a joint removing party. Defendant, Quality Built, LLC, reserves the right to move to remand this cause of action if Defendant, [Criterium] is dismissed from this cause of action.” ECF No. 9 at 1 (emphasis added).

         On June 28, 2016, Plaintiffs filed a Motion to Delay Briefing (ECF No. 11) on Criterium's Motion to Dismiss. The reason for the requested delay was Plaintiffs' stated intent to seek remand. Id. The court granted the Motion to Delay Briefing. ECF No. 12. Plaintiffs, thereafter, filed the present Motion to Remand, which has been fully briefed. ECF No. 19 (motion and memorandum), 22 (response), 23 (reply).


         The burden of demonstrating jurisdiction resides with “the party seeking removal.” Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (citing Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994)). The court is obliged to construe removal jurisdiction strictly because of the “significant federalism concerns” implicated. Id. Courts “should ‘resolve all doubts about the propriety of removal in favor of retained state jurisdiction.'” Hartley v. CSX Transp., Inc., 187 F.3d 422, 425 (4th Cir. 1999) (holding, in addressing fraudulent joinder argument, district court erred by certifying a doubtful claim to the state's supreme court because court should “resolve all doubts about the propriety of removal in favor of retained state court jurisdiction.”); see also Strawn v. AT&T Mobility, LLC, 530 F.3d 293, 296 (4th Cir. 2008) (holding Class Action Fairness Act did not change long-standing rule that “it is the [removing] defendant who carries the burden of alleging in his notice of removal and, if challenged, demonstrating the court's jurisdiction over the matter”).

         The same rule applies to procedural deficiencies as jurisdictional deficiencies, so long as the procedural challenge is timely raised by a party. See Russell Corp. v. Am. Home Assur. Co., 264 F.3d 1040, 1046-47 (11th Cir. 2001). As explained in Russell, “[l]ike all rules governing removal, th[e] unanimity requirement must be strictly interpreted and enforced because of the significant federalism concerns arising in the context of federal removal jurisdiction.” See also Stasio v. Saxon Mortg. Svcs. Inc., C.A. No. 2:12-cv-2797-DCN, 2013 WL 1787041(D.S.C. April 26, 2013) (applying rule in remanding based on challenge to timing and adequacy of co-defendants' consents to removal).


         For the reasons set forth below, the court finds removal procedurally defective both because Quality Built's consent was qualified and because the consent was untimely. In reaching these conclusions, the court has considered Plaintiffs' argument that uncertainty should be resolved in favor of remand. Accordingly, the court grants Plaintiffs' motion to remand.

         Because it impacts the decision to deny fees, the court also addresses Plaintiffs' argument that Section 1446(c)(1) bars removal of this action. This argument rests on the premise Section 1446(c)(1)'s one-year limitation on removal applies to all actions removed on the basis of diversity. Criterium's arguments for a contrary interpretation are, at the least, reasonable. For this and additional reasons, the court finds Criterium did not act unreasonably in removing the action and, therefore, denies Plaintiffs' request for an award of fees and costs.

         I. Adequacy of Consent

         The procedure for removal is set out in 28 U.S.C. § 1446, which was substantially modified in late 2011 and now reads, in relevant part, as follows:

(b) Requirements; generally. - (1) The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading . . .;
(2)(A) When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.
(B) Each defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons described in paragraph (1) to file the notice of removal.
(C) If defendants are served at different times, and a later-served defendant files a notice of removal, any earlier-served defendant may consent to the removal even though that earlier-served defendant did ...

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