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Quinn v. Palmer

United States District Court, E.D. Louisiana

December 19, 2018

F. PATRICK QUINN, III
v.
DIANA N. PALMER, EDWIN M. PALMER, and DECATUR HOTELS, LLC

         SECTION M (2)

          ORDER & REASONS

          BARRY W. ASHE UNITED STATES DISTRICT JUDGE.

         Before the Court is the motion of plaintiff F. Patrick Quinn, III (“Quinn”) to remand[1] the captioned case, which was removed to this Court on July 25, 2018, by defendants Edwin M. Palmer, III, Diana Palmer, and Decatur Hotels, LLC (the “Defendants”). Defendants did not file a timely opposition to the motion, but did file a paper entitled “Notice of Significant Events Relative to Pending Motions and Supplemental Opposition to Motion to Remand” on October 17, 2018, [2] almost two months later than the deadline for any opposition to the motion to remand.[3] See 28 U.S.C. § 1447. Thereafter, Quinn opposed the filing of the “supplemental opposition” to his motion to remand.[4] Having considered the parties' memoranda and the applicable law, the Court issues this Order & Reasons.

         I. BACKGROUND

         This case represents just one of the more recent court battles waged between Quinn and Palmer, former business associates who apparently cannot now get along. Among their business ventures together was their membership interest in Decatur Hotels, LLC, which was formed at least in part to run a hotel.

         In 2013, Quinn commenced the underlying state-court proceeding with the filing of a petition for specific performance and damages.[5] The defendants (not all of the Defendants) answered the petition in 2013 without removing the case.[6] In October 2014, Quinn filed a first supplemental and amending petition.[7] Again, the defendants answered the amending petition in early 2015 without removing the case.[8] In March of 2017, Quinn filed a second supplemental and amending petition (which by this time included all of the Defendants).[9] The case was also not removed in 2017 in response to this amending petition. It is undisputed that Quinn, Edwin M. Palmer, III, Diana Palmer, and Decatur Hotels, LLC are all citizens of Louisiana. Hence, there was (and is) no diversity of citizenship between the parties as would support federal subject-matter jurisdiction. Nor did Quinn, as the state-court petitioner, assert a federal question in his state-court petition as would support federal subject-matter jurisdiction. The petition initiated a derivative action against Decatur Hotels, LLC, and an action against Palmer, as the member-manager of Decatur Hotels, LLC, alleging claims for conversion, self-dealing, breach of fiduciary duty, breach of the operating agreement, and an accounting - all quintessential state-law claims.

         On July 25, 2018, the Defendants filed their verified notice of removal, [10] citing a litany of purported grounds for federal jurisdiction, including (1) the state court's alleged refusal, in rulings issued on June 29, 2018, to give full faith and credit to a judgment of the bankruptcy court rendered on August 11, 2011, in a wholly separate bankruptcy proceeding concerning the sale of a hotel other than the one managed by Decatur Hotels, LLC;[11] (2) the state court's alleged refusal to dismiss “Quinn's attacks on June 29, 2018” when the bankruptcy court retained exclusive jurisdiction to enforce its August 11, 2011 judgment; (3) the state court's refusal to take up issues related to the sale of the St. James Hotel, even though Defendants claimed these issues were involved in the subject matter of a separate proceeding pending in federal court;[12] (4) the state court's denial of a motion to stay due to the pendency of litigation in yet another bankruptcy case;[13](5) the state court's denial of Palmer's motion to strike a contempt proceeding against him, which purportedly raised “serious constitutional questions”; and (6) complete preemption arising from Quinn's alleged bankruptcy fraud and failure to pay a sanctions order.

         II. THE PENDING MOTION

         Quinn contends that removal of this case was “improvident” because this Court lacks federal subject-matter jurisdiction over a case that had been pending for five years in state court “with absolutely no change in the action or discovery of some evidence that would constitute a federal question.”[14] Quinn contends that there were no filings, no new substantive allegations, or no new discovery in the 30 days prior to removal that gave rise to a federal question.[15] In particular, Quinn says that none of the state court's June 29, 2018 rulings, upon which Defendants predicate this removal, gave rise to a federal question.[16]

         In their notice of “supplemental opposition” to the motion to remand, Defendants simply urge that this Court should exercise jurisdiction over a plethora of disputes between these parties - including, presumably, the removed proceeding - as a matter of judicial economy and to speed the resolution of these matters.[17] Quinn responds that any delay in a resolution of the removed proceeding is of the Defendants' own making and that Defendants' effort to obtain “federal review of matters previously adjudicated in a state court” should be rejected because federal subject-matter jurisdiction does not exist.[18]

         III. LAW & ANALYSIS

         A. Remand Standard

         The federal court's jurisdiction is examined as of the time of removal. See Doddy v. Oxy USA, Inc., 101 F.3d 448, 456 (5th Cir. 1996). A defendant may remove from state court to the proper United States district court “any civil action brought in a State court of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). Because federal courts have limited jurisdiction, the removal statute is strictly construed, and any ambiguities are construed against removal and in favor of remand. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). The party seeking removal has the burden of establishing that federal jurisdiction exists and that removal was proper. Id.

         The time limits for removal are set forth in 28 U.S.C. § 1446(b). Generally, a civil action must be removed within 30 days after the defendant receives a copy of the initial pleadings “setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has been filed in court and is not required to be served on the defendant, whichever period is shorter.” 28 U.S.C. §1446(b)(1). However, if the case is not removable based on the initial pleading, “a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” Id. at § 1446(b)(3). “The information supporting removal in a copy of an amended pleading, motion, order or other paper … must be unequivocally clear and certain to start the time limit running.” Morgan v. Huntington Ingalls, Inc., 879 F.3d 602, 608-09 (5th Cir. 2018) (citations and quotations omitted).

         B. ...


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