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First Community Bank of Central Alabama v. Walthall

United States District Court, M.D. Alabama, Northern Division

April 5, 2019

GEORGE P. WALTHALL, JR., et al., Defendants.



         Plaintiff First Community Bank of Central Alabama filed a Complaint in the Circuit Court of Autauga County, Alabama, on August 24, 2017. (Doc. 1-1). The Complaint alleged claims against Defendants George P. Walthall, Jr., the Internal Revenue Service (the “IRS”), and three parcels of land in Autauga County (the “Property”). The Complaint sought a judicial foreclosure as to the Property, alleged breach of a promissory note and unjust enrichment against Defendant Walthall, and two counts seeking a declaration of quiet title to the Property free from any IRS liens. On January 23, 2018, the IRS answered the Complaint in the state court. (Doc. 1-2). On April 9, 2018, the IRS filed a motion for summary judgment in the state court. On April 26, 2018, Plaintiff moved for leave to file an Amended Complaint in the state court “substituting the United States as a party Defendant in the place of the Internal Revenue Service.” (Doc. 1-4 at 1). The state court granted Plaintiff's motion to amend the complaint on April 29, 2018. (Doc. 1-5 at 41). On May 10, 2018, the United States removed this action to this Court pursuant to 28 U.S.C. §§ 1442(a)(1) and 1444. (Doc. 1). This matter comes before the Court on Plaintiffs' Motion to Remand. (Doc. 4). This matter has been fully briefed and taken under submission.

         Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). A federal district court is “‘empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,' and which have been entrusted to them by a jurisdictional grant authorized by Congress.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)). Therefore, a federal court is obligated to inquire into subject matter jurisdiction “at the earliest possible stage in the proceedings.” Id. at 410. “It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen, 511 U.S. at 377. Moreover, “[c]ourts have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it.” Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010).

         Defendant United States removed the action to this Court pursuant to 28 U.S.C. §§ 1442(a)(1) and 1444, stating that “[t]he United States Attorney's Office first received a copy of the amended complaint on 26 April 2018, and this removal is timely under 28 U.S.C. § U.S.C. 1446(b)(1).” (Doc. 1 at ¶ 3). Federal court removal is governed by 28 U.S.C. § 1441(a), which provides in pertinent part that “[a] civil action … that is commenced in a State court and that is against or directed to any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending: (1) The United States or any agency thereof….” Removal statutes are to be strictly construed against removal. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108 (1941); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994) (“[R]emoval statutes are construed narrowly; when the parties dispute jurisdiction, uncertainties are resolved in favor of remand.”). The removing party has the burden of proving that federal jurisdiction exists by a preponderance of the evidence, and the removing party must present facts establishing its right to remove. Williams v. Best Buy Company, Inc., 269 F.3d 1316, 1319 (11th Cir. 2001). When the defendant fails to do so, the case must be remanded. Williams, 269 F.3d at 1321.

         A defendant desiring to remove a civil action must file a notice of removal, together with all process, pleadings, and orders served upon the defendant in the appropriate United States District Court. 28 U.S.C. § 1446. The federal removal statute sets forth the proper procedure for removal of state actions to federal court and provides in relevant part:

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 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 then 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).

         The Eleventh Circuit has clarified the requirements of this statutory provision:

Under the second paragraph, a case becomes removable when three conditions are present: there must be (1) an amended pleading, motion, order or other paper, which (2) the defendant must have received from the plaintiff (or from the court, if the document is an order), and from which (3) the defendant can first ascertain that federal jurisdiction exists.

Lowery v. Ala. Power Co., 483 F.3d 1184, 1215 n. 63 (11th Cir. 2007)(citations and quotation marks omitted). According to the Lowery court, “the documents received by the defendant must contain an unambiguous statement that clearly establishes federal jurisdiction.” Id. (citations omitted).

         The parties do not dispute that as an action brought under 28 U.S.C. § 2410 in which Plaintiff seeks quiet title to real property on which the United States has or claims a lien, this case is otherwise removable to this Court pursuant to § 1444. Rather, the issue before this Court on Plaintiff's motion to remand is whether this motion was removed within the statutorily mandated time based on the service to and participation of the United States as a party in the state court action.

         Plaintiff filed its original Complaint in state court on August 24, 2017, naming the IRS as a Defendant, specifically stating that the “Internal Revenue Service (hereinafter referred to as ‘IRS') is a United States agency.” (Doc. 1-1 at ¶ 3). A civil summons in the state court action was served by certified mail upon the “US Attorney Middle District of Alabama, Clark Morris 131 Clayton Street, Montgomery, AL 36104.” (Doc. 1-5 at 2). The United States Attorney entered an appearance on behalf of the IRS on September 27, 2018, and that same day filed a motion to dismiss, arguing that “the IRS is not a proper party defendant in a suit under § 2410, and First Community's claims against the IRS, as opposed to the United States itself, should be dismissed on sovereign immunity grounds.” (Doc. 1-5 at ¶ 9). The state court set a hearing for January 9, 2018 on the IRS's motion to dismiss. Id. at 17. On January 9, 2018, the state court entered an order stating that “Motion to Dismiss is denied as no defendant or representative appearing.” Id. at 18. The IRS filed its Answer to the state court Complaint on January 23, 2018. Id. at 19- 24. The state court scheduled the matter for trial on May 29, 2018. Id. at 26. The IRS filed a motion for summary judgment in the state court on April 9, 2018, again arguing that the claims against the IRS, as opposed to the United States, should be dismissed on the grounds of sovereign immunity. Id. at 31. On April 26, 2018, Plaintiff moved the state court for leave to amend its Complaint “to substitute the United States of America on behalf of the Internal Revenue Service for the Internal Revenue Service as a party Defendant, ” which the state court granted on April 29, 2018. Id. at 38, 41.

         Plaintiff's argument is that “[t]he U.S. could have removed the action at the time of its original filing. Stated differently, although the U.S. rather than the IRS is the proper party, a misnomer does not preclude removal under 28 U.S.C. § 1444.” (Doc. 5 at 9). Plaintiff further argues that “the U.S. manifested an intent to litigate in the state court by filing a general notice of appearance, foregoing its right to intervene, filing a Motion to Dismiss and a Motion for Summary Judgment before it sought to remove the case.” Id. at 4. The United States argues in response that its removal was timely because it was filed on “May 10, 2018, well within 30 days of receipt of the amended complaint first naming it as a defendant…” (Doc. 10 at ¶ 3). Specifically, the United States argues that the 30-day removal ...

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