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JAX Leasing, LLC v. Ruan

United States District Court, S.D. Alabama, Southern Division

February 15, 2019

JAX LEASING, LLC, etc., Plaintiff,
XIULU RUAN, et al., Defendants.



         This matter is before the Court on the plaintiff's motion for remand. (Doc. 5). The defendant United States of America has filed a response and the plaintiff a reply, (Docs. 8, 9), and the motion is ripe for resolution. After careful consideration, the Court concludes that the motion is due to be denied.


         The plaintiff filed this action against defendant Ruan in state court, alleging a six-figure debt arising from its storage of Ruan's vehicles. The complaint names the United States as an additional defendant because Ruan has been convicted of multiple federal offenses for which he received a sentence including an eight-figure restitution obligation, and the United States has filed a notice of lien in state probate court to enforce the restitution obligation. (Doc. 1-3 at 1; Doc. 8 at 1-2). The complaint includes claims for breach of contract, declaratory judgment (confirming the breach and that the plaintiff holds a valid and enforceable warehouse lien), and judicial foreclosure. The latter claim seeks an order that the vehicles be sold and that the United States receive no proceeds of the sale until and unless the plaintiff's claim be first entirely satisfied. (Doc. 1-3 at 11-14).

         The United States removed this action pursuant to 28 U.S.C. § 1442(a)(1). (Doc. 1). The plaintiff moves to remand, arguing that the United States cannot satisfy the requirements for removal under that provision.


         I. Section 1444.

         “Any action brought under section 2410 of this title against the United States … may be removed by the United States ….” 28 U.S.C. § 1444. “[T]he United States may be named a party in any civil action or suit in … any State court having jurisdiction of the subject matter … to foreclose a mortgage or other lien upon … real or personal property in which the United States has or claims a mortgage or other lien.” Id. § 2410(a)(2). This action appears to fall within the parameters of Section 2410 so as to permit its removal under Section 1444.

         The United States, however, did not invoke Section 1444 in its notice of removal. A notice of removal is required to be filed within 30 days after service of process, 28 U.S.C. § 1446(b), and numerous authorities have held that “[t]he Notice of Removal cannot be amended to add a separate basis for removal jurisdiction after the thirty day period.” ARCO Environmental Remediation, L.L.C. v. Department of Health and Environmental Quality, 213 F.3d 1108, 1117 (9th Cir. 2000).[1] The United States' brief in opposition to the motion for remand was filed seven weeks after service on the United States Attorney and Attorney General. (Doc. 1 at 2). Its invocation of Section 1444 is therefore untimely under the authorities cited above. Because the United States does not argue that its invocation of Section 1444 is timely or that its untimely invocation should be excused, the Court will not consider that provision as a basis of removal jurisdiction.

         II. Section 1442(a)(1).

         (a) 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 federal court]:

(1) The United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office ….

28 U.S.C. § 1442(a)(1).[2]

         The plaintiff raises three arguments why removal under this provision is improper: (1) the complaint is not “against or directed to” the United States; (2) the complaint does not allege an “act under color of such office” that forms the “basis for [the] relief” demanded; and (3) the United States cannot “raise a colorable defense arising out of its duty to enforce federal law.” (Doc. 5 at 2-4).

         A. “Against or Directed to.”

         The plaintiff asserts that the complaint “does not state a claim against” the United States and that the United States is named as a defendant only as an indispensable party, under the state analogue to Rule 19(a)(1)(B)(i), because foreclosing the plaintiff's lien in the absence of the United States might as a practical matter impair the United States' ability to protect its claimed lien interest. (Doc. 5 at 2).

         An indispensable party, however, is still a party, and the United States is denominated by the complaint as a party defendant. (Doc. 1-3 at 11). The plaintiff's express purpose in naming the United States is to judicially establish that the plaintiff's lien primes the United States' competing lien. (Id. at 14). The plaintiff may not seek an affirmative recovery from the United States, but it does seek to recover from Ruan proceeds that otherwise would be recovered by the United States. It is difficult to imagine a more adversarial relationship, and the plaintiff offers no authority in support of its unlikely position.

         “The general rule is that a suit is against the sovereign if the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration, or if the effect of the judgment would be to restrain the Government from acting, or to compel it to act.” Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 101 n.11 (1984) (internal quotes omitted).[3]As discussed in Part II.D, the United States has a statutory obligation to enforce restitution orders. A judgment that the plaintiff's lien against the subject vehicles primes the United States' lien against the same property would render it more difficult for the United States to recover assets and would thus interfere with the public administration regarding the enforcement of restitution orders.

         For reasons expressed above, the Court concludes that this action is against the United States for purposes of Section 1442(a)(1).

         B. “The United States or Any Agency Thereof.”

         Before considering the plaintiff's two remaining arguments, the Court must determine whether the requirements for removal that the plaintiff identifies - an act under color of office and a colorable federal defense - apply to the United States and its agencies in the first place. The plaintiff, relying chiefly on Mesa v. California, 489 U.S. 121 (1989), believes they do.[4] The Court disagrees.

         Mesa did not involve an action against the United States; the removing parties, as in most cases involving Section 1442(a)(1), were individuals (specifically, postal service employees). 489 U.S. at 123. Nor did Mesa involve Section 1442(a)(1) as it now reads; until a 1996 amendment added, “[t]he United States or any agency thereof, ”[5] Section 1442(a) addressed only individuals. Id. at 124-25.[6] It is in that context that Mesa must be read.

         Now, as at the time Mesa was decided, Section 1442(a)(1) identifies the individuals potentially able to remove as: (a) any officer of the United States or of an agency of the United States; and (b) any person acting under such officer. Both then and now, such a person may remove a civil action if it is for “any act under color of such office.” The “colorable federal defense” requirement, 489 U.S. at 129, which does not appear in the text of Section 1442(a), was identified by the Mesa Court as flowing directly from the “act under color of such office” statutory language. Id. at 125, 134.[7] The holding of Mesa - which involved only individual defendants and addressed statutory language applicable only to individual defendants - is thus limited to the proposition that “[f]ederal officer removal under 28 U.S.C. § 1442(a) must be predicated upon averment of a federal defense.” Id. at 139 (emphasis added).

         Under Mesa, the colorable-federal-defense requirement is tied to the act-under-color-of-such-office requirement. Unless the latter requirement applies to the United States and its agencies, the former requirement cannot apply, either. For the reasons that follow, the Court concludes that neither applies.

         The Eleventh Circuit apparently has not decided whether the United States as a defendant must assert a colorable federal defense in order to remove under Section 1442(a)(1), [8] but the Sixth Circuit has done so. In City of Cookeville v. Upper Cumberland Electric Membership Corp., 484 F.3d 380 (6th Cir. 2007), the Court analyzed the text of Section 1442(a)(1)[9] and the legislative history of the 1996 amendment that added “[t]he United States or any agency thereof” to the list of those capable of removing under that provision. The City of Cookeville Court concluded that the proper reading of the statute is “that the three entities that can remove are (1) the United States; (2) any agency thereof; or (3) any officer of the United States or of any agency thereof, sued in an official or individual capacity for any act under color of such office.” Id. at 389. Because the requirement of a colorable federal defense flows from the “act under color of such office” language, and because that language does not apply to the United States or its agencies, such defendants “can always remove under § 1442(a)(1).” Id.

         The Sixth Circuit reasoned that nothing in the syntax or punctuation of Section 1442(a)(1) compels reading “act under color of such office” to apply to the United States or its agencies; that such a reading (as the Supreme Court has indicated) “does not make sense, ” since entities such as a sovereign and its agencies do not act in an “official or individual capacity” or “under color of an office”; that the legislative history clearly delineates between “agencies” on the one hand and “officers sued in either an individual or official capacity” on the other; and that Congress and the Supreme Court have instructed the courts to construe Section 1442(a) broadly in favor of removal. Id. at 389-90.

         The City of Cookeville Court also noted that, unlike in Mesa, a construction of Section 1442(a)(1) to require a colorable federal defense of the United States or its agencies is not necessary to preserve the statute's constitutionality. As the Mesa Court recognized, the absence of a colorable federal defense requirement in the case of officer removal “would … present grave constitutional problems” since, without such a requirement, removal could occur without any federal question sufficient to satisfy Article III's grant of judicial power to hear cases “arising under” federal law, and with no alternative fount of jurisdiction apparent. 489 U.S. at 136-37. In contrast, because Article III extends the judicial power “to Controversies to which the United States shall be a Party, ” U.S. Const. art. III, § 2, cl. 1, no federal defense requirement is needed to ensure the constitutionality of removal by the United States or its agencies. 484 F.3d at 391; see also In re: Meyerland Co., 910 F.2d 1257, 1260 (5th Cir. 1990) (“Even though the only issues to be decided are ones of state law, Article Three permits the exercise of jurisdiction if one of the parties is a federal corporation.”).[10]

         Several district courts outside the Sixth Circuit have agreed with City of Cookeville, [11] and the Court has discovered no appellate or trial court to have disagreed with its analysis or conclusion. The Court agrees with these authorities that the United States and its agencies may remove under Section 1442(a)(1) regardless of whether they assert a colorable federal defense or act under color of office. In doing so, the Court adds the following to the Sixth Circuit's analysis.

         Although the rule is not always honored, “our inquiry into the meaning of [a] statute's text ceases when the statutory language is unambiguous and the statutory scheme is coherent and consistent.” Matal v. Tam, 137 S.Ct. 1744, 1756 (2017) (internal quotes omitted). The Court considers Section 1442(a)(1) to be unambiguous, and its scheme coherent and consistent, obviating resort to legislative history. In order for the United States and its agencies to be subject to the “colorable federal defense” requirement applicable to individuals, Section 1442(a)(1) as it stood following the 1996 amendment must be read as limiting removal to “[t]he United States or any agency thereof ... sued in an official or individual capacity for any act under color of such office.” As the Sixth Circuit noted, this reading may be grammatically defensible, but it “does not make ...

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