Opinion
Civil Action No. 01-2313-GTV
October 9, 2001
MEMORANDUM AND ORDER
This case is before the court on Plaintiff's Motion to Remand to State Court (Doc. 7). Plaintiff originally filed his action for insurance benefits in the District Court of Johnson County, Kansas. Defendant The Standard Insurance Co. ("Standard") filed a notice of removal with this court based on the premise that ERISA preempts plaintiff's claims, thereby giving this court federal question jurisdiction. Defendant The Lehman Agency, Inc. ("Lehman") has indicated that it does not consent to removal or join in the removal notice. Plaintiff asks the court to remand the action because a case may not be removed to federal court unless all defendants join in the removal notice. The court agrees, and accordingly remands the action to state court.
Plaintiff also makes other arguments, but the court need not address them here because it rules in favor of plaintiff on this issue.
A party seeking to remove a case to federal court must comply with certain removal procedures. McShares, Inc. v. Barry, 979 F. Supp. 1338, 1341 (D.Kan. 1997). Failure to comply with such procedures justifies remand of the case to state court. Id. (citing 28 U.S.C. § 1447(c)). Courts strictly enforce removal procedures, and reiterate that "all doubts should be resolved in favor of remand." Id. at 1342 (citations and quotation marks omitted). The party who filed the notice of removal has the burden of showing that it did so properly. Id. (citations omitted); Muller v. TSC Indus., Inc., No. 92-4171-C, 1992 WL 331286, at *1 (D.Kan. Oct. 2, 1992).
A removal notice is procedurally defective if all defendants fail to consent to removal by joining in the notice. Goodman v. Med. Eng'g Corp., No. 98-6437, 1999 WL 672303, at *2 (10th Cir. Aug. 30, 1999) (citation omitted); Godley v. Valley View State Bank, No. 99-2531-GTV, 2000 WL 1114927, at *1 (D.Kan. July 6, 2000) (citation omitted); McShares, Inc., 979 F. Supp. at 1342 (citations omitted). This requirement is known as the unanimity rule, and applies to both diversity cases and federal question cases. McShares, Inc., 979 F. Supp. at 1342 (citations omitted). However, a defendant may properly remove a case without the joinder of all defendants if it can show that the non-joining defendants are nominal, fraudulently joined as parties, or unserved. Id. (citations omitted).
In the instant case, defendant Standard argues that defendant Lehman is a nominal party and fraudulently joined. The court disagrees. Defendant Standard cites Godley in support of its argument that defendant Lehman is a nominal party. In Godley, this court held that a trustee involved in a beneficiary dispute over trust assets was a nominal party because the trustee had no real interest in the controversy. 2000 WL 1114927, at *1. Unlike the trustee in Godley, defendant Lehman has a significant interest in the instant controversy. In the event that plaintiff is unable to recover damages from defendant Standard, plaintiff seeks to recover damages from defendant Lehman on the basis of breach of contract and negligent and intentional misrepresentation. Although defendant Lehman has applied for a stay of proceedings, this court will not presume to anticipate whether the stay will be granted or whether defendant Lehman will ultimately be held responsible for plaintiff's losses. The court concludes that defendant Lehman is not a nominal party in this action.
Likewise, defendant Standard has not met its burden of showing that defendant Lehman is a fraudulently joined party. Defendant Standard's burden of proof is onerous; it must offer evidence which "compels the conclusion that the joinder is without right and made in bad faith . . . ." Muller, 1992 WL 331286, at *3 (citations and quotation marks omitted). A court may find fraudulent joinder under the following circumstances:
when no cause of action is pleaded against the . . . defendant; when the cause of action pleaded against the . . . defendant is defective as a matter of law; when the pleaded cause of action does not exist in fact against the . . . defendant; when there is "no real intention in good faith to prosecute the action against the defendant or seek a joint judgment"; or when "there has been outright fraud in the plaintiff's pleadings of jurisdictional facts."
Id. (citations omitted). A court will not find fraudulent joinder "if there is a possibility that a state court would recognize the cause of action actually pleaded against the . . . defendant . . . ." Id.
Here, defendant Standard directs the court to several circumstances which it argues indicate that defendant Lehman is a fraudulently joined party. Defendant Standard points out that defendant Lehman received notice of the lawsuit before defendant Standard received notice; that plaintiff has filed for summary judgment only against defendant Standard; that plaintiff does not oppose defendant Lehman's motion for a stay of proceedings; and that plaintiff's brother is a stockholder of defendant Lehman. The court concludes that the existence of these "circumstances" is insufficient to show that plaintiff fraudulently joined defendant Lehman as a party. Plaintiff has stated causes of action for breach of contract and negligent and intentional misrepresentation against defendant Lehman, and the court finds no reason a Kansas state court would not recognize the validity of such causes of action.
For the above-stated reasons, the court grants plaintiff's motion to remand. The court notes that plaintiff has requested attorney fees and costs in his motion. An award of fees and costs is authorized by 28 U.S.C. § 1447(c). Such an award lies within the district court's discretion. McShares, Inc., 979 F. Supp. at 1344 (citing Daleske v. Fairfield Cmtys., Inc., 17 F.3d 321, 324-25 (10th Cir. 1994)); Muller, 1992 WL 331286, at *4. "The propriety of removal is the central issue in deciding whether to allow expenses and costs." McShares, Inc., 979 F. Supp. at 1344 (citing Daleske, 17 F.3d. at 324-25). The court finds in its discretion that defendant Standard had a fair basis for seeking removal, and denies plaintiff's request for attorney fees and costs.
IT IS, THEREFORE, BY THE COURT ORDERED that Plaintiff's Motion to Remand to State Court (Doc. 7) is granted, and the case is remanded to the District Court of Johnson County, Kansas. The Clerk is directed to mail a certified copy of this order to the Clerk of the Johnson County District Court.
IT IS FURTHER ORDERED that plaintiff's request for attorney fees and costs is denied.
The case is closed.
Copies of this order shall be transmitted to counsel of record.
IT IS SO ORDERED.