Huber Technology, Inc. v. Gowing Contractors Ltd.

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

3:18-cv-00525-RJC-DCK

HUBER TECHNOLOGY, INC., )

)

Plaintiff, )

)

vs. )

) ORDER

)

GOWING CONTRACTORS LTD., )

)

Defendant. )

____________________________________)

THIS MATTER comes before the Court on Plaintiff’s Motion to Remand, (Doc.

No. 5); the Magistrate Judge’s Memorandum and Recommendation (“M&R”), (Doc.

No. 9); Plaintiff’s Objections to the M&R, (Doc. No. 12); and Defendant’s Response to

Plaintiff’s Objections, (Doc. No. 14).

I. BACKGROUND

On May 31, 2018, Plaintiff Huber Technology, Inc. (“Plaintiff”) filed a

Complaint against Defendant Gowing Contractors Ltd. (“Defendant”) in the Superior

Court of Mecklenburg County, North Carolina. (Doc. No. 1-1.) On September 27,

2018, Defendant removed the action to the United States District Court for the

Western District of North Carolina on the basis of diversity jurisdiction under 28

U.S.C. § 1332(a)(2). (Doc. No. 1.) The parties conducted an Initial Attorney’s

Conference (“IAC”) on October 18, 2018 and filed their Certificate of Initial Attorney’s

Conference (“CIAC”) on October 25, 2018. (Doc. No. 3.)

On October 29, 2018, Plaintiff filed its Motion to Remand, arguing that

Defendant’s removal was untimely. (Doc. No. 5.) In the M&R, the Magistrate Judge

recommended that the Court deny Plaintiff’s motion. (Doc. No. 9, at 4.) The

Magistrate Judge concluded that Plaintiff had waived its right to seek remand

because the motion was untimely, Plaintiff participated in the IAC and CIAC without

raising its demand for remand, and Plaintiff failed to comply with Local Rule 7.1(e).

(Doc. No. 9, at 3.)

II. STANDARD OF REVIEW

A district court may assign dispositive pretrial matters, including motions to

dismiss, to a magistrate judge for “proposed findings of fact and recommendations.”

28 U.S.C. § 636(b)(1)(A)–(B). The Federal Magistrate Act provides that a district

court “shall make a de novo determination of those portions of the report or specific

proposed findings or recommendations to which objection is made.” Id. at

§ 636(b)(1)(C); Camby v. Davis, 718 F.2d 198, 199 (4th Cir. 1983).

III. DISCUSSION

Plaintiff makes two objections to the M&R: (1) the M&R incorrectly found that

Plaintiff’s Motion to Remand was untimely filed, and (2) the M&R erred in concluding

that Plaintiff waived its right to seek remand. (Doc. No. 12, at 2.) After a de novo

review of the record, the Court agrees.

A. Plaintiff timely filed its Motion to Remand.

“A motion to remand the case on the basis of any defect other than lack of

subject matter jurisdiction must be made within 30 days after the filing of the notice

of removal under section 1446(a).” 28 U.S.C. § 1447(c). Under Rule 6 of the Federal

Rules of Civil Procedure, in computing a time period under a statute that does not

specify a method of computing time, the court is to “include the last day of the period,

but if the last day is a Saturday, Sunday, or legal holiday, the period continues to run

until the end of the next day that is not a Saturday, Sunday, or legal holiday.” Fed.

R. Civ. P. 6(a)(1)(C). Section 1447 does not specify a method of computing time and,

thus, Rule 6 applies when computing the thirty-day time period thereunder for filing

a motion to remand.

Here, Defendant filed its Notice of Removal on September 27, 2018. (Doc. No.

1.) Accordingly, Plaintiff was required to file a motion to remand on or before

Saturday, October 27, 2018. See 28 U.S.C. § 1447(c). Applying Rule 6, Plaintiff’s

deadline for filing a motion to remand continued to run until the end of the day on

Monday, October 29, 2018. Fed. R. Civ. P. 6(a)(1)(C). Plaintiff filed its Motion to

Remand on October 29, 2018 and, thus, the motion was timely.

B. Plaintiff did not waive its right to seek remand.

Defendant argues that Plaintiff’s participation in the IAC and CIAC

constituted a waiver of Plaintiff’s right to seek remand on the basis that Defendant’s

Notice of Removal was untimely.

An untimely filed notice of removal is a defect in removal procedure. Cades v.

H & R Block, Inc., 43 F.3d 869, 873 (4th Cir. 1994). Section 1447(c) gives the parties

the responsibility to “assert a procedural defect or to waive the defect if they choose

to remain in the federal forum.” Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d

192, 198 (4th Cir. 2008). The right to seek remand for procedural defects is generally

waived where a plaintiff “vigorously prosecut[es] the case after removal,” 32A Am.

Jur. 2d Federal Courts § 1382 (2019), and where the statutory deadline for moving

for remand on a procedural basis lapses, see Wiley v. United Parcel Serv., Inc., 11 F.

App’x 176, 178 (4th Cir. 2001) (declaring that waiver occurs when a party “fails to

note a non-jurisdictional objection within 30 days of the notice of removal”). For

example, a plaintiff may waive objections to removal by affirmatively litigating in

federal court or attending depositions and amending one’s complaint before moving

to remand. Johnson v. Odeco Oil & Gas Co., 864 F.2d 40, 42 (5th Cir. 1989)

(concluding that plaintiff waived his right to seek remand by attending depositions

noticed by defendants and amending his complaint in federal court); Busby v. Capital

One, N.A., 841 F. Supp. 2d 49, 53 (D.D.C. 2012) (concluding that plaintiff waived her

objections to procedural defects in removal by affirmatively litigating her claim in

federal court).

Here, Defendant removed this action on September 27, 2018 and filed its

Answer on October 4, 2018. (Doc. Nos. 1 to 2.) In the Western District of North

Carolina, the Local Rules require the parties to participate in an IAC within fourteen

days of the filing of the answer to the complaint. LCvR 16.1(a), (d). Within seven

days of the IAC, the parties must file their CIAC. LCvR 16.1(b). In this case, the

parties conducted the IAC and filed their CIAC on October 25, 2018, as required.

(Doc. No. 3.) Four days later, Plaintiff filed its Motion to Remand. (Doc. No. 5.)

Plaintiff’s only actions post-removal thus consisted of (1) participating in the IAC and

CIAC as mandated by Local Rule 16.1 and (2) filing its Motion to Remand.

The Court does not view mere adherence to Local Rule 16.1 as a waiver of the

right to seek remand. Plaintiff’s conduct in this litigation is even more passive than

conduct that courts have found insufficient to constitute a waiver, such as amending

a complaint after a denial of a remand motion, see King v. Marriott Int’l, Inc., 337

F.3d 421, 426 (4th Cir. 2003); failing to seek an immediate appeal of a district court’s

denial of remand, see Caterpillar Inc. v. Lewis, 519 U.S. 61, 74 n.11 (1996); and “filing

an opposition to a pending motion to dismiss,” see SWC Inc. v. Elite Promo Inc., 234

F. Supp. 3d 1018, 1025 (N.D. Cal. 2017) (“Such minimal mandatory and defensive

conduct does not amount to the type of affirmative conduct that courts typically have

found to support waiver.”). Plaintiff merely engaged in the mandatory conference

and accompanying certificate thereto before filing its Motion to Remand. This is

insufficient to waive the right to seek remand. Instead, Plaintiff “did all that was

required to preserve [its] objection to removal.” Caterpillar Inc., 519 U.S. at 74. The

Court therefore concludes that Plaintiff did not waive its right to seek remand.

C. Defendant failed to meet its burden to establish that it timely filed its

Notice of Removal.

Having concluded that Plaintiff’s Motion to Remand was timely and Plaintiff

did not waive its right to seek remand, the Court now addresses the merits of the

motion.

Plaintiff argues that this action must be remanded to state court because

Defendant’s Notice of Removal was untimely. Pursuant to section 1446(b), “[t]he

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[.]” 28

U.S.C. § 1446(b)(1). Plaintiff contends that Defendant was served with the Complaint

and summons on August 27, 2018 and, as such, was required to file any notice of

removal on or before September 26, 2018. Because Defendant did not file its Notice

of Removal until September 27, 2018, Plaintiff asserts that remand is appropriate.

In response, Defendant contends that Plaintiff has failed to prove that Defendant was

served on August 27, 2018. Defendant states that it “has a reasonable belief that its

Notice of Removal was timely filed” based on “its own recollection of the date the

Complaint was received, which was August 31, 2018.” (Doc. No. 14, at 4–5.)

Defendant’s argument fails to recognize that “[t]he burden of establishing that

removal is timely rests with the defendant.” PurAyr, LLC v. Phocatox Techs., LLC,

263 F. Supp. 3d 632, 635 (W.D. Va. 2016); Andrews v. Daughtry, 994 F. Supp. 2d 728,

732 (M.D.N.C. 2014) (“[B]ecause Plaintiffs have challenged the timeliness of

[defendant]’s removal, [defendant] must demonstrate that his notice of removal was

timely.”); Tolley v. Monsanto Co., 591 F. Supp. 2d 837, 845 (S.D. W. Va. 2008) (“The

burden of establishing that removal was timely is on the defendant.”); McPhatter v.

Sweitzer, 401 F. Supp. 2d 468, 472 (M.D.N.C. 2005) (“[T]he burden is on Defendants

to establish that they filed their [notice of removal] in a timely manner.”); see also

Brown v. Kearse, 481 F. Supp. 2d 515, 521 (D.S.C. 2007) (“Defendant bears the

burden of establishing the right to removal, including compliance with the

requirements of § 1446(b).” (quoting Marler v. Amoco Oil Co., 793 F. Supp. 656, 658–

59 (E.D.N.C. 1992)).)

Defendant has not come forward with any evidence that its Notice of Removal

was timely. Defendant merely asserts in its briefs that it reasonably believes the

Notice of Removal was timely based on its recollection of when it received the

Complaint. “[F]ailure to comply with the 30-day limit [of § 1446(b)] is grounds for

immediately remanding a removed case to state court.” PurAyr, LLC, 263 F. Supp.

3d at 635 (alterations in original) (quoting FHC Options v. Security Life Ins. Co. of

Am., 993 F. Supp. 378, 380 (E.D. Va. 1998)). Accordingly, the Court grants Plaintiff’s

Motion to Remand.

D. The Court declines to award attorney’s fees and costs.

Plaintiff also requests an award of attorney’s fees and costs. “An order

remanding the case may require payment of just costs and any actual expenses,

including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). The

Supreme Court has explained that “[a]bsent unusual circumstances, attorney’s fees

should not be awarded when the removing party has an objectively reasonable basis

for removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005). While

“district courts retain discretion to consider whether unusual circumstances warrant

a departure from the rule in a given case,” the court’s “reasons for departing from the

general rule should be faithful to the purposes of awarding fees under § 1447(c).” Id.

at 141 (quotation marks omitted). “The decision whether to award fees pursuant to

§ 1447(c) is a matter within the Court’s sound discretion.” Rice v. Rutledge Rd.

Assocs., LLC, No. 1:15-cv-00269, 2016 U.S. Dist. LEXIS 173634, at *6 (W.D.N.C. Dec.

15, 2016).

Although the Court has concluded that remand is appropriate, the Court finds

that Defendant had an objectively reasonable basis for removal. Indeed, the parties

do not dispute that, absent an untimely notice of removal, removal would have been

proper on the basis of diversity jurisdiction. Therefore, the Court declines to award

attorney’s fees and costs.

IV. CONCLUSION

IT IS THEREFORE ORDERED that:

1. Plaintiff's Motion to Remand, (Doc. No. 5), is GRANTED. This matter

shall be remanded to Mecklenburg County Superior Court; and

2. The Clerk of Court is directed to close this case.

Signed: September 18, 2019

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United States District Judge “ee