Wright v. Terrill

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

KATHY J. WRIGHT, et al.,

Plaintiffs,

Case Nos. 1:25-cv-50

v. 1:25-cv-53

1:25-cv-57

JOHN DAVID TERRILL, et al.,

JUDGE DOUGLAS R. COLE

Defendants.

OPINION AND ORDER

Plaintiffs filed two cases in the Butler County Court of Common Pleas. After

nearly two years of litigation in the first state case and about a year of litigation in

the second, they have both found their way to this Court, with one of the two removed

state cases sprouting a third federal case along the way. Plaintiffs have moved to

remand each of the three now-federal cases back to state court. But for the reasons

stated more fully below, the Court DENIES Plaintiffs’ Motions for Remand to State

Court (No. 50, Doc. 13; No. 53, Doc. 11; No. 57, Doc. 10).

BACKGROUND

Before delving into the factual and procedural background, the Court begins

with some housekeeping. This Opinion and Order addresses motions to remand filed

in three related federal-court cases that arise out of two state-court cases.1 The first

two federal cases (1:25-cv-50 and 1:25-cv-53) arise out of one Butler County Court of

1 Because the Opinion and Order address three motions filed across three dockets, when

citing the various filings, the Court will indicate the docket on which the filing is found by

citing the case number’s terminal digits before the document number and PageID. “No. 50”

refers to case 1:25-cv-50; “No. 53” refers to case 1:25-cv-53; “No. 57” refers to case 1:25-cv-57.

Common Pleas case: Wright v. Terrill, No. 23-05-0927. The third federal case (1:25-

cv-57) arises out of a second Butler County Court of Common Pleas case: Wright v.

Terrill, No. 24-04-0781. Here’s the story.

Start with the first state-court case (“the 0927” one). Plaintiffs—some of

Defendant Butler Heritage Federal Credit Union’s (BHFCU) members—believed the

way in which BHFCU’s officers and directors were operating the credit union wasn’t

up to snuff. (No. 50, Compl., Doc. 3, #130—42). And they viewed an impending merger

between BHFCU and Defendant MyUSA Credit Union as an illegal attempt to sell

off BHFCU’s assets and cover up the BHFCU Board’s mismanagement. (/d.). So, on

May 7, 2023, Plaintiffs sued BHFCU, MyUSA Credit Union, and various Board

members of each entity in the Butler County Court of Common Pleas, alleging breach

of fiduciary duty and negligence. Ud. at #143-44). They sought a declaratory

judgment voiding the proposed merger and enforcing their rights as members. (Id. at

#142—43).

After Plaintiffs filed that state-court complaint, things proceeded as lawsuits

often do. Plaintiffs moved for a temporary restraining order (TRO) and/or preliminary

injunction (PI) to block the merger. (No. 50, Doc. 13-1). The state-court magistrate

judge granted the TRO, and eventually, the PI. (No. 50, Doc. 1-1, #11, 16; No. 50, Doc.

13-4). Defendants then moved to dismiss two of Plaintiffs’ claims for lack of subject-

matter jurisdiction. (No. 50, Doc. 13-3). And they moved to set aside the state-court

magistrate’s decision on the TRO and PI, arguing that the state court was “not the

proper forum for Plaintiffs to seek enforcement of the federal laws and regulations

pertaining to federally insured credit unions.” (No. 50, Doc. 13-5, #380). The state-

court judge denied both motions. (No. 50, Docs. 13-7, 13-13).

But then two things happened that led this first state-court suit to land in

federal court under two separate case numbers: a discovery dispute and a

conservatorship.

Start with the discovery dispute. On December 29, 2023, Plaintiffs filed a

notice of discovery requests in the state case, (No. 50, Doc. 1-1, #19), and then, about

nine months later, a motion to compel discovery in that case, as well, (id. at #20).

Among the items Plaintiffs sought were documents that the National Credit Union

Administration (NCUA)—a federal agency that supervises and regulates federally

chartered credit unions—owns. (No. 50, NCUA Statement of Interest, Doc. 13-15).

NCUA, however, instructed Defendants not to produce those documents in state-

court discovery on penalty of sanction. (No. 50, Doc. 12-1, #206—07). Why? Because

NCUA’s Touhy regulations? require litigants (and anyone else) to request documents

NCUA owns directly from NCUA, not through the judicial process. (See id.; see also

No. 50, Doc. 13-15, #428-31). So, upon receiving NCUA’s instructions, Defendants

informed Plaintiffs and the state court of their inability to produce the requested

documents. (No. 50, Doc. 12-1, #196—99). Then, on November 4, 2024, NCUA filed a

Statement of Interest in the state court reiterating that Plaintiffs hadn’t followed the

proper procedure to obtain the documents at issue. (No. 50, Doc. 13-15).

2 Under 5 U.S.C. § 301, federal agencies “may prescribe regulations for ... the custody, use,

and preservation of its records, papers, and property.” Those regulations are known as Touhy

regulations after the seminal case upholding agencies’ authority to create them: United

States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951).

But all of that was to no avail. On January 28, 2025, the state-court judge

granted (in relevant part) Plaintiffs’ motion to compel and warned of contempt

proceedings if Defendants did not turn over the NCUA-owned documents. (No. 50,

Doc. 13-16).

That order inspired NCUA—which, to be clear, is not formally a party to the

state-court case—to remove only the discovery proceedings to this Court on February

3, 2025. (No. 50, Notice of Removal, Doc. 1, #4—5). As further explained below, in

NCUA’s view, it is entitled to a federal forum under 28 U.S.C. § 1442(a)(1) and (d)(1):

the federal officer removal statute. Specifically, NCUA complains that because of its

sovereign immunity, the state court lacked subject-matter jurisdiction to enter the

order compelling production of its documents—an order that circumvented its Touhy

regulations. Ud. at #4).

Now turn to the second route this same state-court dispute traveled to federal

court—the conservatorship. It arose because, separate from the discovery dispute, the

National Credit Union Administration Board (the NCUA Board) invoked its

authority under 12 U.S.C. § 1786(h)(1)(A)-(B) and placed BHFCU into a

conservatorship, appointing itself Conservator. (No. 53, Doc. 1-3, #9-12). That

arrangement became effective on January 10, 2025. (No. 53, Doc. 14, #1254 n.1). With

the Conservatorship in place, the NCUA Board then removed the entire state-court

case to this Court on February 4, 2025. (No. 53, Notice of Removal, Doc. 1). According

to the NCUA Board, the Conservatorship made it party to the lawsuit, in turn making

the case removable under 12 U.S.C. § 1789(a)(2) and 28 U.S.C. § 1331. (See id. at #2).

That leaves the second state-court case (the “0781” one). On April 16, 2024, as

the discovery conundrum was unfolding in the first state-court case, Plaintiffs filed a

second state-court complaint. It echoes many of the same grievances they raised in

the first complaint—in other words, that BHFCU’s officers and directors had violated

the credit union’s bylaws and engaged in improper conduct. (No. 57, Compl., Doc. 3).

This Complaint, however, does not challenge the allegedly unlawful merger between

BHFCU and MyUSA—in fact, it does not name MyUSA as a defendant at all. (See

id.). Plaintiffs again seek a declaratory judgment enforcing their rights as members,

as well as a declaratory judgment voiding certain board nominations, meetings, and

elections. (Id. at #262–63). And they assert a breach of fiduciary duty and negligence

claim. (Id. at #263).

The NCUA Board’s conservatorship over BHFCU impacted this case, too, or at

least so the NCUA Board claims. The NCUA Board removed this state-court action

on February 5, 2025—a day after it removed the first state-court action. (No. 57,

Notice of Removal, Doc. 1).

To sum it all up, the Court has three proceedings before it: (1) the discovery

dispute from the first state-court case, which NCUA removed; (2) the entire first

state-court case, which the NCUA Board removed; and (3) the entire second state-

court case, which the NCUA Board also removed.

Plaintiffs disagree that this Court is a proper forum for any of those three

proceedings. And while there are a few minor nuances in their three motions,

Plaintiffs generally seek remand on four theories: (1) NCUA and the NCUA Board

did not timely remove, (2) NCUA and the NCUA Board waived removal by seeking

relief in the state court, (3) the real Defendants here are not federal agencies or

officers who can remove under § 1442, and (4) the Rooker-Feldman doctrine prevents

Defendants from re-litigating state-court decisions in this Court. (No. 50, Doc. 13,

#245; No. 58, Doc. 11, #835; No. 57, Doc. 10, #293).

NCUA and the individual Defendants responded to Plaintiffs’ motion in the

first federal case. (No. 50, Docs. 16, 17). As did the NCUA Board and the individual

Defendants in the second two federal cases. (No. 53, Docs. 14, 15; No. 57, Docs. 13,

14).3 And Plaintiffs replied to those responses in all three cases. (No. 50, Doc. 18; No.

53, Doc. 16; No. 57, Doc. 15). So the matters are now ripe.

LEGAL STANDARD

A motion to remand challenges the Court’s subject-matter jurisdiction over the

dispute removed from state court. Eastman v. Marine Mech. Corp., 438 F.3d 544, 549

(6th Cir. 2006). A party may remove an action from state court if the federal court to

which the action is removed would otherwise have had original jurisdiction. 28 U.S.C.

§ 1441(a). The defendant, as the removing party, bears the burden of proving that the

federal court has jurisdiction in response to a motion for remand. Eastman, 438 F.3d

at 549. The Court’s determination of its jurisdiction over the removed action is limited

to the legal bases the removing defendant asserted in its timely filed notice of

removal. Miller v. Adamo Grp., 1:22-cv-14, 2022 WL 1013090, at *3 (S.D. Ohio Apr.

3 The “individual Defendants” include Margaret Hale, Rodney Hale, Lisa Parks, John David

Terrill, Jordan Terrill, Robert J. Fraley, Roger Knabel, Vincent Lovejoy, James Hall, Ernest

W. Howard, James C. Miles, and Kevin Dreyer. They joined NCUA’s and the NCUA Board’s

oppositions to remand in all three cases. (No. 50, Doc. 17; No. 58, Doc. 15; No. 57, Doc. 14).

5, 2022); 28 U.S.C. § 1446(a) (explaining that the removing party must file “a notice

of removal ... containing a short and plain statement of the grounds for removal”). In

evaluating the asserted grounds for removal, a district court is not limited to the

factual allegations in the complaint. Bennett v. MIS Corp., 607 F.3d 1076, 1087 n.11

(6th Cir. 2010). Rather, it enjoys wide discretion in the evidence it may review to

assess its subject-matter jurisdiction. Jd. But despite that latitude, “removal

jurisdiction is assessed based on the facts as they existed at the time of removal.”

Total Quality Logistics, LLC v. Summit Logistics Grp., LLC, 606 F. Supp. 3d 743, 747

(S.D. Ohio 2022).

LAW AND ANALYSIS

Although the three motions to remand turn on largely the same issues, they

implicate different removing entities and different state-court cases, so the Court will

address them each separately. But before turning to the analysis, the Court offers a

brief word on the difference between NCUA and the NCUA Board.

The Federal Credit Union Act (the Act) established NCUA, which is an

independent agency within the executive branch of government. 12 U.S.C. § 1752a(a).

And the Act authorizes NCUA to perform various functions, such as chartering and

regulating federal credit unions, insuring federal and state credit unions, and

administering various credit-union-related funds. Jd. §§ 1754, 1781, 1783, 1790e.

Especially relevant here, NCUA, in its regulatory capacity, examines insured credit

unions. Id. §§ 1756, 1784. In connection with those inspections, NCUA examiners

prepare examination reports that analyze the relevant credit union’s financial

condition. Jd. § 1784(a). And NCUA may share those reports with the credit union.

See 12 C.F.R. § 792.31. But the documents, even when exchanged with the credit

union, remain NCUA’s property. Id.

A Board—made up of individuals whom the President appoints and the Senate

confirms—manages NCUA. 12 U.S.C. § 1752a(a), (b)(1). And as manager, the NCUA

Board has various powers and duties. Among them is the NCUA Board’s ability to

appoint itself as conservator of credit unions that meet certain criteria. 12 U.S.C.

§ 1786(h). For example, the NCUA Board can enter a conservatorship if necessary to

conserve the credit union’s assets, to protect member’s interests, or to address

significant undercapitalization. Id. § 1786(h)(1)(A), (F). When the NCUA Board

becomes conservator, it has “all the powers of the members, the directors, the officers,

and the committees of the credit union,” id. § 1786(h)(8), and succeeds to “all rights,

titles, powers, and privileges of the credit union,” id. § 1787(b)(2).

The cases before the Court involve both NCUA in its role as regulator and the

NCUA Board in its role as conservator. At day’s end, though, NCUA and the NCUA

Board are legally distinct. NCUA Bd. v. Zovko, No. 1:13-ev-1430, 2014 WL 12889797,

at *2 (N.D. Ohio Nov. 19, 2014) (citing NCUA Bd. v. Fisher, 653 F. Supp. 349, 350

(E.D. Mo. 1986)). So the Court will treat them as such, analyzing NCUA’s actions as

regulator, (which arise in No. 50), separate from the NCUA Board’s actions as

conservator, (which arise in Nos. 53 and 57). With that nuance sorted, the Court turns

to the motions to remand.

A. Case Number 1:25-cv-50 Motion to Remand

Recall that the first federal-court case resulted from NCUA removing, under

§ 1442(a), only the discovery proceedings nested within the first state-court case. (No.

50, Doc. 1, #1). Plaintiffs’ motion to remand attacks that removal on four grounds:

(1) untimeliness, (2) waiver, (3) the inapplicability of § 1442(a), and (4) the Rooker-

Feldman doctrine. (No. 50, Doc. 18, #245). NCUA resists all those arguments. (See

generally Doc. 16). At bottom, the parties dispute two things: whether NCUA could

remove the discovery proceedings at all, and if so, whether some other principle—

timing, waiver, or jurisdictional limitations—renders the otherwise legitimate

removal invalid. Take each in turn.

Start with whether NCUA has a right to remove under § 1442(a). It does. The

federal officer removal statute allows “[t]he United States or any agency thereof” to

remove a “civil action ... that is against or directed to” it. 28 U.S.C. § 1442(a)(1). A

“civil action” includes “any proceeding (whether or not ancillary to another

proceeding)” in which a “judicial order, including a subpoena for testimony or

documents, is sought or issued.” Jd. § 1442(d)(1). And an action is “against” the

United States or a federal agency if the judgment would “interfere with the public

administration.” Miami Herald Media Co. v. Fla. Dep’t of Transp., 345 F. Supp. 3d

1349, 1363 (N.D. Fla. 2018) (emphasis omitted) (quoting Dugan v. Rank, 372 U.S.

609, 620 (1963)).

All those requirements are met here.4 NCUA is a federal agency. 12 U.S.C.

§ 1752a(a). The discovery proceedings NCUA removed are a “civil action” as § 1442(d)

defines the term since the state-court case involved a judicial order compelling

Defendants to turn over NCUA-owned documents. And the motion to compel was

“against” NCUA—it obligated Defendants to disclose NCUA-owned documents

notwithstanding NCUA’s Touhy regulations and its non-disclosure directive. That

interfered with NCUA’s administration of its records. See Miami Herald, 345 F. Supp.

3d at 1363; see also Cowlitz Cnty. v. Univ. of Washington, No. 3:19-cv-6250, 2020 WL

1890616, at *4 (W.D. Wash. Apr. 16, 2020). In sum, NCUA had a right to remove

under § 1442(a).

Having concluded that NCUA could remove the discovery proceedings, the

next question is whether NCUA timely did so. Ultimately, the Court concludes that

it did. To explain why, the Court starts with a primer on removal deadlines.

Under typical removal procedure, a defendant must remove a case within

thirty days after receiving service or a summons, whichever is sooner. 28 U.S.C.

§ 1446(b). Or, if the case isn’t initially removable, a defendant has thirty days to

remove after receiving “an amended pleading, motion, order or other paper” that

demonstrates the case has become removable. Jd. For cases removed under § 1442(a),

however, a different removal procedure provision controls:

4 Although some courts have hinted that federal agencies removing under § 1442(a) may need

to assert a colorable federal defense to properly remove, see, e.g., City of Jacksonville v. Dep't

of the Navy, 348 F.3d 1307, 1313 n.2 (11th Cir.2003), the Sixth Circuit has deemed that an

unnecessary requirement, City of Cookeville, Tenn. v. Upper Cumberland Elec. Membership

Corp., 484 F.3d 380, 391 (6th Cir. 2007). In any event, NCUA’s assertion of sovereign

immunity would qualify as a federal defense. City of Jacksonville, 348 F.3d at 1313 n.2.

10

Where the civil action or criminal prosecution that is removable under

section 1442(a) is a proceeding in which a judicial order for testimony or

documents is sought or issued or sought to be enforced, the 30-day

requirement of subsection (b) of this section ... is satisfied if the person

or entity desiring to remove the proceeding files the notice of removal

not later than 30 days after receiving, through service, notice of any such

proceeding.

28 U.S.C. § 1446(g). In other words, for cases removed under § 1442(a), the thirty-day

removal clock starts to run when the removing entity receives notice of a “proceeding

in which a judicial order for testimony or documents is sought or issued or sought to

be enforced.” Id.

Since NCUA removed under § 1442(a), § 1446(g)’s timeline applies. And NCUA

beat the thirty-day deadline. It removed on February 3, 2025, (No. 50, Doc. 1), just

six days after the state-court judge entered the order compelling discovery. In other

words, NCUA removed fewer than thirty days after a “proceeding in which a judicial

order for ... documents ... issued.” 28 U.S.C. § 1446(g). That’s all that was required

for timely removal. In light of NCUA’s timely exercise of its right to remove under

§ 1442(a), the Court concludes that remand is unnecessary for this first federal case.

Plaintiffs, however, insist on remand for a variety of reasons. None persuade.

First, Plaintiffs argue that because the NCUA Board is BHFCU’s Conservator, and

thus, “simply in the shoes of a private non-federal party,” § 1442(a) does not give

NCUA the right of removal. (No. 50, Doc. 13, #260—65). But that argument mistakes

NCUA for the NCUA Board. As the Court explained, the two are legally distinct

entities. So while Plaintiffs contend that the distinction is “not material” to the

motion to remand, (No. 50, Doc. 18, #697—99), the Court disagrees. Plaintiffs have

cited no cases suggesting that NCUA as regulator is the same, in a legal sense, as the

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NCUA Board as conservator. True, Plaintiffs point to caselaw highlighting that

government entities can act only through their agents. (No. 50, Doc. 18, #698). But

it’s unclear how that’s relevant here. If Plaintiffs mean to argue that NCUA can act

only through the NCUA Board, thus blurring any distinction between the two

entities, the Court doubts that’s the case. Agencies often employ thousands of

individuals—more than just board members—to carry out their functions. And here,

it's NCUA as a regulating entity that matters, not the NCUA Board.

Plaintiffs next lean on § 1446(b)(3) to argue that NCUA removed too late. (No.

50, Doc. 13, #245—-55). Specifically, Plaintiffs say that the state-court complaint and

“numerous motions, arguments, pleadings, and ‘other papers,” raised federal

grounds for removal, making clear that the case was removable and should have

started the thirty-day clock. Ud. at #245 (citing § 1443(b)(3)). At the very latest, they

say, NCUA’s statement of interest (which it filed on November 4, 2024) should have

triggered the removal deadline. Ud. at #245—46). And because NCUA did not remove

until February 3, 2025, it was at least two months late. (See id. at #251).

Even accepting (without deciding) that Plaintiffs are right about various state-

court filings raising grounds for removal, Plaintiffs’ argument falls short. That’s

because the operative removal provision here is not § 1446(b); it’s § 1446(g). And

under § 1446(g), what triggers the thirty-day deadline is notice that “a judicial order

for ... documents is sought or issued or sought to be enforced.” As discussed, NCUA

complied with that deadline by removing six days after the state court’s order

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compelling disclosure issued. So the cases Plaintiffs cite concerning “other papers”

and § 1446(b)(3), (see No. 50, Doc. 13, #246—-55), offer them no help.

Of course, NCUA did have notice that a judicial order for documents was

sought (as opposed to issued) on either September 18, 2024, when Plaintiffs moved to

compel discovery, or on October 21, 2024, when Plaintiffs supplemented their motion

to compel. (No. 50, Doc. 1-1, #20—21). But failing to remove within thirty days of those

occurrences didn’t render their removal untimely. As various courts have noted,

§ 1446(g)’s text expressly contemplates multiple trigger points for removal: upon

notice that “a judicial order for ... documents is sought or issued or sought to be

enforced.” 28 U.S.C. § 1446(g) (emphasis added); Miami Herald, 345 F. Supp. 3d at

1366-67; In re Pennsylvania, No. 13-cv-1871, 2013 WL 4193960, at *11 (E.D. Pa. Aug.

15, 2013). Plaintiffs offer no argument why the Court should ignore § 1446(g)’s plain

text. The Court is therefore satisfied that NCUA’s removal within thirty days of that

second trigger point—notice that a judicial order for documents issued—was timely.

Plaintiffs next urge that NCUA waived its right to remove by seeking

“affirmative relief” in state court. (No. 50, Doc. 13, #255-60). They point to the

following filings to demonstrate waiver: Defendants’ motion to dismiss, Defendants’

opposition to the motion to compel discovery, Defendants motion for a stay of

proceedings, the NCUA Board’s motion for substitution, and NCUA’s statement of

interest. (No. 50, Doc. 13, #256—57).

Plaintiffs are right on the law: “[A] defendant may constructively waive the

right to remove by taking substantial action in state court that manifests a

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willingness to litigate on the merits.” Robertson v. U.S. Bank, N.A., 831 F.3d 757, 761

(6th Cir. 2016) (emphasis added). But at least two problems surface when it comes to

application. For one, NCUA is not a defendant in this case; it’s an interested party.

And until it filed a statement of interest, NCUA wasn’t involved in the suit at all. So

even if NCUA knew of the lawsuit before the discovery dispute arose because of its

regulatory authority over BHFCU, as Plaintiffs contend, that knowledge changes

nothing when it comes to waiver. As a non-party, NCUA couldn’t waive a non-existent

right to removal (at least until the discovery dispute arose and § 1446(g) came into

play).

For another, among the filings to which Plaintiffs point as indicating waiver,

NCUA filed only one—the statement of interest. And in that statement, NCUA did

nothing more than explain its Touhy regulations and why an order compelling

disclosure of the NCUA-owned documents would flout those regulations. (No. 50, Doc.

13-15). True, NCUA requested that the state-court deny Plaintiffs’ motion to compel.

Ud. at #429). But that’s hardly an “affirmative action” (as Plaintiffs put it) or a

“substantial action” manifesting a willingness to litigate the discovery dispute on the

merits (as the Sixth Circuit puts it). If anything, the statement was an attempt to

avoid having to litigate the discovery issue, which doesn’t amount to waiver. See

Vistas de Canovanas I, Inc. v. Fed. Deposit Ins. Corp., 266 F. Supp. 3d 563, 570-71

(D.P.R. 2017). The Court is therefore not convinced that NCUA waived its right to

removal.

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Finally, Plaintiffs complain that the Court lacks jurisdiction to consider the

discovery proceedings under the Rooker-Feldman doctrine. (No. 50, Doc. 18, #265—

68). To Plaintiffs’ credit, at first blush, this seems just the sort of case that might fall

into Rooker-Feldman’s purview: NCUA as the “state-court loser|] complaining of

injuries caused by [the] state-court” order on Plaintiff's motion to compel and

“inviting district court review and rejection” of that order. VanderKodde v. Mary Jane

M. Elliott, P.C., 951 F.3d 397, 402 (6th Cir. 2020). Ultimately, though, that’s not the

case. “[U|nlike Rooker or Feldman, the [NCUA] was not a party in the state court.”

Johnson v. De Grandy, 512 U.S. 997, 1006 (1994). So in removing the case to this

Court, NCUA “merely seeks to litigate its [discovery] case for the first time.” /d. That

means its claims are properly before the Court. Id.

For these reasons, the Court DENIES Plaintiffs’ Motion to Remand to State

Court (No. 50, Doc. 13).

B. Case Number 1:25-cv-53 Motion to Remand

The next case involves the NCUA Board as Conservator, not NCUA as

regulator. And here, the NCUA Board removed the entire state-court action (the

“0927” one), not merely the discovery proceedings. So while Plaintiffs press the same

arguments for remand as before, (compare No. 50, Doc. 13, with No. 58, Doc. 11), the

legal analysis differs. Ultimately, though, the result remains the same—no remand.

The Court again begins with whether the NCUA Board has a right to remove

the entire state-court action. Under 12 U.S.C. § 1787(b)(2), when the NCUA Board

acts as conservator of a credit union, it becomes a successor in interest to that credit

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union. And 12 U.S.C. § 1789(a)(2) explains that any civil suit in which the NCUA

Board “shall be a party” is “deemed to arise under the laws of the United States.” The

NCUA Board, in turn, “may ... remove any such action, suit, or proceeding from a

State court.” 12 U.S.C. § 1789(a)(2). In other words, when the NCUA Board becomes

a party to a case by way of conservatorship, it can remove that case.

With those statutes in mind, the Court concludes that the NCUA Board does

have a right to remove under those statutes, though there is admittedly one wrinkle.

The NCUA Board appointed itself Conservator of BHFCU on January 8, 2025, (No.

53, Doc. 1-3, #12), which became effective upon service on January 10, 2025, (No. 53,

Doc. 14, #1254 n.1). So at that point, the NCUA Board succeeded to “all rights, titles,

powers, and privileges” of BHFCU. 12 U.S.C. § 1787(b)(2)(A). The NCUA Board,

however, was never formally substituted as the real party in interest in state court,

(No. 53, Doc. 14, #1258), so one could quibble about whether § 1789(a)(2)—which

allows the NCUA Board to remove suits to which it is a “party”’—permitted removal.

Ultimately, the lack of formal substitution does not impact the NCUA Board’s

right to remove. When it became Conservator, the NCUA Board succeeded “by

operation of law” to BHFCU’s rights, titles, powers, and privileges. 12 U.S.C.

§ 1787(b)(2)(A). So it was then—January 10, 2025—that the NCUA Board became a

party to the state-court action as a matter of law. See FDIC v. N. Savannah Props.,

LLC, 686 F.3d 1254, 1259-60 (11th Cir. 2012) (finding that the Federal Deposit

Insurance Corporation (FDIC) could remove before formal substitution in state court

based on its analogous statute); Woburn Five Cents Sav. Bank v. Robert M. Hicks,

16

Inc., 930 F.2d 965, 969-70 (1st Cir. 1991) (treating “the FDIC as a full party as a

matter of law at the time of appointment since, at that time, the bank ceases to

operate independently”).5 And as a party, the NCUA Board has a right to remove.®

That leads to the question of timeliness. When the NCUA Board has a right to

remove under § 1789(a)(2), it still must “follow[] any procedure for removal ... in

effect.” 12 U.S.C. § 1789(a)(2). Here, the parties agree that the applicable procedure

arises out of § 1446(b), (No. 53, Doc. 11, #835; No. 53, Doc.14, #1256—57), so the Court

will focus its attention on those timelines. Other courts have identified a few potential

dates that trigger § 1446(b)’s thirty-day removal deadline in situations where a

federal agency becomes involved as a conservator or receiver. Some courts have held

that the timeline starts upon a successor in interest’s (like a conservator’s or

receiver's) substitution as a party. T & M Dental Lab, Inc. v. First Indus. Bank, 714

F. Supp. 798, 799-800 (E.D. La. 1989). Other courts have determined that the clock

runs from the date the relevant entity becomes the successor in interest, regardless

of formal substitution. FDIC v. Norwood, 726 F. Supp. 1073, 1076 (S.D. Tex. 1989).

5 The Sixth Circuit has said that FDIC’s statutory banking framework under the Financial

Institutions Reform, Recovery, and Enforcement Act is “similar” to NCUA’s statutory

framework under the Federal Credit Union Act. Perna v. Health One Credit Union, 983 F.3d

258, 269-70 (6th Cir. 2020). So the Court finds caselaw involving removals by FDIC

persuasive, and thus relies on them here.

6 The state-court never formally substituted the NCUA Board as the real party in interest.

But that wasn’t for lack of effort. The NCUA Board moved in state court to substitute as the

real party in interest. (No. 53, Doc. 14, #1258). Plaintiffs, however, apparently planned to

oppose the motion, and the state court declined to expediate briefing. Ud.). So, to avoid letting

the thirty-day removal window lapse, the NCUA Board removed the suit before the state-

court judge ruled on the motion to substitute. Ud.).

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Still others have hinted that the deadline expires thirty days after the successor in

interest files a notice of substitution. See N. Savannah Props., 686 F.3d at 1259-60.

Here, the Court need not choose among these. Even if the earliest possible

trigger date—the genesis of the conservatorship—applies, the NCUA Board timely

removed. As the Court noted, on January 10, 2025, the NCUA Board assumed the

role of BHFCU’s Conservator. (No. 53, Doc. 14, #1254 n.1). And it removed the state-

court action twenty-five days later on February 4, 2025. (No. 53, Doc. 1). The state-

court action is therefore properly before the Court.

Plaintiffs again disagree. And they raise largely the same counterarguments

as before: the NCUA Board as Conservator cannot remove under § 1442(a),

untimeliness, waiver, and the Rooker-Feldman doctrine.

The Court can quickly dispose of Plaintiffs’ first counterargument. The NCUA

Board removed this case under 12 U.S.C. § 1789(a)(2) (which gives the Court original

jurisdiction over civil suits in which the NCUA Board is a party) and 28 U.S.C. § 1441

(which permits removal of actions over which the Court has original jurisdiction).

(No. 53, Doc. 1, #1). Plaintiffs’ argument resisting the NCUA Board’s removal under

§ 1442(a) is therefore misplaced. (No. 53, Doc. 11, #850—55).

Plaintiffs next contest the timeliness of the NCUA Board’s removal. They agree

that § 1446(b)’s timeline controls. Ud. at #835—37). But they disagree about when the

thirty-day clock started running. According to Plaintiffs, because their Complaint

contained “actual evidence of NCUA’s interests,” the clock started when they served

Defendants. Ud. at #835—-36). They add that “numerous motions, arguments,

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pleadings, and ‘other papers” likewise raised grounds for removal, the latest being

NCUA’s statement of interest on November 4, 2024. (/d.). In short, they argue that

because BHFCU could have removed the case in the last two years but did not, and

because the NCUA Board, as Conservator, has filled BHFCU’s shoes, the NCUA

Board’s removal at this stage was simply too late. (No. 53, Doc. 16, #1275—79).

Again assuming (without deciding) that BHFCU could have removed the case

based on the various state-court filings that Plaintiffs say raised federal grounds for

removal, Plaintiffs’ argument fails. Even though the NCUA Board, as Conservator,

succeeds to BHFCU’s rights, title, and interest, it is not the same party as BHFCU.

(See No. 53, Doc. 1-3, #11 (explaining that BHFCU would “continue to operate during

the conservatorship’)); see also 12 U.S.C. § 1787(b) (describing the NCUA Board’s

powers to operate credit unions under conservatorship). What matters here, then, is

when the NCUA Board could remove. And under § 1789(a)(2)’s plain language, once

the NCUA Board became a “party” to the state-court suit, the action became

removable. What BHFCU did or did not do before then is of no moment.? Cf. T& M

Dental Lab, 714 F. Supp. at 800 (noting that even where state-court procedural rules

7 Plaintiffs also argue that both NCUA and the NCUA Board have invoked a version of the

“revival exception” to renew the applicable removal period under § 1446. (No. 50, Doc. 18,

#701—-02; No. 58, Doc. 16, #1277—78). But neither NCUA nor the NCUA Board have argued

anything of the sort. Under the revival exception, “a defendant might theoretically be allowed

to ‘revive’ the original removal period under § 1446 where the plaintiff files an amended

complaint that so changes the nature of the action as to constitute substantially a new suit

begun that day.” State ex rel. Slatery v. Tennessee Valley Auth., 311 F. Supp. 3d 896, 903

(M.D. Tenn. 2018) (cleaned up). Here, Plaintiffs filed no amended complaints; NCUA and the

NCUA Board simply invoked their statutory rights to a federal forum and removed the

relevant proceedings and cases. The revival exception, therefore, has no place in these cases.

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allowed the FDIC to file motions as a non-party, the FDIC timely removed the case

under its jurisdiction-granting statute once it officially became a party).

The cases Plaintiffs cite in support of their untimeliness argument actually

prove the Court’s point. In FDIC v. Generes, for example, the FDIC became a receiver

for a bank, then litigated in state court for two years before removing the case. 650

F. Supp. 66, 67-68 (N.D. II. 1986). Because the FDIC failed to remove within thirty

days of becoming the real party in interest, the court deemed the removal untimely.

Id. at 68. In other words, the court reviewed FDIC’s removal effort based on FDIC’s

own conduct, not that of the predecessor bank.

The same is true in FDIC v. Brooks, 652 F. Supp. 745 (N.D. Tex. 1985). There,

the court determined that § 1446(b)’s deadline started to run when FDIC—who had

been appointed receiver of the originally-sued bank—received a letter from the state-

court judge, directing FDIC to prepare an order for court approval. Brooks, 652 F.

Supp. at 746. And because FDIC ignored the letter, waited six months to formally

intervene, then removed the case, the court found FDIC’s removal untimely. Jd. The

point, though, is that the court determined FDIC’s timeliness by considering FDIC’s

own conduct. See id. By contrast, Plaintiffs here ask the Court to determine whether

the NCUA Board timely removed based on papers BHFCU received and conduct

BHFCU took before the NCUA Board became Conservator. The cases to which

Plaintiffs point, including Brooks, don’t take that tack, and neither does the Court.

If Plaintiffs instead mean to argue that the NCUA Board could have invoked

its statutory authority to place BHFCU under conservatorship sooner, thus

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accelerating when the NCUA Board could remove, that argument is not well-taken

either. Under the Act, the NCUA Board has various powers it may use to effectuate

its statutory goals and duties. See, e.g., 12 U.S.C. §§ 1766, 1786. The removal statutes,

such as § 1446, for example, say nothing about how or when the NCUA Board must

make out-of-court decisions (like whether to place a credit union under

conservatorship). True, those out-of-court decisions may impact the § 1446 removal

timeline. But nonetheless, they do not make removal inherently untimely or

improper. Only once the removal deadlines are triggered does timeliness become a

concern.

Plaintiffs’ argument concerning waiver fails for much the same reason. They

claim that BHFCU’s decision to file various motions in the state court indicates a

willingness to waive its right to remove. (No. 53, Doc. 11, #846—47). So through the

conservatorship, they say, that waiver applies equally to the NCUA Board. (d. at

#847). No doubt, removal after nearly two years of litigation is somewhat of an oddity.

But that quirk doesn’t change that the NCUA Board’s right to remove arose, by

statute, when it became BHFCU’s Conservator. Moreover, the cases Plaintiffs cite to

support their waiver argument are inapt. Take Heafitz v. Interfirst Bank of Dallas,

711 F. Supp. 92, 96 (S.D.N.Y. 1989), for example. There, FDIC was appointed receiver

for a bank. Heafitz, 711 F. Supp. at 93. After that appointment, FDIC moved to amend

a previously-filed motion to dismiss in state court so it could “add new grounds for

dismissal” based on FDIC’s newfound presence in the suit. Jd. at 96. The court,

reasoning that FDIC had taken “affirmative action” by “actively seeking a decision

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on the merits,” found that FDIC had waived its right to remove. Id. at 96-97. Nothing

of the sort happened here. After becoming Conservator, the only action the NCUA

Board took in state court was filing a motion to substitute and filing a motion to stay

proceedings (which it had statutory authority to do, 12 U.S.C. § 1787(b)(12)(A), and

which it later withdrew). (No. 53, Doc. 1-4, #25—27). Neither of those things amount

to an effort to litigate the merits of the suit. The NCUA Board, in sum, did not waive

its right to remove.

That leaves Plaintiffs’ Rooker-Feldman argument. The NCUA Board,

admittedly, neglected to address this issue in its opposition. Even so, the doctrine

doesn’t apply for essentially the same reasons it didn’t apply in the previous federal

case: the NCUA Board was not a party to the state-court case until January 10, 2025,

when it became Conservator. And the only efforts it made after that were filing a

motion to substitute and motion to stay proceedings. So in removing the case to this

Court, the NCUA Board “merely seeks to litigate its [] case for the first time.”

Johnson, 512 U.S. at 1006. The Court thus has subject-matter jurisdiction over the

removed case. See 12 U.S.C. § 1789(a)(2).

Accordingly, the Court DENIES Plaintiffs’ Motion to Remand to State Court

(No. 53, Doc. 11).

C. Case Number 1:25-cv-57 Motion to Remand

That leaves the last federal case, which mirrors the second federal-case in most

respects: it revolves around the NCUA Board removing the entire state-court action

(this time, the “0781” one). The only meaningful difference is that the state-court

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action at issue here did not involve the discovery dispute that the first state-court

action did. (No. 57, Doc. 13, #615). Excepting that difference, the parties briefing in

this third federal case is nearly identical to that of the second federal case. (Compare

No. 53, Docs. 11, 14, 16, with No. 57, Docs. 10, 13, 15).

For that reason, the Court’s analysis concerning the second federal case applies

with equal force here. In short, the NCUA Board had a right to remove the entire case

under § 1789(a)(2). And it timely did so. It removed on February 5, 2025, (No. 57, Doc.

1), just a day after it removed the first state-court case and twenty-six days after the

NCUA Board became Conservator. And for the reasons already explained, Plaintiffs’

counterarguments fail to persuade the Court that the NCUA Board’s removal was

otherwise improper.

The Court therefore DENIES Plaintiffs’ Motion to Remand to State Court (No.

57, Doc. 10).

CONCLUSION

For the above reasons, the Court DENIES Plaintiffs’ Motions to Remand to

State Court (No. 50, Doc. 13; No. 53, Doc. 11; No. 57, Doc. 10).

SO ORDERED.

June 13, 2025

DATE DOUGLAS R. COLE

UNITED STATES DISTRICT JUDGE

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