Petition for Writ of Certiorari — Things Remembered, Inc. v. Petrarca
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941530 MAR 1 0 199%
CASE NO.
“OEFICE OF THE CLERK
IN THE SUPREME COURT
OF THE UNITED STATES
October Term, 1994
THINGS REMEMBERED, INC.,
Petitioner
ANTHONY A. PETRARCA,
Respondent
Petition for Writ of Certiorari
to the United States Court of
Appeals for the Sixth Circuit
PETITION FOR WRIT OF CERTIORARI
Peter A. Greene, Esq.
Counsel of Record
Steven D. Cundra, Esq.
Patricia L. Taylor, Esq.
THOMPSON, HINE & FLORY
1920 N Street, N.W.
Washington, D.C. 20036
(202) 973-2700
Attorneys for Petitioner
Things Remembered, Inc.
ait
~~ -~_~--=-
i
QUESTION PRESENTED FOR REVIEW
Whether an order of a District
Court remanding a case to Bankruptcy
Court on jurisdictional, not equitable,
grounds is reviewable by the Court of
Appeals under 28 U.S.C. § 1452(b).
ii iii
TABLE OF CONTENTS D. Cardinal Canons of Statutory
Construction e- ty ewe
Page ain Language o e
- Given Retect: § 1447(da) Does
QUESTION PRESENTED FOR REVIEW .... i Not Bar Appeal of Bankruptcy -
ee a ee ee ee ee
TABLE GF AUTHORITIES .«. «= se ec sees iii 28
Ee ae oe ee
oes ee ee i 1 _
APPENDICES .+++ « » oc * ° .
Janne lk 8 te 8 ee ee ee eee 12
APPENDIX A... - ie oe oe
STATUTES INVOLVED IN THE CASE .... 3 Sa
Cg a a a ee
STATaeewes CF TB GARR « 2 ec eo te wows Sa
DELO. <6 6 e « 4 ¢ « «
REASONS FOR GRANTING THE PETITION . 11 60a
ES Ee eee
APPEAL OF AN ORDER REMANDING A CASE
REMOVED PURSUANT TO 28 U.S.C. §
1452 (a) IS NOT BARRED IF THE
ORDER OF REMAND IS ON JURISDICTIONAL
GG oe te et ett te ee + oe 8 11
A. There Is a Direct Conflict in
the Circuits on This Important
Issue — >. >. >. 7 > . >. 7 . *. >. 11
B. The Plain Language of the
Statute Bars Appeals Only of
Equitable Remands ...... 14
C. The Cases Relied Upon by the
CourtBelow Are Not in Accord
With the Plain Language of the
OUNUMNS « 0 + 8 Se See ee 16
iv
TABLE OF AUTHORITIES
CASES —
Boone Coal and Timber Co.
v. Polan, 787 F.2d 1056
(6th cir. 1986) al >. > — > *
Browning v. Navarro,
743 F.2d 1069
(OG Gam. 3664) . 2. sc ec cece 17,20,21
Connecticut National Bank
v. Germain, 112 S. Ct. 1146
ie a eae |
Hernandez v. Brakegate,
942 F.2d 1223
i, 4 ). ) Se eee 18,19,24
In re Aztec Industries, Inc.,
84 B.R. 464
(Bankr. N.D. Ohio 1987) ...... £416
In re National Developers, Inc.,
803 F.2d 616
(11th Cir. 1986) “Se ae ot a a oe a 17
Johnson v. Robison,
415 U.S. 361 (1974) ...
Kungys v. United States,
206 @. CO: 2637 (20608) . . . «ce co e 27
Morissette v. United States,
I
National City Bank v. Coopers and
Lybrand, 802 F.2d 990
I ogg ee
Vv
Northern Pipeline Co. v. Marathon
Line Co.,
ane GU. 80° CNSR se. ws
Pacor, Inc. v. Higgins,
743 F.2d 984
( 3d cir - 1984 ) >. * _ — hl * . > >.
South Windsor Convalescent
Home, Inc. v. Mathews,
541 F.2d 910 (2d Cir. 1976)
Sykes v. Texas Air Corp.,
834 F.2d 488
Passim
(Sth Cir. 1987) ....... 19,21,24
Thomas Jefferson University
v. Shalala,
114 S. Ct. 2381 (1994) .....
United States v. Rice,
327 U.S. 742
(1946) . > > > >. 7. > >. > >. — . .
United States v. Shabani,
63 U.S.L.W. 4001 (1994) .... -
STATUTES
28 UsB.G. G@ 1806 ws wee eeee
26 OUsB.Ci @ Ada we eve ee eve
38: GsBsCG. BG 2SS6 «ee ee e@ ew @
28 U.S.C. §§ 1441-1447 ...-. -
28 U.S.C. $6 2447 « «© ee eo ew © ©
36. U.8sG. *H S008 os ee 0 6 ce *
. 17
Passim
vi 1
ie i LLU ee ee IN THE
SUPREME COURT OF THE UNITED STATES
i Ee ce ce ee ee 16 OCTOBER TERM, 1994
28 3.8.@. 1478 . >. > * >. >. . 16,17,26
THINGS REMEMBERED, INC.,
Act of 1887 > i _ > > . J > > > _ > _ 23
Petitioner,
Vv.
ANTHONY A. PETRARCA,
Respondent.
Petition for Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit
Things Remembered, Inc. ("TRI")
petitions for a writ of certiorari to
review the order of the United States
Court of Appeals for the Sixth
Circuit.?
OPINIONS BELOW
The order of the court of appeals
dismissing the action for lack of
jurisdiction is unreported but is
reprinted in the appendix hereto ("App")
i In accordance with Rule 29.1., Cole
National Group, Inc. is the parent company of
TRI. Cole Management Services, Inc. is the only
subsidiary of TRI.
2
at la. The order of the court of
appeals denying petitioner’s petition
for rehearing appears at App. 5a. The
June 25, 1993, opinion of the bankruptcy
court granting petitioner’s motion to
transfer venue is reprinted at App. 8a.
The accompanying order is reprinted at
App. 27a. The order of the district
court reversing the bankruptcy court’s
June 25, 1993, order is reprinted at
App. 3la.
JURISDICTION
_ The jurisdiction of the Court is
timely invoked under 28 U.S.C. §
1254(1). The Sixth Circuit entered its
Order dismissing the case for lack of
jurisdiction on November 15, 1994. The
Sixth Circuit denied of petitioner’s
— for rehearing on January 12,
STATUTES INVOLVED IN THE CASE
28 U.S.C. § 1334. Bankrupt
proceedings ptcy cases and
(a) Except as provided in
subsection (b) of this section, the
district court shall have original and
exclusive jurisdiction of all cases
under title 11.
(b) Notwithstanding an
Congress that confers ron Mae, thang si
jurisdiction on a court or courts other
than the district courts, the district
courts shall have original but not
exclusive jurisdiction of all civil
proceedings arising under title 11, or
“ aad‘
3
arising in or related to cases under
title 11.
(c)(1) Nothing in this section
prevents a district court in the
interest of justice, or in the interest
of comity with State courts or respect
for State law, from abstaining from
hearing a particular proceeding arising
under title 11 or arising in or related
to a case under title 11.
(2) Upon timely motion of a party
in a proceeding based upon a State law
claim or State law cause of action,
related to a case under title 11 but not
arising under title 11 or arising in a
case under title 11, with respect to
which an action could not have been
commenced in a court of the United
States absent jurisdiction under this
section, the district court shall
abstain from hearing such proceeding if
an action is commenced, and can be
timely adjudicated, in a State forum of
appropriate jurisdiction. Any decision
to abstain or not to abstain made under
this subsection is not reviewable by
appeal or otherwise by the Court of
Appeals under section 158(d), 1291, or
1292 of this title or by the Supreme
Court of the United States under section
1254 of this title. This subsection
shall not be construed to limit the
applicability of the stay provided for
by section 362 of title 11, United
States Code, as such section applies to
an action affecting the property of the
estate in bankruptcy.
(ad) The district court in which a
+
case under title 11 is commenced or is
pending shall have exclusive
jurisdiction of all of the property,
wherever located, of the debtor as of
the commencement of such case, and of
property of the estate.
28 U.S.C. § 1447. Procedure after
removal generally
(a) In any case removed from a
State court, the district court may
issue all necessary orders and process
to bring before it all proper parties
whether served by process issued by the
State court or otherwise.
(b) It may require the removing
party to file with its clerk copies of
all records and proceedings in such
State court or may cause the same to be
brought before it by writ of certiorari
issued to such State court.
(c) A motion to remand the case on
the basis of any defect in removal
procedure must be made within 30 days
after the filing of the notice of
removal under section 1446(a). If at
any time before final judgment it
appears that the district court lacks
subject matter jurisdiction, the case
shall be remanded. 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. A certified copy of the
order of remand shall be mailed by the
clerk to the clerk of the State court.
The State court may thereupon proceed
with such case.
(ad) An order remanding a case to
the State court from which it was
removed is not reviewable on appeal or
otherwise, except that an order
remanding a case to the State court from
which it was removed pursuant to section
1443 of this title shall be reviewable
by appeal or otherwise.
(e) If after removal the plaintiff
seeks to join additional defendants
whose joinder would destroy subject
matter jurisdiction, the court may deny
joinder, or permit joinder and remand
the action to the State court.
28 U.S.C. § 1452. Removal of claims
related to bankruptcy cases
(a) A party may remove any claim
or cause of action in a civil action
other than a proceeding before the
United States Tax Court or a civil
action by a governmental unit to enforce
such governmental unit’s police or
regulatory power, to the district court
for the district where such civil action
is pending, if such district court has
jurisdiction of such claim or cause of
action under section 1334 of this title.
(b) The court to which such claim
or cause of action is removed may remand
such claim or cause of action on any
equitable ground. An order entered
under this subsection remanding a claim
or cause of action, or a decision to not
remand, is not reviewable by appeal or
otherwise by the Court of Appeals under
6
section 158(d), 1291, or 1292 of this
title or by the Supreme Court of the
United States under section 1254 of this
title.
STAT OF E
In March, 1992, Anthony A.
Petrarca ("Petrarca") sued Child World,
Inc. ("Child World") and Cole National
2 in an Ohio state court.
Corporation
In the complaint, Petrarca alleged that
Child World had breached leases for
certain real property in Denver,
Colorado, and Wichita, Kansas, and that
Things Remembered, Inc. had breached a
limited, conditional guaranty of the
Denver lease only. The damages alleged
as against TRI only (that is, the
damages relating to the Denver guaranty)
2 TRI is successor in interest by merger
to Cole National Corporation. For ease of
reference, and because any liabilities of Cole
National Corporation in this litigation are
those of TRI, both will be referred to
interchangeably hereafter as "TRI."
resect ermeeremrnen ——e
3
totalled approximately $2.8 million.
In May, 1992, Child World filed a
petition under Chapter 11 of the United
States Bankruptcy Code in the United
States Bankruptcy Court for the Southern
District of New York. Thereafter, as
part of its bankruptcy proceedings,
Child World rejected the leases
specified in Petrarca’s state court
complaint.
On August 28, 1992, Petrarca filed
an amended complaint in state court.
The amended complaint added ten new
counts. In those new counts, Petrarca
alleged new claims relating to different
guaranties of different properties in
Ft. Wayne, Indiana; Lancaster,
Pennsylvania; Akron, Ohio; Westland,
Michigan; and Peoria, Illinois. In
addition, the amended complaint added
new damage claims totalling
8
approximately $12.3 million.
On September 25, 1992 -- i.e.,
less than 30 days after the filing of
the amended complaint -- TRI removed the
claims in the amended complaint to the
United States District and Bankruptcy
Courts for the Northern District of
Ohio.? The District Court
consolidated the removed case filed in
that court with the removed case filed
in the Bankruptcy Court. On competing
motions (Petrarca’s for remand and TRI’s
for transfer to the Child World "home"
Bankruptcy Court) the Bankruptcy Court
held that TRI’s bankruptcy removal was
3 As the District Court in this case
observed, there is "a fair amount of confusion
among the courts concerning whether notices of
removal taken pursuant to 28 U.S.C. § 1452(b)
are properly filed with the bankruptcy court
instead of the district court," and "TRI’s
decision to file notices with both the district
and the bankruptcy court may fairly be seen as
an act of caution given the existing
uncertainty." Order, August 11, 1994, at 2-3
n.1. See App. C at pp. 34a, 35a, n.1l.
——————
9
untimely, but that the removal to
District Court was timely. Because the
district and bankruptcy removals had
been consolidated, the Bankruptcy Court
then ordered the action transferred.
On Petrarca’s appeal, the District
Court reversed. The court held, inter
alia, that the time for removal arose on
the day that Child World filed its
Chapter 11 petition (notwithstanding
that on that day,* none of the new
claims added by Petrarca’s amended
complaint had even been asserted).
Accordingly, the District Court reversed
the order of transfer, and remanded the
case to the Bankruptcy Court for further
4 In fact, the new claims were not
asserted until three and a half months after the
bankruptcy filing. In short, the district court
order -- which found that the time for removal
expired 90 days after the May 6, 1992 bankruptcy
filing -- would require TRI to remove claims
before they were asserted. This cannot, TRI
submits, be the law -- and that is the basis
upon which TRI appealed to the Sixth Circuit.
10
proceedings.
TRI timely appealed. The Sixth
Circuit, finding that "[a]s a general
rule, an order remanding an action to a
state court from which is [sic] was
removed is not reviewable on appeal or
otherwise," Order, Sept. 29, 1994 at l,
see App. D, ordered TRI to show cause
why the appeal should not be dismissed.
After that show cause Order was briefed,
the Sixth Circuit dismissed the appeal
(without addressing the merits?) ,
citing two reasons.
First, the Sixth Circuit held that
the District Court’s ruling on the
removal to the District Court (i.e.,
> The Sixth Circuit’s Order to Show
Cause directed the parties to brief only the
issue of appealability, not the substantive
issue upon which the appeal was taken.
Accordingly, the Sixth Circuit did not consider
TRI’‘s argument that the District Court had
miscalculated the removal period.
11
that it was untimely) was not appealable
by virtue of 28 U.S.C. § 1447(d).
Second, the Sixth Circuit held that the
District Court’s ruling on the
bankruptcy removal was likewise not
appealable, this time on authority of
three cases from the Courts of Appeal
and one from this Court. The Sixth
Circuit did not address the contrary
authority, or the distinction in 28
U.S.C. § 1452(b) between equitable and
other remand orders.
REASONS FOR GRANTING THE PETITION
I. APPEAL OF AN ORDER REMANDING A
CASE REMOVED PURSUANT TO 28 U.S.C. §
1452(a) IS NOT BARRED IF THE ORDER OF
REMAND IS ON JURISDICTIONAL GROUNDS
A. There Is a Direct Conflict in
the Circuits on This
a ue
There is a direct and indubitable
conflict among the circuits as to the
issue of this case. Five circuit Courts
12
of Appeal have squarely addressed or
squarely decidew «he question of whether
appeal may be had from an order
remanding a case on purely
jurisdictional grounds, or whether such
an appeal is barred by 28 U.S.C. §
1452(b). The court below, following the
Seventh and Fifth Circuits, held that
any remand from a District to a
Bankruptcy Court, on whatever grounds,
is not appealable to the Court of
Appeals or otherwise under 28 U.S.C. §
1452(b).
The Third and Eleventh Circuits
hold precisely to the contrary. The
circuits hold that the plain language of
28 U.S.C. § 1452(b) can only be read to
prohibit remands which are made "on any
equitable ground," and that
jurisdictional remands, like the one in
this case, are always reviewable.
ee
13
That this issue is an important
one is clear: it is a “well-established
principle that a court will not construe
a statute to restrict access to judicial
review unless Congress manifests its
intent to do so by ‘clear and convincing
evidence’." Wi Vv ent
Home, Inc. v. Mathews, 541 F.2d 910, 914
(2d Cir. 1976) (quoting Johnson v.
Robison, 415 U.S. 361, 373-74 (1974)).
There is no such "clear and convincing
evidence" to support the ruling here.
In fact, the cases which prohibit
appeals of jurisdictional remands rely
on something other than the plain
language of the statute -- and that
reliance is not permitted to a court.
x RA ctic ional Vv.
ermain, 112 S.Ct. 1146 (1992).
This Court should grant the
petition to resolve this conflict. If
14
it does, TRI will argue that the Third
and Eleventh Circuit holdings are
correct, for the reasons set forth in
this brief.
B. The Plain Language of the
Statute Bars Appeals Only of
Equitable Remands
Section 1452(b) governs
removal of claims related to bankruptcy
cases. Subsection (a) authorizes
removal of both cases and claims.
Subsection (b) governs remand of those
cases or claims:
The court to which such
claim or cause of action is
removed may remand such
Claim or cause of action on
any equitable ground. An
order entered under this
subsection remanding a claim
or cause of action, or a
decision to not remand, is
not reviewable by appeal or
otherwise by the Court of
Appeals...
(emphasis added). By its plain terms,
subsection (b) comprehends remands on
ae
15
equitable grounds -- e.g., grounds
relating to whether the District Court
should or must abstain under 28 U.S.C.
1334(c) -- pursuant to which a court, in
its discretion, determines whether a
"related to" action should be heard in
the federal or state court.
By explicit reference to "any
equitable ground," the statute carves
out remands on other grounds -- it
cannot be read otherwise. A
jurisdictional remand, like the one at
issue here, is not a matter for a
court’s discretion: either there is
jurisdiction or there is not. The
District Court below found jurisdiction
lacking (because it held the removal
untimely), but the District Court did
not address any of the abstention or
other issues urged by Petrarca in his
16
motion to remand. ®
C. The Cases Relied Upon by the
Court Below Are Not in Accord
With the Plain Language of
the Statute
Thus, the nonreviewability
bar of § 1452(b) -- which prohibits
appeals only of remands entered “under
this subsection" (which can only mean
remands on "any equitable ground") does
not apply. And this was the precise
holding of Pacor, Inc. v. Higgins, 743
F.2d 984 (3d Cir. 1984). Pacor held
that "Section 1478(a) [the predecessor
to § 1452(a)] authorizes a very
6 As the lower bankruptcy court found,
issues of abstention and remand should be
addressed by the “home” bankruptcy court. The
proper role of the “conduit” bankruptcy court is
simply to transfer to the “home” bankruptcy
court, which will be "more familiar with the
pending bankruptcy case and what would be
required for efficient administration.”
Memorandum of Decision on Motion to Remand and
Motion to Transfer Venue, June 25, 1993, pp. 3,
4, see App. C at p. 23a, 24a. See also In re
Aztec Industries, Inc., 84 B.R. 464 (Bankr. N.D.
Ohio 1987).
ited odie eee
17
different type of removal than does
section 1441," 743 F.2d at 991, and that
the general removal provisions could not
and should not be applied to bankruptcy
removals, 743 F.2d at 991-92. It then
read the nonreviewability bar of §
1478(b) by its plain language: i.e.,
that remands on equitable grounds were
not reviewable. Since the Pacor
District Court had held that the
original suit was not "related to"
bankruptcy proceedings, and thus that it
lacked jurisdiction, the Third Circuit
accepted jurisdiction over the appeal.
Accord, In re National Developers, Inc.,
803 F.2d 616, 619 (11th Cir. 1986)
(adopting the reasoning of Pacor and
Browning v. Navarro, 743 F.2d 1069, 1076
n.21 (5th Cir. 1984)); see also National
City Bank v. Coopers and Lybrand, 802
F.2d 990 (8th Cir. 1986) (declining to
18
hear appeal of remand order based on
lack of federal question jurisdiction
under § 1331, but accepting appeal
jurisdiction over remand of bankruptcy
removal).
The court below did not address
the Pacor distinction between
"equitable" remands and other remands.
Rather, it simply held that appellate
review of a § 1452 remand is barred, and
then cited to four cases, without citing
or addressing the contrary authority.
Of those four cases, Hernandez v.
Brakegate, 942 F.2d 1223, 1225-26 (7th
Cir. 1991) contains the most in-depth
analysis. Hernandez held that remands
under 28 U.S.C. § 1447(c) are not
reviewable (because of § 1447(d)), and
that § 1452 remands are still subject to
the nonreviewability bar of § 1447(d).
As to the statutory distinction drawn by
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19
Pacor between remands "under this
subsection" and other remands, the
Seventh Circuit found it to be "clever
rather than correct," 942 F.2d at 1225.
After discussing the various policy
reasons why, in its opinion, even
matters of jurisdiction should be
nonreviewable, the court then reformed
the language used by Congress:
"’Equitable’ in § 1452(b) makes more
sense if it means ‘’appropriate.’" 942
F.2d at 1226.
The other case cited by the Sixth
Circuit which squarely considers, and
rejects, the statutory language is Sykes
v. Texas Air Corp., 834 F.2d 488 (5th
Cir. 1987). Like Hernandez, Sykes
recognized the distinction in the
statute but declined to give it effect,
calling it "a sort of semantic crack in
the statute," 834 F.2d at 490.
20
The Sixth Circuit also followed
its own precedent, Boone Coal and Timber
Co. v. Polan, 787 F.2d 1056 (6th Cir.
1986). Boone Coal rejected Pacor,
instead finding a line of Fifth Circuit
cases more persuasive, including,
primarily, Browning v. Navarro, 743 F.2d
1069 (5th Cir. 1984).
The Browning case was undeniably
germane authority for the limited
proposition that equitable remands are
non-reviewable. But Browning also
recognized and endorsed the distinction
between reviewability of remands on
equitable grounds, and of those based on
jurisdictional grounds, which had been
drawn by the Third Circuit in Pacor:
Nonreviewability extends
only to the
decision to remand or not to
remand a properly removed
action, not to whether the
Bankruptcy Court originally
had jurisdiction over the
21
matter. . . There is no
dispute in the instant case
that the Bankruptcy Court
had jurisdiction to act and
the manner in which it acted
is not subject to our
review. In Pacor . . the
Third Circuit held that,
§ 1478(b) [the predecessor
to § 1452(b)]
notwithstanding, it could
review a remand order when
the Bankruptcy Court
[believed that it] lacked
jurisdiction under § 1471(b)
[now § 1334] because the
removed proceeding was not
"related to" bankruptcy. In
Browning, 743 F.2d at 1076 n. 21
(emphasis added).’ Thus Browning
acknowledged the Pacor distinction which
was simply ignored by the Court in Boone
7 The quoted language of Browning was
disavowed in Sykes v. Texas Air Corporation, 834
F.2d 488 (5th Cir. 1987) but of course Sykes had
not been decided at the time of Boone Coal, and,
as set forth in the text infra, Sykes is open to
question as to its continued validity.
22
Coal, and properly determined that it
could not review an order of remand
based on equitable considerations.
Finally, the order below cited
United States v. Rice, 327 U.S. 742, 752
(1946). That case involved a state
court petition for administration of the
estate of a restricted Indian member of
the Five Civilized Tribes in Oklahoma
and a claim of interest in certain lands
in connection therewith. Such petitions
were governed by the Act of April 12,
1926, which, inter alia, gave the United
States the right to intervene and
remove.
The United States did so. The
District Court then dismissed the
complaint in intervention, and remanded
the case to state court for want of
jurisdiction. The question before, this
Court was whether the Court of Appeals
:
:
4
:
:
‘
7
‘
;
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23
could review that remand by mandamus.
This Court held that no such review was
available, observing that the Act of
1887 (i.e., the predecessor to 28 U.S.C.
§ 1447(d)) was "intended to be
applicable not only to remand orders
made in suits removed under the Act of
1887, but to orders of remand made in
cases removed under any other statutes,
as well." 327 U.S. at 752.
For two reasons Rice is not on
point. First, the Act of 1926 did not
contain any "provisions respecting
remand or any mode of review of an order
of remand." 327 U.S. at 748. Given the
statutory silence as to remand or review
of remand, it was necessary to look to
the more general removal statute to fill
in the gaps. Second, § 1452 did not
exist at the time Rice was decided.
24
D. Cardinal Canons of Statutory
Construction Require that the
Plain Language of the Statute
be Given Effect; § 1447(d)
Does Not Bar Appeal of
Bankruptcy Remands
The Hernandez and Sykes
interpretations are contrary to standard
canons of statutory construction. If a
statute has a “semantic crack," it may
be the job of Congress to fix it, but
the job of the courts is to apply it as
written, crack or no:
[Ijn interpreting a statute
a court should always turn
first to one, cardinal canon
before all others. We have
stated time and again that
courts must presume that a
legislature says in a
statute what it means and
means in a statute what it
says there.
Connecticut National Bank v. Germain,
112 S.Ct. 1146, 1149 (1992).
Nor is it correct to say, as the
Hernandez court did, that Congress icould
not have meant "equitable" because there
‘\
25
is no longer a law/equity distinction.
[Wjhere Congress borrows
terms of art in which are
accumulated the legal
tradition and meaning of
centuries of practice, it
presumably knows and adopts
the cluster of ideas that
were attached to each
borrowed word in the body of
learning from which it was
taken and the meaning its
use will convey to the
judicial mind unless
otherwise instructed. In
such case, absence of
contrary direction may be
taken as satisfaction with
widely accepted definitions,
not as a departure from
then.
Morissette v. United States, 342 U.S.
246, 263 (1952); see also United States
v. Shabani, 63 U.S.L.W. 4001, 4002
(1994) (it is a settled principle of
statutory construction that Congress
intends, absent contrary indications, to
adopt the common law definition of
statutory terms).
Moreover, the legislative history
26
shows that Congress could not have
intended that §§ 1441-1447 apply to the
§ 1452 removals. Clearly §§ 1441-1447
were inapplicable to bankruptcy removals
before Northern Pipeline Co. v. Marathon
Pipe Line Co., 458 U.S. 50 (1982); when
Congress re-enacted § 1478 as § 1452 it
could not have intended to change that
circumstance, see Pacor, Inc. v.
Higgins, 743 F.2d at 991-92 nn.
11,12,13.
In short, though the Hernandez
court thought that "appropriate" was a
more sensible word in the context,
Congress did not use the word
"appropriate." It used the word
"equitable," which does not mean
"jurisdictional."
27
And other rules of statutory
construction also militate in favor of
the Pacor interpretation and against the
Hernandez line. An interpretation of §
1452(b) which reads it as prohibiting
all appeals of remand orders, whether on
"any equitable ground" ov on a4
jurisdictional ground, would render
§ 1452(b) superfluous and wholly
circumscribed by § 1447(d): if review
of any remand order is never allowed
under the latter statute, there is no
reason for the bar of the former. No
statutory provision should be construed
to be entirely redundant, Kungys v.
United States, 108 S. Ct. 1537, 1550
(1988), and interpretation that renders
a statute superfluous should be avoided
where possible, Thomas Jefferson
University v. Shalala, 114 S. Ct. 2381,
2396 (1994).
28
CONCLUSION
For the reasons stated herein,
this Court should review this case in
order to resolve this conflict in the
lower courts and to address the
statutory distinction between equitable
and jurisdictional remands in the
context.
Respectfully submitted,
Peter A. Greene,
Counsel of Record
Steven D. Cundra
Patricia L. Taylor
THOMPSON, HINE AND FLORY
1920 N Street, N.W.
Washington, D.C. 20036-1601
(202) 973-2700
Mark A. Gamin
Dean D. Gamin
THOMPSON, HINE AND FLORY
1100 National City Bank Bldg.
Cleveland, Ohio 44114
(216) 566-5500
Attorneys for Petitioner
Things Remembered, Inc.
March, 1995
- es taller NL avi
> er
pe Pe eo ae
Gas
-
APPENDIX A
No. 94-3980
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
ae ee an
Entered: November
15, 1994
ANTHONY A. PETRARCA,
Plaintiff-Appellee,
Vv.
THINGS REMEMBERED, INC.
Defendan*-Appellant.
)
)
)
)
)
)
)
)
)
)
)
Before: MARTIN and BATCHELDER, Circuit
Judges ; and ENSLEN, District
Judge.
This action, initially filed in the
Ny
i -
i ae ens Pe ee ee 1 wen, J Sele ee awn AU0 Ae A TORRES» eee CP COS S Ker
Court of Common Pleas of Summit County,
was removed by defendant pursuant to 28
U.S.C. §§ 1441 and 1452. Finding that
the notices of removal were not timely
file., the district court remanded the
action to state court. Defendant filed
"rhe Honorable Richard A. Enslen, United
States District Judge for the Eastern District of
Michigan, sitting by designation.
2a
a notice of appeal of the remand order.
In response to a show cause order issued
by the court, defendant argues that the
remand order is reviewable on appeal.
Plaintiff asserts that the court lacks
jurisdiction to consider the appeal.
As a general rule, an order
remanding an action to a state court
from which it was removed "is not
reviewable on appeal or otherwise." 28
U.S.C. § 1447(d). Defendant argues that
this general prohibition against
appellate review is not applicable
because this action was removed and
remanded pursuant to the bankruptcy
removal statute, 28 U.S.C. § 1452. The
record clearly demonstrates that
defendant sought removal pursuant to the
general removal statute and that the
district court held that the notice ‘of
removal was not filed within the time
.
as
7 ao
8 _ 2 “ } 2 be, Piet. Ve ‘ Pe hy soe a ne ee
Pe oP eee ee aes ee ee ee eon ee a ee Peto AS he ee eee eee ee ee
3a
required by 28 U.S.C. § 1446(b). Thus,
section 1447(d) prohibits review of that
ruling. See Ohio v. Wright, 992 F.2d
616, 618-19 (6th Cir. 1993); Baldridge
v. Kentucky-Ohio Transportation, Inc.,
983 F.2d 1341, 1343-50 (6th Cir. 1993).
In addition, the district court held
that the notice of removal pursuant to
section 1452 was not timely filed.
Appellate review of that ruling is
likewise barred. Hernandez v.
Brakegate, Ltd., 942 F.2d 1223, 1225-26,
(7th Cir. 1991); Sykes v. Texas Air
Corp., 834 F.2d 488, 590-91, (5th Cir.
1987); Boone Coal and Timber Co. v.
Polan, 787 F.2d 1056, 1060, (6th Cir.
1986); see United States v. Rice, 327
U.S. 742, 752 (1946).
4a
It is therefore ORDERED that the
appeal is dismissed sua sponte for lack
of jurisdiction.
ENTERED BY ORDER OF THE COURT
Ls/_
Clerk
5a
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
100 EAST FIFTH STREET, ROOM 532
POTTER STEWART U.S. COURTHOUSE
CINCINNATI, OHIO 45202-3988
Filed: January 12, 1995
Mark A. Gamin
Thompson, Hine and Flory
629 Euclid Avenue
Suite 1100 National City Bank Building
Cleveland, OH 44114
RE: 94-3980
Petrarca vs. Things Remembered
District Court No. 93-01582
Dear Mr. Gamin:
Enclosed is a copy of an order
which was entered today in the above
styled case.
Very truly yours,
isl
Leonard Green, Clerk
(Mrs.) Peggy Eshman
Administrative Assistant
Enclosure
cc:
Mr. John C. Weisensell
6a
No. 94-3980
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
Entered: January 12, 1995
IN RE: CHILD WORLD, INC.
ANTHONY A. PETRARCA,
Appellee,
Vv.
2)
S
53
THINGS REMEMBERED, INC.
Appellant.
ee ee ee ee ee ee ee ee ee ee ee
BEFORE: MARTIN and BATCHELDER, Circuit
Judges; and ENSLEN, District Judge
The court having received a
petition for rehearing en banc, and the
petition having been circulated not only
to the original panel members but also
to all other active judges of this
court, and no judge of this court having
“Hon. Richard A. Enslen i
> > 7, ted
nic gose F caa a for the Western
str re) Michigan
designation. ats Bist ta
\
ss os
7a
requested a vote on the suggestion for
rehearing en banc, the petition for
rehearing has been referred to the
original hearing panel.
The panel has further reviewed the
petition for rehearing and concludes
that the issues raised in the petition
were fully considered upon the original
submission and decision of the case.
Accordingly, the petition is denied.
ENTERED BY ORDER OF THE COURT
is/
Leonard Green, Clerk
8a
APPENDIX C
IN THE UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
Entered: June 25, 1993
IN RE: ADVERSARY
PROCEEDING
92-5207
ANTHONY PETRARCA
Plaintiff RELATED CASE
CHILD WORLD,
INC. CHAPTER
11 PENDING IN
THE BANKRUPTCY
CHILD WORLD, INC. COURT FOR THE
.
ee ee ee ee ee ee ee ee ee ee ee ee 8
et al. SOUTHERN
DISTRICT OF
Defendant NEW YORK
CASE NO. 92
B20 887(HS)
MEMORANDUM OF DECISION ON MOTION TO
REMAND A MOTION TO TRANSFER VENUE
Before this court is a motion filed
by plaintiff Anthony A. Petrarca
("Petrarca") to remand this action to
state court. Also before this court is
a motion by defendant Things Remembered,
Inc. ("TR") for transfer of venue to the
“a
9a
U.S. Bankruptcy Court, Southern
District, New York. A pre-trial
conference was held on these motions and
no hearings were requested by the
parties and the court finds counsel has
waived any request for a hearing. Upon
review of the record and pleadings, this
court concludes that the removal was
proper and the motion for transfer of
venue shall be granted. This court
shall defer all other issues to the
Bankruptcy Court, Southern District, New
York.
Before discussing the applicable
law, a brief review of the background of
this proceeding is necessary.
TR and Child World, Inc. ("Child
World") jointly filed a notice of
removal in this court and the U.S.
District Court, Northern District of
Ohio, on September 25, 1992, on an
10a
action pending against them in the court
of Common Pleas, Summit County, Ohio,
being titled Petrarca v. Child World,
inc. et al., Case No. CV-92-03-1069 (the
"State Action").
Prior to the removal, on March 18,
1992, Petrarca commenced the State
Action against Child World and Cole
National Corporation ("Cole"). TR is a
successor, by merger, to Cole. The
basis of the State Action relates to
Child World’s alleged breach for failure
to pay rent under two commercial lease
agreements. The parties to the leases
are Petrarca and Child World. The State
Action also seeks payment from Cole
based upon an alleged guaranty of the
performance of Child World under the
leases. Child World filed for
protection under chapter 11 of the 'U.s.
Bankruptcy Code on May 6, 1992 in the
\
lla
U.S. Bankruptcy Court, Southern
District, New York.
On August 28, 1992 Petrarca filed
its first amended complaint (the
"amended complaint") in the State
Action. (See, Exhibit D to Motion to
Remand). The amended complaint
indicates that Child World had filed for
chapter 11 protection and also alleges
additional lease claims against Child
World and TR.
The leases in the State Action have
been rejected in the Child World
Bankruptcy case pursuant to applicable
bankruptcy law.
In the State Action, TR also filed
a motion to dismiss Petrarca’s amended
complaint or stay proceedings related
thereto until the Bankruptcy Court,
Southern District, New York, has
determined the extent of Child World’s
”
12a
obligations, as tenant, under the
leases.
Also pending, from the District
Court file records, is a motion filed by
National Fire Insurance Company of
Hartford to intervene in this
proceeding.
On March 8, 1993, TR and Colfax
Manor Gardens, a counterclaim defendant,
filed a stipulated notice of dismissal
which dismissed a third party complaint
filed against Colfax Gardens.
On March 26, 1993, the removal
action pending in District Court was
transferred and consolidated with the
removal filed in this court. Although
other motions have been filed, this
court will only address whether the
removal of this action was proper in
order to confer jurisdiction on this |
court.
13a
This court has reviewed the
decision of Judge Speer in re Aztec
Industries, Inc., 84 B.R. 464 (Bankr.
N.D. Ohio 1987) and finds the facts
similar to this case and also finds his
reasoning persuasive. In Aztec a state
action was removed to the bankruptcy
court and a motion to transfer the
removed case to the bankruptcy court in
Oklahoma was filed. Judge Speer
determined that he was required to
review the jurisdictional issues only.
The action was found to be properly
removed and the motion to transfer was
granted. Judge Speer noted that the
"home" bankruptcy court in Oklahoma was
more familiar with the pending
bankruptcy case and what would be
required for efficient administration.
Judge Speer followed the rationale of a
similar case and stated:
——
:
:
14a
the proper role of the
"conduit" court was to
transfer the action to the
"home" Bankruptcy Court to
decide the issue of whether to
remand or abstain from hearing
the action.
Id. at 467 citing In re Convent Guardian
Corp., 75 B.R. 346, 347 (Bankr. E.D. Pa.
1987).
This court agrees with Judge Speer
and, accordingly, will only address the
issue of removal to determine if this
court has proper jurisdiction of this
matter.
Petrarca contends the State Action
should be remanded because this case was
wrongfully removed to this court.
Petrarca also requests this court order
TR to pay its costs and fees as a result
of the alleged wrongful removal.
Petrarca contends the removal was
improper because: (1) it was not timely
filed; and (2) TR has waived its right
:
15a
to removal because it filed permissive
offensive counterclaims and crossclaims.
Although TR indicates it “attempted
to be as concise as possible" it has
submitted an exhaustive 38 page
memorandum in opposition to the motion
to remand. In its effort to be concise,
TR has included string cites for
fundamental propositions of law, many of
these string cites exceed one page.
See, eg. pp. 9-10; pp. 15-16. TR also
states Petrarca’s 27 page memorandum in
support exceeds the 15 page limit of
Local Rule 8:8.1(f). TR was granted
leave to file its 38 page memorandun.
This court takes note that Petrarca’s
memorandum exceeds the 15 page limit
without court approval. However, after
reviewing both memoranda, this court’s
only comment is that if the 15 page
limit was observed by both sides, all
16a
parties to this action would have been
better served by their counsel.
The Removal to District Court
TR contends it timely removed the
State Action to District Court because
it did not become removable until after
the amended complaint was filed on
August 28, 1992.
28 U.S.C. §1446(b) states, in relevant
part:
If the case stated by the
initial pleading is not
removable, a notice of removal
may be filed within thirty
days after receipt by the
defendant, through service or
otherwise, of a copy of an
amended pleading, motion,
order or other paper from
which it may first be
ascertained that the case is
one which is or has become
removable, except that a case
may not be removed on the
basis of jurisdiction
conferred by section 1332 of
this title more than 1 year
after commencement of the
action.
17a
TR contends it received the amended
complaint on August 31, 1992, which
contained ten additional counts on
additional lease guaranties which
required the application of federal
bankruptcy law. Thus, TR states, its
removal filed on September 25, 1992 was
within the 30 day period under §1446(b).
This court agrees with TR. The
court has reviewed the original
complaint and the amended complaint
(Notice of Removal, Exhibits 1 and 27)
and finds that the parties are the same
and the only change in the amended
complaint is the addition of ten claims
based on other leases and guaranties
between the parties. The new claims
against TR address additional leases and
also indicate that Child World is
operating under federal bankruptcy law
protection. The claims are state law
18a
Claims, but, because they involve lease
rejection and guaranty claims, they are
specifically and exclusively addressed
in the bankruptcy code. Thus, it is the
opinion of this court that the action
became removable to District Court upon
the service of the amended complaint
which indicated Child World had filed a
petition in bankruptcy. Thus, the
notice of removal filed on September 25,
1992 in the District Court was timely
under §1446(b). Striff v. Mason, 849
F.2d 240, 244 (6th Cir. 1988) (an action
may be removed "where the real nature of
the claim asserted in the complaint is
federal, irrespective of whether it is
so characterized"); E.W. Bowman, Inc. v.
Norfolk and Western Railway Co., 403 F.
Supp. 389, 390 (W.D. Pa. 1975)
"([federal] question must appear in
plaintiff’s complaint by direct and
'
19a
positive allegations or by necessary
implication from the matters alleged").
The Removal to Bankruptcy Court
Federal Rule of Bankruptvy
Procedure ("Rule") 9027 addresses
removal actions and provides, in
relevant part:
(2) TIME FOR FILING; CIVIL
ACTION INITIATED BEFORE
COMMENCEMENT OF THE CASE UNDER
THE CODE. If the claim or
cause of action in a civil
action is pending when a case
under the Code is commenced, a
notice of removal may be filed
only within the longest of
(A) 90 days after the order
for relief in the case under
the Code, (B) 30 days after
entry of an order terminating
a stay, if the claim or cause
of action in a civil action
has been stayed under § 362 of
the Code, or (C) 30 days after
a trustee qualifies in a
chapter 11 reorganization case
but not later than 180 days
after the order of for relief.
Rule 9027(a) (2).
Petrarca contends the removal to
this court was outside the 90 day time
20a
period and, therefore, must be remanded.
This court agrees that the removal to
this court was untimely. In reviewing
Rule 9027, it appears that the 90 day
time limit is the only provision
applicable to this case. There is no
indication before this court that an
applicable order for relief from stay
was entered or that a chapter 11 trustee
has been appointed in the Child World
case. The State Action was initiated
before the bankruptcy filing of Child
World on May 6, 1992, thus, the removal
had to be filed no later than 90 days
thereafter, which is August 5, 1992.
However, the notice of removal was filed
on September 25, 1992 in this court,
clearly beyond the time limit. Thus,
this court finds the bankruptcy removal
is untimely.
21a
However, because the removal was
timely filed in the District Court, as
stated earlier, and subsequently
consolidated with the pleadings filed
herein, this court finds that TR has
filed a timely removal.
Petrarca also argues that TR has
waived its right to remove this action
by filing permissive offensive
counterclaims and crossclaims in the
state court. TR responds that it could
not have waived its right to removal
when it filed the counterclaims and
crossclaims on June 26, 1992, because it
had no right to remove until the amended
complaint was later filed and served
August 31, 1992.
This court agrees with TR’s
position. Petrarca argues that a waiver
of a right to removal occurs when a
defendant files a permissive pleading
22a
seeking affirmative relief and cites in
support, inter alia, Bedell vs. H.R.C.
Ltd., 522 F. Supp. 732 (E.D. Ky. 1981).
In Bedell the court explained that
a defendant may waive its right to
remove an action by taking certain acts
in state court that are deemed to
constitute a submission to its
jurisdiction. 522 F. Supp. at 737.
Such acts may include the filing of a
permissive crossclaim. Id. Other acts
that could result in a waiver of the
right to remove are the filing of
pleadings seeking affirmative relief
resulting in an adjudication on the
merits of an issue which could result in
the dismissal of the action in whole or
in part. Id. at 738.
This court does not disagree with
the holding in Bedell but does find
another case cited more instructive.
:
23a
The court in Bolivar Sand Company, Inc.
v. Allied Equipment, Inc., 631 F. Supp.
171, 172 (W.D. Tenn. 1986) explains that
a right to remove can only be waived by
actions of the defendant after the case
clearly becomes removable. See also
Johnson v. Celotex Corp., 701 F. Supp.
553, 554 (D.Md. 1988).
Accordingly, in the context of this
case, because TR’s right to remove the
state court action on federal question
grounds did not arise until August 31,
1992 (the date on which it first
received a copy of Petrarca’s amended
complaint), very simply, whatever TR or
Child World did prior to that date could
not possibly have constituted a waiver
of the right to remove this action.
This court finds that TR did not
waive its right to remove this action
and removal was proper. Therefore, this
24a 25a
court finds it has jurisdiction to jurisdiction is proper to consider the
consider the motion to transfer venue. motion to transfer venue.
Furthermore, as this court finds that Accordingly, this court adopts the
removal was proper Petrarca’s motion for sound reasoning of Judge Speer in Aztec
costs and fees incurred as a result of at page 467:
removal shall be denied.
Motion to Transfer Venue
TR requests this court transfer
this proceeding to the Bankruptcy Court
in the Southern District of New Y6rk,
where the Child World case is currently
pending. TR relies on Aztec, supra, and
Dunkirk Limited Partnership v. TJX
Companies, Inc., 139 B.R. 643 (N.D. Ohio
1992).
This court agrees with the holding
in Aztec that this action should be
transferred to the "home" bankruptcy
court in New York. As discussed
earlier, this court finds this action
was properly removed and thus,
In addition, the Court which
would try the case can better
evaluate all the interests
involved, and determine its
own expertise in the
particular areas of the law
which form the basis of the
action, as well as its own
scheduling and time
constraints. This [conduit]
Court’s speculation on these
matters would not be an
adequate substitute for a
knowledgeable determination
based upon the actual facts
and circumstances. Moreover,
allowing the Oklahoma Court to
rule on the remand issues
minimizes the potential
conflicts which could arise
due to differences in
controlling authority between
the Courts. Accordingly, a
final ruling on the venue
issues, and the many sub-
issues which have been raised
within the context of venue,
remand, and abstention, should
be left to the "home"
Bankruptcy Court in Oklahoma.
bei!
26a
This court also finds Dunkirk
persuasive authority wherein Judge
Battisti enforced a stay of a removed
state action based upon a lease dispute.
The Dunkirk court held that allowing the
action to go forward in state court
"would be contrary to federal policies
designed to reach just and efficient
results by bringing together as much as
possible litigation affecting a bankrupt
estate". Id. at 647.
Therefore, based upon the
foregoing, this court shall enter a
separate order denying Petrarca’s motion
for costs and fees and granting the
motion of Things Remembered to transfer
venue to the Bankruptcy Court for the
Southern District of New York.
June 25, 1993 /s/
H.F. WHITE
Bankruptcy Judge
'
27a
CERTIFICATE OF SERVICE
I hereby certify that on the 25th
day of June, 1993 a copy of the attached
Memorandum of Decision on Motion to
Remand and Motion to Transfer Venue was
sent by first class mail to each of the
parties listed below.
isl
Terri Hawkins
Chapter 11 Case
Administrator
Patricia L. Taylor/Mark A. Gamin
Thompson, Hine and Flory
1100 National City Bank Bldg.
629 Euclid Avenue
Cleveland, Ohio 44114-3070
Counsel for Things Remenwoered, Inc.
Andrew R. Duff/Jack Morrison, Jr./
John C. Weisensell
Amer Cunningham Brennan Co., L.P.A.
Society Building 159 South Main Street
Akron, Ohio 44308
Counsel for Anthony A. Petrarca
Jeffrey T. Heintz
Brouse & McDowell
500 First National Tower
106 South Main Street
Akron, Ohio 44308-1471
Counsel for Child World, Inc.
28a
IN THE UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
Entered: June 25, 1993
ADVERSARY
IN RE: PROCEEDING
92-5207
ANTHONY PETRARCA
Plaintiff
RELATED CASE
Vv. CHILD WORLD, INC.
CHAPTER 11
CHILD WORLD, INC., PENDING IN
et al. SOUTHERN DISTRICT
OF NEW YORK CASE
Defendant NO. 92 B20
887 (HS)
AND DENYING MOTION FOR COSTS AND FEES
Based upon the "Memorandum of
Decision on Motion to Remand and Motion
to Transfer Venue" entered by this court
on the 25th day of June, 1993;
It is the order of this court that
the motion for costs and expenses
related to the removal of this action
filed by Anthony A. Petrarca is DENIED;
7
29a
It is the further order of this
court that the motion filed by Things
Remembered, inc., to transfer venue of
this action to the U.S. Bankruptcy
Court, Southern District of New York,
wherein is pending the related case
Child World, Inc., case no. 92 B20
887(HS) is GRANTED.
So ordered this 25th day of June,
1993.
Ls/
H.F. WHITE
Bankruptcy Judge
30a
CERTIFICATE OF SERVICE
I hereby certify that on the 25th
day of June, 1993, a copy of the
attached Order Granting Motion to
Transfer Venue and Denying Motion for
Costs and Fees was sent by first class
mail to each of the parties listed
below.
isi
Teri Hawkins
Chapter 11
Case Administrator
Patricia L. Taylor/Mark A. Gamin
Thompson, Hine and Flory
1100 National City Bank Bldg.
629 Euclid Avenue
Cleveland, Ohio 44114-3070
Counsel for Things Remembered, Inc.
Andrew R. Duff/Jack Morrison, Jr.
John C. Weisensell
Amer Cunningham Brennan Co., L.P.A.
Society Building 159 South Main Street
Akron, Ohio 44308
Counsel for Anthony A. Petrarca
31a
Jeffrey T. Heintz
Brouse & McDowell
500 First National Tower
106 South Main Street
Akron, Ohio 44308-1471
Counsel for Child World, Inc.
32a
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
Entered: August 11, 1994
Anthony A. Petrarca ) CASE NO.
) 5:93-CV-1582
ve ey
Plaintiff/Appellant, )
) BANKRUPTCY
-vs- ) CASE NO.
) 92-5207
Things Remembered, Inc. )
)
Defendant/Appellee. ) Judge Sam
) H. Bell
)
ORDER
Presently before the court is
Plaintiff-Appellant Anthony Petrarca’s
appeal from the U.S. Bankruptcy Court
for the Northern District of Ohio’s
order granting Defendant/Appellee’s
motion to transfer venue (docket #9).
33a
STATEMENT OF FACTS
The plaintiff, Anthony Petrarca,
initiated this action in the Court of
Common Pleas, Summit County, Ohio on
March 18, 1992. His four count
complaint asserted claims against Child
World as lessee and Cole National as
guarantor for delinquent rents, future
rents (pursuant to an acceleration
clause), unpaid common area maintenance
costs, taxes, insurance, and late fees
from two leases. On April 14, 1992
Things Remembered, Inc. ("TRI")
_voluntarily entered the case as the
successor by merger to Cole National and
filed for Leave to Plead.
On May 6, 1992, Child World filed
Chapter 11 petitions in the U.S.
Bankruptcy Court for the Southern
District of New York. Child World filed
a suggestion of stay in the Summit
34a
County Common Pleas Court on May 11,
1992, and that court transferred the
case (against only Child World) to its
inactive docket on May 22. Child World
simultaneously rejected the leases.
TRI filed its answer to Petrarca’s
complaint on May 28, 1992; it filed an
amended answer with counterclaim against
Petrarca and Colfax Manor Gardens on
June 26, claiming that its guarantees
were limited and that Petrarca’s
assignment of the leases to Colfax
without Cole National or TRI’s consent
discharged TRI of its obligations. TRI |
also claimed in the amended answer that
Child World’s Chapter 11 bankruptcy
filing allowed Child World to reject the
leases.
On August 28, 1992, Petrarca filed
an amended complaint bringing ten
additional claims regarding five other
35a
leases against TRI and Cole National.
Recognizing Child World’s Chapter 11
status and the Summit County stay,
Petrarca did not bring any additional
claims against Child World.
On September 25, 1992, TRI filed
Notices of Removal in the Summit County
court, the U.S. Bankruptcy Court for the
Northern District of Olio, and the
United States District Court for the
Northern District of Ohio.} In support
lthere remains a fair amount of confusion
among courts concerning whether notices of
removal taken pursuant to 28 U.S.C. §1452 are
properly filed with the bankruptcy court instead
of the district court. See In re Aztec
industries, Inc., 84 B.R. 464, 468 (Bankr. N.D.
Ohio 1987) (holding that petition may be filed
directly with the bankruptcy court and citing
supporting, as well as contradictory, authority).
TRI’s decision to file notices with both the
district and the bankruptcy court may fairly be
seen as an act of caution given the existing
uncertainty. The unfortunate consequence of this
dual filing was the engendering of separate
proceedings involving one and the same action
within the single court system.
Although the two matters were ultimately
"consolidated" by the district court, a more
appropriate course, it seems, would have called
for this court to determine whether it or the
bankruptcy court property retained jurisdiction
36a
of removal, TRI argued that only the
home bankruptcy court in New York could
determine the extent of Petrarca’s lease
rejection damages, if any, after
determining Child World’s obligations
under the leases. This being true, TRI
reasoned, TRI’s obligations as Child
World’s guarantor must also be measured
by, or with reference to, Child World’s
obligations as determined under the
bankruptcy code. Accordingly, TRI
explained, the matter involved in a
federal question and was properly
removed pursuant to 28 U.S.C. §1441.
Relying upon the same assumptions, TRI
further reasoned that the case was
"related to" Child World’s bankruptcy
'
over the matter. While TRI presumably had two
adequate, independent bases for removal, it
plainly did not have two separately removable
actions. \
37a
proceeding in New York and was therefore
removable under 28 U.S.C. §1452.
Plaintiff filed a motion to remand
with the district court on October 23,
1992. Judge Aldrich eventually
transferred the district court case to
the bankruptcy court for consolidation
with the matter pending before
Bankruptcy Judge White.
On May 25, 1993, the Ohio
bankruptcy court granted a motion by TRI
to transfer venue to the United States
Bankruptcy Court for the Southern
District of Ohio. In so doing, Judge
White determined that the notices of
removal were timely filed, that TRI had
not waived the right to remove the
action, and that the court’s sole role
as a "conduit" bankruptcy court was to
transfer the case to the "home" court in
New York.
38a
Petrarca now appeals Judge Whitc’s
May 25, 1993 order.
LAW AND ANALYSIS
Petrarca raises three issues in its
appeal. First and foremost, it
challenges as erroneous the
determination by the bankruptcy court
that TRI timely removed the State
action. Second, Petrarca claims that
the bankruptcy court erred in finding
that TRI did not waive its right to
remove the action. Third, TRI objects
to the bankruptcy court’s refusal to
abstain from hearing the removed action.
Because the objections raised concern
conclusions of law reached by the
bankruptcy court, this Court reviews the
matter de novo. In re Edward M.
Johnson, 845 F. 2d 1395, 1398 (6th Cir.
1988).
39a
I. Timeliness of Removal.
As mentioned above, TRI purported
to remove this matter from state court
pursuant to two independent federal
statutes. Petrarca moved the bankruptcy
court to remand the action for want of
jurisdiction, arguing that TRI had
failed to remove the matter within the
time period provided by either statute.
The bankruptcy court held that TRI
failed to remove the matter pursuant to
§1452 (bankruptcy removal) of Title 28
“ina timely manner. The bankruptcy
court further held, however, that TRI’s
removal was timely under §1441 (federal
question removal) of the same title,
and, for that reason, the court believed
itself to have jurisdiction to consider
TRI’s motion to transfer.
40a
Removal
Section 1331 of Title 28 provides
the federal district courts original
jurisdiction over all civil actions
“arising under the Constitution, law, or
treaties of the United States." 28
U.S.C. §1331. Section 1441 of the same
title allows for the removal to federal
district court of "any civil action
brought in a State court of which the
district courts of the United States
have original jurisdiction...." 28
U.S.C. §1441. As discussed above,
because TRI believed the application and
construction of Title 11 to be
determinative of the present dispute, it
relied in part upon §1441 in removing
the action to the district court.
The chief issue of contention
between the parties concerns the
4la
timeliness of TRI’s notice of removal.
At the core of this dispute is the
language of 28 U.S.C. Section 1446(b),
which sets forth the appropriate time
frame for removing matters deemed
removable under §1441. Section 1446(b)
provides in relevant part:
The notice of removal of a civil
action or proceeding shall be filed
within thirty 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 thirty 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.
If the case stated by the
initial pleading is not removable,
a notice of removal may be filed
except that a case may not be
removed on the basis of
42a
jurisdiction conferred by
section 1332 of this title more
than 1 year after commencement of
the action.
28 U.S.C. §1441(b) (emphasis added).
Petrarca’s original complaint did
not, when filed, implicate the federal
bankruptcy code or any other provision
of federal law. Therefore, it was not
immediately removable, and the thirty
day period in which to remove did not
begin to run upon service of the summons
as provided in the first paragraph of
§1446(b). Rather, the filing period
commenced “after receipt by the
defendant, through service or otherwise,
of a copy of an amended pleading,
motion, order or other paper from which
it ... [was ascertainable] that the case
{[was)" removable. The pertinent
question for our immediate purpose thus
becomes, "What form of notice to the
43a
defendant is required to trigger the
clock on the thirty-day filing period
provided in the second paragraph of
§1446(b)?"
Two competing views have polarized
courts faced with the same question.
Many courts interpret §1446(b) strictly
to require that the defendant receive
formal notice from a voluntary act of
filing taken by the plaintiff. Apache
Nitrogen Products, Inc. v. Harbor
Insurance Co., 145 F.R.D. 674 (D. Ariz.
1993); Phillips v. Allstate Insurance
Co., 702 F. Supp. 1466 (D. Cal. 1989);
Jong _v. General Motors Corporation, 359
F. Supp. 223 (N. D. Cal. 1973) Under
this view, unless the grounds for
removal appear on the face of a
pleading or other filing by the
plaintiff, the defendant is free to rest
upon his right to remove, regardless of
44a
his actual knowledge of grounds upon
which to do so. See, e.g., Jong, 359 F.
Supp. at 226 ("Therefore, the time
period to remove an action cannot depend
on defendant’s actual knowledge, because
the statute expressly allows a defendant
to rely on papers presented to it.").
Consistent with this line of
authority, TRI argues that the thirty-
day period in which it would remove this
action began on August 31, 1992 -- the
date on which Petrarca served TRI with a
paper (its amended complaint) containing
specific reference to Child World’s
bankruptcy.
Judge White accepted as persuasive
TRI’s arguments and authority, holding
"the action became removable to District
Court upon the service of the amended ;
complaint on August 31 which indicated
Child World had filed a abate « in
45a
bankruptcy." Memorandum of Decision
filed June 25, 1993, p. 5. Thus, he
concluded, TRI’s notice of removal filed
September 25, 1992 was timely. Id.
Petrarca finds fault with the
Bankruptcy Court’s narrow reading of
§1446(b)’s notice requirement because
such a reading ignores TRI’s actual
knowledge of grounds for removal.
Adopting the alternative view, Petrarca
insists that the removal period
commenced on May 6, 1992 when Child
World filed its petition for relief
under Chapter 11 and thereby gave TRI
actual, if not formal, notice of such
grounds.
Petrarca is not alone in arguing
the propriety of construing §1446(b)’s
notice requirement liberally. See e.g.
Mielke v. Allstate Ins. Co., 472 F.Supp.
(E.D. Mich. 1979) (no additional time
46a
for removal is allowed if the presence
of removal grounds is unambiguous in
light of the defendant’s knowledge and
the claims of the initial complaint) ;
Weaver v. Miller Electric Mfg. Co.,
inc., 616 F.Supp. 683 (S.D. Ala. 1985)
(the defendant should remove the case if
it comes by knowledge, independent of
the plaintiff, requiring removal and
should not sit upon its rights). In
their widely regarded treatise, Wright,
Miller and Cooper opine that §1446(b)’s
"clear purpose to commence the running
of the thirty-day period once the
defendant received actual notice that
the case has become removable ...."
C. Wright, A. Miller, and E. Cooper,
Federal Practice and Procedure:
Jurisdiction and Related Matters, §3732,
{
p. 520 (1985) (emphasis added).
\
47a
This Court need not weigh afresh
the competing arguments concerning the
form of notice necessary to start
§1446(b)’s thirty-day clock; the Sixth
Circuit Court of Appeals has already
considered and answered the question.
In Holston v. Carolina Freight Carriers
Corp., No. 90-1358, 1991 WL 112809, at
**3 (6th Cir. June 26, 1991), the court
held:
1446(b) starts the thirty day
period running from the date
that a defendant has solid and
unambiguous information that
the case is removable, even if
that information is solely
within its own
possession.....Any ambiguity
regarding the scope of 1446(b)
must be resolved in favor of
remand to the state courts.
Believing §1446(b) to be ambiguous on
its face, the court construed the
statute so as to prevent a defendant
from "“sit[(ting] upon information in its
possession until it feels the time is
48a
right to trigger removal ..." after
having forced the plaintiff to exhaust
his resources in the state court. Id.
at **4. In so doing, the court
specifically discounted the
applicability of the "Voluntary Act"
doctrine in matters involving federal
question (as opposed to diversity)
removal. Id. at **5,
Holden teaches that §1446(b)’‘s
thirty-day filing period commences once
the defendant gains "solid and
unambiguous information that the case is
removable," regardless of the source of
that information. Id. at **3. Petrarca
contends that TRI received actual notice
that the case was removable on May 6,
1992 when Child World filed chapter 11
petitions. TRI claims that it did not.
have notice until August 31, 1992 when |
it was served with Petrarca’s anended
‘
49a
complaint bringing new claims for other
leases which involved the application of
bankruptcy law.
The facts and pleadings placed
before this Court demonstrate that the
Petrarca’s amended complaint was merely
the procedural tool with which TRI
procured removal as opposed to the
actual source from which TRI discovered
the basis for that removal. The amended
complaint does not allege facts
concerning Child World’s bankruptcy
petition which were unknown to TRI.
Given the corporate relationship between
the two defendants, it is nearly
impossible to imagine that TRI was
unaware on May 6, 1992 that Child World
was filing a bankruptcy petition.
Assuming arguendo it was unaware on
May 6, it plainly had knowledge of the
bankruptcy proceedings on June 26, 1992,
50a
the date on which it filed its amended
answer. In that answer, TRI pointed to
Child World’s petition as justification
for Child World’s rejection of its
leases. Thus, TRI plainly had solid,
unambiguous information from which it
had received actual notice of the
bankruptcy by June 26, 1992. This being
true, the September 25, 1992 notice of
removal was plainly without the thirty-
day period for removal provided by
§1446(b).
B. Timeliness of the bankruptcy
court removal
Having determined that TRI did not
timely remove this matter pursuant to 28
U.S.C. §§1441 and 1446, the Court
considers whether TRI nonetheless
properly removed it under 28 U.S.C.
§1452. Section 1452 provides |
specifically for the removal of claims
\
5la
related to bankruptcy cases. It states
in part:
(a) A party may
remove any claim or
cause of action in a
civil action...
to the district court
for the district
where suc civil
action is pending, if
such district court
has jurisdiction of
such claim or cause
ef action under
section 1334* of this
title.
28 U.S.C. §1452.
Bankruptcy Rule 9027 (titled
"Notice of Removal") places temporal
limitations upon the removal of claims
or causes under §1452. In re Aztec
Industries, Inc., 84 B.R. 464, 469
(Bankr. N. D. Ohio 1987). Rule 9027(a)
provides in part:
2 section 1334 provides the district courts
with original jurisdiction over "all civil
proceedings arising under title 11, or arising in
or related to cases under title 11." 28 U.S.C.
§1334.
52a
(2) If the claim or cause of
action in a civil action is
pending when a case under the
Code is commenced, a notice of
removal may be filed only
within the longest of (A) 90
days after the order for
relief in the case under the
Code, (B) 30 days after entry
of an order terminating a stay
if the claim or cause of
action in a civil action has
been stayed under Section 362
of the Code, or (C) 30 days
after a trustee qualifies in a
Chapter 11 reorganization case
but not later than 180 days
after the order for relief.
(3) If a case under the Code
is pending when a claim or
cause of action is asserted in
another court, a notice of
removal may be filed with the
clerk only withir the shorter
of (A) 30 days after receipt,
through service or otherwise,
of a copy of the initial
pleading setting forth the
claim or cause of, action
sought to be remoyed or (B) 30
days after receing of the
summons if the i al
pleading has filed with
the court but served with
the summons.
Bankruptcy Rule 9027 (a) (2) % (3).
53a
Petrarca initiated the state action
on March 18, 1992. The "related" case
under the bankruptcy code commenced on
May 6 of the same year when Child World
filed its Chapter 11 petitions in New
York. Since the Ohio state action
preceded the related bankruptcy action,
the bankruptcy court for this district
applied the ninety-day limit provided in
sub-section (a)(2) of Rule 9027 to
determine the timeliness of TRI’s
removal under 1452. The ninety-day
period ended on August 5, 1992;
accordingly, the bankruptcy court
concluded that TRI’s September 25
removal was not timely under §1452.°
Contesting this conclusion, TRI
distinguishes claim removal from removal
3Because it believed TRI’s removal to be
timel suant to 28 U.S.C. §§1331 & 1346,
None, AR +n bankruptcy court declined to remand
the action.
54a
of an entire cause of action, noting
that §1452 allows a party to remove the
entire lawsuit. Because ten of the
removed claims (those added by Petrarca
in its August 28, 1992 amended
complaint) had not yet been filed when
the ninety-day period provided by Rule
9027(a)(2) expired, TRI reasons, it was
impossible for TRI to remove those
claims within the ninety-day window.
Rather, TRI implies, it had --
consistent with Rule 9027(a)(3) -- an
additional thirty-days from receipt of
the amended complaint in which to remove
the new claims set forth therein.
The Bankruptcy Court for the
Northern District of Texas, when
considering whether an amendment to the
plaintiff’s pleadings operates to extend
the removal period provided by
4
55a
Rule 9027, turned to 28 U.S.C. §1446 for
guidance, observing:
Bankruptcy Rule 9027
substantially
conforms to the
language and
procedure of 28
U.S.C. §1446. There
is no case law to
guide this Court on
the effect of amended
pleadings on the
removal of cases
under 28 U.S.C. §1478
[since repealed and
replaced by 28 U.S.C.
§1452] and Bankruptcy
Rule 9027. This
Court must rely on
decisions concerning
the removal of state
court actions to
United States
district [sic] 28
U.S.C. §1446 for
guidance since
federal law controls.
In Re Shaffer, 42 B.R. 522, 525 (Bankr.
N.D. Tex. 1994). Having conducted an
extensive search, this court has found
no authority offering a mere [sic]
persuasive method of analysis than that
employed in Shaffer. That court’s
56a
reliance on §1446 seems prudent and
leads to a logical resolution of the
problem before us.
As discussed previously, 28 U.S.C.
$1446 allows for removal from state to
district court: (1) within thirty days
after service of the initial pleading
setting forth the removable claim; or
(2) "if the case stated by the initial
pleading is not removable," within
thirty days of receipt by defendant of
information demonstrating that the
matter has become removable. Thus,
“(ujnless the amendment gives rise to
another removable basis, a party will
not acquire an additional thirty days in
which he or she can remove his or her
case." Shaffer, 42 B.R. at 525
(emphasis added) .
Were it’s true that Petrarca’s
amended complaint presented for the
Ay
57a
first time removable claims, this Court
might: be persuaded that TRI had thirty
more days in which to remove those
claims. Under the circumstances
presented, however, this court feels the
bankruptcy court properly held that TRI
failed to remove its case pursuant to
§1452 in a timely fashion.
As previously observed, the ten
claims added by Petrarca’s amended
complaint were predicted upon grounds
identical to those underlying the two
claims comprising the initial complaint.
Accordingly, if -- as TRI alleges -- the
added claims were removable because they
were related to Child World’s
bankruptcy, so too were the original
claims. Thus, the original cause of
action was pending and removable within
the purview of Rule 9027(a) when Child
World filed for Chapter 11 protection on
~~ as wo See ee sic a
58a
May 6, 1992. TRI’s opportunity to
remove that cause (or any single claim
therein) pursuant to §1452 and Rule 9027
arose on May 6 and expired ninety days
thereafter. The "new" claims asserted
in the amended complaint did not enable
TRI to revive its lost removal option
since they neither added nor
substantially altered the basis for
removal.
II. Remaining Issues on Appeal
Having determined that the notices
of removal were filed untimely, and thus
that the bankruptcy court lacked
jurisdiction over this matter, this
Court need not address the issues of
abstention and waiver raised on appeal.
59a
CONCLUSION
For the foregoing reasons, the
Bankruptcy Court’s order denying
Plaintiff’s motion to remand and
granting Defendant’s motion to transfer
venue is reversed. The case is remanded
to the Bankruptcy Court for further
proceedings consistent with this order.
IT IS SO ORDERED.
Ls/
SAM H. BELL
United States District Judge
60a
APPENDIX D
No. 94-3980
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
ANTHONY A. PETRARCA,
Plaintiff-Appellee,
Vv.
THINGS REMEMBERED, INC.,
Defendant-Appellant.
ee ee ee ee ee ee ee ee ee ee
Defendant filed a notice of appeal
of the order of the district court
remanding this action to the bankruptcy
court for the purposes of remanding it
to the state court from which it had
been removed. The district court
concluded that defendant’s notices of
removal pursuant to both 28 U.S.C. §
1441 and 28 U.S.C. § 1452 were untimely.
61a
Consequently, the bankruptcy court
lacked jurisdiction.
As a general rule, an order
remanding an action to a state court
from which it was removed is not
reviewable on appeal or otherwise. 28
U.S.C. § § 1447(d) and 1452(b); see
State of Ohio v. Wright, 992 F.2d 616
(6th. Cir. 1993) (en banc); Baldridge v.
Kentucky-Ohio Transp., Inc., 983 F.2d
1341 (6th Cir. 1993); Boone Coal and
Timber Co. v. Polan, 787 F.2d 1056, 1061
(6th Cir. 1986). It does not appear,
therefore, that the order of the
district court is an appealable order.
Defendant is hereby direct [sic] to
show cause, within twenty-one days of
the entry of this order, why this appeal
should not be dismissed for lack of
jurisdiction.
—
62a
ENTERED PURSUANT TO RULE 8(b)
SIXTH CIRCUIT RULES
Leonard Green, Clerk
fs/_
CERTIFICATE OF SERVICE
A true copy of the
foregoing Petition for Certiorari was
sent by regular U.S. Mail, postage
prepaid on this 10th day of March, 1995
to:
John C. Weisensell, Esq.
Amer, Cunningham & Brennan Co., LPA
Sixth Floor, Society Building
159 South Main Street
Akron, Ohio 44308-1322
(216) 535-9126
Counsel for Anthony A. Petrarca
ls/
One of the Attorneys for
Appellant Things Remembered,
Inc.
In compliance with Rule 29.5. all
parties required to be served have been
served.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.