The opinion of the court was delivered by: Bua, District Judge.
The present action is one for equitable relief, the plaintiffs
claiming essentially that they are entitled to reformation of
certain Participation Agreements currently in effect between them
and defendant Samuel T. Isaac & Associates, Inc. [Associates].
Said action was filed initially in the Circuit Court of Will
County, Illinois, and was timely removed to this court, pursuant
to 28 U.S.C. § 1442(a)(1), by the defendant Secretary of Housing
and Urban Development [HUD or the Department].
The plaintiffs herein are six Illinois commercial banking
concerns. In their action, they contend that they were induced to
enter into the Participation Agreements at issue because of
certain misrepresentations allegedly made by defendant Samuel T.
Isaac. Defendant Isaac is a mortgage broker who, while doing
business as Samuel T. Isaac & Associates, Inc., arranged for the
plaintiff banks to, through him, loan approximately $6,744,500 to
defendant Lutheran Social Services of Illinois [LSSI or Lutheran]
for construction of a retirement housing complex, known as Salem
Village III, to be operated by Lutheran in Joliet, Illinois. This
loan, which was formally made to Salem Village III and secured by
a mortgage and note, was to be-and in fact ultimately was-FHA
insured. Under an agreement reached pursuant to
12 U.S.C. § 1715z, portions of it also were to be repaid to the mortgagee
directly by HUD.
The Participation Agreements under discussion, drawn in
connection with the Salem Village III loan, reflect the extent
and particulars regarding each of the plaintiffs' involvement in
that transaction. Also included in each Agreement are the
provisions: (a) that defendant Samuel T. Isaac & Associates, Inc.
was to be named as mortgagee in the Salem Village III mortgage
and note; and (b) that said mortgage and note, along with all
other documents evidencing and securing the same, were to remain
in the sole possession of Associates. It is these provisions the
plaintiffs seek to have reformed.
Currently pending before the court are the following motions of
Defendant HUD's motion to dismiss or in the
alternative for summary judgment. Rules 12(b)(6) and
The plaintiffs' motion for a preliminary injunction
and appointment of a Receiver. Rule 65(a),
The court, however, because it believes that removal of this
cause was improvidently granted, and because subject matter
jurisdiction to hear the matter otherwise is lacking, will not
rule upon these motions. Rather, for the reasons stated below,
the present action is ordered remanded to the Circuit Court of
Will County, Illinois.
Removal of the Cause was Improvidently Granted
As was noted above, the case at bar was filed initially in the
Circuit Court of Will County, Illinois, and was timely removed to
this court by the defendant Secretary of Housing and Urban
Development. Said removal was founded solely upon the provisions
of 28 U.S.C. § 1442(a)(1), with no other basis for federal
jurisdiction being shown.
28 U.S.C. § 1442(a)(1) provides in relevant part:
(a) A civil action or criminal prosecution commenced
in a State court against any of the following persons
may be removed by them to the district court of the
United States for the district and division embracing
the place wherein it is pending:
(1) Any officer of the United States or any agency
thereof, or person acting under him, for any act
under color of such office . . .
Actions of this type encompassed by § 1442(a)(1) can be removed
to a federal forum even if it is shown that federal jurisdiction
otherwise is lacking. Lindy v. Lynn, 395 F. Supp. 769, 771 (E.D.
Pa. 1974), aff'd, 515 F.2d 507 (3d Cir. 1975). If the state
suit is one not properly removable under § 1442(a)(1), however, a
federal defendant's presence in the matter is essentially
immaterial. In situations of this nature, before the case can be
heard in federal court, the general requirements for removal set
forth in 28 U.S.C. § ...