United States District Court, N.D. Illinois
May 14, 2004.
GREAT AMERICAN INSURANCE COMPANY, Plaintiff,
K & R TRANSPORTATION, INC., and SONY ELECTRONICS, INC. Defendants
The opinion of the court was delivered by: PAUL PLUNKETT, Senior District Judge
MEMORANDUM OPINION AND ORDER
Before the Court is plaintiff's 28 U.S.C. § 1447(c) motion to remand
the action to the Illinois Circuit Court of Cook County. For the reasons
stated below, the motion is denied.
Plaintiff Great American Insurance Company ("Great American") is an
Ohio insurance company. K&R Transportation, Inc. ("K&R") is an
Illinois corporation with its principal place of business in Waukegan,
Illinois. Sony Electronics, Inc. ("Sony") is a Delaware corporation. In
December 2003, Great American filed a complaint for declaratory judgment
in Illinois state court against K&R and Sony. The complaint styled
the action as one concerning the rights and obligations of Great American
under certain inland marine insurance policies it issued to K&R.
Sony removed this case to federal court in February 2004 under
28 U.S.C. § 1446, claiming diversity jurisdiction, jurisdiction under
28U.S.C. § 1352 (bonds executed under federal law) and jurisdiction under 28 U.S.C. § 1337(a) (commerce and antitrust
regulations). Great American has filed a motion to remand under
28 U.S.C. § 1447(c) on the grounds that Sony failed to obtain consent for
removal from co-defendant K&R and that there is no federal question
jurisdiction. Sony opposes the motion, saying that K&R's consent was
unnecessary for the removal petition and that both diversity and federal
question jurisdiction exist.
We first address the issue of whether we have jurisdiction over this
matter. This Court has jurisdiction over a removed case if the case could
have been brought in federal court initially. 28 U.S.C. § 1441(a)
(1994); Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).
Jurisdiction must exist at the time of removal. St. Paul Mercury
Indem. Co. v. Red Cab Co., 303 U.S. 283, 293 (1938); Shaw v. Dow
Brands, Inc., 994 F.2d 364, 368 (7th Cir. 1993).
Sony argues that this Court's jurisdiction over this case is based on
both diversity of citizenship and the existence of a federal question.
Great American argues that there is no federal question jurisdiction
because the action is a declaratory judgment action filed in state court
to fix the rights of the parties under an insurance contract. Great
American does not address the diversity issue.
We find that we do have jurisdiction over this case under the diversity
requirements set out in 28 U.S.C. § 1332(a). First, complete diversity
among the parties exists. Under 28 U.S.C. § 1332(c), a corporation is
deemed to be a citizen of any state where it has been incorporated and of
the state where it has its principal place of business. According to
Sony's representations, Great American is an Ohio corporation with its
principal place of business in Ohio, Sony is a Delaware corporation with its principal place of business in New Jersey and K&R
is an Illinois corporation with its principal place of business in
Illinois. (Notice of Removal at ¶¶ 3, 4, 5.) Inasmuch as Great American
does not challenge these representations (in fact, it is silent in its
memoranda on the issue of diversity), the Court will take them as true
and thus finds the requisite diversity of citizenship.*fn1 See
28 U.S.C. § 1332(a)(1) (1993 and Supp. 2003). In addition, the Court
finds that the amount in controversy is sufficient to support
jurisdiction.*fn2 See id.; Compl. ¶ 15 (indicating 5261, 559.40
potentially at issue).
We now address whether the removal procedure was deficient. Generally,
all defendants must join in a removal petition or consent to such
removal. Chicago, Rock Island, & Pac. Ry. Co. v. Martin, 178 U.S. 245,
248 (1900); Northern III. Gas Co. v. Airco. Indus. Gases, 676 F.2d 270,
272 (7th Cir. 1982). A petition that is not signed by all named
defendants is considered defective if it does not explain the absence of
a co-defendant. Northern Ill. Gas Co., 676 F.2d at 273. A removed matter
must be remanded if there are any defects in the removal procedure.
Shaw, 994 F.2d at 366.
Great American challenges Sony's notice of removal on the grounds that
Sony failed to obtain K&R's consent to the removal and failed to
affirmatively explain K&R's absence from the notice of removal. It is true that K&R has not joined in Sony's notice
of removal. However, this does not make Sony's notice of removal
defective. The Seventh Circuit recognizes an exception to the
joinder/consent rule for defendants who have not been served at the time
the removal petition is filed. See Shaw, 994 F.2d at 369; P. P. Farmers'
Elevator Co. v. Farmers Elevator Mut. Ins. Co., 395 F.2d 546, 547-48 (7th
Cir. 1969). Sony filed its notice of removal on February 24, 2004; K&R
was not served until February 26, 2004. (Mot. to Remand Ex. C.) Under
this exception, K&R's consent was not required.
Great American goes on to say that Sony did not give that particular
explanation in its notice. Instead, Sony states in its notice that K&R
is no longer in business and therefore it could not obtain K&R's
consent. Great American says that although K&R was dissolved in 2002,
under Illinois law, an Illinois corporation survives its dissolution and
can sue, be sued and be served via its registered agent for five years
after dissolution. Thus, says Great American, Sony's explanation for
K&R's absence from the notice of removal is not sufficient to have
relieved Sony from obtaining K&R's consent to removal.
We are not persuaded by Great American's arguments. In its notice of
removal, Sony explained the steps it took to investigate K&R's legal
status and its reasons for not including K&R's consent to the removal.
It did not simply ignore K&R's existence or the requirement that K&R
join in the notice of removal. Cf. Shaw, 994 F.2d at 368 (where defendant
neglected to explain in notice of removal co-defendants' failure to
consent to removal, court would not "punish" defendant for
"technicality"). Moreover, Sony has provided evidence that it did make
some attempt (albeit belatedly, it seems) to inquire about K&R's
registered agent's intentions with respect to this litigation. (Opp'n to
Mot. to Remand Ex. 1.) The registered agent's attorney has indicated that
K&R will not be participating in this case. (Id.) We do not find Sony's
notice of removal defective for its failure to include K&R's consent.
See Shaw, 994 F.2d at 368-69 (notice of removal by only one defendant not
defective because one co-defendant was served after notice of removal
filed, one was dismissed before notice of removal filed and one was
Having found jurisdiction exists and no defect in the removal
procedure, Great American's motion to remand is denied and its request for
costs under 28 U.S.C. § 1447(c) is dismissed as moot.
For the reasons stated above, Great American's motion to remand is