Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Kitson v. Bank of Edwardsville

November 22, 2006

KENNETH KITSON, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
THE BANK OF EDWARDSVILLE AND HARLAND FINANCIAL SOLUTIONS, INC., DEFENDANTS.



The opinion of the court was delivered by: Murphy, Chief District Judge

MEMORANDUM AND ORDER

This matter is before the Court on the motion to remand brought by Plaintiff Kenneth Kitson, individually and on behalf of others similarly situated (Doc. 14). For the following reasons, Kitson's motion is GRANTED.

INTRODUCTION

This case is a class action commenced in state court that has come to this Court via removal. The record of the state-court proceedings that is before the Court is incomplete, but the following facts concerning the procedural history of the case seem not to be in dispute. Kitson originally filed this action in 2002 against Defendant Bank of Edwardsville ("BOE") in the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, on behalf of himself and a putative class of borrowers of commercial loans from BOE, alleging that the bank improperly calculated interest on such loans. Kitson's second amended complaint (Doc. 2, Ex. A, Pt. 2), which appears to be the operative complaint in this case, asserts the following claims for relief against BOE: violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 -- 505/12 ("ICFA"); breach of contract; violation of the Illinois Interest Act, 815 ILCS 205/0.01 -- 815 ILCS 205/11, and the Illinois Promissory Note and Bank Holiday Act, 815 ILCS 105/0.01 -- 815 ILCS 105/16; and declaratory judgment. In 2003 the case was certified as a class action in state court. In June 2006 Kitson amended his complaint to join Defendant Harland Financial Solutions, Inc. ("HFS"), a company that licenses computer software called Laser Pro used by BOE to generate loan documents, alleging that HFS aided and abetted BOE's unlawful conduct (Doc. 2, Ex. A, Pt. 46). Within thirty days after service of the amended complaint, HFS removed the case to this Court, asserting federal subject matter jurisdiction in diversity pursuant to 28 U.S.C. § 1332, as amended by the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.) ("CAFA"). Kitson in turn has moved for remand of the case to state court. Having reviewed carefully the submissions of the parties and conducted a hearing on Kitson's motion for remand, the Court now is prepared to rule.

DISCUSSION

A. Legal Standard

Removal of actions from state court to federal court is governed by 28 U.S.C. § 1441, which provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). In other words, "[a] defendant may remove a case to federal court only if the federal district court would have original subject matter jurisdiction over the action." Disher v. Citigroup Global Mkts. Inc., 419 F.3d 649, 653 (7th Cir. 2005), vacated on other grounds, 126 S.Ct. 2964 (2006). The defendant has the burden of establishing that an action is removable, and doubts concerning removal must be resolved in favor of remand to state court. See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005); Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529 (7th Cir. 2004); Fiore v. First Am. Title Ins. Co., No. 05-CV-474-DRH, 2005 WL 3434074, at *2 (S.D. Ill. Dec. 13, 2005). Cf. Prime Care of N.E. Kan., LLC v. Blue Cross & Blue Shield of Kan. City, Civil Action No. 05-2227-KHV, 2006 WL 2734469, at *1 (D. Kan. Sept. 25, 2006); Beegal v. Park W. Gallery, Civil No. 05-5625 (RBK), 2006 WL 2645123, at **1-2 (D.N.J. Sept. 14, 2006).

B. Subject Matter Jurisdiction under CAFA

As an initial matter, because the parties dispute whether federal subject matter jurisdiction is proper in this case under CAFA, the Court must determine whether the jurisdictional prerequisites of CAFA are satisfied in this case so as to make the case removable to federal court under the statute. Pursuant to CAFA, federal courts have jurisdiction in diversity over class actions with one hundred or more class members, see 28 U.S.C. § 1332(d)(5)(B), in which any member of the plaintiff class is a citizen of a state different from that of any defendant, or any member of a plaintiff class or any defendant is a foreign state or a citizen or subject of a foreign state. See 28 U.S.C. § 1332(d)(2). In a class action in which CAFA's requirement of minimal diversity is met, a federal court has jurisdiction if, after aggregating class members' claims, more than $5 million, exclusive of interest and costs, is in controversy. See 28 U.S.C. § 1332(d)(2), (d)(6). Class actions filed in state court that satisfy the jurisdictional prerequisites of CAFA are subject to removal to federal court. See 28 U.S.C. § 1453(b), (c). Although CAFA is not retroactive and does not permit removal of class actions filed in state court before the effective date of the statute, February 18, 2005, see Schillinger v. 360Networks USA, Inc., Civil No. 06-138-GPM, 2006 WL 1388876, at *2 (S.D. Ill. May 18, 2006) (citing Pub. L. 109-2, § 9, 119 Stat. 4), a party defendant joined after the effective date of the statute in a class action that satisfies the jurisdictional prerequisites of CAFA may remove the case to federal court. See 28 U.S.C. § 1453(b) ("A class action may be removed to a district court of the United States in accordance with [28 U.S.C. §] 1446 . . . by any defendant without the consent of all defendants."). See also Schillinger v. Union Pac. R.R. Co., 425 F.3d 330, 333 (7th Cir. 2005) (quoting Schorsch v. Hewlett-Packard Co., 417 F.3d 748, 749 (7th Cir. 2005)) ("[A] defendant added after February 18[, 2005] could remove because suit against it would have been commenced after the effective date [of CAFA]") (emphasis in original).*fn1

In this case the record before the Court clearly establishes that CAFA's jurisdictional prerequisites are satisfied. Kitson is an Illinois citizen, while HFS is an Oregon citizen, so that minimal diversity of citizenship exists in this case. As to the size of the class, BOE has furnished evidence, specifically, a spreadsheet of borrowers of commercial loans during the class period filed under seal, showing that this case involves interest on some nine thousand loans made by BOE in the relevant time. Even allowing for the fact that some borrowers in the class hold multiple loans from BOE, it is apparent from the information furnished by BOE that the class easily exceeds one hundred or more persons. Further, the evidence submitted by BOE shows that the interest on the loans extended to class members totals at a minimum approximately $171 million, so that the potential class recovery under the Illinois Interest Act, see 815 ILCS 205/6, readily surpasses in the aggregate the $5 million jurisdictional minimum amount for CAFA purposes.

Although Kitson argues that the evidence submitted by BOE as to the size of the class and the amount in controversy in this case is not properly before the Court because it should have been submitted as an exhibit to HFS's notice of removal, Kitson is clearly wrong. It is true that the existence of federal subject matter jurisdiction must be assessed as of the time a case is removed from state court, see Chase v. Shop 'N Save Warehouse Foods, Inc., 110 F.3d 424, 430 (7th Cir. 1997); Gould v. Artisoft, Inc., 1 F.3d 544, 547 (7th Cir. 1993); In re Shell Oil Co., 966 F.2d 1130, 1132 (7th Cir. 1992); In re Amoco Petroleum Additives Co., 964 F.2d 706, 707-09 (7th Cir. 1992), but to ascertain the existence of such jurisdiction a court is entitled to consider any "evidence [that] sheds light on the situation which existed when the case was removed." Harmon v. OKI Sys., 115 F.3d 477, 479-80 (7th Cir. 1997) (considering post-removal interrogatories to evaluate whether federal subject matter jurisdiction existed when a case was removed). See also Cassens v. Cassens, 430 F. Supp. 2d 830, 834 n.2 (S.D. Ill. 2006) ("[A] court is entitled to consider all facts that shed light on the existence of subject matter jurisdiction."); International Test & Balance, Inc. v. Associated Air & Balance Council, No. 98 C 2553, 1998 WL 957332, at *2 (N.D. Ill. Dec. 23, 1998) (quoting Harmon, 115 F.3d at 480) ("The court may review evidence not included in the record at the time of removal if that evidence 'sheds light on the situation which existed when the case was removed.'"). In this instance HFS's notice of removal properly invoked the jurisdictional prerequisites of CAFA, that is, minimal diversity of citizenship, a class of at least one hundred persons, and an amount in controversy worth in the aggregate more than $5 million, exclusive of interest and costs, and the evidence submitted by BOE simply confirms beyond peradventure that CAFA's jurisdictional prerequisites were met at the time this case was removed.

Finally, the Court rejects Kitson's argument that this case is not removable because his amended complaint does not assert class-action claims against HFS. First, this argument is disingenuous. Kitson's amendment to his second amended complaint to join HFS unmistakably asserts a classwide claim against the company and implicitly incorporates by reference the class-action allegations of the second amended complaint. Second, Kitson's argument is simply wrong. As discussed, CAFA provides that "[a] class action may be removed to a district court of the United States[.]" 28 U.S.C. § 1453(b). The clear language of the statute permits the removal of a "class action," regardless of whether specific claims asserted in the action are removable or not. See Braud v. Transport Serv. Co. of Ill., 445 F.3d 801, 808 (5th Cir. 2006) (under CAFA, "it is the 'action,' not claims against particular defendants, that is removable[.]"); Moniz v. Bayer A.G., 447 F. Supp. 2d 31, 36 (D. Mass. 2006)(voluntary dismissal of a defendant who has removed a case under CAFA does not defeat federal subject matter jurisdiction, because removal under CAFA effects removal of the entire case, not merely the claims against the removing defendant); Werner v. KPMG LLP, 415 F. Supp. 2d 688, 696 n.10 (S.D. Tex. 2006) (same); Dinkel v. General Motors Corp., 400 F. Supp. 2d 289, 294 (D. Me. 2005) ("The plain language of CAFA makes clear that any single defendant can remove without the consent of other defendants and that it is the entire lawsuit that is removed, not merely the claims against that defendant."). To hold otherwise would amount to a reintroduction of the doctrine of separate and independent claims into removal of diversity cases, something that clearly is a legislative, not a judicial, prerogative. See 28 U.S.C. § 1441(c) (permitting removal of separate and independent claims only where such claims arise under federal law); Allsup v. Liberty Mut. Ins. Co., 782 F. Supp. 325, 327-28 (N.D. Tex. 1991) (noting the amendment of 28 U.S.C. § 1441 in 1990 to exclude removal of separate and independent claims in diversity). See also Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 576 (5th Cir. 2004) (amendment of the removal statutes is the province of Congress, not the federal judiciary). The Court concludes that this case is properly before it pursuant to CAFA.

C. Abstention under CAFA

Having determined that this case is subject to removal under CAFA, the Court turns to the central issue presented by Kitson's motion for remand, namely, whether the Court is required under CAFA to abstain from hearing this case. At issue here are the provisions of 28 U.S.C. § 1332(d)(4), which states, in pertinent part:

A district court shall decline to exercise jurisdiction under paragraph (2) --

(A)(i) over a class action in which --

(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;

(II) at least 1 defendant is a defendant -- (aa) from whom significant relief is sought by members of the plaintiff class; (bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally filed; and

(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and

(ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons; or

(B) two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.

28 U.S.C. § 1332(d)(4). The provisions of 28 U.S.C. § 1332(d)(4)(A) and 28 U.S.C. § 1332(d)(4)(B) are known, respectively, as the "local controversy" exception and the "home-state controversy" exception to the exercise of federal diversity jurisdiction under CAFA.*fn2 The United States Court of Appeals for the Seventh Circuit recently clarified that a plaintiff seeking remand to state court bears the burden of proving the applicability of the local controversy exception and the home-state exception in a given case. See Hart v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 679-82 (7th Cir. 2006). Cf. Frazier, 455 F.3d at 546; Evans v. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.