The opinion of the court was delivered by: J. Phil Gilbert District Judge
This matter comes before the Court on the Second Motion to Remand (Doc. 28) filed by Plaintiff M & K Chemical Engineering Consultants, Inc. (M&K). Defendants Mallinckrodt, Inc. and Tyco Healthcare Retail Group have responded (Doc. 30). M&K has replied (Doc. 31). For the following reasons, the Court DENIES the Motion.
This action was originally filed in Madison County, Illinois on May 22, 2007. M&K is a citizen of Illinois. Mallinckrodt, Inc. is a citizen of Delaware and Missouri, and Tyco Healthcare Retail Group is a citizen of Delaware and Pennsylvania. Process Automation Concepts, Ltd. is a citizen of Illinois. Therefore, although the amount in controversy far exceeds the jurisdictional amount, as there was not complete diversity of citizenship, the action was not removable when filed.
The Amended Complaint alleges that Mallinckrodt, Inc. and Tyco Healthcare Retail Group (collectively referred to as Tyco) made fraudulent and/or negligent misrepresentations that induced M&K to submit a bid and enter into a contract to perform certain engineering work for Tyco for a price that was too low for M&K to actually complete the work. Process Automation Concepts, Ltd. (PAC) worked as both a subcontractor for M&K and as a direct contractor for Tyco on the project. The Amended Complaint contends that Tyco owes M&K for work completed on the project either under one or more agreements or in quatum meruit. The Amended Complaint seeks recision of the contract between M&K and Tyco, restitution from Tyco for the $162,004 by which M&K went over budget on the project and was not paid by Tyco, and restitution from Tyco for any amount M&K owes PAC for work completed on the project. The only claim against PAC is for a declaration of PAC's rights against M&K and M&K's rights for reimbursement from Tyco.
On or about April 5, 2007, Tyco paid PAC $24,515 in settlement of PAC's claims against Tyco. The agreement specified that it did not address potential claims by PAC against M&K. Sometime prior to August 23, 2007, PAC notified M&K that it had no claims against M&K and wished to be dismissed from the lawsuit. However, on or about September 10, 2007, M&K filed an amended complaint which again included PAC as a defendant and alleged that PAC "contends it is owed $63,576" for work on the project.
In an email dated December 6, 2007, M&K indicated that it was willing to try to arrange a settlement with Tyco, but that any settlement figure would have to include the amount claimed by PAC against M&K. M&K told Tyco that it would find out from PAC the status of PAC's claims against M&K and Tyco. On December 11, 2007, PAC's counsel informed Tyco's counsel that he was "pretty certain" that PAC was no longer going to assert any claims against M&K, but that he was waiting for confirmation from PAC. The next day, December 12, 2007, PAC confirmed in a letter sent to M&K and Tyco that PAC was not going to assert any claims related to the project against either M&K or Tyco. PAC and M&K were to execute a mutual release releasing one another from any claims related to the project, after which M&K would dismiss PAC from the lawsuit with prejudice.
On December 17, 2007, Tyco filed a notice of removal invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332(a)(1). M&K filed the First Motion to Remand asserting that Tyco's removal was not timely. In an Order dated January 18, 2008, the Court denied the Motion, finding that the removal was timely because it came within days of the receipt by Tyco of an "other paper from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446(b). M&K then filed the Second Motion to Remand contending that M&K has not dismissed PAC from the suit, PAC is a non-diverse party, and PAC did not join in the notice of removal, therefore, the case should be remanded. M&K contends that PAC is a proper party to the suit because a clause in the contract may give Tyco a right to reimbursement from M&K for the funds Tyco paid to PAC. Tyco contends that PAC is fraudulently joined and its presence should be disregarded by the Court for purposes of determining jurisdiction.
A defendant may remove to federal court a case filed in state court if there is original federal jurisdiction over the case. 28 U.S.C. § 1441(a); Chase v. Shop 'N Save Warehouse Foods, 110 F.3d 424, 427 (7th Cir.1997). If the case stated by the initial pleading is not removable on its face, the defendant has thirty days from receipt 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." 28 U.S.C. § 1446(b). Both parties agree that the statute does not require that the non-diverse defendant be formally dismissed before removal becomes appropriate. See generally, 14A Charles Alan Wright, Arthur R. Miller and Edward H. Cooper, Federal Practice and Procedure, Jurisdiction 3d § 3732, at 300-29 and n. 26 (3d ed. 1998); see also, Hessler v. Armstrong World Industries, Inc., 684 F.Supp. 393, 395 (D.Del. 1988); King v. Bell & Howell Mail Processing Systems Co., 1997 WL 285969 at *3 (N.D.Ill.). The Court's prior Order found that receipt by Tyco of the letter dated December 12, 2007 from PAC constituted "receipt by the defendant of . . . other paper from which it first may be ascertained that the case is one which . . . has become removable."
I. Diversity Jurisdiction and Fraudulent Joinder
"The district courts shall have original jurisdiction over all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of costs and interests, and is between citizens of different states." 28 U.S.C. §1332(a)(1). The presence of any defendant whose citizenship is not diverse from any plaintiff, destroys the complete diversity required to maintain a federal action based on §1332(a)(1). Strawbridge v. Curtiss, 7 U.S. 267 (1806); Caterpiller, Inc. v. Lewis, 519 U.S. 61, 68 (1996); Fidelity & Deposit Co. of Md. v. Sheboygan Falls, 713 F.2d 1261, 1264 (7th Cir.1983). For purposes of Section 1332, "a corporation shall be deemed to be a citizen of any State by which it is incorporated and of the State in which it has its principal place of business." 28 U.S.C. §1332(c)(1).
Although a plaintiff is normally free to choose his own forum, he may not join an in-state defendant solely to defeat federal diversity jurisdiction, as such joinder is fraudulent. Schwartz v. State Farm Mutual Auto Ins. Co., 174 F.3d 875, 878 (7th Cir.1999). Additionally, "[d]iversity jurisdiction cannot be destroyed by joinder of non-diverse parties if such joinder is fraudulent." Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir.1993). Therefore, the Court will find complete diversity, and allow removal of a case, when the ...