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Camelback Properties v. Phoenix Ins. Co.

June 15, 2010

CAMELBACK PROPERTIES, A PARTNERSHIP, TERRY WILBOURN AND JAMES LANTZ, PARTNERS, PLAINTIFF,
v.
PHOENIX INS. CO., A TRAVELERS CO., DEFENDANTS.



The opinion of the court was delivered by: P. Michael Mahoney Magistrate Judge

MEMORANDUM OPINION AND ORDER

I. Introduction

Before the court is Plaintiffs' motion to remand this case to state court. This is a declaratory judgment action arising from the damage caused by a water pipe that burst on the second floor of a building located in McHenry, Illinois. The defendant insurance company issued a property coverage policy to Plaintiffs regarding the property at issue in this case, and Plaintiffs assert that the policy was in effect at the time that the pipe burst. After the pipe burst, Plaintiffs submitted an insurance claim to Defendant for the damage, which Defendant denied.

On February 5, 2010, Plaintiff filed this action in the Circuit Court of the 22nd Judicial Circuit, McHenry County, Illinois against Defendant seeking a judgment declaring that Plaintiffs' loss is a covered loss under the policy of insurance issued by Defendant, and that Plaintiffs are entitled to recover from Defendant under the terms of the policy. A summons was issued that same day by the clerk of the circuit court, and a courtesy copy of the complaint was delivered to Defendant on February 10, 2010.

Defendant filed a notice of removal on March 5, 2010 in the Eastern Division of the Northern District of Illinois. That same day, Defendant filed a motion with the district court to transfer the case to the Western Division. On March 9, 2010, Judge Gottschall entered a minute order stating, "It appearing that this case was filed in error in the Eastern Division and that this case should have been filed in the Western Division, the court hereby transfers this case to the United States District Court, Northern District of Illinois, Western Division." (Crt. Doc. 7.) On May 19, 2010, the parties jointly consented to the exercise of jurisdiction by the magistrate judge. (Crt. Doc. 15.)

Plaintiffs filed this motion to remand on March 15, 2010. They challenge this court's jurisdiction on three bases. They first argue that Defendant did not file its notice of removal in a timely manner. Second, they argue that diversity does not exist among the parties. Third, they argue that because the case is a declaratory action, it does not involve an amount in controversy in excess of $75,000.

II. Timeliness

Plaintiffs' motion states, "[D]efendant did not timely file its Notice of Removal with the correct division of the district court within which the action was pending as required by 28 U.S.C. Section 1446(a)." (Pls.' Mot. ¶ 1.)

"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[.]" 28 U.S.C. § 1446(b). "[I]f the complaint is filed in court prior to any service, the removal period runs from the service of the summons." Murphy Bros. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 354 (1999).

Section 1406(a), titled, "Cure or Waiver of Defects," states, "The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1402(a). In Wagenknecht v. Wal-Mart Stores, Inc., No. 95-C50243, 1995 WL 617479, 1995 U.S. Dist. LEXIS 15502, at * 3--4 (N.D. Ill. Oct. 13, 1995) (Reinhard, J.), the court held that remand was not required under the statute where the case had been removed to the wrong division. Id. (citing Heller v. Komatsu, 869 F. Supp. 612, 613 (N.D. Ill. 1994) and Kreimerman v. Veederkamp, 22 F.3d 634, 644--45 (5th Cir. 1994)).

Even if Defendant's receipt of the complaint on February 10, 2010 constituted proper service (Defendant asserts that it did not), Defendant's notice of removal was timely filed in the Eastern Division 28 days later on March 5, 2010. Defendant quickly realized that it had filed in the wrong division and filed a motion to transfer on March 5, 2010. Wagenknect, Heller, and Kreimerman all held that section 1406(a) expressly provides a cure for removing a case to the wrong division. But even if section 1406(a) does not provide such a cure, Defendant's motion to transfer, which was filed within the 30 day time limit, does cure the error in this case. The court finds that Defendant filed a timely notice of removal.

III. Diversity

Under section 1332, this court has jurisdiction over civil actions where the matter in controversy exceeds the sum or value of $75,000 and is between citizens of different states. 28 U.S.C. § 1332(a)(1). Section 1332 further provides the following:

[A] corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business, except that in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as ...


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