Opinion
Civ. No. 95-1161 (PG).
August 22, 1995
Julio Maymí Pagán, Santurce, PR, for plaintiffs.
Ramón L. Walker, San Juan, PR, for defendants.
OPINION AND ORDER
Presently before the Court is Plaintiffs Motion to Remand. Plaintiff Colegio de Ingenieros y Agrimensores de Puerto Rico ("Colegio") originally filed this suit in Puerto Rico Superior Court on November 17, 1994. After several months litigating the issue of whether process was properly served on Defendant-CNE, the Defendant sought to remove the case to Federal Court on February 14, 1995. Plaintiff contends that the petition for removal was late, and seeks to have the case remanded to the Commonwealth court. 28 U.S.C. § 1446 (b) requires that the removal of a civil action 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. . . ." A glance at the facts above suggests that Defendant failed to comply with section 1446(b), since Defendant did not seek removal to federal court until nearly three months after the suit was first brought in the Commonwealth court. CNE defends this delay on the grounds, contested by Plaintiff, that service of process was not proper in Puerto Rico. CNE contends that the section 1446(b) "clock" did not start ticking until it was properly served on February 6, 1995.
Plaintiff also challenges subject matter jurisdiction, contending that an insufficient dollar amount is in controversy to meet the requirements of federal diversity jurisdiction, 28 U.S.C. § 1332 (b). Although this is not the place for a recitation of the facts of this case, plaintiff's essential position is that because the contract in dispute is void under Puerto Rico law, the defendant cannot allege that any amount under the contract is in controversy.
This circular argument misapprehends the pleading requirements of the diversity statute. Section 1132(b) simply requires that plaintiffs properly allege that a sufficient dollar amount is in dispute. To dismiss a case for failing to meet this requirement, "[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount. . . ." St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1937). Here, the contract's validity is a fundamental issue in the case, and can not be resolved by examining the pleadings. Thus, plaintiff's argument must fail.
At issue is whether the thirty day removal period mandated by section 1446(b) begins to run upon proper service or upon notice of the complaint. This is a question that has split the district courts into two camps. The "receipt rule" approach requires that a defendant must remove a state action to federal court within thirty days of receipt of a copy of the initial pleading, without regard to whether service has been effected. Kluksdahl v. Muro Pharmaceutical Inc., 886 F. Supp. 535, 537 (E.D.Va. 1995). Under the "proper service" rule, the thirty-day removal period commences only upon proper service of the defendant. Id. See id. at 537 n. 1 and n. 2 (listing cases for both propositions). The Court of Appeals in this circuit has not addressed the issue. For the reasons stated herein, I join those courts that have adopted the receipt rule approach.
Only two appellate decisions exist concerning the conflicting rules, both decided recently. Each adopted the receipt rule. Roe v. O'Donohue, 38 F.3d 298, 304 (7th Cir. 1994); Tech Hills II Associates v. Phoenix Home Life Mutual Insurance Co., 5 F.3d 963, 968 (6th Cir. 1993). The scarcity of relevant appellate decisions is likely attributable to 28 U.S.C. § 1447 (d), which precludes appellate review of district court orders "remanding a case to the State court from which it was removed."
The statute itself designates the "receipt" of the initial pleading as the start of the thirty day period. It specifically states that the receipt may be by "service of process or otherwise." The phrase, "or otherwise" has been construed by the majority of courts and commentators to imply that actual notice signals the start of the thirty day period. See 14A Wright, Miller Cooper, Federal Practice and Procedure section 3732 at 515-16. However the language was intended, it seems apparent that "or otherwise" must mean something different than service of process. Thus, the language is difficult to reconcile with the "proper service" rule, because to require proper service would be to dispense with the "or otherwise" language. See Roe, 38 F.3d at 304 (finding that `[a]ny other conclusion drains the words `or otherwise' of meaning').
The "receipt rule" approach is also justifiable on policy grounds. The purpose of section 1446 is to ensure that defendants will have adequate information on which to judge the availability and desirability of removal. At the same time, it limits the opportunity for removal to the early stages of a lawsuit. In enacting 28 U.S.C. § 1446 (b), Congress choose thirty days as the admittedly short period in which this decision must be made. This compressed timeframe encourages the efficient use of both federal and state judicial resources. See Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941) (removal statutes are to be construed strictly, narrowly, and against removal). Requiring "proper service," however, encourages gamesmanship on the part of defendant's counsel. Under a proper service regime, a defendant is free to litigate the collateral procedural issues ad nauseam (as occurred here) before plaintiff is permitted to air his substantive complaints. The only product of requiring proper service is delay, a result this Court will certainly not encourage.
Following the receipt rule also spares the District Court the burden of determining whether service was, in fact, proper under state law. (An analysis which, following the receipt rule, I do not undertake here.) Under the receipt rule, the focus is on whether the defendant had notice of the complaint. This inquiry is far "simpler," CNE's assertions to the contrary notwithstanding, than ascertaining whether service was proper under the state's (or Commonwealth's) procedural requirements.
In defense of the proper service rule, CNE's arguments are limited to recitations of precedent (which concededly exist), specifically to precedent from this district. Gibbs v. Paley, 354 F. Supp. 270, 271 (D.P.R. 1973) ("receipt by the defendant of the initial pleading will not suffice to start the running of the term for removal where the procedure followed by plaintiff is not sanctioned by state law") (citations omitted); Cervantes v. Allegheny Ludlum Industries, Inc., 90 F.R.D. 163, 166 (D.P.R. 1981) (citing Gibbs). The 1981 decision in Cervantes was the last reported occasion in which the issue arose in this district. Given the lack of appellate guidance and the justified modern trend toward the receipt rule, the cases cited by Defendant should not be viewed as controlling.
In this case, Defendant received notice of Colegio's complaint on November 17, 1994, when process was served on one José A. Martinez Nacer. For the next three months CNE litigated in the Puerto Rico courts the issue of whether Martinez was a proper agent for receipt of process. The record reveals a flurry of Motions and Memoranda by the parties, the first being CNE's December 9, 1994 Motion to Dismiss for faulty service, filed exactly twenty two days after it received Plaintiffs original complaint. The record thus demonstrates that CNE received Colegio's complaint on November 17, 1994. Nonetheless, CNE did not seek to remove the case to federal court until February 14, 1995, 84 days later, and 54 days after section 1446(b)'s thirty day time limit expired.
THEREFORE, Plaintiffs Motion to Remand ( Dkt. #4) is hereby GRANTED.
IT IS SO ORDERED.