United States District Court, D. Montana, Butte Division
SUSAN M. OSSELLO, ROBERT G. DRUMMOND, Trustee, JESSE and HEATHER DIBBLEE, TODD and BARBARA FISHER, MARY ALICE HILDERBRAND, and CYNTHIA VITCOVICH, Plaintiffs,
SWIFT ROCK FINANCIAL, INC., d/b/a World Law Debt; ORION PROCESSING, LLC, d/b/a World Law Processing; WORLD LAW DEBT SERVICES, LLC; WORLD LAW PROCESSING, LLC; GLOBAL CLIENT SOLUTIONS, LLC; GLOBAL HOLDINGS, LLC; BRADLEY HASKINS; ROBERT MERRICK; and MICHAEL HENDRIX, Defendants.
L. Christensen, United States District Court Chief Judge
States Magistrate Judge Jeremiah C. Lynch entered Findings
and Recommendations in this case on July 27, 2017,
recommending that Plaintiffs' Motion to Remand (Doc. 14)
be granted. (Doc. 48 at 16.) Defendants Global Client
Solutions, LLC, Global Holdings, LLC, Robert Merrick, and
Michael Hendrix (collectively "Global Defendants")
timely filed an objection and are therefore entitled to de
novo review of the specified findings and recommendations to
which they have objected. 28 U.S.C. § 636(b)(1). The
portions of the findings and recommendations not specifically
objected to will be reviewed for clear error. 28 U.S.C.
§ 636(b)(1)(A); McDonnell Douglas Corp. v. Commodore
Bus. Mack, Inc., 656 F.2d 1309, 1313 (9th Cir. 1981).
Clear error exists if the Court is left with a "definite
and firm conviction that a mistake has been committed."
United States v. Syrax, 235 F.3d 422, 427 (9th Cir.
2000) (citations omitted). For the reasons stated below,
Judge Lynch's Findings and Recommendations are adopted in
September 2013, Discover Bank brought a collection action
against Plaintiff Susan Ossello ("Ossello") in
Montana district court. In June 2014, Ossello filed a
third-party complaint against Global Client Solutions, Swift
Rock Financial, Inc., and Orion Processing, LLC, alleging
generally that the entities had "used deceptive and
fraudulent representations to solicit her participation in an
illegal debt settlement plan" and asserting several
state law claims. Global Client Solutions, LLC v.
Ossello, 367 P.3d 361, 364 (2016); (Doc. 1-1). Swift
Rock and Orion Processing failed to appear in the case, and
in August 2014 the state court entered an order granting
Ossello's motion for default. (Doc. 1-2.)
meantime, Global Client Solutions appeared in the action and
filed a motion to compel arbitration. The Montana district
court denied the motion and Discover Bank appealed. In July
2015, while that appeal was still pending, Bank of America
instituted a separate collection action against Ossello in
state court. In October 2015, Ossello filed a third-party
complaint against Global Defendants, Swift Rock, Bradley
Haskins, World Law Debt Services, LLC, and World Law
Processing. Swift Rock, Haskins, and the World Law entities
never entered an appearance.
March 2016, the Montana Supreme Court issued a decision
affirming the state court's order denying the motion to
compel arbitration. Global Client Solutions, 367
P.3d 361. After the Montana Supreme Court's decision in
Global Client Solutions, the state court
consolidated Discover Bank and Bank of America's
collection actions and Ossello's third-party actions.
(Doc. 1-8.) In late 2016, Discover Bank and Bank of America
settled their claims against Ossello. On December 13, 2016,
Discover Bank and Bank of America were dismissed from the
consolidation action, leaving Ossello's consolidated
third-party action against Global Defendants and the various
non-appearing defendants. (Docs. 1-9; 1-10; 1-11.)
two months later, Ossello moved for leave to file an Amended
Complaint. The state court granted Ossello's motion, and
on March 14, 2017, Ossello filed an Amended Complaint naming
seven new Plaintiffs. (Docs. 1-13; 1-14.) The Amended
Complaint asserts state law claims on behalf of Ossello and
each new Plaintiff for violation of the Montana Consumer Debt
Management Services Act; violation of the Montana Consumer
Protection Act; fraudulent misrepresentation and deceit;
negligent misrepresentation; illegality, unconscionability,
and impermissible contract of adhesion; unjust enrichment;
unauthorized practice of law; and civil conspiracy. (Doc.
March 24, 2017, Global Defendants filed a notice of removal
invoking this Court's diversity jurisdiction. (Doc. 1.)
Plaintiffs filed a motion to remand pursuant to 28 U.S.C.
§ 1447(c) on the grounds that (1) Global Defendants were
third party defendants in the state court action and have no
right to remove; (2) the notice of removal was untimely; and
(3) Global Defendants did not obtain consent from all
defendants prior to removal.
28 U.S.C. § 1441(a), any "state-court action that
originally could have been filed in federal court may be
removed to federal court by the defendant."
Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987). The "removal statute is strictly construed, and
any doubt about the right of removal requires resolution in
favor of remand." Moore-Thomas v. Alaska Airlines,
Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (citing
Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.
1992)). There is a strong presumption against removal
jurisdiction, which means that the defendant always bears the
burden of establishing that removal is proper. Gaus,
980 F.2d at 566. The removing party must show both that there
are grounds for federal jurisdiction and that it complied
with the procedural requirements for removal. Emrich v.
Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir.
1988). Remand may be ordered based upon defects in the
removal procedure. 28 U.S.C. § 1447(c).
procedure for removing a case from state to federal court is
set forth in 28 U.S.C. § 1446 which provides two
thirty-day periods during which a case may be removed to
federal court. First, § 1446(b)(1) permits a defendant
to file a notice of removal within thirty days of
defendant's receipt "of a copy of the initial
pleading setting forth the claim for relief upon which such
action or proceeding is based." Second, §
1446(b)(3) provides that "if the case stated by the
initial pleading is not removable, " a defendant may
file notice of removal within thirty days of defendant's
receipt "of a copy 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."
However, removal under § 1446(b)(3) based upon diversity
jurisdiction may not occur "more than 1 year after
commencement of the action, " unless the plaintiff acted
in bad faith in order to prevent removal. 28 U.S.C. §
1446(c). "Commencement" for purposes of
removal "refers to when the action was initiated in
state court, according to state procedures." Bush v.
Cheaptickets, Inc., 425 F.3d 683, 688 (9th Cir. 2005).
Lynch looked to Mont. Code Ann. § 27-2-102(1)(b) which
states that "an action is commenced when the complaint
is filed." The parties accepted for purposes of
discussion that Ossello's third-party complaints were the
initial pleadings which commenced the action against Global
Defendants in June 2014 and October 2015, respectively. (Doc.
48 at 9.) Ossello filed an Amended Complaint naming seven new
Plaintiffs on March 14, 2017. (Docs. 1-13; 1-14.) Global
Defendants filed notice of removal on March 24, 2017. (Doc
1.) Global Defendants did not contest that they filed notice
of removal more than one year after Ossello filed her
third-party complaints. Instead, Global Defendants argued
that the addition of new plaintiffs in the Amended Complaint
effectively commenced the action anew for purposes of §
1446(b) and restarted the one-year clock in § 1446(c).
(Doc. 48 at 9-10.) Defendants argued that when the claims
asserted by new plaintiffs do not relate back to the original
complaint, they effectively commence a new action.
(Id. at 13-14.) Therefore, Global Defendants urge
that the March 24, 2017, notice of removal was well within
the thirty-day and one-year time limits of § 1446.
that the Ninth Circuit has not yet considered the issue and
that the federal district courts to have considered the
question have reached different results, Judge Lynch found
that the plain terms of the statute do not support finding
that a case commences anew each time "a new plaintiff is
joined." (Doc. 48 at 12 (quoting US Airways, Inc. v.
PMA Capital Ins. Co., 340 F.Supp.2d 699, 707 n. 12 (E.D.
Va. 2004).) Judge Lynch found that the plain language of
§ 1446(b) did not speak in terms of specific claims but
only of "commencement of the action." Further,
Judge Lynch found that "regardless of the relation back
doctrine, " there is no authority under Montana law to
support the notion that an action "commences"
whenever a new plaintiff is added by the amendment of a
complaint. (Doc. 48 at 14.) Accordingly, Judge Lynch
concluded that to apply the relation back doctrine to
determine whether new plaintiffs claims commence a new action
would "circumvent the plain language of §
1446(b)." Since Global Defendants filed their notice of
removal over one year after Ossello filed her third- party
complaints, Judge Lynch found that removal was time-barred
and recommended that the case be remanded to state court.
(Doc. 48 at 14, 16.)
Defendants object to this specific finding and
recommendation. (Doc. 51 at 10-11.) Because a state court
will not have occasion to address removal directly, Global
Defendants assert that the question must be resolved by
analogy to commencement as interpreted by Montana's
statute of limitations law. (Id. at 11-12.) Global
Defendants assert that Judge Lynch cut his analysis short by
applying a "bright-line" commencement rule after
interpreting the language of Mont. Code Ann. §
27-2-102(1)(b) without delving into the entirety of
Montana's statute of ...