United States District Court, E.D. Wisconsin
DECISION AND ORDER DENYING MOTION TO REMAND
WILLIAM C. GRIESBACH, CHIEF JUDGE
case arises out of the failure of a sophisticated
multi-property real estate transaction involving senior care
living facilities for which Defendants MidCap Financial
Services, LLC and MidCap Funding VII Trust (collectively,
MidCap) provided the financing. Twenty-two Wisconsin limited
liability companies and corporations operating as the
landlords of senior living facilities, all but one of which
is located in Wisconsin, commenced this action against the
tenant/future purchasers of the facilities and their
guarantors on December 14, 2018. Although the original
complaint is not included in the record, an amended complaint
which added MidCap as a defendant was filed on February 19,
2019. Dkt. No. 1-1. MidCap was served on February 19, 2019,
and on March 25, 2019, MidCap removed the action to this
court asserting federal diversity jurisdiction under 28
U.S.C. § 1332. Dkt. No. 1. Plaintiffs have since filed a
motion to remand the case back to state court, claiming that
MidCap's removal is defective because it failed to obtain
the consent of Mary Theresa Khawly, one of the defendants,
and failed to properly allege the citizenship of each of
MidCap's members. Dkt. No. 36. MidCap contends that
Khawly's consent was not required because she had not
been properly served at the time it removed the case.
Alternatively, MidCap argues that its failure to obtain
Khawly's consent should be excused because it exercised
reasonable diligence in attempting to determine whether she
had in fact been served. MidCap also argues that its Notice
of Removal sufficiently alleges diversity jurisdiction.
1446(b)(2)(A) provides that “all defendants who have
been properly joined and served must join in or consent to
the removal of the action.” 28 U.S.C. §
1446(b)(2)(A). “The defendant seeking removal must
secure consent to removal from all of the other properly
joined and served defendants within the thirty-day period
removal is permitted.” Compassionate Pain Mgmt.,
LLC v. Frontier Payments, LLC, No. 17C5568, 2017 WL
4423409, at *3 (N.D. Ill. Oct. 4, 2017) (citation omitted).
“To properly consent to removal or join a notice of
removal, the remaining defendants must sign the notice of
removal.” Id. (citing Gossmeyer v.
McDonald, 128 F.3d 481, 489 (7th Cir. 1997)); Benson
v. LVNV Funding, LLC, No. 11-1096-GPM-MPF, 2012 WL
699632, at *2 (S.D. Ill. Mar. 1, 2012) (explaining the
“rule of unanimity” with respect to removal).
considering a motion for remand, the court must examine the
[plaintiff's] complaint at the time of the
defendant's removal and assume the truth of all factual
allegations contained within the original complaint.”
Riley v. United States, No. 18C4810, 2019 WL
2161693, at *2 (N.D. Ill. May 17, 2019) (citation and
internal quotation marks omitted) (alteration in original).
“The party seeking removal bears the burden of proving
the propriety of removal.” Morris v. Nuzzo,
718 F.3d 660, 668 (7th Cir. 2013). “[F]ederal courts
should interpret the removal statute narrowly, resolving any
doubt in favor of the plaintiff's choice of forum in
state court.” Schur v. L.A. Weight Loss Ctrs.,
Inc., 577 F.3d 752, 758 (7th Cir. 2009).
Consent For Removal
threshold matter, Plaintiffs timely filed their motion to
remand. See 28 U.S.C. § 1447(c); Prolite
Bldg. Supply, LLC v. MW Mfrs., Inc., 891 F.3d 256, 259
(7th Cir. 2018). In their motion, Plaintiffs argue that
MidCap's removal was improper on two grounds: (1)
MidCap's removal failed to attach the written consent of
Defendant Mary Theresa Khawly, as required under 28 U.S.C.
§ 1446(b)(2)(A), and (2) MidCap failed to allege
complete diversity, as required under 28 U.S.C. §§
1332(a) and 1441(b)(2).
MidCap acknowledges that it did not obtain Khawly's
consent. Dkt. No. 1 at ¶ 60. In its notice of removal,
MidCap explained that the docket did not reflect that Khawly
had been served with the original or amended summons and
complaint, and therefore her written consent was not
required. More specifically, MidCap asserted that
“Plaintiffs' attempt, if any, at service by
publication and/or mailing is defective insofar as Ms. Khawly
has not resided at the address listed on the state court
docket in several years.” Id. at ¶¶
60-61. Realizing that the address shown in the state court
docket was not the address at which Plaintiffs attempted to
serve Khawly, MidCap now argues that Plaintiffs'
attempted service upon her was nevertheless defective because
Plaintiffs failed to serve Khawly with both the original
summons and complaint and the amended summons and complaint.
MidCap also argues that Plaintiffs' attempted service of
Khawly was defective because the newspaper in which
Plaintiffs published the summons directed to Khawly was not
one “likely to give notice in the area or to the person
affected” as Wisconsin law requires. Finally, MidCap
argues that even if service upon Khawly was not defective,
MidCap's failure to obtain her consent should be excused
because MidCap exercised reasonable diligence in attempting
to discern whether she had been properly served.
first argue in response that MidCap lacks standing to
challenge its service of Khawly. In the event MidCap does
have standing, Plaintiffs argue that Khawly was properly
served by publication summons in accord with Wisconsin
Statute § 801.11(1)(c) on March 5, 2019 and that the
state court docket reflected that service. Plaintiffs also
claim that they properly served Khawly on March 6, 2019 by
serving the doorman at her confirmed residence in New York
City, in compliance with Wisconsin Statute §
standing argument is easily disposed of. It makes no sense to
say that the removing defendant has the burden of proving
that all properly served defendants provided written consent
for removal, while at the same time claiming that such
defendant lacks standing to assert that service upon a
non-consenting defendant was defective. To hold otherwise
would allow the plaintiff to defeat removal in every case
where fewer than all of the named defendants were served and
their consent for removal therefore not obtained. Plaintiffs
could simply allege they were served and then bar on standing
grounds the defendant's attempt to argue otherwise.
Because Khawly's consent to removal was only required if
she was properly served, Plaintiffs' challenge to
MidCap's removal necessarily places the validity of
Plaintiffs' attempted service of her at issue. Moreover,
as MidCap notes, its argument that Khawly was not properly
served is not a challenge to service on her behalf; it is
simply its explanation of why it was not required to obtain
her written consent to removal.
Service by publication
remaining arguments are not so easily rejected. Wisconsin
Statute § 801.11(1)(c) provides that if a party cannot
be served personally after “reasonable diligence,
” service can be made “by publication of the
summons as a class 3 notice, under ch. 985, and by
mailing.” See Wis. Stat. § 801.11(1)(c)
(2017-18); Krahenbuhl v. Ostrich Ranchers Ltd.
P'ship, No. 96-C-246, 2007 WL 3012712, at *2 (E.D.
Wis. Oct. 12, 3007). “Reasonable diligence”
requires that a plaintiff “exhaust with due diligence
any leads or information reasonably calculated to make
personal service possible, ” Krahenbuhl, 2007
WL 3012712, at *2 (citation omitted), but not “all
possible diligence which may be conceived.” Haselow
v. Gauthier, 212 Wis.2d 580, 591, 569 N.W.2d 97 (Ct.
App. 1997) (citation omitted). To serve by publication, a
plaintiff must publish a class 3 notice “once each
week, for three consecutive weeks, in ‘a newspaper
likely to give notice in the area or to the person affected,
'” Krahenbuhl, 2007 WL 3012712, at *3
(quoting Wisconsin Statutes ...