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Birch Hill Real Estate LLC v. Breslin

United States District Court, E.D. Wisconsin

July 8, 2019

BIRCH HILL REAL ESTATE LLC, et al., Plaintiffs,
v.
KEVIN BRESLIN, et al., Defendants.

          DECISION AND ORDER DENYING MOTION TO REMAND

          WILLIAM C. GRIESBACH, CHIEF JUDGE

         This 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.

         LEGAL STANDARD

         Section 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).

         “In 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).

         ANALYSIS

         A. Consent For Removal

         As a 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).

         Here, 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.

         Plaintiffs 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 § 801.11(1)(b)(2).

         1. Standing

         Plaintiffs' 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.

         2. Service by publication

         Plaintiffs' 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 ...


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