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Birch Hill Real Estate LLC v. Breslin

United States District Court, E.D. Wisconsin

September 10, 2019

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



         Plaintiffs, comprising twenty-two Wisconsin limited liability companies and corporations operating as landlords to senior living facilities located in Wisconsin and Michigan, filed this action on December 14, 2018, in Outagamie County Circuit Court in the aftermath of a failed multi-property real estate transaction. This transaction involved Defendant Kevin Breslin's purchase of the operating entities of the senior care facilities, the execution of a lease for the real property owned by Plaintiffs, and the agreement by several guarantors, who are also defendants in this action, to guarantee the obligations of the operating tenants. In an amended complaint filed on February 19, 2019, Plaintiffs added as defendants MidCap Financial Services, LLC and MidCap Funding VII Trust (collectively, MidCap), who provided financing for the transaction. Dkt. No. 1-1. MidCap was served on February 21, 2019, and timely removed the action on March 25, 2019, asserting federal diversity jurisdiction under 28 U.S.C. § 1332. Dkt. No. 1.

         On April 22, 2019, Plaintiffs filed a motion to remand the case back to state court, claiming that MidCap's removal was improper because it failed to obtain the consent of Mary Theresa Khawly, a defendant guarantor, and failed to sufficiently allege diversity jurisdiction. Dkt. No. 36. In a decision and order dated July 8, 2019, the court denied Plaintiffs' motion, concluding that Plaintiffs failed to properly serve Khawly with an amended summons and complaint under Wisconsin law and that MidCap sufficiently alleged diversity jurisdiction. Dkt. No. 69. Presently before the court is Plaintiffs' motion to reconsider its order denying their motion to remand or, in the alternative, to certify an interlocutory appeal. Dkt. No. 72. The court heard oral argument on the motion on August 21, 2019. For the reasons below, Plaintiffs' motion will be granted and this case will be remanded back to Outagamie County Circuit Court.


         A. Motion for Reconsideration

         Plaintiffs have moved for reconsideration of this court's order denying their motion to remand pursuant to Federal Rules of Civil Procedure 59(e) and 60(b). Dkt. No. 72. Rule 59(e) permits a party to file a motion to alter or amend a judgment within 28 days after entry of judgment. Fed.R.Civ.P. 59(e). Rule 60(b) allows a court to relieve a party from a “final” judgment, order, or proceeding. Fed.R.Civ.P. 60(b). No. judgment has been entered in this case, nor is this court's decision denying Plaintiffs' motion to remand “final.” See Santamarina v. Sears, Roebuck & Co., 466 F.3d 570, 571-72 (7th Cir. 2006) (“But [Rule 60(b)], by its terms limited to ‘final' judgments or orders, is inapplicable to interlocutory orders.” (citations omitted)); Rohrer, Hibler & Replogle, Inc. v. Perkins, 728 F.2d 860, 861 (7th Cir. 1984) (“An order denying a motion to remand a case to state court cannot, by any stretch of the imagination, be considered ‘final' within the meaning of [28 U.S.C.] § 1291.” (citations omitted)). Rules 59(e) and 60(b) therefore appear inapplicable.

         Rule 54(b), which allows a court to revise any order or decision adjudicating “fewer than all the claims or the rights and liabilities of fewer than all the parties, ” also appears inapplicable because, by its plain language, the rule implies that an order the court seeks to revise must have adjudicated some (i.e. one or more) claims, rights, or liabilities, which this court's order denying Plaintiffs' motion to remand did not do. Instead, “[t]he authority of a district judge to reconsider a previous ruling in the same litigation . . . is governed by the doctrine of the law of the case, which authorizes such reconsideration if there is a compelling reason, such as a change in, or clarification of, law that makes clear that the earlier ruling was erroneous.” Santamarina, 466 F.3d at 571-72. “Not to reconsider in such circumstances would condemn the parties to the unedifying prospect of continued litigation when they knew that a possibly critical ruling was in error and, unless it became moot in the course of the proceedings, would compel a reversal of the final judgment at the end of the case.” Id. at 572. Under the doctrine of the law of the case, “a court should not reopen issues decided in earlier stages of the same litigation, ” but “[t]he doctrine does not apply if the court is ‘convinced that [its prior decision] is clearly erroneous and would work a manifest injustice.'” Agostini v. Felton, 521 U.S. 203, 236 (1997) (citing Arizona v. California, 460 U.S. 605, 618 n.8 (1983)).

         B. Removal and Motion to Remand

         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). “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).


         On reconsideration, Plaintiffs ask this court to reconsider its decision that Khawly was not properly served prior to MidCap's removal, thereby obviating the need for MidCap to obtain her consent to removal under 28 U.S.C. § 1446(b)(2)(A). Plaintiffs do not challenge the court's decision regarding the sufficiency of MidCap's allegations of diversity jurisdiction. In the event that this court denies their motion for reconsideration, Plaintiffs move in the alternative for this court to certify for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) the following question: “Does Wisconsin statutory law require a plaintiff to contemporaneously serve via substitute service (i.e., via publication or service pursuant to the law of the state where service is made) both the original and amended summons on a defendant to commence a case against the defendant?” Pls.' Br., Dkt. No. 73 at 12.

         It is undisputed that MidCap did not obtain Khawly's written consent to removal. The question before the court is whether Khawly was properly served and therefore whether MidCap was required to obtain her written consent for removal. Under Wisconsin Statute § 801.11(1)(c), if with reasonable diligence a defendant cannot be personally served, service can be made “by publication of the summons as a class 3 notice, under ch. 985, and by mailing.” Wis.Stat. § 801.11(1)(c); Krahenbuhl v. Ostrich Ranchers Ltd. P'ship, No. 96-C-246, 2007 WL 3012712, at *2 (E.D. Wis. Oct. 12, 2007). The court previously determined, and neither party presently disputes, that Plaintiffs exercised reasonable diligence in attempting to personally serve Khawly. Plaintiffs could therefore serve Khawly by publication, which they proceeded to do.

         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 §§ 985.02(1) and 985.07(3)), and “at or immediately prior to the first publication, a copy of the summons and a copy of the complaint” must be mailed to the defendant, provided that the defendant's post-office address can be ascertained. § 801.11(1)(c). Plaintiffs published a publication summons in the New York Law Journal (NYLJ) once per week for three consecutive weeks, starting on March 5, 2019. Dkt. No. 22. Under § 801.13(2), which provides that “[a] ...

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