Service Lane.com, Inc. v. Pagosa Technologies, Inc. (In re ServiceLane.com, Inc.)

320 B.R. 614, 2005 Bankr. LEXIS 201, 44 Bankr. Ct. Dec. (CRR) 84
CourtUnited States Bankruptcy Court, N.D. Texas
DecidedFebruary 1, 2005
DocketBankruptcy No. 01-36044-SAF-7; Adversary No. 04-3651
StatusPublished
Cited by2 cases

This text of 320 B.R. 614 (Service Lane.com, Inc. v. Pagosa Technologies, Inc. (In re ServiceLane.com, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Service Lane.com, Inc. v. Pagosa Technologies, Inc. (In re ServiceLane.com, Inc.), 320 B.R. 614, 2005 Bankr. LEXIS 201, 44 Bankr. Ct. Dec. (CRR) 84 (Tex. 2005).

Opinion

MEMORANDUM OPINION AND ORDER

STEVEN A. FELSENTHAL, Chief Judge.

ServiceLane.com, the plaintiff, moves the court to remand this adversary proceeding to the 192nd Judicial District Court of Dallas County, Texas. The defendants oppose the motion. The court conducted a hearing on the motion on January 10, 2005.

The sole issue presented by the motion is whether the defendants timely removed this litigation from state court. Although simply stated, the analysis of the issue is more complicated.

ServiceLane.com filed its original petition against the defendants on April 28, 2003. ServiceLane.com served the petition on the defendants on June 9, 2003. The defendants filed their notice of removal, based on 28 U.S.C. §§ 1334, 1452, 1441 [616]*616and 1446, on July 21, 2004. Service-Lane.com contends that the defendants did not timely file the notice of removal and, accordingly, move to remand under 28 U.S.C. § 1447(c).

Defendants desiring to remove a civil action from state court to federal court must file in the United States District Court a notice of removal. 28 U.S.C. § 1446(a). The United States Code provides:

(b) The notice of removal of a civil action or proceeding shall 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, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, 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, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

28 U.S.C. § 1446(b).

ServiceLane.com contends that the initial petition sets forth the claim for relief that forms the basis for the notice of removal, thereby triggering the thirty day time period of the first paragraph of § 1446(b). The defendants contend that the initial petition does not set forth a removable claim, but alleges only state law claims for relief. The defendants maintain that only upon the discovery of a bankruptcy court order did they learn with certainty of a federal bankruptcy claim, thereby triggering the thirty day time period of the second paragraph of § 1446(b).

As the Fifth Circuit has explained, the two paragraphs of § 1446(b) describe the documents that trigger the time limits for notices of removal. The first paragraph governs notices based on the “initial pleading setting forth the claim for relief upon which such action or proceeding is based.” By contrast, the second paragraph governs notices of removal based on “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.” Bosky v. Kroger Texas, LP, 288 F.3d 208, 209 (5th Cir.2002)(emphasis added). For purposes of the first paragraph, the thirty day time period starts to run from the defendant’s receipt of the initial pleading only when the “pleading affirmatively reveals on its face” that the plaintiff has raised a federal question. Id., at 210 (discussing removal based on diversity). The pleading must contain a specific allegation raising a federal question. The defendants have no obligation to engage in due diligence to determine if the case is removable. The subjective knowledge of the defendants cannot convert a case into a removable action. Id. The “affirmatively reveals on its face” standard does not apply to the second paragraph of § 1446(b), “but rather the information supporting removal in a copy of an amended pleading, motion, order or other paper must be ‘unequivocally clear and certain’ to start the time running for a notice of removal under the second paragraph of § 1446(b).” Id., at 211.

[617]*617The initial petition alleges at ¶ 2 that ServiceLane.com is a Delaware corporation in a Chapter 7 bankruptcy case pending in the United States Bankruptcy Court for the Northern District of Texas, case no. 01-36044-HCA. The petition further alleges, at ¶ 8, that the defendants, beginning on December 15, 2000, committed acts while they had conflicts of interest. The petition further alleges that ServiceLane.com then filed its bankruptcy petition. The petition continues that despite the filing of the bankruptcy petition, the defendants continued to use Service-Lane.com’s name, good will and its assets, and that they diverted its assets. Based on those allegations, the petition alleges claims for breach of fiduciary duty (¶ 9), usurpation of corporate opportunities (¶¶ 10, 11), and conversion (¶ 12). ServiceLane.com seeks damages on those causes of action. (¶ 13).

The petition affirmatively reveals on its face that the plaintiff is a Chapter 7 debt- or. The petition affirmatively reveals allegations of pre-bankruptcy activity giving rise to state law causes of action. Upon the filing of the bankruptcy case, those causes of action become property of the bankruptcy estate, 11 U.S.C. § 541, under the jurisdiction of the federal court. 28 U.S.C. § 1334(e). Liquidation of those causes of action could have a conceivable effect on the administration of the bankruptcy estate. 28 U.S.C. § 1334(b); Matter of Wood, 825 F.2d 90, 96-97 (5th Cir.1987). The petition affirmatively reveals allegations that the defendants exercised control over the debtor’s assets after the filing of the bankruptcy case. Without leave of the bankruptcy court, a person, other than the bankruptcy trustee, may not exercise control over property of the bankruptcy estate. 11 U.S.C. § 362(a)(3). An action to protect property of the bankruptcy estate would affect the administration of the estate. The initial petition thereby affirmatively reveals a basis for federal bankruptcy jurisdiction. The initial petition triggered the thirty day period to file a notice of removal. The defendants did not timely file their notice of removal.

The defendants argue, however, that the initial pleading does not affirmatively reveal a federal bankruptcy question.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
320 B.R. 614, 2005 Bankr. LEXIS 201, 44 Bankr. Ct. Dec. (CRR) 84, Counsel Stack Legal Research, https://law.counselstack.com/opinion/service-lanecom-inc-v-pagosa-technologies-inc-in-re-servicelanecom-txnb-2005.