Simenz v. Amerihome Mortgage Co.

544 F. Supp. 2d 743, 2008 WL 859206
CourtDistrict Court, E.D. Wisconsin
DecidedMarch 28, 2008
DocketNo. 07-C-601
StatusPublished
Cited by3 cases

This text of 544 F. Supp. 2d 743 (Simenz v. Amerihome Mortgage Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Simenz v. Amerihome Mortgage Co., 544 F. Supp. 2d 743, 2008 WL 859206 (E.D. Wis. 2008).

Opinion

DECISION AND ORDER

LYNN ADELMAN District Judge.

On May 22, 2007, plaintiff Brad Simenz filed this putative class action in Milwaukee County Circuit Court on behalf of himself and others who, within six years of the date of filing, had purchased a mortgage from defendant secured by property within the State of Wisconsin and had been charged a fee allegedly in violation of Wisconsin law. On June 29, 2007, defendant removed the action to federal court under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d), but on October 23, 2007,1 remanded it to state court. Plaintiff now seeks reimbursement of costs related to the removal and remand under 28 U.S.C. § 1447(c). I have jurisdiction over this case for the limited purpose of deciding plaintiffs motion. Wisconsin v. Hotline Indus., Inc., 236 F.3d 363, 365 (7th Cir.2000).

I. APPLICABILITY OF § 1447(c)

“The process of removing a case to federal court and then having it remanded back to state court delays resolution of the case, imposes additional costs on both parties, and wastes judicial resources.” Martin v. Franklin Capital Corp., 546 U.S. 132, 140, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005). Thus, when a party’s “adversary wrongfully drags them into a second judicial system the loser must expect to cover the incremental costs.” Garbie v. DaimlerChrysler Corp., 211 F.3d 407, 411 (7th Cir.2000). Section 1447(c), the fee-shifting provision applicable to wrongful removal, provides that “[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” This section gives district courts discretion to award expenses when a defendant “lacked an objectively reasonable basis for seeking removal.” Martin, 546 U.S. at 141, 126 S.Ct. [745]*745704. Removal is not reasonable if it is foreclosed by law that is clearly established at the time of removal. Lott v. Pfizer, 492 F.3d 789, 792 (7th Cir.2007).

Defendant removed the present case under CAFA, which provides that a district court has jurisdiction over any class action in which the aggregated claims meet or exceed $5 million and any member of the proposed class is a citizen of a state different from any defendant. § 1332(d)(2)(A). However, CAFA states that a district court “shall decline” to exercise such jurisdiction if greater than two-thirds of the class members and the primary defendants are all citizens of the state in which the action was filed. § 1332(d)(4)(B). In my remand decision, I found that it was not clear that at least $5 million was in controversy. Plaintiffs complaint estimated that the putative class had at least 1,000 members and sought unspecified compensatory and punitive damages. Though only defendant knew the actual number of class members and the amount of each class member’s loan origination (the basis for damages), defendant did not present any evidence supporting its contention that 1,000 class members were in a position to seek the maximum compensatory damages along with a very large punitive damage award. I also found, based on evidence presented by plaintiff and not disputed by defendant, that more than two-thirds of class members and the only defendant were citizens of Wisconsin. Thus, even if § 1332(d)(2)(A) granted jurisdiction, § 1332(d)(4)(B) took it away.

Defendant asserts that its removal was reasonable because plaintiffs complaint did not limit the damages sought to less than $5 million and did not limit the class to individuals domiciled in Wisconsin. This is not an objectively reasonable basis for removal given that the complaint sought compensatory damages low enough that only a very large punitive damages award could get defendant over the jurisdictional hurdle and, regardless, defendant is a Wisconsin citizen and the proposed class consisted only of individuals who purchased property in Wisconsin — a group that was very likely to consist primarily of Wisconsin citizens.1 When it removed, defendant did not argue that the amount at stake likely exceeded $5 million or that fewer than two-thirds of the class were Wisconsin domiciliaries, notwithstanding that it had to establish jurisdiction by a preponderance of the evidence. Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 542-43 (7th Cir.2006). In arguing that removal was reasonable, defendant points out that the Third Circuit has held that CAFA shifts the burden of proving jurisdiction to the plaintiff, but omits that the Seventh Circuit has rejected this position. Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 447-48 (7th Cir.2005). In short, defendant lacked a reasonable basis for removal.

II. COVERED EXPENSES

Thus, plaintiff is entitled to “actual expenses, including attorney fees, incurred as a result of the removal.” § 1447(c). Defendant argues that I should award plain[746]*746tiff nothing because he retained counsel on a contingency basis and has paid no expenses. However, in drafting § 1447(c), Congress used the passive voice, and it is undisputed that “actual expenses” have been “incurred,” whether by plaintiff or his attorneys. Plaintiffs attorneys forwent other paying work and paid costs out of pocket, thereby incurring expenses in contesting removal. The Seventh Circuit has treated a class action attorney’s time, for which the plaintiffs had almost certainly not paid, as an “actual expense” under § 1447(c). Garble, 211 F.3d at 411. Further, the court’s admonition that a defendant who wrongfully drags a plaintiff into a second judicial system “must expect to cover the incremental costs,” id., is apt “regardless of whether the immediate burden of defeating an improper removal falls on the plaintiff paying an hourly rate or on a plaintiffs lawyer who took the case on a contingency.” Keesling v. Richman, No. 1:02-CV-1392, 2003 WL 1921812, at *2, 2003 U.S. Dist. LEXIS 6756, at *6-7 (S.Ind. Apr. 18, 2003). If § 1447(c) did not apply to expenses borne by attorneys, the section would not “reduee[ ] the attractiveness of removal as a method for delaying litigation and imposing costs on the plaintiff.” Martin, 546 U.S. at 140, 126 S.Ct. 704. Defendants could remove every contingent fee case filed against them with impunity.

My research indicated that courts which have addressed whether § 1447(c) permits a plaintiff to recoup expenses paid by counsel has answered in the affirmative. Gotro v. R & B Realty Group, 69 F.3d 1485, 1487-88 (9th Cir. Nov.14, 1995); Lawrence v. Biotronik, Inc., No. 04C1876, 2005 WL 2338812, 2005 U.S. Dist. LEXIS 20911 (N. D.Ill. Sept. 20, 2005); Harris v. Home Depot U.S.A, Inc., No. 05-C-164-S, 2005 WL 1587593, 2005 U.S. Dist.

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544 F. Supp. 2d 743, 2008 WL 859206, Counsel Stack Legal Research, https://law.counselstack.com/opinion/simenz-v-amerihome-mortgage-co-wied-2008.