Tuesday, November 29, 2005

SCOTUS Issues Opinion in Removal Jurisdiction Case

The Supreme Court has issued a decision in Lincoln Property Co. et al. v. Roche, a case that addressed various issues surrounding removal jurisdiction under 28 U.S.C. s. 1441. Here is a portion of the Syllabus released today:

Title 28 U.S.C. § 1441 authorizes the removal of civil actions from state court to federal court when the state-court action is one that could have been brought, originally, in federal court. When federal-court jurisdiction is predicated on the parties’ diversity of citizenship, see §1332, removal is permissible “only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which [the] action [was] brought.” §1441(b).

Christophe and Juanita Roche, plaintiffs below, respondents here, leased an apartment in a Virginia complex, Westfield Village, managed by Lincoln Property Company (Lincoln). The Roches commenced suit in state court against diverse defendants, including Lincoln, asserting serious medical ailments from their exposure to toxic mold in their apartment, and alleging loss, theft, or destruction of personal property left in the care of Lincoln and the mold treatment firm during the remediation process. The Roches identified themselves as Virginia citizens and defendant Lincoln as a Texas corporation. Defendants removed the litigation to a Federal District Court, invoking that court’s diversity-of-citizenship jurisdiction. In their consolidated federal-court complaint, the Roches identified themselves and Lincoln just as they did in their state-court complaints. Lincoln, in its answer, admitted that it managed Westfield Village, and did not seek to avoid liability by asserting that some other entity was responsible for managing the property. After discovery, the District Court granted defendants’ motion for summary judgment, but before judgment was entered, the Roches moved to remand the case to state court. The District Court denied the motion, but the Fourth Circuit reversed, holding the removal improper on the ground that Lincoln failed to show the nonexistence of an affiliated Virginia entity that was a real party in interest.

Held: Defendants may remove an action on the basis of diversity of citizenship if there is complete diversity between all named plaintiffs and all named defendants, and no defendant is a citizen of the forum State. It is not incumbent on the named defendants to negate the existence of a potential defendant whose presence in the action would destroy diversity. Pp. 6—13.

The High Court reversed the Fourth Circuit and remanded. Readers can view the full Syllabus by visiting Cornell's LII website here.


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