of New Jersey (the "Bankruptcy Court"). Id., P 3. Soon thereafter, the Wissels sought joint voluntary Chapter 11 protection. Id.
On 6 December 1989, Wissel Contracting and the Wissels filed separate adversary proceedings (the "Wissel Adversary Proceedings") in the Bankruptcy Court against Howard Savings. Moving Brief at 5. Howard Savings filed an adversary proceeding, on 28 March 1990 (the "Howard Savings Adversary Proceeding"), seeking a determination of the validity and priority of its secured and unsecured claims including the Foreclosure Judgment. Id.
On 12 August 1992, the bankruptcy proceedings of Wissel Contracting and the Wissels were converted to liquidation proceedings under Chapter 7 of the United States Bankruptcy Code; the Trustee was appointed to represent both estates. Notice of Removal, P 4.
On or about 2 October 1992, the Commissioner of Banking of the State of New Jersey declared Howard Savings insolvent and appointed the FDIC as receiver. Id., P 5. On 26 January 1993, the Trustee filed a motion for partial summary judgment against the FDIC. Opp. Brief at 4; Moving Brief at 6.
On 5 February 1993 the FDIC filed a cross-motion to dismiss the Wissel Adversary Proceedings for lack of subject matter jurisdiction. Moving Brief at 6. The Bankruptcy Court denied the FDIC's motion on 16 September 1993. Id. In late January or February 1993
, the FDIC moved and was substituted as plaintiff in the Howard Savings Adversary Proceeding. Id. at 6-7, 12.
The FDIC moved for summary judgment, on 22 February 1993, contending the Wissel Adversary Proceedings were barred by the entire controversy doctrine and claim preclusion in light of the Foreclosure Judgment. Id. at 6; Opp. Brief at 4. By Order, dated 24 March 1994 (the "24 March 1994 Order"), the Bankruptcy Court granted the motion by FDIC for summary judgment and dismissed the Wissel Adversary Proceedings. Opp. Brief at 5. The Bankruptcy Court concluded the issues raised by the Wissel Adversary proceedings were relevant to, but not asserted in connection with, the Foreclosure Judgment. Id.
On 4 April 1994, the Trustee filed an appeal of the 24 March 1994 Order in the United States District Court for the District of New Jersey. Moving Brief at 5; Opp. Brief at 7. The 24 March 1994 Order was affirmed with regard to the claims of Wissel Construction and Conrad Wissel, III, but remanded with regard to Beatrice Wissel. Moving Brief at 5 & n.2; Opp. Brief at 7.
On 4 October 1994, the Trustee filed a motion in the Superior Court of New Jersey to set aside the Foreclosure Judgment in order to raise various defenses to the foreclosure (the "Foreclosure Action"). Moving Brief at 7; Opp. Brief at 5-6. The FDIC appeared, as receiver of Howard Savings, in opposition to the Trustee's motion. Moving Brief at 7; Opp. Brief at 6. The FDIC filed opposition papers on 27 October 1994 and was heard at oral argument on 4 November 1994. By Order of the Superior Court, dated 4 November 1994, the Foreclosure Judgment was vacated. Moving Brief at 7-8; Opp. Brief at 6.
Thereafter, the FDIC sought formal substitution, as a plaintiff, in the Foreclosure Action. Notice of Removal, P 10. A consent order, dated and filed 9 December 1994 (the "Consent Order"), was entered by the parties. See Consent Order, attached as Exhibit B to the Notice of Removal. The Consent Order formally substituted the FDIC as plaintiff in its capacity as receiver of Howard Savings and authorized the intervention of the Trustee in the Foreclosure Action on behalf of the Chapter 7 bankruptcy proceedings of Wissel Construction and the Wissels. Id.
After formal substitution as plaintiff, on 22 December 1994, the FDIC removed the Foreclosure Action to the United States District Court for the District of New Jersey. See Notice of Removal. The Trustee, by way of the instant motion, seeks a remand of the instant action to the Superior Court of New Jersey. See Notice of Remand.
A. Removal Under 28 U.S.C. § 1446
Under the general Federal removal statutes, an action brought in state court can be removed by the defendant to the Federal district court encompassing the state court if that Federal district court would have had original jurisdiction over the action. 28 U.S.C. § 1441(a).
A defendant seeking to remove a case must file a "notice of removal ... containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings and orders served." 28 U.S.C. § 1446(a) (emphasis added).
When confronted with a motion to remand, the removing party has the burden of establishing the propriety of removal. See Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085, 112 L. Ed. 2d 1046, 111 S. Ct. 959 (1991); Steel Valley Auth. v. Union Switch & Signal Div., Am. Standard, Inc., 809 F.2d 1006, 1011 (3d Cir. 1987), cert. dism'd sub nom American Standard, Inc. v. Steel Valley Auth., 484 U.S. 1021, 98 L. Ed. 2d 756, 108 S. Ct. 739 (1988); Moore v. DeBiase, 766 F. Supp. 1311, 1315 (D.N.J. 1991); Mountain Ridge State Bank v. Investor Funding Corp., 763 F. Supp. 1282, 1288 (D.N.J. 1991). Moreover, "removal statutes 'are to be strictly construed against removal and all doubts resolved in favor of remand.'" Boyer, 913 F.2d at 111 (quoting Steel Valley, 809 F.2d at 1010); see Moore, 766 F. Supp. at 1314; Mountain Ridge, 763 F. Supp. at 1288.
An action that has been removed to Federal court may be remanded to state court pursuant to 28 U.S.C. § 1447(c) on the grounds of a defect in the removal procedure.
For example, failure to file a notice of removal within the time period provided by the removal statutes is a sufficient ground on which to remand. See Mountain Ridge, 763 F. Supp. at 1288; Capone v. Harris Corp., 694 F. Supp. 111, 112 (E.D.Pa. 1988); Blow v. Liberty Travel, Inc., 550 F. Supp. 375, 375-76 (E.D.Pa. 1982).
Section 1446(b) sets forth the time in which a removal petition must be filed:
The notice of removal of a civil action or proceeding shall be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim upon which such action or proceeding is based....
28 U.S.C. § 1446(b) (emphasis added). The burden of proof is on the removing party to show removal was timely. See Boyer, 913 F.2d at 111; Steel Valley, 809 F.2d at 1011.
To meet its burden, the defendant must show it filed a notice of removal within thirty days after receipt of the complaint. Section 1446 provides receipt by the defendant may be effected "through service or otherwise." 28 U.S.C. § 1446(b). Therefore, the date upon which formal service of process was received is not dispositive of whether removal was timely. See Foster v. Mutual Fire, Marine & Inland Ins. Co., 986 F.2d 48, 51-51 (3d Cir. 1993) (thirty day period begins running when defendant has "sufficient information... to determine Federal jurisdiction," irrespective of when formal service was made); Greensmith Co. v. Com Systems, Inc., 796 F. Supp. 812, 813 (D.N.J. 1992) (same); North Jersey Sav. & Loan v. Fidelity & Deposit Co. of Maryland, 125 F.R.D. 96, 100 (D.N.J. 1988) (same); Maglio v. F.W. Woolworth Co., 542 F. Supp. 39, 41 (E.D.Pa. 1982) (Section 1446 "specifically reads 'receipt by the defendant,' and the statute clearly does not require service.").
The defendant cannot carry its burden of proving timely removal simply by showing removal was effected within thirty days after formal service of process. In Unique Oriental Rugs v. Carolina Freight Carriers Corp., No. 91-1331, slip op. (D.N.J. 30 May 1991), the defendant's notice of removal stated: "this action was commenced by service of process ... and the time has not elapsed within which [defendant] is allowed to file [the petition for removal]." Slip op. at 2. The only other proof of timely removal offered by the defendant was a copy of the state court summons, which was attached to the notice of removal. Id. The defendant argued: "this court has clear and convincing proof that less than thirty days had elapsed from the time of the service of the State Court complaint upon the Defendant and the time of removal to the Federal District Court." Id.
It was held that the petition for removal did not contain sufficient proof of timely removal. As was stated, "the Petition does not address, and it is not possible to determine from the face of the Petition ..., whether the defendant received a complaint prior to the formal service of the summons and complaint." Id. at 3. Therefore, it was stated, "it cannot be determined whether removal was effected within thirty days, as required." Id. at 4.
B. Removal Under 12 U.S.C. § 1819
Federal courts have broad jurisdiction over matters concerning the FDIC. See 12 U.S.C. § 1819(b)(2)(A). Section 1819 of Title 12 provides: "Except as provided in subparagraph (D) *fn5"
], all suits of a civil nature at common law or in equity to which the [FDIC], in any capacity, is a party shall be deemed to arise under the laws of the United States." 12 U.S.C. § 1819(b)(2)(A).
With regard to the removal power of the FDIC, section 1819(b)(2)(B) of Title 12, which was amended on 19 December 1991 (the "1991 Amendment"), provides:
Except as provided in subparagraph (D), the [FDIC] may, without bond or security, remove any action, suit, or proceeding from a State court to the appropriate United States District Court before the end of the 90-day period beginning on the date the action, suit or proceeding is filed against the [FDIC] or the [FDIC] is substituted as a party.
12 U.S.C. § 1819(b)(2)(B).
According to the FDIC, it was substituted as plaintiff in the instant action by the Consent Order, on 9 December 1994, and removed the instant case on 22 December 1994. Opp. Brief at 9. Therefore, the FDIC argues its removal "is both timely and proper as the removal occurred ... within 90 days of the date of its substitution in the ... Foreclosure Action." Id.
The Trustee contends
this argument ignores that the FDIC can, and in this case did, litigate the validity and enforceability of its mortgage on an ongoing basis well before ["formal" substitution] and further ignores traditional removal practice and common sense. Therefore, "substitution", for purposes of [section] 1819, ... should not be construed as synonymous with "formal" substitution by motion or consent order, but, consistent with longstanding practice, as referring to that date when [the] FDIC first became part of the case, whether by notice, participation or "formal" substitution.