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Automotive Consulting Resources, Inc. v. Interstate National Dealer Services, Inc.

United States District Court, N.D. Oklahoma

July 3, 2018

AUTOMOTIVE CONSULTING RESOURCES, INC.; ROBBY HEFNER; Plaintiffs,
v.
INTERSTATE NATIONAL DEALER SERVICES, INC., Defendant.

          OPINION AND ORDER

          JOHN E. DOWDELL, JUDGE

         I. Background

         The plaintiffs, Automotive Consulting Resources, Inc. (ACR), and its principal, Robby Hefner, initiated this action in Rogers County, Oklahoma District Court on April 25, 2016. (Doc. 2-1). The plaintiffs allege that, under a 2005 Agreement, ACR was an independent agent for the defendant, Interstate National Dealer Services, Inc. (Interstate). On April 22, 2016, Interstate notified the plaintiffs that Interstate considered them in violation of the Agreement's non-compete terms, and Interstate terminated the Agreement. Plaintiffs brought suit in state court, asserting three claims. In Count I, the plaintiffs seek a declaratory judgment determining the parties' rights and obligations under the Agreement, including plaintiffs' rights to compete against Interstate and their alleged “continued right to compensation for business procured by Plaintiffs on behalf of Interstate.” (Doc. 2-1 at 4). In Count II, plaintiffs allege that Interstate breached the Agreement, and in Count III, plaintiffs assert a claim for quantum meruit based on their allegation that Interstate improperly retained the benefits of accrued compensation and commissions acquired from the plaintiffs' work. In Counts II and III, the plaintiffs asserted that damages were “less than $75, 000, ” such that the case was not initially removable upon the plaintiffs' pleading.

         In the course of the litigation in state court, Interstate served the plaintiffs with requests for admissions regarding the amount of damages sought by plaintiffs:

REQUEST FOR ADMISSION NO. 1: Admit that Plaintiffs' total damages, exclusive of interest and costs, exceed $75, 000.
REQUEST FOR ADMISSION NO. 2: Admit that Plaintiffs' total damages, exclusive of interest and costs, do not exceed $75, 000.

(Doc. 2-18 at 1-2). On April 17, 2017, the plaintiffs responded to each of those requests by stating that they “are unable to respond” and arguing that the information to calculate damages is solely in the possession of Interstate. (See id.).

         Given plaintiffs' refusal or inability to confirm that they are seeking less than $75, 000 in damages, and based upon Interstate's own analysis of the amount in controversy, Interstate then filed a notice of removal in this Court on April 25, 2017, which was the one year anniversary of the commencement of this action in state court. In the notice of removal, Interstate asserted that the Court has subject matter jurisdiction based upon diversity of citizenship under 28 U.S.C. § 1332. Interstate asserted that the plaintiffs are Oklahoma citizens, while Interstate is a Delaware corporation with its principal place of business in Georgia. Diversity of citizenship is undisputed.

         Plaintiffs seek remand based on two arguments. (See Doc. 16). First, plaintiffs contend that Interstate's removal was not timely. Second, plaintiffs assert that Interstate's notice of removal did not sufficiently set forth “all facts” that establish the requisite amount in controversy. The Court held a hearing on the plaintiffs' motion on June 28, 2018. At the hearing, the Court asked whether plaintiffs seek damages in excess, or not in excess, of the jurisdictional amount in controversy, and the plaintiffs' counsel asserted that they are unable to answer that question.[1]

         II. Discussion

         A. Timeliness of Removal

         Plaintiffs allege that Interstate's removal was untimely under 28 U.S.C. § 1446(c)(1), which provides that “a case may not be removed [on the basis of diversity jurisdiction] more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” The plaintiffs argue that, even though the notice of removal was filed in this Court within one year of the commencement of the action, the removal was not timely because a copy of the Notice was not filed in state court until the next day, so that the removal was rendered untimely under 28 U.S.C. § 1446(d).

         The plaintiffs have confounded timeliness with the date on which the removal is effected and the state court is thus deprived of jurisdiction. The plaintiffs' construction of § 1446(d) is inconsistent with the express filing deadlines set forth throughout the rest of § 1446. The requirements for timely filing of a notice of removal are found in subsections (a), (b), and (c), not in subsection (d). Subsection 1446(a) describes what is generally required to remove a case, by reference to the filing of the notice of removal in federal court:

A defendant or defendants desiring to remove any civil action from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of ...

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