Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_08-cv-00841/USCOURTS-almd-2_08-cv-00841-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

---

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

BEAR LUMBER COMPANY, )

INC., et al., )

)

Plaintiffs, )

) CIVIL ACTION NO.

v. ) 2:08cv841-MHT

) (WO) 

KIMBERLY S. HEADLEY, ) 

et al., )

)

Defendants. )

OPINION AND ORDER

In this lawsuit, plaintiff Bear Lumber Company, Inc.,

originally sued defendant Kimberly Headley in Alabama

state court. Headley later filed a third-party complaint

against Colonial Bank, N.A., which subsequently removed

the entire case to this federal court. This lawsuit is

now before the court on Headley’s motion to remand. For

the reasons that follow, that motion will be granted. 

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I. BACKGROUND

Bear Lumber originally filed this lawsuit against

Headley and others in the Circuit Court of Montgomery,

Alabama on April 18, 2007. On May 27, 2008, that case

was consolidated with two other state-court cases, filed

by plaintiffs Elegante Surfaces and Edward J. Thomas.

The complaints sought damages for various violations of

Alabama state law, including breach of contract, fraud,

and passing of a worthless check. These claims all

relate to fees owed for supplies and services rendered in

the construction of Headley’s home in Montgomery,

Alabama. Each of the original complaints sought less

than $ 10,000 in damages and raised no federal-law

claims. 

During the course of the state-court litigation, many

cross-claims, counterclaims, and third-party complaints

were filed; none of these pleadings contained federal-law

claims. On September 17, 2008, however, Headley filed an

amended third-party complaint in the consolidated cases

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1. One of the consolidated cases, Edward J. Thomas

v. A Plus Mortgage, et al., was not removed, however,

because Headley herself was not a party to that case and

her amended third-party complaint therefore did not

pertain to it.

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adding several new third-party defendants. Headley’s

amended third-party complaint raises state-law claims of

negligence, negligent supervision, promissory fraud, and

unauthorized practice of law; it also raises four very

specific federal-law claims: violations of the Truth In

Lending Act, 15 U.S.C. § 1601 et seq.; the Real Estate

Settlement Procedures Act, 12 U.S.C. § 2601 et seq.; the

Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.; and

the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et

seq.

One of these new third-party defendants, Colonial

Bank, subsequently removed the consolidated cases to

federal court pursuant to § 1441(c) based on the addition

of the federal-law claims.1

 

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II. REMOVAL STANDARD 

Federal courts are courts of limited jurisdiction;

they possess only that power authorized by the

Constitution and by Congress. Kokkonen v. Guardian Life

Ins. Co. of Am., 511 U.S. 375, 377 (1994). As such,

“[r]emoval statutes are construed narrowly; where

plaintiff and defendant clash about jurisdiction,

uncertainties are resolved in favor of remand.” Burns v.

Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1999).

Federal courts are “obligated to inquire into

subject-matter jurisdiction sua sponte whenever it may be

lacking.” Chacon-Botero v. U.S. Att'y Gen., 427 F.3d

954, 956 (11th Cir. 2005) (internal quotation marks

omitted). 

Pursuant to 28 U.S.C. § 1441(c), “Whenever a separate

and independent claim or cause of action within the

jurisdiction conferred by section 1331 of this title is

joined with one or more otherwise non-removable claims or

causes of action, the entire case may be removed and the

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district court may determine all issues therein, or, in

its discretion, may remand all matters in which State law

predominates.” Pursuant to 28 U.S.C. § 1331, "The

district courts shall have original jurisdiction of all

civil actions arising under the Constitution, laws, or

treaties of the United States."

III. DISCUSSION

Most circuit courts have refused to extend the right

of removal in § 1441(c) to “third-party defendants

brought into [a] state action by the original defendant.”

14C Charles A. Wright, Arthur R. Miller, & Edward H.

Cooper, Federal Practice and Procedure § 3731 (3d ed.

2001) (footnotes omitted). However, there is contrary

authority in the Fifth and Eleventh Circuits, stemming

from Carl Heck Engineers, Inc. v. Lafourche Parish Police

Jury, in which the former Fifth Circuit stated, “If the

third party complaint states a separate and independent

claim which if sued upon alone could have been brought

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2. In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th

Cir. 1981) (en banc), the Eleventh Circuit Court of

Appeals adopted as binding precedent all of the decisions

of the former Fifth Circuit handed down prior to the

close of business on September 30, 1981. 

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properly in federal court, there should be no bar to

removal.” 622 F.2d 133, 136 (5th Cir. 1980).2

 

Headley argues, however, that Carl Heck is no longer

good law, at least in the Eleventh Circuit, for two

reasons. First, she points out that § 1441(c) was

amended in 1990, thereby undermining the authority of

Carl Heck. See Moss Land and Mineral Corp. v. Fidelity

and Cas. Co. of New York, 2003 WL 21360803, at *3 (N.D.

Ala. June 6, 2003) (Acker, J.) (“In this court's opinion

that amendment wiped out Carl Heck. In fact, Carl Heck

may have been a cause, if not the precipitating reason,

for the Congressional tightening of the removal loophole

that had been created by the Fifth Circuit in Carl

Heck.”) Second, Headley argues that an intervening

Supreme Court case, Holmes Group, Inc. v. Vornado Air

Circulation Sys., Inc., 535 U.S. 826 (2002), suggests

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that third-party defendants should never be able to

remove cases. 

As such, it is not perfectly clear that this case

would be removable pursuant to a proper third-party

complaint. In any event, the court need not reach that

question, because Headley’s complaint is not a proper

third-party complaint. Rule 14 of the Federal Rule of

Civil Procedure governs third-party practice and

establishes that “A defending party may, as third-party

plaintiff, serve a summons and complaint on a nonparty

who is or may be liable to it for all or part of the

claim against it.” Fed. R. Civ. P. 14(a)(1). “Rule

14(a) allows a defendant to assert a claim against any

person not a party to the main action only if that third

person's liability on that claim is in some way dependent

upon the outcome of the main claim.” United States v.

Olavarrieta, 812 F.2d 640, 643 (11th Cir. 1987).

Headley’s pleading does not allege and cannot be

construed to allege that the newly added defendants are

liable for the claims raised against her. She focuses on

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3. In fact, Colonial Bank agrees that it was

improperly impleaded as a third-party, arguing this

ground in support of its motion for summary judgment.

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the allegedly wrongful practices of her lenders but fails

to suggest how the lenders would ever be liable for the

outstanding fees she may owe to the original plaintiffs,

Bear Lumber and Elegante Surfaces. Therefore, this is

not a proper third-party complaint.

Because Headley’s complaint is not a proper thirdparty complaint, § 1441(c) is not a proper basis for

removal. First, because Colonial Bank was improperly

impleaded, Headley’s claims in her third-party complaint

were not properly “joined” under § 1441(c).3

 In addition,

the court cannot consider whether Headley’s claims are

“separate and independent” pursuant to § 1441(c) when

that nature of those claims (whether they are really

cross-claims or counterclaims) has not been established.

Finally, Colonial Bank has failed to provide the court

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4. Some courts have addressed this problem by

redesignating the pleading and analyzing whether the case

would be removable pursuant to that proper designation.

See e.g, Mace Sec. Intern., Inc. v. Odierna, 2008 WL

3851839, at *3 (S.D. Fla. Aug. 14, 2008) (Altonga, J.).

This approach, however, is highly problematic. For

example, the court’s authority to redesignate pleadings

extends to counterclaims misdesignated as defenses or

defenses misdesignated as counterclaims. See Fed. R.

Civ. Pro. 8. It does not address third-party complaints

and should not be extended to do so. See Bozsi Ltd.

Partnership v. Lynott, 676 F.Supp. 505, 516 (S.D.N.Y.

1987) (Carter, J.) (refusing to apply Rule 8 in similar

circumstances explaining, “Redesignating a third-party

complaint does not merely correct a technical pleading

error. It alters the essential character of a case

....”). 

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with any other basis for removal. Therefore, this case

must be remanded to state court.4

 

***

Accordingly, it is the ORDER, JUDGMENT, and DECREE of

the court as follows: 

(1) Defendant Kimberly Headley’s motion to remand

(doc. no. 15) is granted.

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(2) Plaintiff Bear Lumber Company, Inc., and Elegante

Surfaces, LLC’s motions to sever and remand (doc. nos. 9

and 14) are denied as moot.

(3) Pursuant to 28 U.S.C. § 1447(c), this cause is

remanded to the Circuit Court of Montgomery County,

Alabama for want of subject-matter jurisdiction.

All the other pending motions are left for resolution

by the state court after remand.

The clerk of the court is DIRECTED to take

appropriate steps to effect the remand.

DONE, this the 10th day of August, 2009. 

 /s/ Myron H. Thompson 

UNITED STATES DISTRICT JUDGE 

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