17

‐ 3497

‐ cv

Gale et al. v. Chicago Title Insurance Company et al.

1 

## In the



# United States Court of Appeals

**For the Second Circuit**

August Term 2018

No. 17

‐ 3497

‐ cv

JOHN Q. GALE, JOHN Q. GALE, LLC, FKA Gale & Kowalyshyn, LLC,

Plaintiffs

‐ Appellants,

GALE & KOWALYSHYN, LLC,

Plaintiff

‐ Intervenor,

v.

CHICAGO TITLE INSURANCE COMPANY, COMMONWEALTH LAND

TITLE INSURANCE COMPANY, FIRST AMERICAN TITLE INSURANCE

COMPANY, LAWYERS TITLE INSURANCE CORPORATION, individually

and as a successor in interest to Transnation Title Insurance Company, OLD

REPUBLIC NATIONAL TITLE INSURANCE COMPANY, STEWART TITLE

GUARANTY COMPANY, TICOR TITLE INSURANCE COMPANY, TICOR

TITLE INSURANCE COMPANY OF FLORIDA, FIDELITY NATIONAL

TITLE INSURANCE COMPANY, UNITED GENERAL

TITLE INSURANCE COMPANY,

Defendants

‐ Appellees

,

TRANSNATION TITLE INSURANCE COMPANY,

Defendant

.17

‐ 3497

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Gale et al. v. Chicago Title Insurance Company et al.

2 Appeal from the United States District Court

for the District of Connecticut

No. 6 Civ. 1619 (RNC), Robert N. Chatigny, District Judge, Presiding.

(Argued: April 30, 2019; Decided: July 9, 2019)

Before: PARKER, WESLEY, and CARNEY, Circuit Judges. 1

2

John Q. Gale, a Connecticut attorney, sued a group of title insurance 3

companies for allegedly violating a Connecticut law that allows only Connecticut 4

attorneys to act as title agents in the state. The original complaint included class

‐ 5

action allegations, and the District Court exercised jurisdiction under the Class 6

Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). After a number of years of 7

litigation, Plaintiffs amended the complaint to remove all class

‐ action allegations. 8

The United States District Court for the District of Connecticut (Chatigny, J .) 9

concluded that the withdrawal of the class

‐ action allegations divested it of CAFA 10

jurisdiction and dismissed the amended complaint. We agree and conclude that 11

when jurisdiction

‐ granting class

‐ action allegations are removed from a 12

complaint, a district court is divested of CAFA jurisdiction and the action must 13

be dismissed. 14

15

AFFIRMED. 16

17

Mathew P. Jasinski, Motley Rice LLC, 18

Hartford, CT, for appellants John Q. Gale, 19

John Q. Gale, LLC, FKA Gale & Kowalyshyn, 20

LLC

. 21

22

Ross L. Hirsch (Arthur G. Jakoby, on the 23

brief ), Herrick, Feinstein LLP, New York, 24

N.Y., for appellees Chicago Title Insurance 25

Company, Commonwealth Land Title 26

Insurance Company, Fidelity National Title 27

Insurance Company, Lawyers Title Insurance 28

Company, Ticor Title Insurance Company, 2917

‐ 3497

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Gale et al. v. Chicago Title Insurance Company et al.

3 Ticor Title Insurance Company of Florida, 1

Transnation Title Insurance Company

. 2

3

Frank J. Silvestri, Jr., Verrill Dana LLP, 4

Westport, CT, for appellee Old Republic 5

National Title Insurance Company

. 6

7

Gerard D. Kelly, Kevin M. Fee, Sidley 8

Austin LLP, Chicago, IL, for appellee Stewart 9

Title Guaranty Company

. 10

11

BARRINGTON D. PARKER, Circuit Judge : 12

Plaintiff

‐ Appellant John Q. Gale is a Connecticut attorney, who, along with 13

John Q. Gale, LLC, FKA Gale & Kowalyshyn, LLC, different iterations of his law 14

firm (collectively “Plaintiffs”), sued Defendants

‐ Appellees, a group of title 15

insurance companies, alleging that they violated a Connecticut law that allows 16

only attorneys admitted to practice in Connecticut to act as real estate title 17

agents. In the original complaint, Plaintiffs included class

‐ action allegations and 18

maintained those allegations through three subsequent amendments to the 19

original complaint. The District Court exercised federal jurisdiction over the 20

initial and the amended complaints under the Class Action Fairness Act 21

(“CAFA”), which confers jurisdiction when, among other things, the case “is a 22

class action.” 28 U.S.C. § 1332(d)(2). 2317

‐ 3497

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Gale et al. v. Chicago Title Insurance Company et al.

4 After approximately twelve years of litigation, Plaintiffs filed a Fourth 1

Amended Complaint (“FAC”) that removed all class

‐ action allegations and 2

asserted only state law claims on behalf of the individual plaintiffs. The United 3

States District Court for the District of Connecticut (Chatigny, J .) concluded that 4

the withdrawal of the class

‐ action allegations divested it of CAFA jurisdiction 5

and dismissed the FAC without prejudice. 6

Plaintiffs appeal, principally contending that the amendment did not 7

divest the District Court of jurisdiction. We agree with Judge Chatigny that when 8

(i) federal jurisdiction in a case filed originally in federal court rests solely on 9

CAFA, (ii) the jurisdiction

‐ granting class

‐ action allegations are eliminated from 10

the complaint, and (iii) no new jurisdiction

‐ granting allegations are added, the 11

district court is divested of CAFA jurisdiction and must dismiss the complaint. 12

BACKGROUND 13

John Q. Gale is a Connecticut attorney who also works as a real estate title 14

agent, writing title policies. Generally, under Connecticut law, only attorneys 15

licensed to practice in Connecticut may act as title agents in that state. See Conn. 16

Gen. Stat. § 38a

‐ 402(13). Gale claims, however, that Defendants

‐ Appellees, title 1717

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Gale et al. v. Chicago Title Insurance Company et al.

5 insurance companies that do business in Connecticut, have been employing for 1

work as title agents individuals who are not licensed Connecticut attorneys. 2

In 2006, Gale sued Defendants, contending that they had tortiously 3

interfered with business opportunities and violated Connecticut statutes 4

regulating trade practices. Jurisdiction was predicated on CAFA. Gale sought to 5

represent a class consisting of Connecticut attorneys and law firms that worked 6

in the title insurance industry, and he sought injunctive and declaratory relief as 7

well as damages. The District Court certified the class under Fed. R. Civ. P. 8

23(b)(2). In 2011 the Supreme Court decided Wal

‐ Mart Stores, Inc. v. Dukes

, 564 9

U.S. 338 (2011), which held that a class could not be certified under Rule 23(b)(2) 10

if the class sought monetary relief that was not merely incidental to the injunctive 11

or declaratory relief sought, id

. at 360. Since Gale’s class sought monetary relief, 12

Defendants moved to decertify the class. The District Court granted the motion 13

but left open the possibility that a class could be certified in the future. 14

After the class was decertified, Plaintiffs informed the court that in order to 15

facilitate the resolution of the case they would be willing to litigate the case in 16

their individual capacities rather than as a class action. See Joint App’x 137 1717

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Gale et al. v. Chicago Title Insurance Company et al.

6 (Plaintiffs’ letter to the District Court). 1 At a pre

‐ trial conference addressing this 1

request, Plaintiffs offered to “withdraw in any form the class allegations.” Joint 2

App’x 146. Defendants then explained that “the first order of business

. . . is for 3

Plaintiffs to move to amend” so that Defendants could “review [the FAC] and see 4

the claims that are then asserted.” Joint App’x 148. After this conference, 5

Plaintiffs filed the FAC, which omitted the class

‐ action allegations but added no 6

new bases for federal jurisdiction. Defendants then moved to dismiss the 7

complaint, arguing that the FAC’s omission of the class action allegations had 8

divested the court of CAFA jurisdiction. 9

The FAC does not allege any statutory basis for the District Court’s 10

jurisdiction other than CAFA. The District Court agreed with Defendants that 11

CAFA jurisdiction was lacking and dismissed the complaint. Plaintiffs appealed. 12

This Court reviews a district court’s dismissal of a complaint for lack of subject 13

1 Plaintiffs advised the court that they were willing to abandon their class claims

and proceed exclusively with their individual claims so as to expedite matters

while “eliminat[ing] any risk of violating the ‘one

‐ way intervention’ rule.” Joint

App’x 137. (That judicially made rule bars class

‐ action plaintiffs from seeking

pre

‐ class

‐ certification merits rulings. See, e.g., Brecher v. Republic of Argentina, 806

F.3d 22, 26 (2d Cir. 2015)). Defendants expressed an openness to this proposal,

provided, however, that Plaintiffs amend their complaint accordingly. Joint

App’x 138, 148.17

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Gale et al. v. Chicago Title Insurance Company et al.

7 matter jurisdiction de novo

. Ford v. D.C. 37 Union Local 1549

, 579 F.3d 187, 188 (2d 1

Cir. 2009). 2

DISCUSSION 3

I. 4

Plaintiffs’ original complaint, as well as the first three amended 5

complaints, contained class

‐ action allegations under CAFA, which confers 6

original jurisdiction over class actions where there is minimal diversity between 7

the parties and the amount in controversy exceeds $5,000,000. See 28 U.S.C. 8

§ 1332(d). No one disputes that CAFA jurisdiction existed when the case was 9

initially filed and continued to exist until the FAC became the operative 10

complaint. Both parties agree that after the class was decertified, the District 11

Court still had CAFA jurisdiction because class

‐ action allegations remained in 12

the complaint. See, e.g.

, Metz v. Unizan Bank

, 649 F.3d 492, 500 (6th Cir. 2011) 13

(stating that “denial of class certification does not divest federal courts of [CAFA] 14

jurisdiction”); see also F5 Capital v. Pappas

, 856 F.3d 61, 76

‐ 77 (2d Cir.), cert. denied

, 15

138 S. Ct. 473 (2017). Therefore, the only question before us is whether the filing 16

of the FAC, which omitted all class

‐ action allegations, divested the District Court 17

of CAFA jurisdiction and required dismissal. We agree that it did. 1817

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Gale et al. v. Chicago Title Insurance Company et al.

8 In Rockwell Int’l Corp. v. United States

, 549 U.S. 457, 473–74 (2007), the 1

Supreme Court considered this situation. There the Court explained that both 2

“the state of things” and “the alleged state of things” must support jurisdiction. 3

Id

. “[W]hen a plaintiff files a complaint in federal court and then voluntarily 4

amends the complaint, courts look to the amended complaint to determine 5

jurisdiction.” Id. The Court went on to explain: “demonstration that the original 6

allegations were false will defeat jurisdiction. So also will the withdrawal of 7

those allegations, unless they are replaced by others that establish jurisdiction.” 8

Id

. at 473 (internal citations omitted). 2 Neither party contends that the FAC 9

introduced new jurisdiction

‐ granting allegations. 10

In Touch Concepts, Inc. v. Cellco Partnership 788 F.3d 98, 101 (2d Cir. 2015), 11

made clear that Rockwell applies to cases brought under CAFA. We explained 12

2 The Court noted that this rule would not apply to cases that were removed to

federal court: “[W]hen a defendant removes a case to federal court based on the

presence of a federal claim, an amendment eliminating the original basis for

federal jurisdiction generally does not defeat jurisdiction.” Rockwell

, 549 U.S. at

474 n.6. This is because, although a plaintiff is the master of his or her complaint,

to allow a plaintiff to divest a federal court of jurisdiction by amending the

complaint would allow that plaintiff to frustrate a defendant’s federal right to

remove the case and to be heard in a federal court. But this exception, the

Supreme Court explained, applies only to removal cases because “removal cases

raise forum

‐ manipulation concerns that simply do not exist when it is the

plaintiff who chooses a federal forum and then pleads away jurisdiction through

amendment.” Id

. (emphasis omitted)17

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Gale et al. v. Chicago Title Insurance Company et al.

9 that “[i]n cases filed originally in federal court,

. . . ‘courts look to the amended 1

complaint to determine jurisdiction.’” Id

. (citing Rockwell

, 549 U.S. at 473–74). We 2

then stated, albeit in dicta, the general rule: “So if this case had been filed 3

originally in federal court, the district court would have had to dismiss it as soon 4

as [the plaintiff] filed the First Amended Complaint, which dropped all class

‐ 5

action allegations and thereby destroyed the only basis for federal jurisdiction.” 6

Id

. These principles resolve this appeal. 7

Plaintiffs’ main contention is that this case should be governed by the 8

time

‐ of

‐ filing rule, which states that “the jurisdiction of the court depends upon 9

the state of things at the time of the action brought.” Grupo Dataflux v. Atlas Glob. 10

Grp., L.P

., 541 U.S. 567, 570 (2004). Plaintiffs claim that because this case was a 11

class action when it was filed, the District Court continues to have CAFA 12

jurisdiction after the FAC. This contention misunderstands the time

‐ of

‐ filing rule 13

and, in any event, was rejected in Rockwell

. In Rockwell

, the Court emphasized 14

that jurisdiction must be supported solely by the allegations in the amended 15

complaint and made clear that “[t]he rule that subject

‐ matter jurisdiction 16

‘depends on the state of things at the time of the action brought,’ does not 17

suggest a different interpretation.” Rockwell

, 549 U.S. at 473 (internal citation 1817

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Gale et al. v. Chicago Title Insurance Company et al.

10 omitted). The time

‐ of

‐ filing rule applies to changes of the “state of things,” but 1

not to changes of the “ alleged state of things.” Id. (emphasis added). Therefore, 2

because a court can look only to the amended complaint to ascertain jurisdiction, 3

“withdrawal of those allegations [that support a court’s jurisdiction]” will defeat 4

jurisdiction “unless they are replaced by others that establish jurisdiction.” Id

. 5

Therefore, by removing all class

‐ action allegations in the FAC, Plaintiffs divested 6

the District Court of CAFA jurisdiction. 7

CONCLUSION 8

The judgment of the District Court is AFFIRMED

. 9