In the

United States Court of Appeals

For the Seventh Circuit

No. 12-3746

GE BETZ, INC.,

a Pennsylvania corporation,

Plaintiff-Appellant,

v.

ZEE COMPANY, INC.,

a Tennessee corporation,

Defendant-Appellee,

and

BMO HARRIS BANK,

Appellee.

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 1:12-cv-07302—Milton I. Shadur, Judge.

ARGUED FEBRUARY 27, 2013—DECIDED MAY 3, 2013

Before FLAUM, SYKES, and TINDER, Circuit Judges.

TINDER, Circuit Judge. After winning a multi-million

dollar judgment against Zee Company in a North Carolina
2 No. 12-3746

state court, GE Betz discovered that Zee had tied up

virtually all of its assets in a credit facility agreement

with BMO Harris Bank before the entry of final judgment. As a result, GE Betz registered the North Carolina

final judgment in the Circuit Court of Cook County,

Illinois, Harris’s principal place of business, and served

Harris with a citation to discover Zee’s assets. Zee subsequently removed the Cook County case to federal court

based on diversity jurisdiction under 28 U.S.C. § 1441(b).

But GE Betz objected to Zee’s removal, arguing that

it ran afoul of (1) subject-matter jurisdiction, and (2) the

forum-defendant rule. The district court rejected both

removal arguments, and less than three months later,

dismissed GE Betz’s case entirely. GE Betz filed a

timely appeal. Contrary to the district court, we find that

GE Betz raised a timely and sound objection to Zee’s

removal under the forum-defendant rule, and the

district court should have remanded the case back to

the Cook County Circuit Court. Without any overwhelming concerns of finality, efficiency, or judicial economy

standing in our way, we now vacate the district court’s

dismissal order and remand the case to the district

court with instructions to send GE Betz’s case back to

the Cook County Circuit Court.

I

The complicated history of this case began in April 2006,

when the CEO and sole shareholder of Zee Company,

Robert Bullard, decided to expand his chemical sales

business into the water treatment industry. In an effort
No. 12-3746 3

to become competitive in water treatment, an area

in which he lacked experience, Bullard hired several

new employees who were currently working or had

previously worked for other companies in the industry.

Four of the new employees came from GE Betz, a whollyowned subsidiary of General Electric that specializes

in water treatment technology.

Unfortunately for Bullard and Zee, these four employees were still bound by non-compete agreements

that they had signed while employed at GE Betz. As a

result, in April 2007, GE Betz sued both Zee and its

former employees in North Carolina state court for

breach of contract, tortious interference with contract,

and unfair trade practices. From the start, the North

Carolina litigation did not go well for Zee and the

former GE Betz employees. The state court issued a

temporary restraining order and a preliminary injunction against Zee and the four employees within a

month after the case was filed. In February 2010, the

state court found all four non-compete agreements enforceable. In July 2011, the state court held Zee and

the four employees jointly and severally liable for

$288,297.00 in compensatory damages as a result of

unfair and deceptive trade practices. Finally, in

May 2012, the North Carolina court found Zee and

the four employees jointly and severally liable for

$5,769,903.10 in attorney fees, $864,891.00 in punitive

damages, and $257,931.44 in costs. These large awards

came as a result of the state court finding that Zee

had “[n]ot only . . . elicit[ed], encourage[d], and compensate[d] the illegal conduct of the Individual Defen-
4 No. 12-3746

dants, but . . . [also had] lied about its employees activities before the litigation and throughout the course of

the lawsuit, including before this Court.”

Yet still the plot thickens: after the North Carolina

state court had determined that Zee was liable to GE

Betz and had awarded compensatory damages—but

before the state court had determined punitive damages

and attorney fees—Zee entered into a financial arrangement with BMO Harris Bank. On December 1, 2011,

Harris agreed to extend a $22 million credit facility to

Zee and its thirteen sister companies, which are also

solely owned by Bullard. As part of its commitment

to Harris, Zee agreed to pay a final judgment of up to

$2 million in the GE Betz case, and if the final judgment

exceeded $2 million, Bullard personally guaranteed

the amount exceeding $2 million. In exchange for extending the credit facility, Harris placed a lien on all

fourteen borrowers’ “accounts, instruments, documents,

chattel paper, general intangibles . . . , letter-ofcredit rights, investment property, deposit accounts,

inventory, equipment, commercial tort claims, fixtures,

and real estate.” Later in December 2011, Harris filed

a UCC financing statement in Tennessee, where Zee and

its co-borrowers are headquartered, in an attempt to

perfect its lien.

GE Betz did not become aware of Zee’s credit arrangement and Harris’s ensuing lien until many months

later. After the North Carolina state court entered final

judgment of more than $7 million dollars in favor of

GE Betz in May 2012, Zee filed a timely appeal with the
No. 12-3746 5

North Carolina Court of Appeals. Nonetheless, even a

timely appeal “does not stay the execution of the judgment” in North Carolina “unless a written undertaking . . .

by one or more sureties,” such as a bond, “is executed

on the part of the appellant.” N.C. Gen. Stat. § 1-289(a).

Despite its timely appeal, Zee never posted a bond, nor

did Zee do anything else resembling a “written undertaking . . . by one or more sureties” to stay the judgment.

In its brief to our court, Zee offers no explanation for

its failure to stay the North Carolina judgment, stating

only that “[f]or various reasons, Zee was unable to

secure a bond on appeal.” Nor was Zee’s explanation

at oral argument any more satisfactory: despite Zee’s

“attempt to bond this matter,” Zee blamed GE Betz for

its failure, arguing that GE Betz had repeatedly objected

to the chosen surety companies. Yet instead of asking

the North Carolina Court to approve the bonds over

GE Betz’s objection, Zee decided to do nothing, offering

only this excuse: “Given the vagaries of the decisions

coming out of the court in North Carolina, we felt that

it would have been futile to have gone before the court

to have the bonds approved.”

Whatever Zee’s reasons for failing to post a bond,

without a stay of the execution of the judgment, nothing

stood in GE Betz’s way from initiating the collection

process against Zee. On July 6, 2012, GE Betz obtained

two ex parte orders from a North Carolina trial court,

which prohibited Zee from disposing of any North

Carolina property and further required Zee to pay

any proceeds from its North Carolina accounts
6 No. 12-3746

receivable into the county clerk’s office. Only then did

GE Betz discover Zee’s credit facility agreement with

BMO Harris. As part of this agreement, Zee had transferred its financial assets, including its accounts receivable, to BMO Harris, and Harris had placed a lien

on seemingly all of Zee’s assets.

Concerned that it may never collect anything from

Zee—and that it would lose creditor priority—GE Betz

registered the North Carolina judgment in the Cook

County, Illinois, Circuit Court on August 24, 2012. Although BMO Harris is a Delaware corporation, Illinois

is Harris’s principal place of business. Thus, Illinois was

the new home of some or all of Zee’s assets and a

place—if not the only place—where GE Betz believed it

had any chance of collecting the judgment. In addition

to registering the North Carolina judgment, GE Betz

served Harris with a citation to discover Zee’s assets,

which in Illinois has the effect of freezing all of

Zee’s property in Harris’s possession. See 735 Ill. Comp.

Stat. 5/2-1402. Harris moved to quash the citation five

days later in Cook County Circuit Court, and on September 12, 2012, Harris and GE Betz (without Zee’s participation) set a briefing schedule and a hearing date on

the citation action.

But at the same time that GE Betz and Harris were

setting the briefing schedule and hearing date in Cook

County Circuit Court, Zee was busy pursuing its own

ends in federal court—unbeknownst to either GE Betz or

Harris. Zee alone filed a notice of removal of the Cook

County case to the federal district court in the Northern
No. 12-3746 7

District of Illinois on September 12, 2012. Zee alleged

that removal was proper based on diversity jurisdiction, under 28 U.S.C. § 1441(b), because GE Betz (a Pennsylvania corporation with its principal place of business

in Pennsylvania) was a citizen of Pennsylvania, Zee

(a Tennessee corporation with its principal place of business in Tennessee) was a citizen of Tennessee, and

the amount in controversy well exceeded $75,000—

$7,604,083.00 at the time of removal, to be exact. Harris

neither joined in nor consented to Zee’s notice of removal. On the same day that Zee filed the notice, Zee

also filed an emergency motion in the federal district

court for relief from the citation issued to Harris in

the Cook County Circuit Court.

Two days later, on the morning of September 14,

2012, GE Betz, Zee, and Harris all appeared in federal

district court, and GE Betz made an oral motion to

remand the case back to the Cook County Circuit Court

based on improper removal. The district court judge

asked the parties to submit case law on the propriety of

the removal and set a time for them to return to

court that afternoon. In a matter of a few hours, GE Betz

scrambled to assemble a written memorandum, which

focused solely on the issue of subject-matter jurisdiction (and not the forum-defendant rule, which is a statutory problem, see Hurley v. Motor Coach Indus., Inc., 222

F.3d 377, 378-80 (7th Cir. 2000)). GE Betz filed the brief

later that morning. When the parties returned in

the afternoon, the district court judge orally denied GE

Betz’s motion to remand, finding Zee’s removal proper.

The district court believed that the case was properly
8 No. 12-3746

characterized as “an independent proceeding,” instead

of an ancillary proceeding, which gave the federal

court subject-matter jurisdiction over the case as long

as the other requirements for diversity were met. 

Even though GE Betz had not submitted case law on

the forum-defendant rule in its late-morning filing, the

district court judge brought up the potential problem posed by the rule during the afternoon hearing on

September 14, 2012. The forum-defendant rule prohibits

removal to federal court if “any of the parties in interest

properly joined and served as defendants is a citizen of

the State in which such action is brought.” 28 U.S.C.

§ 1441(b)(2). With its principal place of business in

Illinois, BMO Harris would run into a problem with the

forum-defendant rule if it were properly characterized

as a defendant (since the case was removed to the

Northern District of Illinois). Instead of having the

parties submit additional briefing on BMO Harris’s

status in the case, however, the district court judge

sua sponte addressed the matter from the bench at the

September 14th hearing. The judge orally concluded—without explanation—that Harris was not properly characterized as a defendant—or even as a “party” to

the case. Harris, according to the district court judge,

was merely a third-party citation respondent, so Zee’s

removal of the case to federal court did not run afoul of

the forum-defendant rule.

Given that these rather complex jurisdictional and

statutory determinations were made orally, in the course

of a day, and without much briefing, GE Betz filed a
No. 12-3746 9

motion to reconsider two weeks later on September 28,

2012. In its memorandum accompanying the motion

to reconsider, GE Betz more clearly articulated its arguments for remand back to the Cook County Circuit

Court. First, GE Betz argued that the federal court

lacked subject-matter jurisdiction over the case, as it was

merely an ancillary proceeding “to register and enforce

state court judgments.” Second, GE Betz argued that

even if the proceeding were independent, Harris was

“the true party in interest” to the case. As such, Harris

was properly characterized as a defendant, and removal ran afoul of the forum-defendant rule.

Despite the clearer articulation of GE Betz’s two arguments, the district court denied the motion to reconsider

on October 2, 2012. Rejecting both of GE Betz’s

arguments, the district court judge held that Harris was

“a new and independent party” but not “a party in interest.” As a new and independent party that had not

participated in the North Carolina proceedings, Harris

made the federal case sufficiently different from

the North Carolina case, according to the district court.

Harris’s presence rendered the federal case more than

just a supplemental proceeding and, since the diversity requirements were satisfied, gave the federal

court subject-matter jurisdiction. Nonetheless, even

though the district court recognized Harris as a party,

it did not recognize Harris as a party in interest. The

district court reasoned that Zee was the only party in

interest (besides GE Betz) because Zee was the sole

party that could be harmed by an adverse decision of

the district court. According to the court, Harris was
10 No. 12-3746

protected from harm because any money in its possession that was “drain[ed] off” as a result of the citation

action would result in Zee’s “indebted[ness] to Harris

in the full amount.” The district court did not consider

the somewhat likely event that Zee would default and

never be able to satisfy its indebtedness to Harris.

Meanwhile, as GE Betz was unsuccessfully trying to

get the case remanded back to the Cook County Circuit

Court, Zee and Harris—now apparently collaborating

on their legal strategy—were busy pursuing an

emergency motion for relief from the citation served on

Harris while the case was in the Cook County Circuit

Court. On September 20, 2012, the district court granted

a temporary restraining order (TRO) modifying the

Cook County citation, which partially lifted the freeze

on Zee’s accounts at Harris and allowed Zee to pay

its employees and necessary suppliers. Because Harris

had filed UCC financing statements covering all of Zee’s

assets in December 2011—before the North Carolina

court entered final judgment in the GE Betz case—the

district court judge believed that the “first in time, first

in right” rule controlled, and Harris had a priority

security position over GE Betz with regard to Zee’s

assets. Unless GE Betz could establish an exception to

this general rule, the district court thought that Harris

and Zee were likely to succeed on the merits.

Over the course of the next several months, GE Betz,

Zee, and Harris continued to fight ruthlessly in

the federal district court over both the priority and

the propriety of Harris’s credit agreement with Zee.
No. 12-3746 11

Indeed, the district court docket demonstrates ninetyeight entries in the two-and-a-half months following

the case’s removal on September 12, 2012. In addition

to the existing citation that GE Betz had served on

BMO Harris Bank while the case was in Cook County,

GE Betz served a second citation directly on Zee. Moreover, GE Betz aggressively sought discovery about

the credit arrangement between Zee and Harris, in an

effort to gather evidence to support its multiple theories

of why its North Carolina judgment should jump ahead

of Harris’s lien in terms of creditor priority. GE Betz’s

theories included that payment of the GE Betz judgment was a stipulation of the credit agreement, that

Harris had failed to perfect its lien over all Zee’s assets,

that Harris lost its priority status once it declined to

enforce its rights and remedies against Zee, and that

the arrangement between Harris and Zee constituted

a fraudulent transfer. In response, Harris and Zee

argued that GE Betz’s theories were groundless, and

additional discovery was unwarranted. In the midst of

these battles over discovery, it appears the only thing

that the parties could agree on was an order to extend

the September 20th TRO until the district court could

“actually set up a schedule for meaningful determination.”

That “meaningful determination” came on November 28, 2012—less than three months after Zee removed

the case to federal district court. At a status hearing

that morning, the district court declared, “[I]t is time to

call a halt to all this. . . . Betz . . . begins with a false premise. And guess what? That ends with a false conclusion.” The district court judge did not believe that
12 No. 12-3746

GE Betz had adequately established any of the exceptions to the general rule of “first in time, first in right.”

Dismissing GE Betz’s theories as “fallacious,” the judge

characterized them as requiring Harris “to act contrary

to its own economic interest.” Furthermore, the district

court judge found “nothing to suggest . . . anything other

than arm’s length arrangements . . . between Harris

and Zee.” All in all, the judge found GE Betz’s attempts

to jump ahead of Harris “absurd,” and as a result,

quashed both the citation served on Harris and the

citation served directly on Zee, and dismissed the

case. GE Betz filed a timely appeal of all the district

court’s decisions.

Before we can address any of the district court’s later

merits-based decisions, we must first review the district

court’s earlier denial of GE Betz’s motion to remand, as

this motion questioned the basis for subject-matter jurisdiction in federal court. Schur v. L.A. Weight Loss Ctrs.,

Inc., 577 F.3d 752, 758 (7th Cir. 2009). We review a

district court’s denial of a motion to remand de novo. Id.

II

GE Betz advances two arguments regarding the impropriety of Zee’s removal. First, GE Betz argues that

the federal court lacks subject-matter jurisdiction over

such an action. Second, GE Betz argues that even if the

federal court had subject-matter jurisdiction, Zee’s

removal violated the forum-defendant rule, and the

action should have been remanded back to the Cook

County Circuit Court upon GE Betz’s timely objection.
No. 12-3746 13

Subject-matter jurisdiction is our foremost concern; without it, “the court cannot proceed at all in any cause.”

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94

(1998) (quoting Ex parte McCardle, 7 Wall. 506, 514 (1868)).

Accordingly, we begin by addressing GE Betz’s subjectmatter jurisdiction argument.

GE Betz’s subject-matter jurisdiction argument is, in

reality, twofold. Although GE Betz admits that the case

complies with the requirements of diversity jurisdiction under 28 U.S.C. § 1441(b), it argues that the case

runs into trouble with two other statutes that limit the

subject-matter jurisdiction of federal courts, namely

28 U.S.C. § 1441(a) and 28 U.S.C. § 1963. With respect

to 28 U.S.C. § 1441(a), GE Betz contends that the Cook

County Circuit Court case was not a “civil action

brought in a State court of which the district courts of

the United States have original jurisdiction,” and therefore, was not removable. We have long interpreted

§ 1441(a) “to allow removal only of ‘independent

suits’ but not ancillary or ‘supplementary’ proceedings.”

Travelers Property Cas. v. Good, 689 F.3d 714, 724 (7th

Cir. 2012) (quoting Fed. Sav. & Loan Ins. Corp. v. Quinn,

419 F.2d 1014, 1018 (7th Cir. 1969)). This prudential interpretation of § 1441(a), which dates back as early as

Barrow v. Hunton, 99 U.S. 80, 83 (1878), “seeks to avoid

the waste of having federal courts entertain satellite

elements of pending state suits and judgments.” Travelers,

689 F.3d at 724 (quotations and citations omitted). According to GE Betz, the Cook County Circuit Court case

was nothing more than a satellite element of the pending

North Carolina state court suit; it was merely an action
14 No. 12-3746

to enforce the North Carolina judgment. As a result,

GE Betz argues that § 1441(a) prohibited removal to

federal court.

GE Betz’s first jurisdictional argument has some

merit—especially considering that the North Carolina

suit remains pending in the state court of appeals, and a

decision vacating GE Betz’s judgment there would

render the instant matter moot. To be sure, this proceeding is similar to the North Carolina case, and our

court has never developed a “bright-line formula . . . for

separating the independent and removable sheep from

the ancillary and nonremovable goats.” Travelers, 689

F.3d at 724. Still, we believe that the matter before us

contains one distinction that places it squarely on the

side of the removable sheep: the presence of BMO Harris.

BMO Harris has been heavily involved in this

matter since its inception in the Cook County Circuit

Court. It first came into the proceeding when GE Betz

served it with a citation to discover Zee’s assets. Since

then, Harris has sought to quash the citation, vigorously

asserting “the priority of its security interest in Zee’s

assets and its right of setoff.” In contrast, BMO Harris is

wholly uninvolved in the underlying North Carolina

case. Harris’s presence also renders the subject of

the dispute in this case completely different from the

subject of the dispute in the North Carolina case. In

North Carolina, GE Betz and Zee are fighting about

covenants not to compete and trade practices. Here, GE

Betz, Zee, and BMO Harris are fighting about Harris’s

priority as Zee’s secured creditor. As we pointed out in
No. 12-3746 15

Travelers, 689 F.3d at 724 (quoting Buford v. Strother, 10

F. 406, 407 (C.C.D. Iowa 1881)), “ ‘where the supplemental

proceeding is not merely a mode of execution or relief,

but where it, in fact, involves an independent controversy with some new and different party, it

may be removed into the federal court.’ ” In the instant

proceeding, we have a new and different party (BMO

Harris) as well as an independent controversy (the

priority of Harris’s lien). Therefore, under Travelers,

we have an action that was removable under 28 U.S.C.

§ 1441(a).

Although we reject the argument that Zee’s removal

violated 28 U.S.C. § 1441(a), Zee “is not out of the jurisdictional woods.” Abbott Labs. v. CVS Pharmacy, Inc., 290 F.3d

854, 858 (7th Cir. 2002). For GE Betz makes a second

jurisdictional argument based on 28 U.S.C. § 1963. Section

1963 provides that a “judgment in an action for the recovery of money or property entered in any court of

appeals, district court, bankruptcy court, or in the Court

of International Trade may be registered” in a federal

court (emphasis added). GE Betz argues that this

language only permits a federal court to register

foreign judgments from other federal courts. Judgments

from state courts, according to GE Betz’s interpretation

of § 1963, may not be registered in a federal court. To

support its interpretation, GE Betz cites a host of

district court decisions, including Polo Realty Inc. v.

Kruse, 2010 WL 3087417, at *2, *5 (N.D. Ind. Aug. 2, 2010)

(concluding that federal courts “cannot enforce a state

court judgment,” even though there is “no authority in

the Seventh Circuit addressing this question”); Marbury
16 No. 12-3746

Law Group, PLLC v. Carl, 729 F. Supp. 2d 78, 83 (D.D.C.

2010) (finding that a federal court “lacks jurisdiction

to enforce state court judgments”); and Euro-Am Coal

Trading, Inc. v. James Taylor Mining, Inc., 431 F. Supp. 2d

705, 707 (E.D. Ky. 2006) (holding that “the registration

procedures of 28 U.S.C. § 1963 contain jurisdictional

limitations that prohibit federal courts from registering

state court judgments”). Since 28 U.S.C. § 1441(a) limits

removal to actions in “which the district courts of the

United States have original jurisdiction,” parties can

only remove matters that could have originally been

brought in federal court. GE Betz argues that this case is,

at heart, the registration of a foreign state-court judgment, which under several district courts’ interpretations

of 28 U.S.C. § 1963, could not have been originally

brought in federal court. As a result, GE Betz contends

that removal was improper.

GE Betz’s argument invites us to join several district

courts—at least one of which is in our own circuit—in

holding that 28 U.S.C. § 1963 bars federal courts from

enforcing judgments rendered by state courts. We

decline this invitation. Although the language of § 1963 is

somewhat ambiguous, GE Betz’s interpretation requires

reading additional words into the statute. GE Betz

insists that § 1963 explicitly allows for the registration

of federal court judgments, and thus, implicitly bars the

registration of state court judgments. But we note

that neither the word “state” nor the word “federal”

appear in the text of § 1963.

It is true that only the federal system has a “bankruptcy

court” and a “Court of International Trade.” But every
No. 12-3746 17

state system has the equivalent of a “district court” and

a “court of appeals”—even if the state-court versions

of these courts go by a different name. Moreover, some

state-court systems actually use the same names as the

federal-court system; Minnesota and Virginia, for

example, refer to their trial courts as “district courts” and

their appellate courts as “courts of appeals.” See, e.g.,

Minnesota Judicial Branch, Minnesota District Courts,

available at http://www.mncourts.gov/?page=238 (last

visited May 1, 2013); Office of the Executive Secretary

of the Supreme Court of Virginia, Virginia’s Judicial System,

available at http://www.courts.state.va.us/courts/gd.html

(last visited May 1, 2013). Thus, it is not clear that

the language of § 1963 refers solely to judgments

rendered by federal courts.

And even if § 1963 did refer only to judgments

rendered by federal courts, the statute does not contain

any other language barring federal courts from

enforcing state-court judgments. Section 1963 merely

states that a “judgment . . . entered in any court of appeals, district court, bankruptcy court, or in the Court of

International Trade may be registered.” Section 1963

could have said, “Only a judgment . . . entered in any

federal court of appeals, district court, bankruptcy court,

or in the Court of International Trade may be registered”—but it does not. Nor is there any other language

in § 1963 that suggests that a state-court judgment

meeting the other requirements for federal jurisdiction

may not be enforced by a federal court. Reading a bar

against the enforcement of state-court judgments by

federal courts requires reading additional words into
18 No. 12-3746

§ 1963 that are not there. A court has “ ‘no right, in the

guise of construction of an act, to either add words to or

eliminate words from the language used by congress.’ ”

King v. I.R.S., 688 F.2d 488, 491 (7th Cir. 1982) (quoting

DeSoto Sec. Co. v. Comm’r, 235 F.2d 409, 411 (7th Cir. 1956)).

We have no right to add words into the text of § 1963,

and we certainly have no right to add a restriction that

is not already there.

As a result, we conclude that § 1963 does not prohibit

the removal of all matters related to the registration of

state-court judgments; more specifically, we conclude

that § 1963 does not prohibit the removal of the citation proceeding initiated by GE Betz. We acknowledge

that this conclusion runs contrary to previous interpretations by several district courts. But we note that

GE Betz has not cited, nor have we been able to locate,

any decisions by sister circuits that interpret § 1963

as barring post-judgment proceedings of the sort

presented here. Moreover, we are not concerned that

our refusal to read a bar against the enforcement of statecourt judgments into 28 U.S.C. § 1963 will open the floodgates to new litigation in federal court. In order to be

enforceable by a federal court, a state-court judgment

enforcement proceeding must still meet the other requirements for federal jurisdiction, including the amount

in controversy and the diversity requirements under

28 U.S.C. §§ 1332 and 1441(b) as well as the independent

proceeding requirement under 28 U.S.C. § 1441(a).

We believe that the § 1441(a) independent proceeding

requirement particularly limits the number of statecourt judgments that a federal court may enforce, as
No. 12-3746 19

most state-court judgment enforcement proceedings are

more properly characterized as ancillary or supplementary suits. As a result, we expect that the

instant matter is not the norm, but rather one of the

rare judgment-enforcement proceedings that is sufficiently independent from the underlying statecourt proceedings to give the federal court jurisdiction

under § 1441(a).

III

Having satisfied ourselves that federal court jurisdiction is secure under 28 U.S.C. § 1441(a) and not precluded

by 28 U.S.C. § 1963, we now turn to GE Betz’s second

argument why Zee’s removal to federal court was improper: the forum-defendant rule. Codified under 28

U.S.C. § 1441(b)(2), the forum-defendant rule prohibits

removal “if any of the parties in interest properly joined

and served as defendants is a citizen of the State in

which such action is brought.” The purpose of this rule

is “to preserve the plaintiff’s choice of a (state) forum,

under circumstances where it is arguably less urgent

to provide a federal forum to prevent prejudice against

an out-of-state party.” Hurley, 222 F.3d at 380. Although

the forum-defendant rule arises under 28 U.S.C.

§ 1441—which, as we know from the discussion above,

contains some jurisdictional requirements—the forumdefendant rule itself is nonjurisdictional. See Hurley,

222 F.3d at 380 (endorsing “the longstanding line of

authority that holds that the forum defendant rule is

nonjurisdictional”). As a result, noncompliance with the
20 No. 12-3746

forum-defendant rule is a statutory, not a jurisdictional,

defect. Holmstrom v. Peterson, 492 F.3d 833, 838-40 (7th

Cir. 2007) (discussing the reasons why the forum-defendant rule is a statutory defect).

This distinction between statutory and jurisdictional

defects is important because it determines when a

plaintiff may object to removal. Of course, a plaintiff

may object to removal based on a jurisdictional defect

at any time. See Ruhrgas AG v. Marathon Oil Co., 526

U.S. 574, 583 (1999) (reminding that “subject-matter

delineations must be policed by the courts on their own

initiative even at the highest level”). But the timeframe

for objecting to removal based on a statutory defect is

much smaller. Under 28 U.S.C. § 1447(c), a plaintiff’s

“motion to remand the case on the basis of any defect

other than lack of subject-matter jurisdiction must be

made within 30 days after the filing of the notice of removal.” The reason behind this thirty-day time limit is

“to ‘prevent a party who is aware of a defect in

removal procedure from using the defect as insurance

against later unfavorable developments in federal

court.’ ” Holmstrom, 492 F.3d at 838-39 (quoting In re Shell

Oil Co., 932 F.2d 1518, 1522 (5th Cir. 1991)). Consequently,

if a plaintiff fails to raise a forum-defendant objection

within thirty days of removal, the plaintiff waives the

right to raise the objection later. Hurley, 222 F.3d at 378-80.

With this general overview of the rule in mind, we

turn to the specifics of GE Betz’s forum-defendant argument. GE Betz asserts that Zee’s removal to the federal

district court in the Northern District of Illinois violated
No. 12-3746 21

the forum-defendant rule because BMO Harris was both

a defendant and a citizen of the forum. (Recall that

Harris’s principal place of business is Illinois.) GE Betz’s

forum-defendant objection was timely under 28 U.S.C.

§ 1447(c); it raised the argument in its motion to

reconsider, filed sixteen days after Zee’s removal. Still,

GE Betz’s argument only holds water if (1) BMO Harris

is properly considered a defendant to this action, and

(2) the forum-defendant rule can pose a problem even

when a non-forum defendant removes the case without

the participation of the forum defendant. We address

each argument in turn.

A

Zee and BMO Harris spent much of oral argument

addressing the first issue, insisting that Harris is not a

“defendant” for the purposes of 28 U.S.C. § 1441(b)(2).

According to them, Harris is merely a “third-party

citation respondent” under Illinois law. Harris and Zee

admit that this status makes Harris a “party in interest” to

the suit, but they contend that Harris’s status does not

rise to the level of a defendant. In order to decide

whether Harris is properly classified as a defendant, we

now consider the governing law, and how this law

informs Harris’s status in the present action.

Because we sit in diversity in the present action, “we

are required to apply the substantive law of the forum

state . . . as we believe the highest court of the state would

apply it.” Wolverine Mut. Ins. v. Vance ex rel. Tinsley, 325

F.3d 939, 942 (7th Cir. 2003); see also Erie R.R. Co. v.
22 No. 12-3746

Tompkins, 304 U.S. 64, 78 (1938). Therefore, we are required to apply the substantive law of Illinois that governs

citation actions to discover assets. At the same time, we

must apply federal procedural law to this case. See Erie,

304 U.S. at 78; Windy City Metal Fabricators & Supply, Inc.

v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 670 (7th Cir.

2008). Although formally titled as a citation action to

discover assets, this case is, at bottom, an enforcement action to collect a money judgment. Fed. R. Civ.

P. 69(a)(1), which governs the enforcement of money

judgments in federal court, provides that the “procedure

on execution—and in proceedings supplementary to

and in aid of judgment or execution—must accord with

the procedure of the state where the court is located.”

Illinois is the state where the federal district court is

located, so we look again to Illinois law for the procedural

rights and processes accompanying a citation to discover

assets. We endeavor to provide the same procedural

rights and processes that the parties would enjoy in

Illinois state court here in federal court; however, we

need not “apply[] every jot and tittle of Illinois procedural law.” Resolution Trust Corp. v. Ruggiero, 994

F.2d 1221, 1226 (7th Cir. 1993); see also Star Ins. Co. v.

Risk Mktg. Grp. Inc., 561 F.3d 656, 661 (7th Cir. 2009)

(holding that a “district court was correct in turning to

state law” because under Rule 69, “the Federal Rules of

Civil Procedure are not strictly applicable to [Illinois]

supplementary proceedings”); Vukadinovich v. McCarthy,

59 F.3d 58, 62 (7th Cir. 1995) (noting that Rule 69

“governs collection proceedings in the federal courts,

[and] adopts whatever procedures are followed by the
No. 12-3746 23

state courts in the state in which collection is sought”).

Instead, our principal objective under Rule 69 is to “conform[] collection proceedings to state law.” Star, 561

F.3d at 661 (quoting Matos v. Richard A. Nellis, Inc., 101

F.3d 1193, 1195 (7th Cir. 1996)).

With this framework in mind, we turn now to study

both the substantive and procedural rights accorded the

parties to an Illinois citation action to discover assets.

Specifically, we seek to determine the procedural

rights, the substantive rights, and the remedies to

which parties to a citation action are entitled. Once

we understand the specifics of an Illinois citation action,

we will be in a better position to assess whether a thirdparty citation respondent like BMO Harris is properly

classified as a defendant for purposes of federal

removal law.

Often referred to as “supplementary proceedings,”

citations to discover assets are the “dominant procedure

of the modern era” used in Illinois to enforce money

judgments. Robert G. Markoff, Survey of Illinois Law:

Enforcement of Judgments, 33 S. Ill. L. Rev. 631, 639-40

(Summer 2009). Two provisions of Illinois law govern

citation actions. The first provision, 735 Ill. Comp. Stat. 5/2-

1402, provides in part: 

A judgment creditor, or his or her successor in

interest when that interest is made to appear of

record, is entitled to prosecute supplementary

proceedings for the purposes of examining the

judgment debtor or any other person to discover assets

or income of the debtor not exempt from the
24 No. 12-3746

enforcement of the judgment. . . . A supplementary

proceeding shall be commenced by the service of

a citation issued by the clerk.

735 Ill. Comp. Stat. 5/2-1402(a) (emphasis added). The

second provision, Ill. Comp. Stat. S. Ct. R. 277, outlines

the procedures of a citation action in more detail. It requires the party to whom the citation is directed,

whether the judgment debtor or a third party, “to

appear for examination . . . concerning the property or

income of or indebtedness due the judgment debtor.”

Ill. Comp. Stat. S. Ct. R. 277(c)(3). The rule also allows

the party bringing the citation action to demand that

the judgment debtor or third party produce “any

books, papers, or records in his or its possession or

control which have or may contain information concerning the property or income of the debtor.” Ill. Comp.

Stat. S. Ct. R. 277(c)(4). Furthermore, the rule provides

for discovery and a hearing on the citation, allowing

“[a]ny interested party”—including a third-party citation respondent—to “subpoena witnesses and adduce

evidence as upon the trial of any civil action.” Ill. Comp.

Stat. S. Ct. R. 277(e).

At the conclusion of these citation proceedings, the

trial court may order the party to whom the citation

is directed to turn over the judgment debtor’s assets to

the judgment creditor. 735 Ill. Comp. Stat. 5/2-1402(b);

see also Pyshos v. Heart-Land Development Co., 630 N.E.2d

1054, 1057 (Ill. App. Ct. 1994). Regardless of whether

the trial court decides to order the turnover of

assets, the trial court’s final order in a citation pro-
No. 12-3746 25

ceeding is appealable by both the creditor and the party

to whom the citation is directed. Ill. Comp. Stat. S. Ct.

R. 304(b)(4).

Not surprisingly, our court has previously encountered Illinois citation actions. Indeed, in Resolution

Trust, 994 F.2d at 1223, we even provided a brief

summary of the rights of the parties in a citation action:

The relevant provisions of Illinois law . . . [for

citation actions:] Entitle the judgment creditor

to question the judgment debtor, or anyone else

who might have relevant information, under oath

regarding the existence and whereabouts of

assets that might be used to satisfy the judgment. . . . Entitle any third party who claims

an interest in those assets to appear and be heard

on his claim. Empower the court to order the

debtor to turn over property to the creditor to

satisfy the judgment.

Moreover, we held in Dexia Crédit Local v. Rogan that

a bench trial was within “the proper scope” of a citation

action since Illinois law “ ‘give[s] the court broad powers

to compel the application of discovered assets or income

in order to satisfy a judgment.’ ” 629 F.3d 612, 624 (7th

Cir. 2010) (quoting Dowling v. Chi. Options Assocs., Inc.,

847 N.E.2d 741, 746 (Ill. App. Ct. 2006)). Distinguishing

it from “a mere discovery statute,” we further observed

that 735 Ill. Comp. Stat. 5/2-1402 “permit[s] the court to

determine the rights of third parties.” Id. (emphasis added).

Our previous examinations of Illinois citation proceedings in Resolution Trust and Dexia are certainly helpful
26 No. 12-3746

in teasing out the substantive and procedural rights

accorded the parties. But perhaps the most helpful examinations of these proceedings come from the Illinois state

appellate courts. Regarding the scope of permissible

discovery by the judgment creditor, more than one appellate court has held that extensive searching for assets—even described as “a ‘fishing expedition’ ”—is

permissible against a third-party citation respondent

“if it is based on a belief that such assets are in the third

party’s possession.” Regan v. Garfield Ridge Trust &

Sav. Bank, 617 N.E.2d 818, 820 (Ill. App. Ct. 1993)

(quoting Federal Loan Corp. v. Harris, 308 N.E.2d 125, 127

(Ill. App. Ct. 1974)). In addition to these extensive discovery rights, the parties to a citation action are entitled

to broad procedural safeguards. According to Workforce

Solutions v. Urban Servs., 977 N.E.2d 267, 275-76 (Ill. App.

Ct. 2012) (emphasis added), both 735 Ill. Comp. Stat. 5/2-

1402(a) and Ill. Comp. Stat. S. Ct. R. 277

impos[e] a requirement on the court to conduct a trial

or evidentiary hearing to determine ownership of a

third party’s assets where both the judgment

creditor and the third-party citation respondent

claim entitlement to those assets. . . . Failure to do so

is reversible error. . . . We specifically held that it is

insufficient for the court to decide the matter based

solely on the arguments of counsel without hearing

evidence on a fraudulent conveyance allegation. . . . In order for a dispute to arise, the thirdparty citation respondent also must have made

a claim on the asset at some point in the proceedings. Resolving that dispute raises a question of
No. 12-3746 27

fact requiring an evidentiary hearing regardless

of which party raises it. Cf. Harmon v. Ladar Corp.,

557 N.E.2d 1297, 1299 (Ill. App. Ct. 1990) (“if

the judgment creditor claims entitlement to the

assets of a third party and the third party

contests the claim, a trial must be held”).

In sum, the above rules and cases tell us that a judgment creditor in Illinois, like GE Betz, is entitled to “prosecute” a citation action to discover assets against a

third party, like BMO Harris, as long as the creditor

reasonably believes that the third party holds a judgment debtor’s assets. 735 Ill. Comp. Stat. 5/2-1402(a).

After bringing the citation action, the creditor is entitled

to search through the third party’s books, papers, and

records to locate the debtor’s assets and to determine

the validity of the third party’s claim to those assets.

Regan, 617 N.E.2d at 820. The creditor is then entitled to

a trial or evidentiary hearing on the evidence it obtains

from its discovery efforts. Workforce, 977 N.E.2d at 275-

76. If the creditor successfully proves at trial that it has

the superior claim to the debtor’s assets, the court is

empowered to order the third party to turn over the

debtor’s assets to the creditor. 735 Ill. Comp. Stat. 5/2-

1402(b); Resolution Trust, 994 F.2d at 1223. And if any

party—whether the judgment creditor or the third

party—is dissatisfied with the outcome of the citation

proceedings, that party has the right to appeal the outcome. Ill. Comp. Stat. S. Ct. R. 304(b)(4).

With this background on Illinois citation actions, we

now return to the issue at hand: is a third-party citation
28 No. 12-3746

respondent in such an action properly characterized as

a “defendant” under 28 U.S.C. § 1441(b)(2)? Unfortunately, the term “defendant” is not defined within

§ 1441, and, surprisingly, very few courts have had to

grapple with its definition in the past. The Supreme

Court has only briefly considered the meaning of the

term as used within § 1441, concluding that “the word

‘defendant’ as there used is directed toward more important matters than the burden of proof or the right

to open and close.” Chicago, R.I. & P.R. Co. v. Stude, 346

U.S. 574, 579 (1954) (holding that the labels assigned to

parties by state law do not matter because “federal

law determines who is plaintiff and who is defendant”

for the purposes of removal). In addition, the Eleventh

Circuit has suggested that a defendant under § 1441 is a

party whose interests are in opposition to the plaintiff’s

interests. See City of Vestavia Hills v. Gen. Fid. Ins. Co., 676

F.3d 1310, 1314 (11th Cir. 2012) (noting that “[w]here

the parties’ interests are the same, we have held that

those parties must be aligned together [for the purposes

of removal] and have reversed a district court’s failure

to do so, even where the parties’ interests were in opposition outside of the issues raised in the subject action”).

Without much direction from either the Supreme

Court or our sister circuits, we turn to dictionaries for

additional guidance on the meaning of the word “defendant.” Black’s Law Dictionary does not offer much help,

defining a civil defendant as a “person sued in a civil

proceeding.” Black’s Law Dictionary, “Defendant” (9th ed.

2009); see also Black’s Law Dictionary, “Sue” (9th ed. 2009)

(defining to “sue” as “[t]o institute a lawsuit against
No. 12-3746 29

(another party)”). The Merriam-Webster Dictionary provides slightly more assistance, describing a defendant as

“a person required to make answer in a legal action or

suit.” Merriam-Webster Dictionary Online, available at

http://www.merriam-webster.com/dictionary/defendant

(last visited May 1, 2013).

Although the guidance provided by dictionaries and

prior case law is not substantial, it all points in the

same direction—indicating that a third-party citation

respondent in an Illinois citation action is a defendant.

The Supreme Court indicated in Chicago, R.I. & P.R. Co.,

346 U.S. at 579, that a party can be a “defendant” for

the purposes of § 1441 even if state law labels the party

with another name. As a result, the fact that Illinois

law refers to parties like Harris as “third-party citation

respondents” instead of “defendants” is not determinative of a party’s status under federal removal law. What

is determinative—as the Eleventh Circuit has previously

held in Vestavia Hills, 676 F.3d at 1314—is the alignment

of the parties’ interests. Here, Harris’s interests are

clearly in opposition to the interests of the plaintiff, GE

Betz. Moreover, we note that third-party citation respondents like BMO Harris fit all dictionary definitions of

the word defendant. When GE Betz served Harris with

a citation to discover assets, it instituted a legal action

to recover assets from Harris. As a result of being

served with the citation, Harris was required to make

answer in the legal action in order to retain the contested assets.

Furthermore, throughout our inquiry into whether a

third-party citation respondent in an Illinois citation
30 No. 12-3746

action is a “defendant” for the purposes of 28 U.S.C. § 1441,

we have been continually reminded of the famous duck

test: “if it walks like a duck, swims like a duck, and quacks

like a duck, it’s a duck.” Lake v. Neal, 585 F.3d 1059, 1059

(7th Cir. 2009). If something has all of the qualities of

a duck, then inductive reasoning tells us that it must, in

fact, be a duck. Similarly, if a participant in a judicial

proceeding has all the qualities of a defendant, then

inductive reasoning tells us that the participant must,

in fact, be a defendant.

And indeed, a third-party citation respondent in

Illinois has all of the qualities traditionally associated

with a defendant. A third-party citation respondent is

initially served with notice of the action against it; it is

in direct opposition to the party bringing the action

(the judgment creditor); it has the opportunity to

vindicate its rights at trial; and it has the right to

appeal any adverse judgment against it. There is no

reason to think that, in drafting § 1441, Congress

intended the word “defendant” to be understood in

some unusual or extraordinary way. Therefore, we

hold that a third-party citation respondent in an Illinois

citation action is a “defendant” for the purposes of 28

U.S.C. § 1441. (Note that, in spite of our painstaking

efforts to reach this holding, it is not a far cry from

our previous characterizations of third-party citation respondents under Illinois law. In fact, we have

previously referred to a third-party citation respondent

as “a party to the postjudgment proceeding.” See Resolution Trust, 994 F.2d at 1224 (finding a third-party

citation respondent’s motion to intervene in the citation
No. 12-3746 31

action unnecessary since “she was already a party to

the postjudgment proceeding and had been from

the outset”).)

Despite the fact that BMO Harris clearly possesses all

the qualities of a defendant, at oral argument, both Zee

and Harris likened Harris’s status to that of a thirdparty defendant, who—according to our precedent—is not

generally authorized to remove a case to federal court

under 28 U.S.C. § 1441(c). See Thomas v. Shelton, 740

F.2d 478, 487 (7th Cir. 1984) (concluding that “in the

broad run of third-party cases . . . the third-party defendant cannot remove the case under section 1441(c)”).

We note, as an initial matter, that this argument is not

on point. The instant action was removed under § 1441(a),

not § 1441(c), since all claims in this case came within

the original jurisdiction of the federal court.

Even if Thomas were on point, it makes no sense to

liken Harris to a third-party defendant. A third-party

defendant is a “party brought into a lawsuit by the

original defendant.” Black’s Law Dictionary, “Third-Party

Defendant” (9th ed. 2009). But Harris was not brought

into this suit by the defendant, Zee; Harris was brought

into this suit by the plaintiff, GE Betz—in the same

manner that a plaintiff would bring any original

defendant into a lawsuit. Similarly, as we noted in

Thomas, “[t]he most common third-party claim is a

claim for indemnity, that is, a claim that should the defendant (third-party plaintiff) be held liable to the

plaintiff, the third-party defendant must reimburse the

defendant for the cost of satisfying the plaintiff’s judg-
32 No. 12-3746

ment.” 740 F.2d at 486. A third-party defendant stands

in opposition to the original defendant (the thirdparty plaintiff). Harris, in contrast, stands side-by-side

with Zee. Harris and Zee appear to be in complete agreement with respect to this case; they are working together—even coordinating litigation strategies—to

fight off GE Betz.

Harris and Zee’s reliance on Thomas is clearly

misplaced, but they make other arguments as to why

Harris is not a “defendant” to the present suit. They

ignore the Supreme Court’s holding in Chicago, R.I. &

P.R. Co., 346 U.S. at 579, that the label assigned by state

law to a party is not dispositive as to whether that party

is a defendant for the purposes of 28 U.S.C. § 1441.

Harris and Zee instead point to our holding in Shaw v.

Dow Brands, Inc., 994 F.2d 364, 369 (7th Cir. 1993), arguing

that the definition of “defendant” in 28 U.S.C. § 1441(b)

is very narrow and does not include “[n]ominal or

formal parties.” According to Shaw, a “defendant is

nominal if there is no reasonable basis for predicting

that it will be held liable.” Id. There are two reasons

why Harris is more than just a “nominal or formal” party

to this suit. First, Harris does not fit the Shaw definition

of a nominal party. On the contrary, there is a very reasonable basis for predicting that Harris will be held

liable to GE Betz. If, for example, GE Betz were to prove

its fraudulent transfer claim successfully, then Harris

would be liable for the funds that Zee fraudulently transferred to it. Second, recalling our discussion from

Section II, Harris’s presence is the only reason why this

case was removable to federal court in the first place.
No. 12-3746 33

Without Harris, this matter would have been a purely

ancillary matter to the North Carolina suit, and 28 U.S.C.

1441(a) would bar removal to federal court. Travelers,

689 F.3d at 724. Consequently, it is difficult to reduce

Harris to a mere nominal party in this suit.

Along these lines, we are troubled by the way in

which Zee and BMO Harris are talking out of both sides

of their mouths. They play up Harris’s status as a “new

and independent party” to support removal under

§ 1441(a), but in the same breath, they discount

Harris’s status as a “nominal party” to avoid a conflict

with § 1441(b)(2) and keep the case in federal court. An

examination of Zee’s brief to this court demonstrates

just how contradictory their arguments are. On one

page, Zee argues that “Harris is still a new party with a

new claim and a new controversy—which party has

lien priority over Zee’s assets,” in order to get around

the § 1441(a) jurisdictional problem. But on the very next

page, Zee argues that “Zee was the only named defendant . . . and the only party against whom liability

could be found,” in order to avoid the § 1441(b)(2) forumdefendant rule problem. As we have stated before,

parties “cannot have it both ways” in order to ensure a

case remains in their desired forum; allowing parties to

have it both ways “would be unjust.” Oshana v. Coca-Cola

Co., 472 F.3d 506, 512-13 (7th Cir. 2006) (rejecting a plaintiff’s attempt to argue that the value of her case

was less than $75,000 in order to defeat removal, while

simultaneously seeking to preserve her right to recover

more than $75,000 upon remand to the state court). In
34 No. 12-3746

spite of the attempts to characterize Harris otherwise,

Harris is a defendant to this action.

B

With regard to the second issue—whether it matters

that only the non-forum defendant, Zee, consented to

the removal of this case—the parties spend a great deal

of time arguing about the importance of who removed

the case, as though it makes a difference now. It could

have made a difference during the first thirty days following Zee’s removal. 28 U.S.C. § 1441(a) “require[s]

that all defendants (or none) join a notice of removal.”

McMahon v. Bunn-O-Matic Corp., 150 F.3d 651, 653 (7th

Cir. 1998). Here, there were two defendants, Zee and

BMO Harris, but only one defendant, Zee, joined the

notice of removal. Harris’s failure to consent to Zee’s

removal constituted a removal defect. Id. But such a

defect is statutory, not jurisdictional. Id. Because GE Betz

failed to raise this defect in either its initial motion

to remand or its motion to reconsider, GE Betz waived

it after thirty days. Doe v. GTE Corp., 347 F.3d 655, 657

(7th Cir. 2003). Nevertheless, even if BMO Harris had

properly consented to Zee’s removal of this case, the

forum-defendant rule would still stand in the way of

removal. It is true that only Zee removed the case, and

Zee is not a forum defendant. But, as our analysis in

Section III.A demonstrated, Harris is a forum defendant.

28 U.S.C. § 1441(b)(2) clearly prohibits removal “if any

of the parties in interest properly joined and served as
No. 12-3746 35

defendants is a citizen of the State in which such action

is brought” (emphasis added). Harris and Zee cannot

run around the forum-defendant rule by having only the

non-forum defendant remove the case.

In sum, this case was sufficiently independent of

the North Carolina suit to be removable under 28 U.S.C.

§ 1441(a). If neither Harris nor Zee had been citizens

of Illinois, then this case would have been properly

removed to federal court. But Harris is a citizen of

Illinois, and removal to the federal district court

violates the forum-defendant rule, 28 U.S.C. § 1441(b)(2).

Because GE Betz pointed out Harris’s citizenship to

the district court within thirty days—and thus, raised

a timely objection to removal based on the forum-defendant rule—the federal district court should have

remanded this case back to the Cook County Circuit Court.

IV

As we know from the procedural posture of this

case, however, the federal district court did not remand

the case back to the Cook County Circuit Court. It

retained the case for two months after denying GE Betz’s

motion to reconsider. During that time, the district

court granted a TRO that partially lifted the freeze on

Zee’s accounts at BMO Harris, and the three parties filed

an abundance of discovery-related motions. The case

concluded on November 28, 2012 without the district

court judge addressing many of these motions. Deciding

that the “first in time, first in right rule” was dispositive
36 No. 12-3746

of all issues in the case, the district court judge quashed

the citations and dismissed the case.

Despite the fact that the federal district court

improperly retained this case, Zee and BMO Harris

urge that we need not remand the case back to Cook

County now. Relying on Caterpillar Inc. v. Lewis, 519 U.S.

61, 75 (1996), Zee and Harris argue that “considerations

of finality, efficiency, and economy” overwhelm the

district court’s incorrect decision on the motion to

remand because the case has subsequently proceeded to

a final determination on the merits. But the way in

which Caterpillar proceeded to a final determination is

very different from the way in which the present case

proceeded to a final determination.

In Caterpillar, a district court improperly denied a plaintiff’s motion to remand the case back to state court.

The plaintiff correctly argued that the parties lacked

complete diversity: one of the initial defendants was

a citizen of the same state as the plaintiff. Despite this

rather obvious flaw in subject-matter jurisdiction, the

district court denied the plaintiff’s motion to remand,

and the case remained in federal court. Id. at 64-66.

During the course of the next four years, the plaintiff

settled with the non-diverse defendant. Once the nondiverse defendant dropped out of the case, diversity

was complete. Id. at 65-67. The case proceeded to a jury

trial, and the jury returned a verdict for the remaining

defendant. The plaintiff appealed, arguing that the

district court lacked subject-matter jurisdiction to

enter judgment for the defendant since the court had
No. 12-3746 37

lacked subject-matter jurisdiction at the time of the

case’s removal. Id. at 67. The Supreme Court rejected

the plaintiff’s argument, holding that “a district court’s

error in failing to remand a case improperly removed is

not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time judgment is

entered.” Id. at 64. Given that the case had gone to a

jury trial—not to mention that the case had been in

federal court for more than seven years by the time it

reached the Supreme Court—the Supreme Court believed that “considerations of finality, efficiency, and

economy [were] overwhelming.” Id. at 75. Emphasizing

that “no jurisdictional defect [had] lingered through

judgment,” the Court noted remanding the case back to

state court “would impose an exorbitant cost on our

dual court system, a cost incompatible with the fair

and unprotracted administration of justice.” Id. at 77.

Caterpillar stands for the proposition that when

remand to state court would “impose an exorbitant

cost,” a federal court may overlook a jurisdictional defect

at the time of removal that has subsequently been cured.

Id. Zee and BMO Harris ask us to extend the holding

of Caterpillar to find that a federal court may overlook

a statutory defect at the time of removal that has not

subsequently been cured. We decline to make such

an extension in the case at hand.

The situation faced by the Supreme Court in Caterpillar

is distinguishable from the situation we face here for

four reasons. First, and most obviously, this case has

been in federal court for only a fraction of the time that
38 No. 12-3746

the Caterpillar case was in federal court. The final determination in Caterpillar consisted of a jury trial more

than four years after removal to federal court. But in

this case, the final determination consisted of a dismissal

less than three months after removal to federal court. It

is true that during the course of these three months,

GE Betz, Zee, and BMO Harris flooded the district court

judge with a “paper blizzard.” Yet the fact remains

that, even now, the case has been in federal court for

less than one year, weakening any considerations of

finality, efficiency, and economy.

Further weakening any considerations of finality,

efficiency, and economy is the way in which the district court judge dismissed GE Betz’s case. On a day

that the parties thought they were merely going in

front of the judge to argue about a protective order, the

judge instead decided from the bench “to call a halt to

all this.” Although we certainly understand the district court judge’s frustration with all the “garbage” that

the parties have filed in this case, the judge did not adequately address at least two of GE Betz’s arguments

in his dismissal. For example, the district court judge

failed to address GE Betz’s argument that BMO

Harris’s UCC filing did not perfect its security interest

in all of Zee’s assets, and in particular, its real property.

Additionally, while the judge briefly addressed GE

Betz’s fraudulent-transfer claim, the judge misstated

the claim’s required elements. The judge found the

fraudulent-transfer claim meritless because “Harris has

no stake in pursuing remedies that would somehow
No. 12-3746 39

jeopardize its own interest,” suggesting that GE Betz

would need to prove that Harris had fraudulent

intent when it entered into the credit facility. But fraudulent transfer requires proving that Zee—not Harris—

had “actual intent to hinder, delay, or defraud” when

it entered into the credit facility. 740 Ill. Comp. Stat.

160/5(a)(1). Furthermore, neither the fraudulent-transfer

argument nor the real-property argument is automatically resolved by the “first in time, first in right”

rule, which formed the basis of the judge’s dismissal.

The way in which the district court judge dismissed

the case particularly weakens any considerations of

finality, efficiency, and economy in light of the discovery and procedural rights to which GE Betz would

have been entitled had the case remained in the Cook

County Circuit Court. As detailed in Section III.A, it is

“reversible error” for an Illinois state court “to decide

[a citation action] based solely on the arguments of counsel”—which is precisely what occurred here. Workforce,

977 N.E.2d at 276. In this case’s original venue, GE Betz

would have been entitled to additional, extensive discovery, including the discovery of all “books, papers, or

records in [Harris’s] possession or control which have

or may contain information concerning the property or

income of [Zee].” Ill. Comp. Stat. S. Ct. R. 277(c)(4). This

additional discovery would have been particularly

useful on the issues of fraudulent transfer and the perfection of Harris’s security interest. More importantly,

GE Betz would have been entitled to an evidentiary

hearing or trial, in which it could have “subpoena[ed]
40 No. 12-3746

witnesses and adduce[d] evidence as upon the trial of

any civil action.” Ill. Comp. Stat. S. Ct. R. 277(e). GE Betz

enjoyed none of these benefits in the federal district court.

The final reason why we are unmoved by considerations of finality, efficiency, and economy is that the underlying removal defect remains uncured in this case. In

the Caterpillar case, the Supreme Court was moved by

such considerations because “no jurisdictional defect

lingered through judgment.” 519 U.S. at 77. Yet the removal defect lingers on in the present case. BMO

Harris was a forum defendant when the case was

removed; BMO Harris is still a forum defendant today.

True, the removal defect in Caterpillar was jurisdictional;

the defect here is only statutory. But considering the

district court’s lightning-fast resolution of this very

complicated case—made possible, in part, by its refusal

to let GE Betz conduct the full exploration that a

citation proceeding allows on at least two of its claims

against Zee and Harris—the fact that a statutory defect

remains uncured only strengthens our conclusion that

considerations of finality, efficiency, and economy are

virtually nonexistent here.

V

In a last-ditch attempt to keep this case in federal

court, Zee and BMO Harris make one final argument

why we should ignore the statutory defect in removal:

waiver. According to them, GE Betz waived the

removal defect created by the forum-defendant rule for
No. 12-3746 41

two reasons: (1) GE Betz failed to mention the forumdefendant rule in its initial filing to support remand,

and (2) GE Betz proceeded to litigate the case on the

merits despite the forum-defendant removal defect.

We consider both waiver arguments in detail below.

A

Zee and Harris’s first waiver argument centers on

GE Betz’s failure to mention the forum-defendant rule

in its initial memorandum to the district court

addressing the propriety of removal. Zee and Harris

concede that GE Betz raised the forum-defendant issue

well within the thirty-day period required by 28 U.S.C.

§ 1447(c). But the first time that GE Betz mentioned the

forum-defendant rule in a written filing was in its

motion to reconsider. As a result, Zee and Harris

argue that under Brooks v. City of Chicago, 564 F.3d 830,

833 (7th Cir. 2009), GE Betz automatically waived the

forum-defendant argument because “any arguments . . .

raised for the first time in [a] motion to reconsider

are waived.” 

This argument ignores what transpired in the courtroom prior to GE Betz filing a motion to reconsider.

Technically, this argument was not raised for the first

time in GE Betz’s motion to reconsider; it was raised

earlier, during the hearing on GE Betz’s initial oral

motion to remand. At this hearing, the district court

judge, on his own, brought up the forum-defendant

problem, stating:
42 No. 12-3746

There is, of course, a complicating factor, if you

wait just a minute, and that has to do with

looking at 1441(b)(2), . . . if Harris partakes of

Illinois citizenship . . . . So under 1441(b)(2), if

Harris were a party as such, the action could not

be removed because . . . we . . . permit removal

by foreign corporations but not by a domestic

corporation.

Evidently, the forum-defendant rule gave the district

court judge some pause at that first hearing. But, as we

know, the judge ultimately decided not to take more

time considering Harris’s status in the case and ask

the parties for additional briefing. Instead, the judge

dismissed the forum-defendant problem as a nonissue. 

In deciding whether an argument has been properly

preserved, one factor we evaluate is when the opposing

party was on notice of the argument. See, e.g., Hernandez

v. Cook Cnty. Sherriff’s Office, 634 F.3d 906, 913 (7th Cir.

2011) (explaining that the “underlying concern [with

waiver] is to ensure that the opposing party is not prejudiced by being denied sufficient notice to respond

to an argument”). Given the judge’s discussion of the

forum-defendant rule at the hearing on the initial

motion to remand, Zee and Harris should have been

on notice of a potential forum-defendant problem from

the outset.

Another factor we evaluate is whether the district

court “effectively considered” the argument during its

initial determination. See Kunz v. DeFelice, 538 F.3d 667,
No. 12-3746 43

681 (7th Cir. 2008) (finding an argument waived if it

“require[d] the application of a novel legal theory” that

was “not fully developed” during the initial determination); see also Bloch v. Frischholz, 587 F.3d 771, 784 (7th

Cir. 2009) (finding an argument waived because the

district “court never considered” the plaintiffs’ argument

before the motion to reconsider). Perhaps the district

court judge did not evaluate the forum-defendant argument as thoroughly as he should have, but there is

no question that the judge effectively considered the

implications of the forum-defendant rule at the

first hearing.

Furthermore, we find this waiver argument even

more unpersuasive given the circumstances surrounding that first hearing. On September 12, 2012, Zee

filed both a notice of removal and an emergency motion

for relief from the citation served on BMO Harris. Only

two days later, on September 14th, all three parties appeared before the district court at 9:15 a.m. to argue

the emergency motion. At that time, GE Betz orally contested the propriety of Zee’s removal, citing several

cases to support its position, including Travelers, 689

F.3d at 714. The judge had his law clerk print these

cases and, after briefly glancing at them on the bench,

told GE Betz “that the cases that you have provided

me with don’t create a very inspiring position for your

argument.” GE Betz then begged the judge to delay his

determination until the afternoon, noting that it had

not received Zee’s notice of removal and emergency

motion until 3:30 p.m. on September 13th and had
44 No. 12-3746

“worked during the night to try to pull [its argument] together.” The judge allowed GE Betz more time,

instructing the parties to come back at 2:30 p.m. It was

during those few hours of recess that GE Betz filed its

written memorandum to support remand. When the parties

returned at 2:30 p.m., the district court denied remand

on the basis of both subject-matter jurisdiction and the

forum-defendant rule.

Undoubtedly, this entire case was adjudicated at lightning speed, but GE Betz’s initial motion to remand

was decided particularly rapidly. Yet Zee and BMO

Harris ask us to find that GE Betz waived an argument in the memorandum supporting its initial motion,

despite the fact that it had less than twenty-four hours

to research it and only a few hours to write it. We

remind Zee and Harris that the “[r]ules of practice and

procedure are devised to promote the ends of justice, not

defeat them.” Hormel v. Helvering, 312 U.S. 552, 557 (1941).

Because GE Betz had almost no time to collect its

thoughts or even find its best argument before filing

this initial memorandum, we decline to hold GE Betz to

the exceptionally strict waiver rule that Zee and Harris

advocate. Cf. Fleishman v. Cont’l Cas. Co., 698 F.3d 598,

608 (7th Cir. 2012) (noting that we enforce the appellate waiver rule “unless . . . ‘the equities heavily preponderate in favor of correcting it’ ” (quoting Judge v. Quinn,

624 F.3d 352, 360 (7th Cir. 2010))); Johnson v. Artim Transp.

Sys., Inc., 826 F.2d 538, 548 (7th Cir. 1987) (explaining

that in the context of the appellate waiver rule, “[t]here

are narrow exceptions,” including “ ‘exceptional circum-
No. 12-3746 45

stances where justice demands more flexibility’ ” (quoting

Zbaraz v. Hartigan, 763 F.2d 1532, 1544 (7th Cir. 1985))).

In closing our discussion of Harris and Zee’s first

waiver argument, we note that it is not our intent to

criticize the speed with which the able district judge

addressed this litigation. In fact, his promptness in attempting to sort out this messy case is to be commended. Our only disagreement with his creditable

efforts in this matter is with the conclusions he reached

on the remand request, security interest perfection, and

fraudulent transfer issues.

B

Even though their first waiver argument fails, BMO

Harris and Zee claim that they have a second, “brighter

bulb” reason for finding that GE Betz waived the forumdefendant argument (despite formally presenting the

argument only sixteen days after removal). Harris and

Zee argue that GE Betz “consented” to being in federal

court by litigating the case on the merits after losing its

initial motion to remand. In fact, Zee told us at oral argument that “before [GE Betz] presented [its] motion to

reconsider, [it] had a separate citation issued by the

district court to Zee. . . . [GE Betz] filed a motion to

modify the TRO . . . for [its] own benefit with the

district court. And then [it] issued a deluge of discovery.”

Zee and Harris then cite Bernstein v. Lind-Waldock & Co.,

738 F.2d 179, 186 (7th Cir. 1984), for the proposition

that a plaintiff cannot “thr[o]w in the towel” and start
46 No. 12-3746

litigating the case on the merits after losing a motion to

remand; instead, a plaintiff must “st[i]ck by his guns

and . . . [be] vindicated . . . on appeal.”

This argument misconstrues the holding in Bernstein.

The plaintiff in that case brought suit in an Illinois state

court alleging that the defendants had violated state

law. The defendants removed the action to federal

court, claiming that federal law, not state law, governed

the plaintiff’s rights (the underlying facts involved unsuccessful transactions in securities). Id. at 181-82. The

plaintiff disputed the defendants’ claim and filed a

motion to remand the case back to state court based on

lack of subject-matter jurisdiction. The federal district

court incorrectly denied the plaintiff’s motion. Id. at 182.

At that point, the plaintiff then decided to amend his

complaint and add a federal cause of action against one

of the defendants. Id. at 185. Even though the federal

district court had lacked subject-matter jurisdiction

over the plaintiff’s first complaint, the district court

now had original jurisdiction over his amended complaint. Id. Under these circumstances, our court

held that “once [the plaintiff] decided to take advantage of his involuntary presence in federal court to

add a federal claim to his complaint he was bound

to remain there.” Id.

Unlike the plaintiff in Bernstein, GE Betz has done

nothing to take advantage of its involuntary presence

in federal court. It has never added a federal claim to

its original registration and citation action. Nor has

GE Betz taken any actions that resolve the underlying

problem with removal. There was a forum-defendant
No. 12-3746 47

problem at the time of removal because BMO Harris

was a defendant; there is a forum-defendant problem

now because BMO Harris is still a defendant. Contrast

the plaintiff’s actions in Bernstein, which resolved the

underlying problem with removal. When the Bernstein

defendants filed a notice of removal, the federal district

court did not have subject-matter jurisdiction over the

controlling complaint. But once the Bernstein plaintiff

amended his complaint to include a federal cause of

action, the district court gained jurisdiction.

Besides misconstruing the holding in Bernstein, Harris

and Zee’s argument also misconstrues the record in

this case. Zee’s statement at oral argument that GE Betz

had a citation issued to Zee, filed a motion to modify

the TRO, and issued discovery requests before presenting

its motion to reconsider is not true. In the fourteen-day

period between the denial of the motion to remand and

the filing of the motion to reconsider, the only thing that

GE Betz filed was an attorney appearance form. Meanwhile, during that same fourteen-day period, Zee

and BMO Harris filed an emergency motion for a preliminary injunction, set a hearing for a TRO, drafted a TRO,

and filed another motion to quash the citation served

on BMO Harris. Eventually, GE Betz would issue a

second citation to Zee, file a motion to modify the TRO,

and issue discovery requests—but only after filing its

motion to reconsider.

Upon reviewing the record, it is clear that GE Betz has

not “invoke[d] the jurisdiction of the federal court, and

then disclaim[ed] it when [it] los[t].” Bernstein, 738 F.2d
48 No. 12-3746

at 185-86. Two days after Zee filed a notice of removal,

GE Betz began asking the federal district court to

remand the case back to Cook County where it belongs.

Only after it properly preserved its forum-defendant

argument did GE Betz begin litigating the case on the

merits. Nor has GE Betz ever “thr[own] in the towel” on

its forum-defendant argument. Id. at 185. On the contrary, GE Betz raised the argument again in its first

filing with our court, and it has continued to raise the

argument in every subsequent filing. Clearly, GE Betz

has stuck to its guns on the forum-defendant argument

throughout this litigation. Now, under Bernstein, 738

F.2d at 186, it is time for us to vindicate GE Betz’s forumdefendant argument on appeal.

VI

No matter how many ways Zee and BMO Harris try

to recharacterize what happened in this case, the fundamental facts are as follows: Zee removed this case to

federal court even though its co-defendant, BMO

Harris, was a forum-defendant, in violation of 28 U.S.C.

§ 1441(b)(2). GE Betz objected to the removal based

on the forum-defendant rule within the thirty days prescribed by 28 U.S.C. § 1447(c). Despite GE Betz’s timely

objection, the federal district court improperly retained

the case and eventually dismissed it on the merits.

Because the district court should never have reached

the merits of this case, we now VACATE its dismissal.

Furthermore, we REMAND the case to the district court

with instructions to REMAND the case back to its original
No. 12-3746 49

venue, the place where it properly belongs: Cook County

Circuit Court.

5-3-13