Opinion
No. 04-CV-0415E(F).
September 13, 2004
MEMORANDUM and ORDER
This decision may be cited in whole or in any part.
This receivership action has been thrice removed from the New York State Supreme Court, County of Erie. This action was first removed by the United States ("IRS") on May 21, 2004 ("First Removal"); this Court remanded sua sponte because the IRS had not been a party to the state court action. The IRS again removed this action on June 2, 2004 ("Second Removal"); this Court partially remanded the action in an Order dated June 3, 2004. The IRS again removed this case on June 24, 2004 ("Third Removal"). MONH, LLC ("MONH") filed a motion on June 30, 2004 seeking remand of this action addressing the Second and Third Removals. The New York State Department of Health ("NYSDOH") filed papers supporting MONH's motion on July 12, 2004. MONH's motion to remand was submitted on the papers on August 6, 2004. For the reasons set forth below, MONH's motion for remand will be denied.
The Third Removal was effected pursuant to 26 U.S.C. § 7424 ("Section 7424") and 28 U.S.C. § 1444 ("Section 1444") because the IRS's motion for intervention had been granted by the state court on June 3, 2004. Section 7424 provides in relevant part:
"If the United States is not a party to a civil action or suit, the United States may intervene in such action or suit to assert any lien arising under this title on the property which is the subject of such action or suit. The provisions of section 2410 of title 28 of the United States Code (except subsection (b)) and of section 1444 of title 28 of the United States Code shall apply in any case in which the United States intervenes as if the United States had originally been named a defendant in such action or suit."
Section 1444 provides in relevant part:
"Any action brought under section 2410 of this title against the United States in any State court may be removed by the United States to the district court of the United States for the district and division in which the action is pending."
The Third Removal was proper because Sections 7424 and 1444 gave the IRS an affirmative right to remove that arose when the IRS's motion to intervene was granted on June 3, 2004. Indeed, Section 7424 expressly provides that Section 1444 and 28 U.S.C. 2410 ("Section 2410") are applicable where the United States has intervened under Section 7424. Consequently, case law applying Section 1444 via Section 2410 is persuasive. For example, the Northern District of New York has held that Section 1444 "gives the United States the unqualified option to remove such an action to the district court." Accordingly, the Third Removal is proper because the IRS had the right to remove this action pursuant to Sections 7424 and 1444.
See, e.g., Johnson Serv. Co. v. H.S. Kaiser Co., 324 F. Supp. 745, 746, 750 (N.D. Ill. 1971) (permitting removal pursuant to Sections 7424 and 1444).
Federal courts to which state actions have been removed pursuant to Section 2410 and Section 1444 have held that Section 1444 "confers a substantive right to remove, independent of any other jurisdictional limitations." City of Miami Beach v. Smith, 551 F.2d 1370, 1374 n. 5 (5th Cir. 1977); see also Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623, 635 n. 46 (5th Cir. 2002) (citing City of Miami with approval); Sch. Bd. of Broward County v. J.V. Constr. Corp., 2004 WL 1304058, at *9 (S.D. Fla. 2004) (same); Truong v. Grand Trunk W.R.R. Co., 882 F. Supp. 107, 108-109 (E.D. Mich. 1995) (same); Noske v. Noske, 980 F. Supp. 1026, 1029 (D. Minn. 1997) (stating that Section 1444 "gives the United States the unqualified option to remove an action originally brought in state court under [28 U.S.C.] § 2410") (internal quotations and citation omitted); Hood v. United States, 256 F.2d 522, 525-526 (9th Cir. 1958) (holding that it was proper for the United States to remove a state court quiet title action pursuant to Section 1444); United States v. Webster Record Corp., 192 F. Supp. 104, 105 (S.D.N.Y. 1961) (same); Horizon Bank Trust Co. v. Flaherty, 309 F. Supp. 2d 178, 184-185 (D. Mass. 2004) (citing Hood with approval); Wilkinson v. United States, 724 F. Supp. 1200, 1202 (W.D.N.C. 1989) (stating in dicta that "the propriety of removal would not be at issue" if the United States had removed pursuant to Section 1444).
Vincent v. P.R. Matthews Co., 126 F. Supp. 102, 105 (N.D.N.Y. 1954).
Moreover, in addition to having a substantive right to remove, the Third Removal satisfied any procedural requirements that may apply to a Section 1444 removal. First, the timeliness of the Third Removal is not disputed. Second, the IRS did not require the consent of any other party in removing this action. Finally, the Third Removal did not violate this Court's Order dated June 3, which partially remanded this action subsequent to the IRS's Second Removal, because the IRS's motion for intervention had been granted after this Court's June 3 Order had been issued.
The IRS's notice of removal was filed within thirty days after the IRS was permitted to intervene in the state court action. See Groesbeck Invs. Inc. v. Smith, 224 F. Supp. 2d 1144, 1147-1148 (E.D. Mich. 2002) (remanding case removed pursuant to Section 1444 because the United States failed to timely remove the state court quiet title action); Johnson Serv. Co., supra note 2, at 746, 750 (applying thirty-day period for removal set forth in Section 1446(b) to removal by United States pursuant to Sections 1444, 1446(b) and 7424); cf. Gen. Ins. Co. of Am. v. Tilcon N.Y., Inc., 1996 WL 389265, at *1 (S.D.N.Y. 1996) (remanding case because of untimely removal where action was removed after the United States intervened pursuant to Section 7424 — but failing to discuss Section 1444). The IRS describes its right to remove under Section 1444 as "an absolute unqualified right to have all of its rights (whether arising under federal or State law) be adjudicated in federal court, via this notice of removal, and that this Court has no authority to remand any issue that may affect the rights of the United States in this civil action, absent the United States' consent to such remand" Notice of Removal, at 4. As noted above, however, some courts have held that the right of the United States to remove under Section 1444 is subject to the timeliness requirement of Section 1446(b). Groesbeck, supra at 1147-1148. Although some courts have held that removal under Section 1444 is subject to the timeliness requirement set forth in 28 U.S.C. 1446(b) ("Section 1446(b)"), the Second Circuit Court of Appeals has not addressed the issue. Inasmuch as the timeliness of the Second and Third Removals is not disputed, however, this Court need not address whether Section 1444 is so limited.
Noske, supra note 3, at 1029 (holding that, when removing an action pursuant to Section 1444, the United States does not require the consent of the other defendants); Chrysler First Fin. Servs. Corp. v. Greenfield, 753 F. Supp. 939, 941 (S.D. Fla. 1991) (same); Country Hill Bank v. Gen. Dev., L.P., 1990 WL 168417, at *1 (D. Kan. 1990) (same).
Because this Court lacks discretion to remand an action removed pursuant to Sections 7424 and 1444 for any reason other than, perhaps, timeliness, this Court must reject the arguments by MONH and the NYSDOH — which largely fail to address Sections 7424 or 1444. Nonetheless, this Court will briefly address several arguments raised by MONH and the NYSDOH. First, this Court has discovered no authority supporting an "important state interests" exception to Section 1444. Second, MONH argues that the IRS has waived its right to remove. Even assuming arguendo that the right to remove under Section 1444 may be waived, no waiver exists here. Indeed, the IRS was required to intervene in the state court action pursuant to Section 7424 in order for it to remove this action pursuant to Section 1444. Furthermore, the IRS did not clearly and unequivocally waive its right to remove this action under Section 1444 because its actions in state court were designed to preserve the status quo until the state court addressed the IRS's motion to intervene. Third, the Rooker-Feldman doctrine — which prohibits federal courts from reviewing state court judgments — is inapplicable to cases removed from state court. Fourth, the abstention doctrines cited by MONH and the NYSDOH are inapplicable. Younger abstention is inapplicable because there is no ongoing state court action that will be interfered with if this Court exercises jurisdiction in this case. Likewise, Colorado River abstention is inapplicable because there is no parallel state court action — indeed, there is only one action and it has been removed to this Court. Finally, Burford abstention is only available where "a federal court is asked to provide some form of discretionary relief." Burford abstention is therefore inapplicable here because this Court does not have the discretion to remand this action as discussed above. Furthermore, although "federal courts should abstain from interfering with specialized, ongoing state regulatory schemes," the nursing homes in question have been closed and the state scheme concerning nursing home receiverships is thus no longer ongoing. Accordingly, MONH's arguments in favor of remand are rejected and its motion for remand will be denied.
Despite MONH's suggestion to the contrary, 28 U.S.C. 1441(c) is on its face inapplicable to actions removed pursuant to Section 1444. 16 MOORE'S FEDERAL PRACTICE, 107 App.109, at 150 (3d ed. 2004) ("Perhaps much difficulty and faulty reasoning can be avoided by simply not confusing the substantive right to remove conferred by § 1444 with that conferred by § 1441."); cf. Swan v. Cmty. Relations-Soc. Dev. Comm'n, 374 F. Supp. 9, 11 (E.D. Wis. 1974) ("Generally speaking, the limitations on removal under § 1441 are not applicable to removal under § 1442 * * * [because] while Congress has gradually restricted the right of removal under the general statute, it has broadened the special right of removal by federal officers * * *" — a right that has since been extended to the federal government at large) (citation omitted). Moreover, MONH appears to concede the applicability of Section 1444 — albeit subject to its contention that the IRS waived such a right of removal. MONH's Memo. of Law, at 7 ("Although the U.S. may be correct in its assertion that a right to remove generally exists, such an argument is inapplicable in this instance because by substantively participating in state court, the U.S. waived its right to intervene."). The IRS asserted that its research "failed to disclose a single instance of a remand to a state court of a case in which the government intervened under I.R.C. § 7424 and removed pursuant to that statute and 28 U.S.C. § 1444." Notice of Removal Obj.'s, at 12. This Court, however, has found such a case. Illinois v. $31,990, 704 F. Supp. 165, 165-166 (N.D. Ill. 1989) (remanding state forfeiture proceeding removed by the IRS under Sections 7424 and 1444 because the United States intervened in a supplemental proceeding after the forfeiture action had been dismissed by the state court). Illinois v. $31,990, however, appears inapplicable because the state court in that case had issued a final judgment, which is absent here. Ibid. (citing Galesi v. United States, 406 F. Supp. 623 (D. Vt.), aff'd, 544 F.2d 606 (2d Cir. 1976), which held that any rights that the IRS had relative to a quiet title action were discharged by the state court judgment by reason of the IRS's failure to intervene pursuant to Section 7424).
Although this Court opined in its Order dated May 28, 2004 — which denied the IRS's motion to reconsider this Court's sua sponte remand of this action subsequent to the First Removal — that the IRS had waived its right to remove by filing a motion to intervene in state court, it had not had the benefit of briefs addressing Sections 7424 and 1444.
See, e.g., Labry v. Internal Revenue Serv., 940 F. Supp. 148, 149 (E.D. La. 1996) (finding that the United States did not waive its right to remove under Section 1444 by filing an answer in state court); cf. Cronin v. Family Educ. Co., 105 F. Supp. 2d 136, 137-138 (E.D.N.Y. 2000) ("The waiver of a party's statutory right to remove a case to federal court must be clear and equivocal."); Swan, supra note 7, at 12 ("Actions which are primarily preliminary and nonconclusive in character have generally been held not to constitute waiver of the right to remove * * * [because] the requisite intent to waive cannot be gleaned from preliminary actions brought about by the filing of a complaint.") (citation omitted); Dri Mark Prod., Inc. v. Meyercord Co., 194 F. Supp. 536, 537 (S.D.N.Y. 1961) (noting that "the right to removal should not be foreclosed to a defendant because he takes steps to protect his rights, prepares for trial or uses the processes of the State court while the case is still pending there"). Cases cited by MONH in support of its waiver argument — see, e.g., Fred Berglund Sons, Inc. v. CDI Assocs., 1991 WL 83506 (N.D. Ill. 1991) and Zbranek v. Hofheinz, 727 F. Supp. 324, 326 (E.D. Tex. 1989) — do not involve Section 1444 removal. MONH cites Berglund and Zbranek for the proposition that "it would be a dangerous precedent to allow [the United States] to remove this action after being heard on substantive issues, and not receiving the relief it sought." MONH Memo. of Law, at 8. This proposition, however, is not applicable here because the IRS was not heard on any substantive issues and it merely acted to preserve the status quo in the state court action while attempting to honor Judge Makowski's request to defer removing the action as long as possible.
See Santini v. Conn. Hazardous Waste Mgt. Serv., 342 F.3d 118, 126 (2d Cir. 2003) ("The essence of the Rooker-Feldman doctrine is that inferior federal courts have no subject matter jurisdiction over cases that effectively seek review of judgments of state courts and that federal review, if any, can occur only by way of certiorari petition to the Supreme Court.") (internal quotations and citation omitted) (emphasis added).
See 28 U.S.C. § 1450 ("Section 1450") ("Whenever any action is removed from a State court to a district court of the United States * * * [a]ll injunctions, orders, and other proceedings had in such action prior to its removal shall remain in full force and effect until dissolved or modified by the district court."); Nasso v. Seagal, 263 F. Supp. 2d 596, 608 (E.D.N.Y. 2003) ("Upon removal, the orders entered by the state court are treated as though they had been entered by the federal court. Because the Rooker-Feldman doctrine does not work to defeat a district court's authority over the management of its own case, even where the exercise of such management has the secondary effect of voiding a state court determination, the doctrine does not preclude this Court from reviewing orders that were entered prior to removal.") (internal quotation marks and citation omitted) (citations omitted); Breedlove v. Cabou, 296 F. Supp. 2d 253, 267 (N.D.N.Y. 2003) (holding that the Rooker-Feldman doctrine was inapplicable to removed actions because of Section 1450). Indeed, the Rooker-Feldman "doctrine does not apply to any review that is authorized by Congress" such as a district court's ability under Section 1450 to reconsider orders issued by a state court before an action was removed. Nasso, at 608 (citing Kropelnicki v. Siegel, 290 F.3d 118, 128 (2d Cir. 2002)).
MONH and NYSDOH cite abstention doctrines set forth in the following cases: Younger v. Harris, 401 U.S. 37 (1971), Colorado River Water Conserv. Dist. v. United States, 424 U.S. 800, 821 (1976), Burford v. Sun Oil Co., 319 U.S. 315 (1943). Indeed, "[a]bstention is the exception, exercise of jurisdiction the rule." Hachamovitch v. DeBuono, 159 F.3d 687, 697 (2d Cir. 1998) (citation omitted).
See Alleyne v. City of New York, 244 F. Supp. 2d 214, 216 n. 2 (S.D.N.Y. 2003) ("The abstention doctrine does not apply upon removal of the entire case, because this Court's jurisdiction would no longer interfere with a currently pending state court action, which is an essential element of Younger abstention.") (emphasis added); Mountain Funding, Inc. v. Frontier Ins. Co., 2003 WL 21518556, at *3 (N.D. Ill. 2003) (same); Levin v. Tiber Holding Co., 1999 WL 649002, at *4 (S.D.N.Y. 1999) (same); cf. Spargo v. N.Y.S. Comm'n on Judicial Conduct, 351 F.3d 65, 74 (2d Cir. 2003) (noting that, under Younger, "federal courts should generally refrain from enjoining or otherwise interfering [with] ongoing state proceedings.") (emphasis added).
See Dittmer v. County of Suffolk, 146 F.3d 113, 117-118 (2d Cir. 1998) (citing Kirkbride v. Continental Cas. Co., 933 F.2d 729, 734 (9th Cir. 1991) for the proposition that the Colorado River abstention doctrine is inapplicable where "there was no concurrent state court proceeding after the case was removed to federal court" and holding that "a finding that the concurrent proceedings are `parallel' is a necessary prerequisite to abstention under Colorado River"); see also Village of Westfield v. Welch's, 170 F.3d 116, 122 (2d Cir. 1999) ("[F]ederal courts consider abstaining under Colorado River only in cases where there are concurrent and simultaneous federal and state proceedings."); County of Suffolk v. Amerada Hess Corp. (In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig.), 2004 WL 1575102, at *7 (S.D.N.Y. 2004) (applying Dittmer and holding that Colorado River abstention is inapplicable where an action has been removed from state court resulting in the fact that the case "will be heard in only one forum").
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 730 (1996).
Alliance of Am. Insurers v. Cuomo, 854 F.2d 591, 599 (2d Cir. 1988) (internal quotation marks and citation omitted) (emphasis added).
N.Y. Pub. Health L. § 2810(2)(e)(i)(c) ("The court shall terminate the receivership only under any of the following circumstances: * * * (c) at such time as all of the patients in the facility have been provided alternative modes of health care, either in another facility or otherwise."). Moreover, inasmuch as Dr. Mansouri is the DOH approved receiver, there is no reason why this Court cannot administer the corporate liquidation of Manor Oak Skilled Nursing Facility. Cf. In re Neuman, 75 B.R. 966, 968 (Bankr. S.D.N.Y. 1987) (holding that there was no conflict between New York's Public Health Law § 2810 and the power of the bankruptcy court to permit bankruptcy trustee to operate nursing home because the DOH had approved of the trustee as a receiver), aff'd, 88 B.R. 30 (S.D.N.Y. 1988).
The parties did not brief whether this action seeks equitable relief and this Court will not address such. Nonetheless, if this action were so construed, Burford abstention would be inapplicable. See Kirschner v. Klemons, 225 F. 3d 227, 238 (2d Cir. 2000) (quoting Tribune Co. v. Abiola, 66 F.3d 12, 16 (2d Cir. 1995) for the proposition that "abstention is generally appropriate only in cases where equitable relief is sought").
The propriety of the Third Removal — which removed this entire action — makes it unnecessary for this Court to address the propriety of the Second Removal. Moreover, given the fact that MONH's motion for remand will be denied, its request for sanctions and attorneys' fees pursuant to FRCvP 11 will also be denied.
It is accordingly ORDERED that MONH's remand motion is denied, that MONH's request for attorneys' fees is denied and that MONH's request for FRCvP 11 sanctions is denied.