Opinion
Civil Action No. 3:00-CV-2561-D
March 1, 2001
MEMORANDUM OPINION AND ORDER
This case presents the question whether a plaintiff-counterdefendant, after taking a nonsuit in a state court action, can remove the case to federal court under 28 U.S.C. § 1446(b) on the basis of the defendant-counterplaintiff's federal-law counterclaim. Concluding that removal was proper, the court denies the present motion to remand.
I
Defendant City of Aubrey ("the City") filed suit in Texas state court against plaintiff Khosrow Sadeghian ("Sadeghian") seeking to enjoin him from operating a mobile home park without a permit. Sadeghian answered and filed a counterclaim seeking relief under 42 U.S.C. § 1983. Nearly nine months later, the City filed a notice of nonsuit (loosely the Texas analog to a federal notice of dismissal) as to all claims against Sadeghian, leaving only Sadeghian's federal-law counterclaim against the City. The City answered Sadeghian's counterclaim a few days later and, within 30 days of taking the nonsuit, filed a notice of removal. Although there is no indication in the record that the state court ever formally realigned the parties, the City, in its notice of removal and in other pleadings in state court and in this court, characterizes itself as defendant (rather than as counterdefendant) and Sadeghian as plaintiff (rather than as counterplaintiff). Sadeghian timely moved to remand this case to state court.
The City filed suit in the 211th Judicial District Court of Denton County, Texas. Denton County is located in the Eastern, not the Northern, District of Texas. By agreed order, however, the case was transferred to the 193rd Judicial District Court of Dallas County, Texas, which is within the Northern District of Texas.
II
Sadeghian argues that remand is appropriate for two reasons. First, he contends that as the plaintiff in the original action, the City may not remove the case to federal court on the basis of his federal counterclaim. Second, Sadeghian asserts that the City has failed to comply with the timing requirements of the removal statute. The court addresses these arguments in turn.
A
Under § 1446(a), only a defendant may remove an action to federal court. It is well settled, as Sadeghian recognizes, that the filing of a counterclaim does not transform a plaintiff into a defendant for the purposes of removal. See Scott v. Communications Servs., Inc., 762 F. Supp. 147, 150 (S.D.Tex. 1991) (a party "does not become a defendant under § 1441(a) when a defendant files a counterclaim against it"). The determination of which party is the defendant is a matter of federal law, to be decided at the time of removal. See id at 149. In the present case, at the time of removal, the only remaining claims were those brought by Sadeghian against the City. The City had the right under Texas state law to dismiss voluntarily all of its claims. See Ray v. State Farm Lloyds, 1999 WL 151667, at *3 (N.D. Tex. Mar. 10, 1999) (Fish, J.) (citing Leon Springs Gas Co. v. Rest. Equip. Leasing Co., 961 S.W.2d 574, 577 (Tex.App. 1997, no writ)). When the City did, and then filed its notice of removal, it was effectively the defendant for the purposes of § 1446(a), regardless of the fact that the parties had never been formally realigned. This is so because, in determining a party's posture with respect to removal, courts apply a "functional test" that examines which parties' claims constitute the "mainspring of the proceedings." Ray, 1999 WL 151667, at *3 (citing Mason City Fort Dodge R. R. Co. v. Boynton, 204 U.S. 570, 579-80 (1907); General Motors Corp, v. Gunn, 752 F. Supp. 729, 731 (N.D. Miss. 1990)). Under the "functional test" used by federal courts to determine which party is the defendant for purposes of removal, Sadeghian's federal-law claims constituted the "mainspring" of the proceedings. The City is therefore properly deemed the defendant as of the time of removal.
B
Sadeghian next argues that the City failed to comply with § 1446(b) because it did not timely file its notice of removal. Under § 1446(b), the notice of removal "may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446(b). Sadeghian contends the grounds for removal became apparent when he filed his counterclaim on February 8, 2000, thus making the City's November 22, 2000 notice of removal untimely. This argument appears to contradict Sadeghian's previous (correct) assertion that the filing of the federal-law counterclaim did not give rise to removal jurisdiction. If Sadeghian's counterclaim did not of itself transform the City into a defendant, then the grounds for removal did not take effect at that time. Rather, the basis for removal first arose when the City filed its notice of nonsuit, leaving only Sadeghian's federal-law counterclaim to be adjudicated. Because the City removed the case within thirty days of taking the nonsuit, it complied with § 1446(b).