United States District Court, W.D. Arkansas, Fayetteville Division
RJO INVESTMENTS, INC.; RANDY ODOM, INC. PLAINTIFFS
CROWN FINANCIAL, LLC DEFENDANT
MEMORANDUM OPINION AND ORDER
TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE
before the Court is the Motion to Remand (Doc. 13) submitted
by Plaintiffs, RJO Investments, Inc. and Randy Odom, Inc., on
February 15, 2018. In their Motion to Remand, Plaintiffs
argue that the Court lacks subject matter jurisdiction
because Defendant, Crown Financial LLC, untimely removed the
case under 28 U.S.C. § 1446(b), (c)(1).
Court has reviewed the parties' briefs and entertained
oral arguments on the motion during a hearing on March 28,
2018. As explained below, the Motion to Remand is
RJO Investments, Inc. and Randy Odom, Inc., both Arkansas
corporations, allegedly hold certain promissory notes
executed on December 2, 2011, by Jeremy Carroll, individually
and as Managing Member of Beckham Creek Properties, LLC. The
promissory notes are secured by certain real property in
Newton County, Arkansas that is owned by Beckham Creek
Properties. Plaintiffs at some point felt that Carroll and/or
Beckham Creek Properties did not satisfy the obligations
imposed on them by the promissory notes, so Plaintiffs filed
the Original Complaint (Doc. 1-1) in the Circuit Court of
Newton County, Arkansas on September 29, 2016. The Original
Complaint named Carroll and Beckham Creek Properties, both
Arkansas citizens and Crown Financial, LLC ("Crown
Financial"), a Texas citizen, which the plaintiffs
believed held a superior lien on the mortgaged property
located in Newton County.
were ultimately unable to perfect service of process on both
Carroll and Beckham Creek Properties. Thus, Carroll filed a
motion to dismiss the claim against him for failure to
perfect service, and that motion was granted without
prejudice on September 11, 2017. See Doc. 16, p. 2.
As for Beckham Creek Properties, Plaintiffs opted to
voluntarily nonsuit their claims against it on November 7,
2017. Id. Plaintiffs thereafter filed a separate
case on November 20, 2017, against both Carroll and Beckham
Creek Properties in Newton County Circuit Court. (Doc. 14, p.
2). Therefore, as of the end of November of 2017, there were
two cases pending in state court concerning Plaintiffs'
interest in the subject property: one against Crown Financial
and one against Carroll and Beckham Creek Properties.
in late December of 2017, Plaintiffs learned through
discovery that Carroll had conveyed his membership interest
in Beckham Creek Properties to Crown Financial approximately
four months prior to the execution of the promissory notes.
See Doc. 14-2. Upon learning this information,
Plaintiffs filed an Amended Complaint (Doc. 3) against Crown
Financial on January 16, 2018, alleging that: (1) Carroll
retained apparent authority to enter into the promissory
notes on behalf of Beckham Creek Properties; (2)
Plaintiffs' lien on the mortgaged property remained valid
because they were entitled to rely upon Carroll's
representations that he remained the company's Managing
Member; (3) Crown Financial's lien on the mortgage
property "merged" with its ownership of Beckham
Creek Properties; and (4) this merger elevated
Plaintiffs' mortgage to the primary lien status.
January 29, 2018, less than two weeks after Plaintiffs filed
the Amended Complaint, Crown Financial filed its Notice of
Removal in this Court. See Doc. 1. The basis for
removal was complete diversity of citizenship between the
parties to the Amended Complaint, Plaintiffs and Crown
Financial, and an amount in controversy exceeding $75, 000.
However, at the time the Original Complaint was filed,
complete diversity did not exist because Carroll and Beckham
Creek Properties-both Arkansas citizens-were named
defendants. Complete diversity was created only after the two
nondiverse defendants were dismissed from the Original
Complaint and the Amended Complaint was filed.
believe removal under these circumstances was improper, and
they filed a Motion to Remand on February 15, 2018. (Doc.
13). As grounds for remand, they argue that the Court lacks
subject matter jurisdiction because Crown Financial's
removal was untimely under 28 U.S.C. § 1446(b), (c)(1).
Crown Financial responds that when Plaintiffs filed their
Amended Complaint more than a year after the lawsuit began,
they drastically changed the character of the allegations
against Crown Financial, which effectively brought a new
lawsuit against Crown Financial that the company sought to
remove. (Doc. 16, p. 5). Alternatively, Crown Financial
argues that the Plaintiffs acted in bad faith to prevent
removal, and therefore, the one-year time limit to removal
pursuant to diversity jurisdiction does apply. For these
reasons, Crown Financial contends that removal within 30 days
of service of the Amended Complaint was timely.
may remove civil actions to federal court only if the claims
could have been originally filed in federal court."
Cent. Iowa Power Coop. v. Midwest Indep. Transmission
Sys. Operator, Inc., 561 F.3d 904, 912 (8th Cir. 2009).
"The proponents of federal jurisdiction bear 'the
burden to establish federal subject matter jurisdiction,
' and 'all doubts about federal jurisdiction must be
resolved in favor of remand.'" Moore v. Kan.
City Pub. Sen., 828 F.3d 687, 691 (8th Cir. 2016)
(quoting Cent. Iowa Power Coop., 561 F.3d at 912).
U.S.C. § 1446(b)(1) states that a notice of removal
"shall be filed within 30 days after the receipt by the
defendant... of a copy of the initial pleading setting forth
the claim upon which such action or proceeding is based"
If an action is not initially removable under §
1446(b)(1), "a notice of removal may be filed within
thirty days after receipt by the defendant... 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)(3). However,
"a case may not be removed under subsection (b)(3) on
the basis of jurisdiction conferred by section 1332 more than
1 year after commencement of the action, unless the district
court finds that the plaintiff has acted in bad faith in
order to prevent a defendant from removing the action."
28 U.S.C. § 1446(c)(1).
case at bar, it is clear that the Original Complaint filed in
state court was not initially removable, and the Notice of
Removal was filed in this Court more than one year after the
case commenced. In opposition to the Motion to Remand, Crown
Financial avers that its removal motion is timely because it
falls under two exceptions to the general rules of §
1446: (1) the judicially created "revival
exception" to § 1446(b)(1); and (2) the bad-faith
exception to § 1446(c)(1).