United States District Court, W.D. Virginia, Charlottesville Division
ROLAND H. SIMON, et al., Plaintiffs,
REGAL INVESTMENT ADVISORS LLC, et al., Defendants.
Glen E. Conrad Chief United States District Judge.
Roland H. Simon, Carlos R. Ayers, Earl Richard Brownlee, II,
and Jan Main Thomas filed this action against Regal
Investment Advisors LLC ("RIA") and four individual
defendants in the Circuit Court for the County of Albemarle,
seeking monetary damages for alleged violations of state and
federal law. RIA and three of the individual defendants
(collectively, the "Regal Defendants") removed the
case to this court on the grounds of federal question and
diversity jurisdiction. The plaintiffs have moved to remand
the case to state court on the basis that the fourth
individual defendant, James Martin Barnes, did not timely
consent to removal. The court held a hearing on the
plaintiffs' motion to remand on March 22, 2017. For the
following reasons, the court will grant the motion and remand
the case to state court.
plaintiffs are retired employees of the University of
Virginia. In the 1980s, Barnes introduced himself to the
plaintiffs as a University-approved financial advisor. Each
of the plaintiffs became a client of Barnes and allowed him
to manage their retirement accounts. In 2014, while working
for RIA, Barnes allegedly defrauded the plaintiffs by
convincing them to invest in a North Carolina site
development and construction company known as Triton Sitework
Development ("Triton"). Unbeknownst to the
plaintiffs, Barnes was a part owner of Triton, and the
company was "already undergoing bankruptcy" at the
time Barnes convinced them to invest in it. Compl.¶ 54,
Docket No. 1-1. As a result of Barnes'actions, the
plaintiffs "lost the entirety of their principal
investment totaling $1, 808, 802, " as well as the
"income stream" promised by Barnes. Id. at
November of 2016, the plaintiffs filed suit against the Regal
Defendants and Barnes in the Circuit Court for the County of
Albemarle, asserting claims for breach of contract,
negligence, breach of fiduciary duty, fraud, and violations
of state and federal securities laws. At the time the action
was filed, none of the defendants resided in Virginia.
Accordingly, on November 30, 2016, the plaintiffs served the
defendants through the Secretary of the Commonwealth,
pursuant to Virginia Code § 8.01-329(C). On December 1,
2016, the Secretary of the Commonwealth forwarded the
complaint and summons by certified mail to the defendants.
The Regal Defendants, each of whom resides in Michigan,
received the certified mail on or around December 6, 2016. On
December 16, 2016, the Secretary of the Commonwealth filed
Certificates of Compliance in the Circuit Court, which
triggered the defendants' time to file responsive
pleadings under § 8.01-329(C).
December 23, 2016, the Regal Defendants removed the case to
this court. In their notice of removal, the Regal Defendants
alleged, "upon information and belief, " that
Barnes had "not yet been properly served with
process." Notice of Removal ¶ 27, Docket No. 1.
They further alleged, "upon information and belief,
" that even if Barnes had been properly served with
process, "he would consent to the removal of the State
Court Action to this Court." Id. at ¶ 28.
January 23, 2017, the plaintiffs timely moved to remand,
asserting that Barnes had been properly served with process,
and that the removal was procedurally defective for lack of
consent by all defendants. See 28 U.S.C. § 1447
("A 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
under section 1446(a).").
January 26, 2017, the Regal Defendants filed a "notice
of Barnes' consent to removal and supplemental notice of
removal." Supp'l Notice, Docket No. 17. The
supplemental notice was accompanied by a January 26, 2017
email from an attorney in North Carolina expressing
Barnes' consent. See Supp'l Notice Ex. A, Docket No.
17-1 ("As NC Counsel for Defendant James Martin Barnes,
please accept this email as his consent to the removal of
this matter to U.S. District Court for the Western District
of Virginia, Charlottesville Division.").
plaintiffs subsequently moved to strike the supplemental
notice on the basis that it was filed more than 30 days after
Barnes was served with process. In response to the
plaintiffs' filing, the Regal Defendants submitted an
affidavit from Barnes, in which he explained that he was not
currently residing at the address in Durham, North Carolina
where the summons and complaint had been mailed. Barnes
asserted that he came into possession of the summons on
December 24, 2016, but did not receive a copy of the
complaint until December 28, 2016. Barnes Affid. ¶¶
5-7, Docket No. 28-1.
plaintiffs subsequently requested and obtained leave to
depose Barnes regarding the statements contained in his
affidavit. On March 17, 2017, three days before the scheduled
deposition, the Regal Defendants filed a corrected affidavit
from Barnes. In the corrected affidavit, Barnes explained
that his sister was residing at the address in Durham where
the summons and complaint had been mailed. On December 24,
2016, while visiting his sister, Barnes was given a stack of
mail that had been sent to her residence. However, Barnes did
not open the mail at that time. Over the next few days,
Barnes received additional items that had been mailed to his
sister's address. On December 28, 2016, Barnes opened a
package that contained the complaint filed in the Circuit
Court for the County of Albemarle. Barnes indicated in the
corrected affidavit that he does "not know when the
summons or complaint first came into [his] possession."
Barnes Corrected Affid. ¶ 14, Docket No. 32-1. At the
conclusion of the corrected affidavit, Barnes noted that he
had suffered a series of debilitating losses in recent years,
which had led him to seek treatment from physical and mental
health care providers. Barnes also stated that he "did
and do[es] consent to the removal" of the action to
federal court. Id. at ¶ 20.
was deposed on March 20, 2017. During the deposition, Barnes
initially testified that the envelope containing the summons
and complaint was "physically handed" to him on
December 24, 2016. Barnes Dep. 45 Docket No. 34; see also
id. at 45-46 ("I received both documents on the
same day, opened and read both documents four days later, on
the 28th."). However, Barnes later testified that he was
not absolutely certain as to when he received the summons and
complaint. See Id. at 74-75 ("When I was asked
by my attorney, ... [m]y answer to her was no, I can't
swear definitively that I had received that package ... on
December 24th. I can't."). He made clear, however,
that the summons and complaint were contained in the same
envelope, and that he received them on the same day. See
Id. at 45 ("I didn't receive [the summons
and complaint] on two separate days. I received both
documents on the same day."); 14. at 50 (indicating that
"the envelope" containing the summons and complaint
was given to him on the 24th of December, but that he did not
"open it" until the 28th") (emphasis added);
Id. at 78 (discussing when he became aware of
"the existence of the package" and "the
contents contained within that package")
(emphasis added). At the conclusion of his deposition, Barnes
reiterated that he "want[s] [the case] to be in federal
court." Id. at 84.
courts are courts of limited jurisdiction, " which
"possess only that power authorized by Constitution and
statute." Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994). Accordingly, the court
must "presume that a cause lies outside this limited
jurisdiction, . . . and the burden of establishing the
contrary rests upon the party asserting jurisdiction."
Barbour v. Int'l Union. 640 F.3d 599, 605 (4th
Cir. 2011) (en banc) (abrogated in part on other grounds by
the Federal Courts Jurisdiction and Venue Clarification Act
of 2011, Pub. L. No. 112-63, 125 Stat. 758 (Dec. 7, 2011)).
statutes, in particular, must be strictly construed, inasmuch
as the removal of cases from state to federal court raises
significant federalism concerns." Id; see also Dixon
v. Coburg Dairy, Inc.. 369 F.3d 811, 816 (4th Cir. 2004)
(noting that federal courts "are obliged to construe
removal jurisdiction strictly because of the significant
federalism concerns implicated") (internal quotation
marks omitted). Thus, any doubts about the propriety of
removal should be resolved against the federal forum and in
favor of remanding the case to state court. Barbour,
640 F.3d at 605; see also Palisades Collections LLC v.
Shorts, 552 F.3d 327, 336 (4th Cir. 2008) (emphasizing
that courts have a "duty to construe removal
jurisdiction strictly and resolve all doubts in favor of
remand"); Marshall v. Manville Sales Corp., 6
F.3d 229, 232 (4th Cir. 1993) (recognizing
"Congress' clear intention to restrict removal and
to resolve all doubts about the property of removal in favor
of retained state court jurisdiction").
case, the parties' dispute regarding the propriety of
removal boils down to two issues: (1) whether Barnes properly
consented to removal; and (2) if not, whether this procedural
defect should be deemed cured in light of Barnes'
expressed desire to litigate the case in federal court. The
court addresses each of these issues in turn and concludes
that remand is warranted.
Adequacy of ...