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Continental Property Group v. City of Minneapolis: US District Court : CIVIL PROCEDURE - removal untimely; any 'revival exception' to usual 1446 30-day time not applicable; remand to state court

Continental Property Group, Inc.,
v. Civil No. 08-5929 ADM/JJK
City of Minneapolis,
William Skolnick, Esq., Skolnick & Shiff, P.A., Minneapolis, MN, on behalf of the Plaintiff.
Charles Nauen, Esq., Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, on behalf of the
On January 29, 2009, the undersigned United States District Judge heard oral argument
on Plaintiff Continental Property Group, Inc.s (CPG) Motion to Remand [Docket No. 6]. At
issue is whether the revival exception to 28 U.S.C. 1446(b) applies in this case. For the
reasons set forth below, the revival exception does not apply, and the motion to remand is
CPG owns a number of properties zoned as an Institutional Office Residence District in
Minneapolis. Notice of Removal [Docket No. 1], Attach. 2, (Amend. Compl.) 1, 3. CPG
hired architects, began planning a mixed-use development for these properties, and CPG
representatives met with city officials including Councilwoman Lisa Goodman (Goodman).
Id. 5-7. Based on this meeting, CPG redesigned its development and applied for two
conditional use permits, two variances, and a major site plan review. Id. 8, 9. After the
Department of Community Planning and Economic Development and the City of Minneapolis
Planning Commission denied CPGs application, CPG appealed to the Minneapolis City
Council, which also denied the application. Id. 10-12.
On April 23, 2007, CPG filed this action in state court seeking declaratory and injunctive
relief for alleged violations of Minn. Stat. 555 and 42 U.S.C. 1983. Specifically, CPG
alleged the Citys decision to deny its application was arbitrary and capricious, the stated reasons
for the denial were pretextual and not applied evenly to similarly situated developments, and the
decision was motivated by personal animus, apparently by Goodman. Id. 13. CPG also
alleged that the City violated its right to equal protection under the Fourteenth Amendment to the
United States Constitution. Id. 22. CPG sought declaratory relief, money damages, an order
directing the city to approve the application, and costs and attorneys fees. Id. at 4-5.
The parties engaged in discovery from late 2007 until May 2008, after which the City
moved for summary judgement. Mot. of Removal Exs. [Docket No. 4], Ex. 9. In its opposition
to summary judgment, CPG included a section alleging violations of its due process rights under
the Fourteenth Amendment. Id., Ex. 35 at 37-38. On October 10, 2008, the state court denied
summary judgment with respect to the claim under the Minnesota statute and granted summary
judgment on the equal protection claim. Cargill Aff. [Docket No.10], Ex. F at 6-11. The court
added a new wrinkle, however, by recognizing a due process claim even though such a claim had
not been explicitly pled. Id. at 6. A trial date was set for Judge Aldrichs next assigned civil
trial time commencing February 17, 2009. Id., Ex. G.
On November 6, 2008, the City removed this action to this Court citing 28 U.S.C. 1331
1 Section 1446(b) includes a second paragraph that details the removal procedure if an
action is not originally removable but later becomes removable because a plaintiff files an
amended complaint. This action was removable from its inception because of the inclusion of
the equal protection claim, and neither party disputes that the second paragraph of 1446(b) is
as the jurisdictional basis for removal because the due process claim arises under the
Constitution of the United States. Notice of Removal 9. While the City recognizes that
removal was untimely under 28 U.S.C. 1446(b), it maintains that the revival exception to this
rule applies because the Complaint had effectively been amended by the state courts order to
add a new federal claim that substantially altered the character of this action. Id. 10. CPG then
brought the instant motion to remand this action to state court.
A case shall be remanded to state court [i]f at any time before final judgment it appears
that the district court lacks subject matter jurisdiction. 28 U.S.C. 1447(c). The party seeking
removal and opposing remand has the burden of establishing federal subject matter jurisdiction.
See In re Bus. Mens Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993). When
considering a motion to remand, a court must resolve all doubts questioning federal jurisdiction
in favor of remand. See id.
Under 28 U.S.C. 1446(b):
The notice of removal of a civil action or proceeding shall be filed
within thirty days after the receipt by the defendant, through service
or otherwise, of a copy of the initial pleading setting forth the claim
for relief upon which such an action or proceeding is based, or within
thirty days after the service of summons upon the defendant if such
initial pleading has then been filed in court and is not required to be
served on the defendant, whichever period is shorter.1
The City did not remove this action within thirty days of receiving CPGs complaint, and
typically, this would foreclose removal under 1446(b). However, courts have created a narrow
exception to this rule where the complaint has been amended to substantially alter the character
of the action. See Johnson v. Heublein, Inc., 227 F.3d 236 (5th Cir. 2000). While the Eighth
Circuit has not addressed the requirements for this revival exception, other courts that have
recognized the exception rely on Wilson v. Intercollegiate (Big Ten) Conference Athletic Assoc.,
668 F.2d 962 (7th Cir. 1982), to explain the contours and policy considerations for the exception.
See e.g. Johnson, 227 F.3d at 242; McKenna v. Brassard, 704 F.Supp. 309, 310 (D. Mass. 1989);
Pearson v. Gerber Products Co., 788 F.Supp. 410, 413 (W.D. Ark. 1992).
In Wilson, the plaintiff initially raised claims in state court under the equal protection and
due process clauses of the United States and Illinois constitutions, and the defendant did not
attempt to remove the case at the time it was served. Id. at 964. About a year later, the plaintiff
amended his complaint to alleged violations of several civil rights statutes, Title IX, and the First
Amendment to the United States Constitution. Id. The defendant then removed the case to
federal court, the plaintiff moved to remand, and the district court denied the motion to remand
and granted summary judgment for the defendant. Id. On appeal, the Seventh Circuit traced the
revival exception to a Supreme Court decision that allowed removal if the amendment of the
complaint so changes the nature of [an] action as to constitute substantially a new suit begun
that day. Id. at 965 (quoting Fletcher v. Hamlet, 116 U.S. 408, 410 (1886)). The court then
considered the rationale of the thirty-day limitation. It was designed to deprive the defendant of
the undeserved tactical advantage that he would have if he could wait and see how he was faring
in state court before deciding whether to remove the case to another court system. Id. A
second purpose for the time limitation is to prevent the delay and waste of resources involved in
starting a case over in a second court after significant proceedings, extending over months or
even years, may have taken place in the first court. Id. These considerations can be
overbourne if the plaintiff purposely misleads the defendant about the nature of the action to
dissuade removal or because new facts [have] come to light in the course of pretrial discovery.
Id. at 965-66. Finally, the court found that when applying the revival exception, courts should be
mindful of the danger of encroaching unduly on the authority of the state courts. Id. at 966.
An amendment may substantially change a complaint if it modifies the target of [the
plaintiffs claim] or the nature of the relief sought. Id. A change in the basic legal theory of
the action may also constitute a substantial change. Id. Additionally, the interjection of a new
claim based on an entirely new set of facts is a possible basis for a revival exception. See Dow
Corning Corp. v. Schpak, 65 F.R.D. 72, 75 (D. Ill. 1974). So too is the complete realignment of
parties to an action. Johnson, 227 F.3d at 242. However, a new or different theory of recovery
or measure of damages, McKenna, 704 F.Supp. at 311-12, or claims that require some additional
evidence or different burdens of proof, have failed to give rise to a revival exception. Samuels v.
Allstate Ins. Co., No. Civ.A.05-2490, 2006 WL 449257, at *4 (D. Kan. Feb. 23, 2006).
The City does not assert that CPG attempted to mislead it by holding back and then
asserting the due process claim. Therefore, the Court must determine whether the state court
judges reconstruction of the claims effectively constituted an amendment that so substantially
changed the complaint as to warrant application of the revival exception.
The City remains the target of CPGs lawsuit, and its decision to not grant CPG a
variance is still the focus of the complaint. The parties have not changed, and the basic legal
theory of the case, that the City wrongly denied CPG a variance, continues to drive this action.
In a trial of an equal protection claim, the focus would be on a comparison of the similarly
situated properties whereas the evidence in a due process claim would focus on whether the City
had a rational basis for its determination. Nonetheless, CPG would present evidence about
Goodman and her alleged role in the process under either theory. The underlying facts remain
the same, and CPG has not changed the relief it seeks.
Additionally, remand best serves the objectives of the thirty-day rule. The City remained
in litigation in state court for nearly two years until such time its motion for summary judgment
was denied. Discovery and dispositive motions have been completed, and one theory of relief
has been rejected. Trial is set to begin in the near future. As such, retaining jurisdiction of this
action in federal court would poorly serve judicial economy given how far the case has
progressed and the fact that state court is already very familiar with the dispute. Finally, the
Court is particularly mindful of comity and not encroaching upon the authority of the state court
given that the City alleges it was the state courts order that amended this action.
Courts have rarely applied the revival exception. In fact, it appears that the only court to
apply the revival exception in the last forty years was the Fifth Circuit in Johnson. The facts in
that case, however, are nothing like those in this case. The plaintiffs in Johnson originally filed
an action against numerous defendants based on an alleged default on promissory notes. 227
F.3d at 239. While a summary judgment motion was pending, two defendants filed a
confession of judgment and assignment of claims in state court and assigned to the plaintiffs
any claims they might have against the remaining defendants. Id. The plaintiffs and these new
co-plaintiffs then filed an amended complaint against the remaining original defendants adding
previously unfiled claims. Id. In finding that the revival exception applied, the court stated that
the allegations contained in the [amended complaint] bear no resemblance whatsoever to the
allegations of the [original complaint] and that arguably, the only valid claims in the original
complaint were directed at the new co-plaintiffs. Id. at 242. The complex factual and
procedural issues in Johnson bear no resemblance to the relatively straightforward situation in
this case.
CPG also requests an award of the attorneys fees it has incurred as a result of removal.
A court may award attorneys fees under 28 U.S.C. 1447(c) only where the removing party
lacked an objectively reasonable basis for seeking removal. Martin v. Franklin Capital Corp.,
546 U.S. 132, 141 (2005). The unique circumstance that led to the addition of the equal
protection claim persuades the Court there was uncertainty as to whether removal was
appropriate, and the City had an objectively reasonable basis for removal. Thus, CPGs request
for attorneys fees is denied.
Based upon the foregoing, and all of the files, records and proceedings herein, IT IS
HEREBY ORDERED that Plaintiff Continental Property Group, Inc.s Motion to Remand
[Docket No. 6] is GRANTED.
s/Ann D. Montgomery
Dated: February 5, 2009.


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