Removal Generally
Removal of cases from one court to another is typically done when a party involved in a legal dispute believes the case should be heard in a different jurisdiction or court. Removal is governed by specific legal procedures and statutes, and it can occur for various reasons, depending on the nature of the case.
One common reason for removal is jurisdictional considerations. If a party believes that the case is better suited for a federal court rather than a state court, or vice versa, they may seek to remove the case to the more appropriate jurisdiction. One of the most common scenarios of “removal” is based on what is known as diversity jurisdiction exists. In the United States, diversity jurisdiction allows a party to move a case from state court to federal court if the parties involved are from different states and the amount of controversy exceeds a certain threshold.
Another common basis for removal is the existence of a federal issue. If a case involves a “federal question,” which is based on federal law, the party may seek to remove it to a federal court. Federal courts have jurisdiction over cases that involve federal laws or the U.S. Constitution.
In cases involving complex legal issues, a party might argue that the case should be heard in a court with specialized expertise. This is often the case in matters involving bankruptcy, intellectual property, or other specialized areas of law.
Removal to Bankruptcy Court
In some situations, having a case transferred from another court to a bankruptcy court makes sense. This makes sense, for example, when a defendant in a case in another court files for bankruptcy. Because the Bankruptcy Court is responsible for adjudicating claims against a bankruptcy estate, it makes sense for the Bankruptcy Court to be involved in the matter. Bankruptcy courts are often able to move cases along quicker than other courts, which is important in the context of bankruptcy cases where the ability of a debtor to exist as a going concern often requires expedited action.
28 U.S.C. §1452(a) provides as follows:
A party may remove any claim or cause of action in a civil action other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce such governmental unit’s police or regulatory power, to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.
As the title to 28 U.S.C. §1452 itself indicates (“Removal of Claims related to bankruptcy cases”), matters that can be removed include claims “related to” a bankruptcy case within the meaning of 28 U.S.C. §1334(b).
In addition to 28 U.S.C. §1452(a), any civil action brought in a state court may also be subject to removal pursuant to 28 U.S.C. §1441(a), if applicable. 28 U.S.C. §1441(a) provides as follows:
- Generally. – Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
Generally, where the basis for removal includes claims related to bankruptcy cases, or federal questions concerning title 11 of the United States Code (the “Bankruptcy Code”), if the underlying court case sought to be removed (the “Bankruptcy Related Removed Case”) is pending in one state, the removal pleadings should be filed in the United States Bankruptcy Court for the U.S. district of that state (or, if such state has more than one federal district, in the Bankruptcy Court for the appropriate federal district), whether the bankruptcy case is pending in the United States Bankruptcy Court for that district or in a a bankruptcy court located in another state. See Rule 9027(a)(1), Federal Rules of Bankruptcy Procedure (hereinafter referred to as “Bankruptcy Rule ___”); and 28 U.S.C. §1446(a).
Removal Procedures
As set forth in both Bankruptcy Rule 9027(a) and 28 U.S.C. §1446(a), the basic pleading to remove a case is a Notice of Removal. Neither a motion nor a court order is required to effect removal of a court action; removal is accomplished by filing a notice of removal with the clerk of the bankruptcy court and a copy of such notice with the clerk of the court from which the case is being removed.
With respect to removal pursuant to 28 U.S.C. §1452, Bankruptcy Rule 9027(a)(1) provides as follows:
- Where filed; form and content. A notice of removal shall be filed with the clerk for the district and division within which is located the state or federal court where the civil action is pending. The notice shall be signed pursuant to Rule 9011 and contain a short and plain statement of the facts which entitle the party filing the notice to remove, contain a statement that upon removal of the claim or cause of action the proceeding is core or non-core and, if non-core, that the party filing the notice does or does not consent to entry of final orders or judgment by the bankruptcy judge, and be accompanied by a copy of all process and pleadings.
As set forth in the foregoing Rule, the notice of removal must contain a statement of the facts which entitle the party filing the notice to remove the matter. Those facts should include sufficient facts to establish a jurisdictional basis for removal, with reference to the statutes conferring jurisdiction (e.g., 28 U.S.C. §1452 and 28 U.S.C. §1334.) Also included in the facts should be a reference to the underlying bankruptcy case to which the removed action relates, including the case name and number and the court in which such bankruptcy case is pending. As further set forth in Bankruptcy Rule 9027(a)(1), the notice must state whether the removed matter is core or non-core and, if it is non-core, whether the party removing the matter consents to entry of final orders or judgment by the bankruptcy judge.
Another requirement set forth in Bankruptcy Rule 9027(a)(1) is that the notice of removal be accompanied by a copy of all process and pleadings in the removed action. The bankruptcy court will enter an order after the filing of the notice of removal directing that copies of all process and pleadings not already filed with the bankruptcy court be filed within 21 days, and the order will set a status conference before the court at which a pretrial schedule and trial date will be discussed.
Promptly after filing the notice of removal, a copy of the notice must be served by the party filing the notice on all other parties to the removed claim or cause of action. Bankruptcy Rule 9027(b). All other pleadings filed in the removed action should also be served on all other parties. In addition, promptly after filing the notice of removal, a copy of the notice must be filed by the removing party with the clerk of the court from which the claim or cause of action was removed. Bankruptcy Rule 9027(c). The Rule further states that removal is effected on filing of a copy of the notice of removal with the clerk of the court from which the claim or cause of action is removed, and that parties to the removed action shall proceed no further in that court unless and until the claim or cause of action is remanded.
Bankruptcy Rule 9027(c).
With respect to removal pursuant to 28 U.S.C. §1441(a), 28 U.S.C. §1446 sets forth procedures very similar to those contained in Bankruptcy Rule 9027.
Time for Filing Notice of Removal
With respect to removals pursuant to 28 U.S.C. §1452, Bankruptcy Rules 9027(a)(2) and (3) govern the time in which a notice of removal must be filed in order to be timely. The rules distinguish between the time for seeking removal if the underlying court action sought to be removed is already pending when the bankruptcy case is thereafter commenced (Bankruptcy Rule 9027(a)(2)) and when the underlying court action sought to be removed is filed after the bankruptcy case has already been commenced (Bankruptcy Rule 9027(a)(3)).
Bankruptcy Rule 9027(a) provides, in pertinent part, as follows:
- Time for Filing; Civil Action Initiated For Commencement of the Case Under The Code. If the claim or cause of action in a civil action is pending when a case under the Code is commenced, a notice of removal may be filed only within the longest of (A) 90 days after the order for relief in the case under the Code, (B) 30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under §362 of the Code, or (C) 30 days after a trustee qualifies in a Chapter 11 reorganization case but not later than 180 days after the order for relief.
- Time for Filing; Civil Action Initiated After Commencement of the Case Under the Code. If a claim or cause of action is asserted in another court after the commencement of a case under the Code, a notice of removal may be filed with the clerk only within the shorter of (A) 30 days after receipt, through service or otherwise, of a copy of the initial pleading setting forth the claim or cause of action sought to be removed, or (B) 30 days after receipt of the summons if the initial pleading has been filed with the court but not served with the summons.
With respect to removals pursuant to 28 U.S.C. §1441(a), the time in which a notice of removal must be filed in order to be timely is set forth in 28 U.S.C. §1446(b).
Motion To Remand
A party seeking to oppose removal of a claim or cause of action pursuant to 28 U.S.C. §1452(a) may file a motion to remand in the bankruptcy court. As provided in Bankruptcy Rule 9027(d), a motion to remand will be governed by Bankruptcy Rule 9014 and must be served on the parties to the removed claim or cause of action.
In addition to motions to remand based upon lack of subject matter jurisdiction, the bankruptcy court may remand a claim or cause of action “on any equitable ground.” 28 U.S.C. §1452(b).
An order pursuant to §1452(b) remanding a claim or cause of action, or a decision pursuant to §1452(b) not to remand, is not reviewable by appeal or otherwise by a United States Court of Appeals or by the United States Supreme Court. 28 U.S.C. §1452(b). Such an order may, however, be reviewed on appeal by the United States District Court.
Pursuant to 28 U.S.C. §1447(c), a motion to remand a case removed from State court pursuant to 28 U.S.C. §1441(a) on the basis of any defect other than lack of subject matter jurisdiction must be filed within 30 days after the filing of the notice of removal. In addition, §1447(c) also provides that an order remanding a case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.
With respect to removals pursuant to 28 U.S.C. §1441(a), §1447(d) provides that an order remanding a case to state court is not reviewable on appeal or otherwise. Note that this provision, unlike §1452(b), does not mention a decision not to remand a case.
Motion to Transfer Venue
A party removing a claim, a cause of action or a case may desire to seek to transfer venue from the district to which it was transferred to another federal district court. This may be particularly true in a case where the underlying bankruptcy case which is the basis for removal of the Bankruptcy Related Removed Case is pending in a bankruptcy court in a different state. A motion to transfer venue may be brought under 28 U.S.C. §1412 and/or §1404(a).
28 U.S.C. §1412 provides as follows:
A district court may transfer a case or proceeding under title 11 to a district court for another district, in the interest of justice or for the convenience of the parties.
28 U.S.C. §1404(a) provides as follows:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.
Additionally, Bankruptcy Rule 7087 provides:
On motion and after a hearing, the court may transfer an adversary proceeding or any part thereof to another district pursuant to 28 U.S.C. §1412, except as provided in Rule 7019(2).
A motion to transfer venue should be filed with the clerk of the bankruptcy court. Except with respect to cases to be tried in the district court pursuant to 28 U.S.C. §157(b)(5), unless the reference to the bankruptcy court has been withdrawn, the bankruptcy court will determine the motion to transfer venue.
Procedure After Removal
With respect to removals pursuant to 28 U.S.C. §1452(a), Bankruptcy Rule 9027(e) sets forth certain procedures applicable after a claim or cause of action is removed. After removal the court may issue all necessary orders and processes to bring before it all proper parties. Bankruptcy Rule 9027(e)(1). If one or more of the defendants has not been served with process, the service has not been perfected prior to removal, or the process served proves to be defective, such process or service may be completed or new process issued pursuant to Part VII of the Bankruptcy Rules. Any defendant upon whom process is served after removal may seek to remand the case. Bankruptcy Rule 9027(f).
Any party filing a pleading in connection with the removed claim or cause of action, other than the party filing the notice of removal, must file a statement admitting or denying any allegation in the notice of removal asserting that the proceeding is core or non-core. If such statement asserts that the proceeding is non-core, it shall state that the party does or does not consent to entry of final orders or judgment by the bankruptcy judge. Such statement shall be signed pursuant to Bankruptcy Rule 9011 and shall be filed not later than 14 days after the filing of the notice of removal. A copy of such statement shall be mailed to every other party to the removed claim or cause of action. Bankruptcy Rule 9027(e)(3).
If a right to trial by jury exists and is properly asserted, the parties must also file a statement consenting or withholding consent to the jury trial being conducted by the bankruptcy judge. Bankruptcy Rule 9015(b).10 The statement must be filed before the conclusion of the initial pretrial conference.
Pursuant to Bankruptcy Rule 9027(g), the rules provided in Part VII of the Bankruptcy Rules apply to a removed claim or cause of action and shall govern procedure after removal. Repleading is not necessary unless the court so orders. In a removed action in which the defendant has not answered, the defendant shall answer or present other available defenses or objections within 21 days following the receipt through service or otherwise of a copy of the initial pleading setting forth the claim for relief on which the action or proceeding is based, or within 21 days following the service of summons on such initial pleading, or within 7 days following the filing of the notice of removal, whichever period is longest. Bankruptcy Rule 9027(g).
If the court from which the claim or cause of action has been removed fails to deliver certified copies to a party requesting such copies when a proper request has been made accompanied by payment or tender of the lawful fees required in connection therewith, the court to which the claim or cause of action has been removed may, on affidavit reciting the facts, direct such record to be supplied by affidavit or otherwise. Thereupon the proceedings, trial and judgment may be had in the court, and all processes awarded, as if such certified copies had been filed. Bankruptcy Rule 9027(h).
Pursuant to Bankruptcy Rule 9027(i), all injunctions issued, orders entered and other proceedings had prior to removal shall remain in full force and effect until dissolved or modified by the court to which the claim or cause of action is removed. In addition, any attachment or sequestration of property in the court from which the claim or cause of action was removed shall continue to hold the property to answer the final judgment or decree in the same manner as the property would have been held to answer final judgment or decree had it been rendered by the court from which the claim or cause of action was removed. All bonds, undertakings or security given by either party to the claim or cause of action prior to its removal shall remain valid and effectual notwithstanding such removal.
Bankruptcy Rule 9027(i).
With respect to removals pursuant to 28 U.S.C. §1441(a), similar procedures are set forth in 28 U.S.C. §§1448, 1449 and 1450.
Summary
Understanding the reasons and legal mechanisms behind case removal is crucial for both legal practitioners and individuals involved in legal disputes. It ensures that cases are heard in the most appropriate forum, promoting fair and efficient resolution.
Freeman Law represents clients in the Dallas-Fort Worth area. Schedule a consultation or call (214) 984-3410 to discuss your Bankruptcy concerns.
