Removal, Snap Removal, and Complete Diversity
A homeowner in State A hires BuildCo, a corporation incorporated in State B with its principal place of business in State C, to renovate a kitchen. BuildCo's project manager, Dana, a citizen of State A, supervised the crew. The job goes badly. The homeowner sues Dana in State A state court for $70,000 in negligent supervision and BuildCo for $15,000 in fraud over a misrepresented schedule, naming both as defendants in one complaint. BuildCo is served on March 2; Dana, who is traveling abroad, is served on March 20. On March 25, BuildCo files a notice of removal to the federal district court sitting in State A, invoking diversity jurisdiction. The homeowner moves to remand and, in the alternative, moves to amend the complaint to add a $10,000 fraud claim against BuildCo. BuildCo argues that the homeowner waited too long, that Dana's citizenship is irrelevant because she was not served when the notice was filed, and that the claims should be aggregated to satisfy the amount in controversy.
1. Is removal proper? Address complete diversity, the forum-defendant rule, and BuildCo's service-timing argument.
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Removal fails, but not for the reason BuildCo expects.
Complete diversity. Section 1332 requires that no plaintiff share citizenship with any defendant. The homeowner is a State A citizen; Dana is a State A citizen. The presence of a single non-diverse defendant defeats diversity, and § 1441(b)(2) cannot cure it. Dana's later service is irrelevant to the diversity analysis, because citizenship is measured at the time of removal and service does not change citizenship. BuildCo's reliance on the 'properly joined and served' language of § 1441(b)(2) addresses only the forum-defendant rule, which is an additional bar to removal, not a grant of jurisdiction.
Fraudulent joinder. BuildCo could argue Dana was joined solely to defeat diversity. The standard is whether there is no possibility of recovery against Dana under state law. Dana personally supervised the crew whose work is alleged to be defective, so a negligent-supervision claim is at least colorable. That defeats fraudulent joinder.
Forum-defendant rule. Even if diversity existed, § 1441(b)(2) bars removal 'if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.' Courts are split on snap removal, but the decisions permitting it generally require that no forum defendant has been served, a condition met here. BuildCo's argument would have force in those courts, but it cannot overcome the absence of complete diversity.
Result: the court lacks subject-matter jurisdiction and must remand.
2. Does the proposed amendment adding a $10,000 fraud claim against BuildCo change the analysis? What if the homeowner had dropped Dana and sued BuildCo alone for $85,000?
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The amendment changes nothing. Dana remains a party and remains a State A citizen, so complete diversity is still absent. The amendment also cannot create federal-question jurisdiction: the fraud claim arises under state law, and § 1331 requires a federal issue on the face of the well-pleaded complaint. A plaintiff cannot manufacture diversity by adding claims; only dropping the non-diverse party helps.
The hypothetical is different. If the homeowner sued BuildCo alone for $85,000, complete diversity would exist. BuildCo is a citizen of State B (state of incorporation) and State C (principal place of business) under § 1332(c)(1); neither is State A. The amount in controversy would be $85,000, which exceeds $75,000. A single plaintiff may aggregate multiple claims against a single defendant to reach the threshold even if no individual claim does. Removal would then be proper, assuming the notice is timely under § 1446(b).
Timing point. The relevant citizenship and amount are measured at the time of removal. Post-removal events generally do not defeat jurisdiction that existed when the notice was filed, but a plaintiff may still seek remand if the jurisdictional facts were never present.
3. What is the consequence of the homeowner's delay in moving to remand, and what standard governs the motion?
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Section 1447(c) draws a line between procedural and jurisdictional defects. A motion to remand on the basis of a defect other than lack of subject-matter jurisdiction must be made within 30 days after the notice of removal is filed. A defect in subject-matter jurisdiction, by contrast, may be raised at any time, by a party or by the court sua sponte, and the court must remand if it lacks jurisdiction. Because the absence of complete diversity is jurisdictional, the homeowner's delay is not fatal.
Costs and fees. The court may award costs and attorney's fees under § 1447(c) if the removing party lacked an objectively reasonable basis for removal. BuildCo's reliance on snap removal is not frivolous in circuits that permit it, but ignoring Dana's citizenship is harder to defend, especially since she was a named defendant from the outset. That is a discretionary call.
The one-year limit is irrelevant. Section 1446(c)(1) bars removal on diversity grounds more than one year after commencement. Removal here occurred within weeks, so the limit does not apply.