Firefighters' Ret. Sys. v. Consulting Grp. Servs., LLC

STEPHEN C. RIEDLINGER, UNITED STATES MAGISTRATE JUDGE

Phillip W. Preis, Caroline Dana Preis, Charles Malcolm Gordon, Charles M. Thompson, Crystal Dibenedetto Burkhalter, Jennifer Rae Dietz, John Neher Grinton, Preis Gordon, APLC, Baton Rouge, LA, for Plaintiffs, Firefighters' Retirement System, Municipal Employees' Retirement System and New Orleans Firefighters' Pension & Relief Fund.

Paul James Masinter, Justin P. Lemaire, Michael Q. Walshe, Jr., Nicholas John Wehlen, Stone, Pigman, Walther, Wittmann, LLC, Amelia Williams Koch, Kathlyn G. Perez, John B. Davis, II, Baker, Donelson, Bearman, Caldwell & Berkowitz, New Orleans, LA, Grant J. Esposito, Jessica L. Kaufman, Morrison & Foerster LLP, New York, NY, for Defendants, Consulting Services Group, LLC and Grant Thornton, LLP.

RULING

SHELLY D. DICK, DISTRICT JUDGE, MIDDLE DISTRICT OF LOUISIANA

The Court has carefully considered the Petition, the record, the law applicable to this action, and the Report and Recommendation of United States Magistrate Judge Stephen C. Riedlinger dated August 25, 2015. Plaintiffs have filed an Objection which the Court has also considered.

The Court hereby approves the Report and Recommendation of the Magistrate Judge and adopts it as the Court's opinion herein.

Accordingly, the Motion to Remand filed by the Plaintiffs is denied.

MAGISTRATE JUDGE'S REPORT

STEPHEN C. RIEDLINGER, UNITED STATES MAGISTRATE JUDGE

Before the court is a Motion to Remand filed by plaintiffs, the Firefighters' Retirement System, Municipal Employers' Retirement System of Louisiana and New Orleans Firefighters' Pension and Relief Fund (hereafter, “plaintiffs”). Record document number 17. The motion is opposed.¹

Plaintiffs filed a Petition for Damages in state court against defendants Grant Thornton, LLP, (“Grant Thornton”) and Consulting Services Group, LLC (“CSG”).² In their Petition the plaintiffs alleged claims against Grant Thornton under the following theories of liability based on Louisiana state laws: (1) the Louisiana Securities Act; (2) detrimental reliance; (3) negligence and negligent misrepresentation; (4) third party beneficiary; and, (5) the Louisiana Unfair Trade Practices Act. Against CSG, the plaintiffs alleged claims for breach of contract and a violation of the Louisiana Unfair Trade Practices Act. Plaintiffs did not allege claims under federal law against any of the defendants.

Defendant CSG removed the petition to this court based on the following grounds: (1) jurisdiction under 28 U.S.C. § 1334(b), which provides that “the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11”; and (2) diversity jurisdiction under 28 U.S.C. § 1332(a).³ Defendant Grant Thornton consented to the removal.⁴

General Principles

The removing party bears the burden of establishing federal jurisdiction over a state court suit. Carpenter v. Wichita Falls Independent School Dist., 44 F.3d 362, 365 (5th Cir.1995). As with removal under the general provision of § 1441(a), the existence of subject matter jurisdiction is determined as of the time of removal. In re Bissonnet Investments LLC, 320 F.3d 520, 525 (5th Cir.2003); In re Legal Xtranet, Inc., 453 B.R. 699, 703–04 (W.D.Tex.2011). Thus, if “related to” jurisdiction exists at the time of removal, subsequent events do not divest the district court of subject matter jurisdiction. In re Enron Corp. Securities, 535 F.3d 325, 336 (5th Cir.2008). Generally, the “well-pleaded complaint” rule applies only to statutory “arising under” cases. American National Red Cross v. S.G., 505 U.S. 247, 258, 112 S.Ct. 2465, 120 L.Ed.2d 201 (1992). Therefore, the “well-pleaded complaint” rule is used to determine whether there is “arising under” jurisdiction in bankruptcy, but it is not applicable in “related to” bankruptcy removal cases. In re Enron Corp. Securities, Derivative & ERISA Litigation, 511 F.Supp.2d 742, 764 (S.D.Tex.2005); In re Brooks Mays Music Co., 363 B.R. 801, 814–15 (N.D.Tex.2007).

Contractual Waiver of Right to Remove