Is a District Court Error of Law Subject to Correction via Rule 60(b)(1) or Only on Appeal? A State Court Error of Law Pre-Removal? Circuit Split

Lindsey v. Highwoods Realty LP, 2011 U.S. Dist. LEXIS 127860 (E.D. Va. Nov. 4, 2011):

On July 15, 2010, Plaintiff filed a Motion to Amend Complaint with the Circuit Court for the City of Richmond requesting that the style of the original complaint be amended to include Western as a named defendant. Plaintiff also requested that the amendment relate back to June 23, 2010, the date the initial Complaint was filed. The Circuit Court of the City of Richmond granted this request in an order dated July 29, 2010. Id. at 8. Plaintiffs waited until June 23, 2011, to serve Defendants. Following service, Highwoods promptly filed a Notice of Removal with this Court on July 13, 2011, premised on diversity of citizenship. The following day, July 14, 2011, Western filed a consent order to the removal.

After removing the case to this Court, Defendant, Western, filed the instant Motion for More Definite Statement or, in the Alternative, to Dismiss the First Amended Complaint, and to Correct the July 29, 2010 Order. Specifically, Western contends that the Plaintiff's Amended Complaint fails to adequately allege the time of Western's misconduct and Plaintiff's injury. As a result, Western cannot assess whether it may raise a statute of limitations defense. Additionally, Western argues that pursuant to Rule 60 of the Federal Rules of Civil Procedure, this Court should strike the portion of the Circuit Court's Order allowing Plaintiff's amended complaint to relate back to the original filing date. Because this Court's decision regarding the correct filing date impacts the necessity of a more definite statement, the Court will address Western's motion to correct the Circuit Court's order first. ***

Under 28 U.S.C. § 1450, "[w]henever any action is removed from a State court to a district court of the United States ... all injunctions, orders, and other proceedings had in such action prior to its removal shall remain in full force and effect until dissolved or modified by the district court." See Granny Goose Foods, Inc. v. Teamsters Local No. 70, 415 U.S. 423, 437, 94 S.Ct. 1113 (1974) ("Section 1450 ... recogniz[es] the district court's authority to dissolve or modify injunctions, orders, and all other proceedings had in state court prior to removal notwithstanding state court orders issued prior to removal."); Wright & Kane, Federal Practice & Procedure: Federal Practice Deskbook § 42 (2002) ("The orders of the state court are not conclusive, but they are binding until set aside.").

Once a "notice of removal has been effectively filed in both courts, the federal court takes the case in the posture in which it departed the state court, treating everything done in the state court as if it had been done in the federal court." Holmes v. AC & S, Inc., 388 F. Supp.2d 663, 667 (E.D.Va. 2004); see also, In re Diet Drugs, 282 F.3d 220, 231-32 (3d Cir. 2002) ("After removal, interlocutory orders of the state court are transformed into orders of the court to which the case is removed."); Resolution Trust Corp. v. Northpark Joint Venture, 958 F.2d 1313, 1316 (5th Cir. 1992) ("A prior state court order in essence is federalized when the action is removed to federal court."); Preaseau v. Prudential Ins. Co., 591 F.2d 74, 79 (9th Cir. 1979) ("[T]he federal court ... treats everything that occurred in the state court as if it had taken place in federal court.") (internal quotation marks omitted). As a result, federal procedural rules govern an action after removal. See, e.g., Granny Goose Foods, Inc., 415 U.S. at 437, 94 S.Ct. at 1123 ("[O]nce a case has been removed to federal court, it is settled that federal rather than state law governs the future course of proceedings, notwithstanding state court orders issued prior to removal"); Resolution Trust Corp., 958 F.2d at 1316 ("Federal procedure governs the enforcement of a prior state court order in a case removed to federal court."); Preaseau, 591 F.2d at 79 ("[T]he federal rules apply after removal.").

Removal of a case from state to federal court neither nullifies a state court action, nor precludes the federal court from taking further steps that it could have taken if the case had originated there. Thus, this Court must determine, given the particular posture of this case upon removal, whether it would be properly within this court's authority to modify the instant July 29, 2010 order, assuming that the case had been initiated in federal court. See Holmes, 388 F.Supp.2d at 668.

Treating the order as if it had originated in this Court, Rule 60(b) of the Federal Rules of Civil Procedure provides that the Court "may relieve a party . . . from a final judgment, order, or proceeding for . . . mistake." Fed. R. Civ. Pro. 60(b)(1). The Fourth Circuit has suggested, but not decided, that a "mistake" encompasses a "mistake of law by the court itself apparent on the face of the record . . . ." Compton v. Alton S.S. Co., 608 F.2d 96, 104 (4th Cir.1979); see also Malagrida v. Holland, 19 F.3d 1429 (table), No. 93-1381, 1994 U.S. App. LEXIS 5158, at *11-12, 1994 WL 89336, at *4 (4th Cir.1994) (unpublished) (explaining the Fourth Circuit has yet to address the issue and finding that the case before the court did not require a decision on the issue).

As the court in Malagrida noted, however, other circuits are split on this issue. The First and Seventh Circuits require errors of law to be handled on appeal, while the Ninth Circuit permits errors of law to be addressed under Rule 60(b)(1). In contrast, the Sixth and Second Circuits take the middle ground, permitting errors of law to be corrected under Rule 60(b)(1) if the motion is made within the time for appeal of the final judgment. See Malagrida, 1994 U.S. App. LEXIS 5158, at * 11-12, 1994 WL 89336, at *4. The Fourth Circuit has stated, however, that "[w]here the motion is nothing more than a request that the district court change its mind, however, it is not authorized by Rule 60(b)." United States v. Williams, 674 F.2d 310, 313 (4th Cir. 1982).

Relying on Fourth Circuit precedent, this Court is not convinced that Western has requested this Court to do anything more than "change its mind"; or in this case, review the substantive decision of the Circuit Court. Thus it is unclear whether this Court even has the authority to grant the relief requested by Western. In any event, however, a review of the applicable procedural law convinces this Court that had the case been originally filed in this Court, it would have reached the same outcome as the Circuit Court.

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