Magnifi Financial Credit Union v. Paczkowski

Background

Magnifi Financial Credit Union filed a one-count state-court complaint against Matthew Charles Paczkowski seeking to recover personal property in Waseca County, Minnesota. The complaint asserted a state-law claim for replevin. The public record reflected that Magnifi served Paczkowski with the complaint on November 30, 2024.

Paczkowski filed an answer and counterclaim in the state action. His counterclaims against Magnifi alleged violations of the Fair Debt Collection Practices Act, breach of contract, unjust enrichment, failure to provide proof of debt, and improper debt collection. He did not assert counterclaims against any other party in that filing.

On February 24, 2025, Paczkowski filed a notice seeking to remove the state case to federal court. He identified himself as “Petitioner” and Magnifi and the Federal Reserve Bank of Minneapolis as “Respondents.” He asserted federal-question and diversity jurisdiction under 28 U.S.C. §§ 1331 and 1332.

Subject-Matter Jurisdiction

The court explained that the party invoking federal jurisdiction bears the burden of showing that the jurisdictional requirements are satisfied. It examined jurisdiction based on the parties and claims in Magnifi’s original state-court complaint, rather than based on Paczkowski’s self-styled removal papers or counterclaims.

The court concluded that diversity jurisdiction was not adequately pleaded. The state-court complaint named only Paczkowski and Magnifi and did not allege either party’s citizenship. The Federal Reserve Bank of Minneapolis was not named as a party in the state action, including in Paczkowski’s answer and counterclaim. The court also noted that diversity jurisdiction requires complete diversity, meaning that no defendant may be a citizen of the same state as any plaintiff.

The court separately concluded that the complaint did not establish federal-question jurisdiction. The complaint asserted only replevin, which the court characterized as a state-law claim. The court rejected Paczkowski’s attempt to create federal jurisdiction by adding federal questions and asserting a purported counterclaim against the Federal Reserve Bank.

Timeliness of Removal

The court also found the removal untimely. Under 28 U.S.C. § 1446, a notice of removal generally must be filed within 30 days after service of the complaint, or within 30 days after receipt of a later document showing that the case has become removable. Magnifi served Paczkowski on November 30, 2024, more than 30 days before he filed his notice of removal. The court found no later state-court document that established removability.

The court noted that, during the intervening months, Paczkowski filed numerous motions, notices, affidavits, and discovery requests in the state action. Magnifi also filed a summary-judgment motion scheduled for a state-court hearing on March 12, 2025. The court stated that allowing removal at that point would be improper under the removal statute, prejudicial to Magnifi, and inefficient.

Recommendation and Procedural Status

Magistrate Judge Dulce J. Foster recommended that the federal action be remanded to state court. The document is a report and recommendation, not an order or judgment of the District Court, and it states that it is not directly appealable to the Eighth Circuit. The notice allowed the parties to file specific written objections within 14 days after being served with the report and recommendation, under Local Rule 72.2(b)(1).