MOAC Mall Holdings LLC v. The Walking Company

Background

MOAC Mall Holdings LLC owns the Mall of America and leases commercial spaces there. The Walking Company signed a commercial lease with MOAC in 2013. After The Walking Company stopped paying rent, MOAC obtained a $1,450,000 state-court default judgment against it.

MOAC alleged that The Walking Company and its holding companies took steps to protect The Walking Company’s assets from creditors. Those steps allegedly included removing The Walking Company’s inventory from the mall and transferring substantially all of its assets to WalkingCo, LLC through a below-value purchase. MOAC alleged that WalkingCo was a continuation of The Walking Company.

MOAC later sued The Walking Company and WalkingCo in Hennepin County District Court under Minnesota’s Uniform Voidable Transaction Act, for unjust enrichment, and on a successor-liability theory. WalkingCo removed the case to federal court. The Walking Company did not consent to the removal, did not indicate whether it consented, and had not appeared in the federal case.

The Remand Motion

MOAC moved to remand, or return, the case to state court because WalkingCo had not obtained The Walking Company’s consent. Federal law generally requires all properly joined and served defendants to join in or consent to removal when a defendant moves a case from state court to federal court.

WalkingCo relied on an exception for a nominal defendant. A nominal defendant is one against whom the plaintiff seeks no real relief. WalkingCo argued that The Walking Company was effectively defunct, so its consent was unnecessary.

Court’s Analysis

The court concluded that The Walking Company was not a nominal defendant. The opinion noted that WalkingCo admitted purchasing substantially all of The Walking Company’s assets and employing several of its former officers, while also describing itself as a separate entity and a complete stranger to The Walking Company.

The court also examined the claims themselves. Although MOAC primarily sought relief from WalkingCo, the court reasoned that Minnesota’s Uniform Voidable Transaction Act could require WalkingCo to return the acquired assets to The Walking Company. That could allow MOAC to collect its existing judgment against The Walking Company. The court therefore found that MOAC sought relief against, and might recover from, The Walking Company.

The court further stated that The Walking Company remained the principal alleged wrongdoer because it breached the lease and was responsible for the state-court judgment. The court concluded that The Walking Company was an important party, not merely nominal, and that WalkingCo’s failure to obtain its consent was a defect in removal.

Ruling

Judge Wilhelmina M. Wright granted MOAC’s motion for remand to state court. The order directed the clerk to send a certified copy to the Hennepin County District Court, Fourth Judicial District. The opinion did not decide the merits of MOAC’s claims under Minnesota law.