U.S. Bank National Association v. Copy Center of Topeka, Inc.

Background

U.S. Bank National Association, doing business as U.S. Bank Equipment Finance, filed the lawsuit in the state district court for Lyon County, Minnesota, against Copy Center of Topeka, Inc. U.S. Bank alleged that Copy Center failed to make payments under three equipment-financing agreements that Konica Minolta Business Solutions U.S.A., Inc. had assigned to U.S. Bank. U.S. Bank asserted three breach-of-contract claims and a claim seeking delivery of the equipment, all under state law.

Copy Center filed a counterclaim against U.S. Bank and a third-party claim against Konica Minolta. Copy Center alleged that the copy machines Konica Minolta sold did not function properly and asserted state-law claims including fraud, fraudulent inducement, unjust enrichment, breach of warranties, and breach of the implied covenant of good faith and fair dealing.

About one month after Copy Center filed its third-party complaint, Konica Minolta removed the case to the United States District Court for the District of Minnesota. The magistrate judge required Konica Minolta to provide more specific allegations about U.S. Bank’s citizenship and asked the parties to address whether removal was proper under the Supreme Court’s decision in Home Depot U.S.A., Inc. v. Jackson. Konica Minolta amended its notice of removal. U.S. Bank then moved to remand, meaning to return the case to state court.

Court’s Analysis

The court explained that, in the Eighth Circuit, third-party defendants generally may not remove a case. It relied on Home Depot, in which the Supreme Court held that the federal removal statute does not allow a counterclaim defendant—including a party brought into the lawsuit for the first time through a counterclaim—to remove the civil action.

Konica Minolta argued that Home Depot barred removal only when the third-party claim was the sole basis for federal jurisdiction. It contended that removal was permitted here because the original parties were citizens of different states, creating diversity jurisdiction. The court rejected that interpretation.

The court held that original federal jurisdiction over the plaintiff’s complaint is necessary but not sufficient for removal. Under the removal statute, the “defendant” who may remove is the defendant named in the plaintiff’s original complaint, not a party named in a counterclaim or brought into the case as a third-party defendant. Because Konica Minolta was a third-party defendant, it could not remove the action, even though the original complaint could be heard under diversity jurisdiction.

The court also addressed the timing of U.S. Bank’s motion. Although U.S. Bank filed the motion after the statute’s 30-day period, U.S. Bank argued that Konica Minolta’s amended notice of removal restarted that period. Konica Minolta did not challenge the motion’s timeliness, so the court treated any argument about that nonjurisdictional defect as waived.

Ruling

The court granted U.S. Bank’s Motion to Remand and ordered that the matter be remanded to the Minnesota District Court for the Fifth Judicial District, Lyon County. The order resolved whether Konica Minolta could remove the case; it did not resolve the underlying state-law claims.