Martha Barotz 2006-1 Insurance Trust v. Barotz
- Philip Halpern
- 7:20-cv-02605
- U.S. District Court · Southern District of New York
- 5
In Martha Barotz Trust v. Barotz, Judge Halpern remanded the case because diversity removal violated the forum-defendant rule.
The federal case brought by Martha Barotz 2006-1 Insurance Trust against Peter Barotz, as executor of the Estate of Martha Barotz, was sent back to New York Supreme Court, Westchester County. The federal court also closed the action and terminated all pending matters, including the counterclaim and third-party complaint described in the opinion.
What happened
Martha Barotz 2006-1 Insurance Trust v. Barotz began in New York Supreme Court, where the Trust sued Peter Barotz, as executor of Martha Barotz’s estate. Barotz removed the case to federal court based on diversity of citizenship and then filed an answer, counterclaim, and third-party complaint.
The court considered whether removal was allowed even though the Trust had served only a summons with notice instead of a complaint. It concluded that, under New York law, the summons with notice properly joined and served Barotz before removal. Because Barotz was a citizen of New York, the state where the case was filed, the forum-defendant rule barred removal based solely on diversity jurisdiction.
Judge Philip M. Halpern remanded the action to New York Supreme Court, Westchester County, under 28 U.S.C. § 1447(c). The clerk was directed to send that court a copy of the order and close the federal case, and all pending matters were terminated.
The detailed version
- Martha Barotz 2006-1 Insurance Trust v. Barotz · No. 7:20-cv-02605
- Philip Halpern
- Apr. 10, 2020
Background
Martha Barotz 2006-1 Insurance Trust started the action in New York Supreme Court, Westchester County, by filing a summons with notice on March 10, 2020, and serving Peter Barotz, as executor of the Estate of Martha Barotz, on March 11, 2020. On April 2, 2020, Barotz removed the action to the Southern District of New York, relying on diversity jurisdiction. The next day, he filed an answer and affirmative defenses, a counterclaim against the Trust, and a third-party complaint against Life Accumulation Trust III and Helix Capital Funding, LLC.
Removal Standard
A case based solely on diversity jurisdiction generally cannot be removed when a properly joined and served defendant is a citizen of the state where the action was filed. This restriction is known as the forum-defendant rule and appears in 28 U.S.C. § 1441(b)(2). The party seeking removal has the burden of showing that all statutory requirements are satisfied.
Analysis
The notice of removal stated that the Trust was a citizen of Delaware and Barotz was a citizen of New York, where the action had been brought. Barotz argued that the forum-defendant rule did not apply because he had received only a summons with notice, not a complaint. He also argued that the rule’s service requirement was not met because a complaint had not been served.
The court rejected both arguments. It explained that, under New York law, filing a summons with notice instead of a complaint commences an action. The court also relied on prior authority recognizing that a summons with notice is enough to properly join a defendant for purposes of the forum-defendant rule. Because Barotz had received the summons with notice before removal, he was properly joined and served. The court distinguished a prior appellate decision holding that removal before service of a complaint can make the forum-defendant rule inapplicable; here, Barotz had been served with the summons with notice before removal.
Ruling
Judge Philip M. Halpern held that the forum-defendant rule barred removal. The court remanded the action under 28 U.S.C. § 1447(c) to the New York Supreme Court, Westchester County. It directed the clerk to send that court a copy of the order and close the federal action. The court also terminated all pending matters.
Effect of the Order
The opinion addresses whether the case could remain in federal court; it does not decide the underlying claims, counterclaim, or third-party claims.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.