March 7, 1995
This action is yet another skirmish between the warring factions of the Tabas family.
On November 30, 1994, Harriette S. Tabas, widow of Charles L. Tabas, and others (collectively "Harriette") filed a "Petition . . . for a Citation to Show Cause why Daniel Tabas Should Not Be Removed as Managing Partner and a Receiver Appointed in his Stead, to Preserve and Manage Tabas Enterprises" (the "Petition") in the Pennsylvania Orphans' Court. The Petition alleges that Daniel M. Tabas ("Daniel") has engaged in, inter alia, "ongoing waste on a massive scale, dissipation of assets, [and] fraud and mismanagement of Tabas Enterprises." See Petition at 1. It asks the Orphans' Court to appoint a receiver who would take control of and manage Tabas Enterprises.
On December 22, 1994, Daniel filed a Notice of Removal to this Court. By Order dated January 10, 1995, we questioned our jurisdiction to proceed in this action, noting that the Petition does not appear to present a federal question, and that the adverse parties are not citizens of different states. We directed the parties to brief the issue of jurisdiction, and the parties have submitted excellent briefs to guide our judgment.
The sole question that this Memorandum addresses is whether Harriette may remove the Petition to federal court. We adhere to our earlier decision in Chase v. Auerbach, 115 S. Ct. 783, 130 L. Ed. 2d 676 (E.D. Pa. 1994), and conclude that no statute authorizes the Petition's removal. We will therefore remand the action to the Pennsylvania Orphans' Court pursuant to 28 U.S.C. § 1447(c).
Daniel advances four alternative arguments in support of removal. First, he argues that the language of the Petition incorporates the federal RICO action that the Third Circuit recently decided in banc, Tabas v. Tabas, 1995 U.S. App. LEXIS 2585, Nos. 92-1495 and 92-1529, slip op. at 3-13 (3d Cir. February 13, 1995) (in banc), and therefore that the Petition itself poses a federal question. Second, he contends that the supplemental jurisdiction statute, 28 U.S.C. § 1367, creates federal jurisdiction where there otherwise would be none. Third, he claims that the Petition is in fact an artfully pleaded federal claim. Daniel relies on the All Writs Act, 28 U.S.C. § 1651, as his final basis of jurisdiction. We shall consider these arguments in turn.
1. The Plain Language of the Petition
Daniel first argues that Harriette has "made a disputed question of federal law (RICO) a necessary element of the Petition." Daniel Tabas's Memorandum of Law in Support of Notice of Removal and Motion for Consolidation at 1-2. For support, Daniel points to language in the Petition that refers to the RICO action. For example, the Petition alleges "fraud, dishonesty, [and] violations of state and federal law", Daniel's Memorandum of Law at 2. The Petition also describes "the RICO case" and instructs that the conduct of Daniel as alleged in the federal action, "if true, clearly establishes Daniel Tabas' fraud against the Estate in connection with Tabas Enterprises", id.
In essence, Daniel argues that the Petition would force the Orphans' Court to decide the RICO claim (and, hence, that the Petition should be in federal court instead of state court). We reject this argument. The Supreme Court has instructed:
The presence or absence of federal-question jurisdiction is governed by the "well-pleaded complaint rule," which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.
Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987) (footnotes and citation omitted). The Petition only alleges that Daniel has engaged in fraud in the summer of 1994.
Fraud is an element, but only one element, of RICO, see Tabas, slip op. at 19, and without more cannot transform the Petition into a federal claim. The Orphans' Court will not need to address the RICO claim when it decides the merits of the Petition.
We also note that the remedy that Harriette seeks in the Petition -- the appointment of an receiver to manage Tabas Enterprises -- is inherently prospective, since the receiver would seek to "preserve and manage" Tabas Enterprises. Petition at 25. The RICO claim is inherently retrospective. It only seeks trebled money damages for past fraudulent conduct.
We do not believe that our analysis here depends upon a finding of closed-ended or open-ended RICO continuity. See Tabas, slip op. at 26-31. Even if the alleged squandering of assets in the summer of 1994 ultimately is relevant both to the Petition and to the RICO claim, that overlap should not affect the RICO claim in any substantive way.
The presence of a receiver might affect the amount of damages at issue in the RICO claim, but his functions would not turn upon a finding of a RICO violation.
We find that the Petition does not pose a federal question despite the references in it to the pending federal action.
2. The Supplemental Jurisdiction Statute
Daniel next argues that we may consolidate the Petition with the RICO claim because the similarity of claims, parties, and transactions bring the Petition within the supplemental jurisdiction of this Court. This argument has the inquiry backwards.
As we held in Chase v. Auerbach, 1994 U.S. Dist. LEXIS 15283, No. 94-5892 (E.D. Pa. October 26, 1994), the supplemental jurisdiction statute does not allow a party to remove an otherwise unremovable action to federal court for consolidation with a related federal action. Although such an approach would have the benefits of efficiency, it runs aground on a close reading of the statute, which states:
In any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. . . .
28 U.S.C. § 1367(a). On its face the statute distinguishes between actions and claims. Section 1367 allows plaintiffs to bring federal claims in federal court even though combined with state-law claims that would not otherwise be within a federal court's jurisdiction.
The statute is not, however, an independent source of removal jurisdiction. To remove the Petition from state court to federal court, Daniel must first find a federal claim in the Petition itself (which we have concluded is not present). An already-existing federal action cannot provide the mechanism for removal of a non-removable state-court action.
Daniel quotes Cohen v. Reed, 868 F. Supp. 489, 494 (E.D.N.Y. 1994), to support his construction of § 1367. In Cohen, the plaintiff filed a RICO action in federal court in 1990 and a state-court action in state court in 1994. The defendant removed the state-court action, and the plaintiff moved to remand. Id. at 491-93. In dicta,
Judge Seybert wrote:
Because the [state-court action] involves many of the same factual intricacies that are before this Court in [the federal action], the Court may properly assert supplemental jurisdiction over the [state-court action]. See 28 U.S.C. § 1367.