Unreported / Non-Citable
Background
Vicki Milner filed a breach of contract action in Texas state court on April 14, 2025, alleging unpaid wages from NexGen Contact Solutions, LLC. Her original pleading claimed $35,000 in unpaid salary and indicated damages would increase. On September 18, 2025, she notified NCS’s counsel that her damages had risen to approximately $95,000—exceeding the $75,000 federal diversity jurisdiction threshold.
On December 10, 2025, Milner added as defendants NexGen Technologies, LLC (NCS’s parent) and Joseph Jacoboni (CEO of both entities), alleging fraudulent transfer of funds to hinder satisfaction of her claims. Notably, she did not provide these newly joined defendants with any communication about her increased damages amount at that time.
On April 13, 2026—almost exactly one year after filing and 124 days after adding the new defendants—Milner sent a settlement communication to all defendants’ counsel indicating her damages had risen to $116,589.92. NexGen Technologies and Jacoboni removed the case to federal court on May 12, 2026 (29 days later), invoking diversity jurisdiction under 28 U.S.C. § 1332 and relying on the April 13 communication as triggering the removal timeline under § 1446(b)(3).
The Court’s Holding
The court denied Milner’s motion to remand on three grounds. First, the court confirmed subject matter jurisdiction existed under 28 U.S.C. § 1332: Milner is a Texas citizen; Jacoboni is a Florida citizen; and the corporate defendants are citizens of Florida, California, and Utah. The amount in controversy exceeded $75,000.
Second, the court held the removal was timely under § 1446(b)(3). That statute permits removal within 30 days of receiving an “other paper” from which removability “may first be ascertained.” The court rejected Milner’s argument that the September 2025 email to NCS’s counsel should have alerted the new defendants and triggered an earlier removal deadline. Following the Fifth Circuit’s decision in Chapman v. Powermatic, Inc., 969 F.2d 160 (5th Cir. 1992), the court held that § 1446(b)(3) requires defendants to receive the initial pleading first, then receive the triggering “other paper” within 30 days—constructive or imputed knowledge before joining the suit does not start the clock. Thus, the 30-day period began April 13, 2026, when Milner first notified the new defendants of true damages, and the May 12 removal fell within the deadline.
Third, the court found clear and convincing evidence of bad faith under 28 U.S.C. § 1446(c)(1), which bars removal under § 1446(b)(3) more than one year after suit commencement unless the plaintiff acted in bad faith to prevent removal. The court held that Milner’s conduct—knowing in September 2025 that damages exceeded $75,000, failing to amend her pleading, remaining silent for 124 days after adding the defendants, then disclosing true damages just before the one-year anniversary—constituted a “transparent attempt” to avoid federal jurisdiction. The court applied equitable tolling to permit timely removal despite the one-year deadline.
Key Takeaways
- Under § 1446(b)(3), the 30-day removal clock for “other paper” runs only from the defendant’s receipt of that paper after receiving the initial pleading—not from constructive knowledge before the defendant joined the suit.
- Deliberately withholding actual damages information until just before the one-year removal deadline constitutes bad faith sufficient to trigger equitable tolling under § 1446(c)(1).
- Plaintiffs cannot manipulate jurisdiction by failing to amend pleadings with known damage amounts; courts will infer intentional delay to prevent removal.
- Equitable tolling applies to extend removal deadlines when bad faith conduct by the plaintiff would otherwise deprive defendants of their removal rights.
Why It Matters
This decision provides critical guidance on removal timing and plaintiff conduct under the federal removal statute. It clarifies that the trigger for § 1446(b)(3)’s 30-day window is objective receipt of specified documents by the defendant, not imputed knowledge or prior communications to other parties. Plaintiffs cannot circumvent federal jurisdiction by strategic non-disclosure, and courts will examine the temporal proximity between when plaintiffs knew of removability and when they disclosed it to new defendants.
For defendants, the decision reinforces that removal rights are protected against artificial procedural manipulation and that equitable tolling will apply against bad faith delay tactics. For practitioners, it underscores the importance of amending pleadings promptly when damages estimates change and the risks of withholding material jurisdictional information from newly joined defendants.