First American Bank v. Kashi Hospitality LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
FIRST AMERICAN BANK,
Plaintiff,
v. 	Case No. 1:25-cv-00333-WJ-JFR
KASHI HOSPITALITY LLC, KISHOR
K. VIRANI, ASHOK BALUBHAI UKANI,
VINAYAK DHIRAJLAL KATHROTIA, HOTEL
GP ILIFF ABQ, LLC, GOPI D. PATEL,
SUBHASH T. NAIK, and SHIVAM R. PATEL,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING MOTION TO REMAND
THIS MATTER is before the Court upon Defendants Hotel GP Iliff ABQ, LLC, Gobi D.
Patel, and Subhash T. Naik’s (“Hotel GP Defendants”) Motion to Remand this removed diversity
action to state court. 	[Doc. 14]. 	Plaintiff and Defendants Kashi Hospitality, LLC (“Kashi
Hospitality”), Kishor K. Virani, Ashok Bulabhai Ukani, and Vinayak Dhirajlal Kathrotia (“Kashi
Hospitality Defendants”) oppose the Motion. 	[Docs. 21, 22]. 	Having reviewed the relevant
pleadings and the applicable law, the Court finds Hotel GP Defendants’ Motion to Remand is well-
taken, and is therefore GRANTED, and this action is REMANDED to state court.
BACKGROUND
Plaintiff filed suit in the Second Judicial District Court, Bernalillo County, New Mexico on
February 21, 2025, alleging claims of breach of contract and guarantor liability in connection with
the financing of a transaction involving the sale and purchase of a Motel 6 property in
Albuquerque. 	[Doc. 1-1]. 	Kashi Hospitality was served with the complaint on March 4, 2025,
and on April 3, 2025, timely filed a notice of removal (“Notice of Removal”), [Doc. 1], pursuant
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to 28 U.S.C. § 1441. [Id. at 2 ¶ 6]; see 28 U.S.C. § 1446(b)(1) (“The notice of removal of a civil
action or proceeding shall be filed within 30 days after the receipt by the defendant, through service
or otherwise, of a copy of the initial pleading setting forth the claim for relief . . . .”). On April 25,
2025, Hotel GP Defendants filed a notice of non-consent to removal, [Doc. 15], and moved to
remand the case to state court, [Doc. 14], asserting that removal was procedurally defective for
failure to obtain the consent of all defendants. See 28 U.S.C. § 1446(b)(2)(A). Kashi Hospitality
Defendants and Plaintiff each filed objections to the Motion to Remand. [Docs. 21, 22].
Following removal, Hotel GP Defendants filed an answer in this Court addressing the
allegations in the complaint and asserting a host of crossclaims against Kashi Hospitality
Defendant. Hotel GP Defendants seek indemnification and damages based on breach of contract,
unjust enrichment, negligent misrepresentation, negligence, fraud, constructive fraud, business
interruption, loss of opportunity, breach of the covenant of good faith and fair dealing, breach of
the New Mexico Unfair and Unconscionable Trade Practices Act, civil conspiracy, conversion.
They also seek rescission of the transaction. 	[Doc. 19]. Although there is some disagreement
about the nexus between these crossclaims and Plaintiff’s claims for relief, the parties do not seem
to dispute that at base, they arise out of the same transaction — the purchase and sale of the Motel
6 property. [See Doc. 22 at 5–6; Doc. 21 at 3].
LEGAL STANDARD
“[A]ny civil action brought in a State court of which the district courts of the United States
have original jurisdiction, may be removed by the defendant or the defendants, to the district court
of the United States for the district and division embracing the place where such action is pending.”
28 U.S.C. § 1441(a). “When a civil action is removed solely under section 1441(a), all defendants
who have been properly joined and served” at the time a notice of removal is filed “must join in
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or consent to the removal of the action.” Id. § 1446(b)(2)(A).
“The failure of one defendant to join in the notice renders the removal notice procedurally
defective, which requires that the district court remand the case.” Brady v. Lovelace Health Plan,
504 F. Supp. 2d 1170, 1172–73 (D.N.M. 2007) (quoting Cornwall v. Robinson, 654 F.2d 685, 686
(10th Cir. 1981)). This rule is commonly known as the “unanimity rule.” Gladstone Indus. Corp.
v. Fair and Fast Logistics, Inc., No. 25-cv-665, 2025 WL 3281821, at *2 (D.N.M. Nov. 25, 2025).
In general, a party has the right to move to remand “on the basis of any defect . . . within
30 days after the filing of the notice of removal under section 1446(a),” and may move to remand
due to lack of subject matter jurisdiction at any time. 28 U.S.C. § 1447(c). Because the unanimity
rule is procedural, not jurisdictional, objections based on the rule may be waived if not raised
within 30 days of notice of removal. 28 U.S.C. § 1447(c); Idemudia v. J.P. Morgan Chase, 434 F.
App’x 495, 498 n.2 (6th Cir. 2011); Flagler v. Budget Rent a Car Sys., 538 F. Supp. 2d 557, 558
n.1 (E.D.N.Y. 2008).
A party may waive the right to seek or object to removal if they demonstrate assent to the
unwanted forum’s jurisdiction by affirmatively litigating in that forum. See City of Albuquerque
v. Soto Enters., Inc., 864 F.3d 1089, 1092, 1099–1100 (10th Cir. 2017), cert. denied, 583 U.S. 1116
(2018); Koehnen v. Herald Fire Ins. Co., 89 F.3d 525, 528 (8th Cir. 1996). A defendant waives
their removal right by substantially litigating in state court after the right to removal accrues. See
Soto Enters., Inc., 864 F.3d at 1098–1100. Likewise, a party waives “objections to any procedural
defect in removal by affirmatively litigating in federal court.” 	Busby v. Cap. One, N.A., 841 F.
Supp. 2d 49, 53 (D.D.C. 2012) (citing Koehnen, 89 F.3d at 528; Ficken v. Golden, 696 F. Supp. 2d
21, 26–27 (D.D.C. 2010); Moffit v. Balt. Am. Mortg., 665 F. Supp. 2d 515, 517 (D. Md. 2009)).
The Tenth Circuit has referred to this doctrine as “waiver by participation.” Soto Enters., Inc., 864
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F.3d at 1098.
Federal courts are courts of limited jurisdiction; thus, there is a presumption against
removal jurisdiction, which the defendant seeking removal must overcome. See Baby C. v. Price,
138 F. App’x 81, 83 (10th Cir. 2005) (citing Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir.
1995)). 	“It is well-established that statutes conferring jurisdiction upon the federal courts, and
particularly removal statutes, are to be narrowly construed in light of our constitutional role as
limited tribunals.” 	Pritchett v. Office Depot, Inc., 420 F.3d 1090, 1094–95 (10th Cir. 2005)
(quoting Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09 (1941); United States ex rel.
King v. Hillcrest Health Ctr., 264 F.3d 1271, 1280 (10th Cir. 2001)). 	“[A]ll doubts are to be
resolved against removal.” Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982).
The removing defendant bears the burden of establishing federal jurisdiction. Montoya v.
Chao, 296 F.3d 952, 955 (10th Cir. 2002). The burden likewise lies with the removing defendant
to show compliance with removal statute requirements, and to “explain affirmatively the absence
of any co-defendants in the notice of removal.” Brady, 504 F. Supp. 2d at 1173; Ennix v. Abbott
Lab’ys, 794 F. Supp. 3d 1177, 1180 (S.D. Fl. 2024); Zilahy-Welsh v. Denton, No. 24-cv-352, 2025
WL 850151, at *3 (N.D. Okla. Jan. 30, 2025). 	The parties do not address whether waiver by
participation is subject to a distinct burden of proof and the Court is not aware of controlling
authority on this point. In any event, the Court resolves the issue based on the undisputed nature
of Hotel GP Defendants’ post-removal conduct.
DISCUSSION
Kashi Defendants and Plaintiff concede that the Notice of Removal lacks consent1 by all
1 Neither Kashi Defendants nor Plaintiff contend that any defendant’s consent was not required due to lack of proper
joinder or service at the time of removal. See § 1446(b)(2)(A). So, the Court assumes consent was in fact required
and, accordingly, the failure to obtain consent of all defendants is indeed a procedural defect.
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defendants and is thus procedurally defective but contend that Hotel GP Defendants waived the
ability to contest removal on that basis by asserting voluntary crossclaims seeking relief from this
Court after the Notice of Removal was filed. [Doc. 22 at 3–7; Doc. 21 at 1–3].
Hotel GP Defendants assert that remand is required because Kashi Defendants failed to
obtain their consent prior to filing the Notice of Removal. [Doc. 26 at 2]. Second, they assert that
Kashi Hospitality signaled an intent to continue to litigate in state court by litigating in that forum
prior to filing its notice of removal. [Id. at 4].2 Additionally, they observe that the right to remove
is limited to defendants and assert that it is “improper and nonsensical” for Plaintiff to oppose
remand when it selected state court as its forum. [Id. at 1]. Finally, Hotel GP Defendants assert
that they filed an answer in this Court to avoid default and that filing a responsive pleading within
the time required by the Federal Rules of Civil Procedure should not result in waiver of non-
consent to removal, particularly where, as here, the responsive pleading was filed after giving
notice of non-consent and moving to remand. [Id. at 5–7].
I. 	Kashi Defendants Have Met Their Burden of Establishing Subject Matter
Jurisdiction
Because lack of subject matter jurisdiction requires remand, the Court begins by
considering whether it has subject matter jurisdiction under 28 U.S.C. § 1332. 	Diversity for
purposes of federal jurisdiction exists where the matter in controversy “exceeds the sum or value
of $75,000” and “is between . . . citizens of different States.” Id. § 1332(a)(1).
Hotel GP Defendants do not dispute that the amount in controversy requirement is satisfied
but contend that defendants are not diverse because Hotel GP Iliffe ABQ, LLC is a New Mexico
limited liability company. [Doc. 14 at 2]. For purposes of diversity jurisdiction, however, a limited
2 Upon review of the record in both this and the state court, it is not apparent what specific state-court conduct by
Kashi Defendants is said to demonstrate an intent to substantially litigate. In any event, that point is unnecessary to
the Court’s disposition of the Motion, and the Court does not address it further.
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liability company adopts the citizenship of its members. Siloam Springs Hotel, L.L.C. v. Century
Sur. Co., 781 F.3d 1233, 1234 (10th Cir. 2015). Elsewhere in the record, Hotel GP states that its
members reside in Texas and California. [Doc. 19 at 15 ¶¶ 2, 8–10]. No party contends that any
member is domiciled in New Mexico, where Plaintiff is a citizen. [See Doc. 1 at 3 ¶ 14]. On this
record, the Court is satisfied that Hotel GP Iliffe ABQ, LLC is not a citizen of New Mexico for
purposes of diversity jurisdiction. No party asserts that any other defendant is a citizen of New
Mexico. 	Therefore, for present purposes, the Court concludes that Kashi Defendants have met
their burden of establishing diversity of citizenship.
The existence of subject matter jurisdiction, however, does not end the remand inquiry.
Even where diversity jurisdiction exists, a case must be remanded if removal was procedurally
defective and a timely motion to remand is filed. See 28 U.S.C. § 1447(c); Brady, 504 F. Supp. 2d
at 1172–73. The Court therefore turns to whether Hotel GP Defendants waived their objection to
removal by participating in federal proceedings.
II. 	Hotel GP Defendants Did Not Waive Their Right to Object to Removal
Merely Because They Filed a Responsive Pleading in Federal Court
“There is no bright line rule defining what litigation conduct qualifies as ‘affirmative
action’ sufficient to constitute acquiescence” to an unwanted forum. Vill. Apts. Co., L.P. v. Asset
Shelters Grp., Inc., No. 1:07-cv-817, 2008 WL 11414603, at *3 (D.N.M. Apr. 29, 2008).3 Rather,
courts examine whether a party has engaged in substantial offensive or defensive litigation conduct
indicating a willingness to litigate in the forum whose jurisdiction it later seeks to contest. Soto
Enters., Inc., 864 F.3d at 1098. 	The district court has broad discretion in determining whether
3 The Court notes that in Soto, the Tenth Circuit established two “bright-line” rules in the context of waiver by
participation, but neither applies here. The Court held (1) a defendant waives its removal right where it “files a motion
to dismiss seeking disposition, in whole or in part, on the merits in state court before removing the case to federal
court,” and (2) an exception to waiver of a defendant’s removal right applies “when a state’s procedural rules compel
a defendant’s state-court participation.” Soto Enters., Inc., 864 F.3d at 1099.
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certain conduct constitutes sufficient acquiescence to result in waiver. Vill. Apts. Co. L.P., 2008
WL 11414603, at *3 (citing Lanier v. Am. Bd. of Endodontics, 843 F.2d 901, 904 (6th Cir. 1988)).
Kashi Defendants and Plaintiff rely principally on two cases in support of their argument
that waiver applies. 	See Parks v. Montgomery Ward & Co., 198 F.2d 772 (10th Cir. 1952) and
Busby v. Cap. One, N.A., 841 F. Supp. 2d 49 (D.D.C. 2012). These cases bear little resemblance
to the facts at bar.
In Parks, the Tenth Circuit addressed waiver of procedural objections to removal where the
plaintiff, after a full jury trial and entry of judgment in federal court, sought remand based on
procedural defect. The court concluded that the plaintiff had acquiesced in federal jurisdiction by
affirmatively seeking relief in federal court, rendering the belated motion to remand untimely. 198
F.2d at 774. That posture differs significantly from the present case. Here, the alleged waiver is
attributed not to Plaintiff — who, notably, despite selecting state court as its forum now urges
removal — but to a non-consenting defendant, and the case remains in the pleading stage. Even
though the version of the removal statute extant when Parks was decided did not impose a time
limitation on motions to remand based on procedural defects, see ch. 646, §§ 1447–48, 62 Stat.
869, 937–40 (1948), the same principle applies. Waiver by participation arises from substantial
invocation of the federal forum on the merits, not from filing a responsive pleading after providing
timely notice of nonconsent and seeking remand.
Busby is similarly inapposite. There, prior to seeking remand, the plaintiff “ha[d] litigated
her claim in [federal] court for well over a year,” filing several motions, submitting oppositions to
the defendants’ motions and pursuing an appeal. 841 F. Supp. 2d at 53. Therefore, Busby involved
sustained federal-court litigation over an extended period. Hotel GP Defendants have filed only
an answer and crossclaims. 	This limited post-removal activity looks little like the extensive
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litigation conduct that supported a finding of waiver in Busby.
Notably, in both Parks and Busby, the parties seeking remand did so only after engaging in
affirmative litigation conduct for many months, if not years, after the federal court had assumed
jurisdiction. Here, Hotel GP Defendants moved to remand just weeks after the notice of removal
was filed and well within the statutory window for objecting to procedural defects in removal.
Only after doing so did they file a responsive pleading. Under these circumstances, the premise
of waiver by participation is, at a minimum, doubtful. But even assuming that a party may waive
its objection to removal after timely moving to remand, the litigation conduct at issue here falls far
short of the conduct found sufficient to establish waiver in Parks or Busby.
The Tenth Circuit’s decision in Soto Enterprises underscores why the conduct here is not
sufficient to constitute waiver. There, a defendant filed a motion to dismiss in state court before
removing the case to federal court. Looking to the relevant state court’s procedural rules, the Court
determined that the defendant was not required to file the motion to dismiss prior to removal.
Because the motion sought disposition of the case on the merits in state court and was not
compelled by the governing procedural rules, its filing “manifest[ed] a ‘clear and unequivocal’
intent to submit the case to the state court’s jurisdiction,” thereby effecting waiver of the
defendant’s removal right. 864 F.3d at 1099.
But here, unlike the non-compulsory and potentially dispositive pleading in Soto
Enterprises, Hotel GP Defendants were required to file an answer or otherwise risk default. 	[See
Doc. 26 at 7]. 	The federal rules govern civil actions after removal. 	Fed. R. Civ. P. 81(c)(1).
Under Federal Rule of Civil Procedure 81(c), “[a] defendant who did not answer before removal
must answer or present other defenses or objections” within “21 days after receiving . . . a copy of
the initial pleading,” “21 days after being served with the summons” or “7 days after the notice of
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removal is filed.” Fed. R. Civ. P. 81(c)(2). Compliance with that obligation — particularly where,
as here, the defendant has already timely moved to remand — does not manifest a clear and
unequivocal intent to submit to federal jurisdiction. 	See also Busby, 841 F. Supp. 2d at 53
(“[M]erely engaging in offensive or defensive litigation, especially when the [party] has already
filed a motion for remand, does not forfeit the right to a remand.”).
Kashi Defendants and Plaintiff do not dispute that the Federal Rules require a responsive
pleading within 21 days of service of the complaint, Fed. R. Civ. P. 81(c)(2), and instead focus on
Hotel GP Defendants’ assertion of crossclaims, which they assert are “not merely defensive but
affirmative in nature” and outside the scope of the complaint. [Doc. 21 at 3; Doc. 22 at 5–6].
Kashi Defendants suggest that, accordingly, Hotel GP Defendants could have brought these claims
in a separate proceeding in state court, and the fact that they did so here demonstrates acquiescence
to federal jurisdiction. [Doc. 22 at 6].
It is, of course, true that crossclaims are permissive and never mandatory. Fed. R. Civ. P.
13(g). Therefore, Hotel GP Defendants were not required to assert crossclaims in their answer.
However, as a matter of default, if a party wishes to assert crossclaims, it does so in its answer.
See Fed. Rs. Civ. P. 7(a), 13(g). Moreover, there are numerous commonsense reasons why a party
would raise its claims in a responsive pleading rather than a new proceeding altogether. The Court
perceives at least three. (1) The Federal Rules encourage related disputes to be resolved in a single
proceeding when possible. Fed. R. Civ. P. 13(g). (2) Asserting crossclaims in federal court may
preserve claims that could otherwise be time-barred and avoid questions about tolling while
jurisdictional issues are pending. 	(3) Asserting claims in an existing proceeding promotes
efficiency by litigating overlapping issues in one proceeding and in a single forum. Nothing in the
federal rules or in the removal statute suggests that choosing this route reflects consent to federal
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adjudication of the merits, compared to, say, a dispositive motion accompanied by a request for a
hearing. See Soto Enters., Inc., 864 F.3d at 1098; Kolb v. Mayes Emergency Servs. Tr. Auth., No.
21-cv-209, 2022 WL 3654743, at *3 (N.D. Okla. Aug. 24, 2022) (finding that “a hearing request
is a clear indication that the requesting party wants to argue its position to the state court”). The
crossclaims were filed as part of the same responsive pleading required by Rule 81(c) after a timely
motion to remand.
Accordingly, Hotel GP Defendants have not waived their right to seek remand based on
procedural defect by including crossclaims in a responsive pleading required under the federal
rules.
III. 	Certain Defendants’ Non-Consent to Removal Renders the Removal
Procedurally Defective
The removal statute provides: “When a civil action is removed solely under section
1441(a), all defendants who have been properly joined and served must join in or consent to the
removal of the action.” 28 U.S.C. § 1446(b)(2)(A). Hotel GP Defendants do not join in or consent
to removal, and Kashi Defendants do not argue that Hotel GP Defendants were not properly joined
or served. Because unanimous consent is a statutory condition of proper removal, the removal is
procedurally defective. See Fajen, 683 F.2d at 333 (“Removal statutes are to be strictly construed,
and all doubts are to be resolved against removal.”) (citing Shamrock Oil, 313 U.S. at 108–09;
Greenshields v. Warren Petrol. Corp., 248 F.2d 61, 65 (10th Cir.), cert. denied, 355 U.S. 907
(1957)). Given that no exception to the unanimity rule applies, and Defendants bear the burden of
establishing compliance with the removal statutes, including “explain[ing] affirmatively the
absence of any co-defendants in the notice of removal,” the Court must resolve this defect against
removal.
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CONCLUSION
Under the rule of unanimity and 28 U.S.C. § 1446(b), Kashi Defendants were required to
obtain consent to removal from each served defendant. 	Because they did not do so, removal is
procedurally defective.
Hotel GP Defendants’ Motion to Remand is GRANTED and the case is remanded to
Second Judicial District Court, County of Bernalillo, State of New Mexico.
SO ORDERED.
/s/_________________________________
WILLIAM P. JOHNSON
SENIOR UNITED STATES DISTRICT JUDGE
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