17‐3497‐cv
Gale et al. v. Chicago Title Insurance Company et al.


                                                    In the
                       United States Court of Appeals
                                     For the Second Circuit

                                             August Term 2018

                                               No. 17‐3497‐cv

       JOHN Q. GALE, JOHN Q. GALE, LLC, FKA Gale & Kowalyshyn, LLC,

                                                                Plaintiffs‐Appellants,

                                   GALE & KOWALYSHYN, LLC,

                                                                 Plaintiff‐Intervenor,

                                                        v.

    CHICAGO TITLE INSURANCE COMPANY, COMMONWEALTH LAND
    TITLE INSURANCE COMPANY, FIRST AMERICAN TITLE INSURANCE
   COMPANY, LAWYERS TITLE INSURANCE CORPORATION, individually
   and as a successor in interest to Transnation Title Insurance Company, OLD
   REPUBLIC NATIONAL TITLE INSURANCE COMPANY, STEWART TITLE
   GUARANTY COMPANY, TICOR TITLE INSURANCE COMPANY, TICOR
     TITLE INSURANCE COMPANY OF FLORIDA, FIDELITY NATIONAL
              TITLE INSURANCE COMPANY, UNITED GENERAL
                         TITLE INSURANCE COMPANY,

                                                                Defendants‐Appellees,

                     TRANSNATION TITLE INSURANCE COMPANY,

                                                                           Defendant.



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     17‐3497‐cv
     Gale et al. v. Chicago Title Insurance Company et al.



                          Appeal from the United States District Court
                                for the District of Connecticut
             No. 6 Civ. 1619 (RNC), Robert N. Chatigny, District Judge, Presiding.
                         (Argued: April 30, 2019; Decided: July 9, 2019)

 1   Before:          PARKER, WESLEY, and CARNEY, Circuit Judges.
 2
 3           John Q. Gale, a Connecticut attorney, sued a group of title insurance
 4   companies for allegedly violating a Connecticut law that allows only Connecticut
 5   attorneys to act as title agents in the state. The original complaint included class‐
 6   action allegations, and the District Court exercised jurisdiction under the Class
 7   Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). After a number of years of
 8   litigation, Plaintiffs amended the complaint to remove all class‐action allegations.
 9   The United States District Court for the District of Connecticut (Chatigny, J.)
10   concluded that the withdrawal of the class‐action allegations divested it of CAFA
11   jurisdiction and dismissed the amended complaint. We agree and conclude that
12   when jurisdiction‐granting class‐action allegations are removed from a
13   complaint, a district court is divested of CAFA jurisdiction and the action must
14   be dismissed.
15
16           AFFIRMED.
17
18                                                           Mathew P. Jasinski, Motley Rice LLC,
19                                                           Hartford, CT, for appellants John Q. Gale,
20                                                           John Q. Gale, LLC, FKA Gale & Kowalyshyn,
21                                                           LLC.
22
23                                                           Ross L. Hirsch (Arthur G. Jakoby, on the
24                                                           brief), Herrick, Feinstein LLP, New York,
25                                                           N.Y., for appellees Chicago Title Insurance
26                                                           Company, Commonwealth Land Title
27                                                           Insurance Company, Fidelity National Title
28                                                           Insurance Company, Lawyers Title Insurance
29                                                           Company, Ticor Title Insurance Company,



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     17‐3497‐cv
     Gale et al. v. Chicago Title Insurance Company et al.

 1                                                           Ticor Title Insurance Company of Florida,
 2                                                           Transnation Title Insurance Company.
 3
 4                                                           Frank J. Silvestri, Jr., Verrill Dana LLP,
 5                                                           Westport, CT, for appellee Old Republic
 6                                                           National Title Insurance Company.
 7
 8                                                           Gerard D. Kelly, Kevin M. Fee, Sidley
 9                                                           Austin LLP, Chicago, IL, for appellee Stewart
10                                                           Title Guaranty Company.
11
12   BARRINGTON D. PARKER, Circuit Judge:

13           Plaintiff‐Appellant John Q. Gale is a Connecticut attorney, who, along with

14   John Q. Gale, LLC, FKA Gale & Kowalyshyn, LLC, different iterations of his law

15   firm (collectively “Plaintiffs”), sued Defendants‐Appellees, a group of title

16   insurance companies, alleging that they violated a Connecticut law that allows

17   only attorneys admitted to practice in Connecticut to act as real estate title

18   agents. In the original complaint, Plaintiffs included class‐action allegations and

19   maintained those allegations through three subsequent amendments to the

20   original complaint. The District Court exercised federal jurisdiction over the

21   initial and the amended complaints under the Class Action Fairness Act

22   (“CAFA”), which confers jurisdiction when, among other things, the case “is a

23   class action.” 28 U.S.C. § 1332(d)(2).




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     17‐3497‐cv
     Gale et al. v. Chicago Title Insurance Company et al.

 1           After approximately twelve years of litigation, Plaintiffs filed a Fourth

 2   Amended Complaint (“FAC”) that removed all class‐action allegations and

 3   asserted only state law claims on behalf of the individual plaintiffs. The United

 4   States District Court for the District of Connecticut (Chatigny, J.) concluded that

 5   the withdrawal of the class‐action allegations divested it of CAFA jurisdiction

 6   and dismissed the FAC without prejudice.

 7           Plaintiffs appeal, principally contending that the amendment did not

 8   divest the District Court of jurisdiction. We agree with Judge Chatigny that when

 9   (i) federal jurisdiction in a case filed originally in federal court rests solely on

10   CAFA, (ii) the jurisdiction‐granting class‐action allegations are eliminated from

11   the complaint, and (iii) no new jurisdiction‐granting allegations are added, the

12   district court is divested of CAFA jurisdiction and must dismiss the complaint.

13                                                BACKGROUND

14           John Q. Gale is a Connecticut attorney who also works as a real estate title

15   agent, writing title policies. Generally, under Connecticut law, only attorneys

16   licensed to practice in Connecticut may act as title agents in that state. See Conn.

17   Gen. Stat. § 38a‐402(13). Gale claims, however, that Defendants‐Appellees, title




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     Gale et al. v. Chicago Title Insurance Company et al.

 1   insurance companies that do business in Connecticut, have been employing for

 2   work as title agents individuals who are not licensed Connecticut attorneys.

 3           In 2006, Gale sued Defendants, contending that they had tortiously

 4   interfered with business opportunities and violated Connecticut statutes

 5   regulating trade practices. Jurisdiction was predicated on CAFA. Gale sought to

 6   represent a class consisting of Connecticut attorneys and law firms that worked

 7   in the title insurance industry, and he sought injunctive and declaratory relief as

 8   well as damages. The District Court certified the class under Fed. R. Civ. P.

 9   23(b)(2). In 2011 the Supreme Court decided Wal‐Mart Stores, Inc. v. Dukes, 564

10   U.S. 338 (2011), which held that a class could not be certified under Rule 23(b)(2)

11   if the class sought monetary relief that was not merely incidental to the injunctive

12   or declaratory relief sought, id. at 360. Since Gale’s class sought monetary relief,

13   Defendants moved to decertify the class. The District Court granted the motion

14   but left open the possibility that a class could be certified in the future.

15           After the class was decertified, Plaintiffs informed the court that in order to

16   facilitate the resolution of the case they would be willing to litigate the case in

17   their individual capacities rather than as a class action. See Joint App’x 137




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     17‐3497‐cv
     Gale et al. v. Chicago Title Insurance Company et al.

 1   (Plaintiffs’ letter to the District Court).1 At a pre‐trial conference addressing this

 2   request, Plaintiffs offered to “withdraw in any form the class allegations.” Joint

 3   App’x 146. Defendants then explained that “the first order of business . . . is for

 4   Plaintiffs to move to amend” so that Defendants could “review [the FAC] and see

 5   the claims that are then asserted.” Joint App’x 148. After this conference,

 6   Plaintiffs filed the FAC, which omitted the class‐action allegations but added no

 7   new bases for federal jurisdiction. Defendants then moved to dismiss the

 8   complaint, arguing that the FAC’s omission of the class action allegations had

 9   divested the court of CAFA jurisdiction.

10           The FAC does not allege any statutory basis for the District Court’s

11   jurisdiction other than CAFA. The District Court agreed with Defendants that

12   CAFA jurisdiction was lacking and dismissed the complaint. Plaintiffs appealed.

13   This Court reviews a district court’s dismissal of a complaint for lack of subject




     1Plaintiffs advised the court that they were willing to abandon their class claims
     and proceed exclusively with their individual claims so as to expedite matters
     while “eliminat[ing] any risk of violating the ‘one‐way intervention’ rule.” Joint
     App’x 137. (That judicially made rule bars class‐action plaintiffs from seeking
     pre‐class‐certification merits rulings. See, e.g., Brecher v. Republic of Argentina, 806
     F.3d 22, 26 (2d Cir. 2015)). Defendants expressed an openness to this proposal,
     provided, however, that Plaintiffs amend their complaint accordingly. Joint
     App’x 138, 148.
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     17‐3497‐cv
     Gale et al. v. Chicago Title Insurance Company et al.

 1   matter jurisdiction de novo. Ford v. D.C. 37 Union Local 1549, 579 F.3d 187, 188 (2d

 2   Cir. 2009).

 3                                                  DISCUSSION

 4                                                           I.

 5           Plaintiffs’ original complaint, as well as the first three amended

 6   complaints, contained class‐action allegations under CAFA, which confers

 7   original jurisdiction over class actions where there is minimal diversity between

 8   the parties and the amount in controversy exceeds $5,000,000. See 28 U.S.C.

 9   § 1332(d). No one disputes that CAFA jurisdiction existed when the case was

10   initially filed and continued to exist until the FAC became the operative

11   complaint. Both parties agree that after the class was decertified, the District

12   Court still had CAFA jurisdiction because class‐action allegations remained in

13   the complaint. See, e.g., Metz v. Unizan Bank, 649 F.3d 492, 500 (6th Cir. 2011)

14   (stating that “denial of class certification does not divest federal courts of [CAFA]

15   jurisdiction”); see also F5 Capital v. Pappas, 856 F.3d 61, 76‐77 (2d Cir.), cert. denied,

16   138 S. Ct. 473 (2017). Therefore, the only question before us is whether the filing

17   of the FAC, which omitted all class‐action allegations, divested the District Court

18   of CAFA jurisdiction and required dismissal. We agree that it did.



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     17‐3497‐cv
     Gale et al. v. Chicago Title Insurance Company et al.

 1           In Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473–74 (2007), the

 2   Supreme Court considered this situation. There the Court explained that both

 3   “the state of things” and “the alleged state of things” must support jurisdiction.

 4   Id. “[W]hen a plaintiff files a complaint in federal court and then voluntarily

 5   amends the complaint, courts look to the amended complaint to determine

 6   jurisdiction.” Id. The Court went on to explain: “demonstration that the original

 7   allegations were false will defeat jurisdiction. So also will the withdrawal of

 8   those allegations, unless they are replaced by others that establish jurisdiction.”

 9   Id. at 473 (internal citations omitted).2 Neither party contends that the FAC

10   introduced new jurisdiction‐granting allegations.

11           In Touch Concepts, Inc. v. Cellco Partnership 788 F.3d 98, 101 (2d Cir. 2015),

12   made clear that Rockwell applies to cases brought under CAFA. We explained


     2
      The Court noted that this rule would not apply to cases that were removed to
     federal court: “[W]hen a defendant removes a case to federal court based on the
     presence of a federal claim, an amendment eliminating the original basis for
     federal jurisdiction generally does not defeat jurisdiction.” Rockwell, 549 U.S. at
     474 n.6. This is because, although a plaintiff is the master of his or her complaint,
     to allow a plaintiff to divest a federal court of jurisdiction by amending the
     complaint would allow that plaintiff to frustrate a defendant’s federal right to
     remove the case and to be heard in a federal court. But this exception, the
     Supreme Court explained, applies only to removal cases because “removal cases
     raise forum‐manipulation concerns that simply do not exist when it is the
     plaintiff who chooses a federal forum and then pleads away jurisdiction through
     amendment.” Id. (emphasis omitted)
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     17‐3497‐cv
     Gale et al. v. Chicago Title Insurance Company et al.

 1   that “[i]n cases filed originally in federal court, . . . ‘courts look to the amended

 2   complaint to determine jurisdiction.’” Id. (citing Rockwell, 549 U.S. at 473–74). We

 3   then stated, albeit in dicta, the general rule: “So if this case had been filed

 4   originally in federal court, the district court would have had to dismiss it as soon

 5   as [the plaintiff] filed the First Amended Complaint, which dropped all class‐

 6   action allegations and thereby destroyed the only basis for federal jurisdiction.”

 7   Id. These principles resolve this appeal.

 8           Plaintiffs’ main contention is that this case should be governed by the

 9   time‐of‐filing rule, which states that “the jurisdiction of the court depends upon

10   the state of things at the time of the action brought.” Grupo Dataflux v. Atlas Glob.

11   Grp., L.P., 541 U.S. 567, 570 (2004). Plaintiffs claim that because this case was a

12   class action when it was filed, the District Court continues to have CAFA

13   jurisdiction after the FAC. This contention misunderstands the time‐of‐filing rule

14   and, in any event, was rejected in Rockwell. In Rockwell, the Court emphasized

15   that jurisdiction must be supported solely by the allegations in the amended

16   complaint and made clear that “[t]he rule that subject‐matter jurisdiction

17   ‘depends on the state of things at the time of the action brought,’ does not

18   suggest a different interpretation.” Rockwell, 549 U.S. at 473 (internal citation



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    17‐3497‐cv
    Gale et al. v. Chicago Title Insurance Company et al.

1   omitted). The time‐of‐filing rule applies to changes of the “state of things,” but

2   not to changes of the “alleged state of things.” Id. (emphasis added). Therefore,

3   because a court can look only to the amended complaint to ascertain jurisdiction,

4   “withdrawal of those allegations [that support a court’s jurisdiction]” will defeat

5   jurisdiction “unless they are replaced by others that establish jurisdiction.” Id.

6   Therefore, by removing all class‐action allegations in the FAC, Plaintiffs divested

7   the District Court of CAFA jurisdiction.

8                                                 CONCLUSION

9           The judgment of the District Court is AFFIRMED.




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