Seaver Business Acquisition, LLC v. FullerSeaver Business Acquisition, LLC v. Fuller
MEMORANDUM OPINION
Seaver Business Acquisition (Seaver) is the assignee of a Small Business Administration loan guaranteed by Douglas Fuller, Susan Groenewold, Adam Fuller, Colin Fuller, Ethan Fuller, and Paula Fuller (Guarantors). After the SBA loan went into default, Seaver filed a complaint in the Eighteenth Judicial Circuit in DuPage County on February 9, 2026 to collect from the Guarantors. (Dkt. 1). Seaver filed a Notice of Removal in DuPage County on March 11, 2026 and in this court on March 23, 2026. Id. The Guarantors filed a Motion for Remand on May 12, 2026 arguing that the Notice of Removal was filed too late and that this court lacked subject matter jurisdiction. The issues have been fully briefed and argued.1 As explained below, the Notice of Removal was timely filed, this court has “related
BACKGROUND
The court made extensive findings of fact in its prior Memorandum Opinion and will only briefly provide the factual background of this dispute for purposes of understanding the history of the Motion for Remand. See In re Fuller’s Serv. Ctr., Inc., 675 B.R. 575 (Bankr. N.D. Ill. 2025). During the COVID-19 pandemic, Fuller’s Service Center, Inc. (Debtor) obtained a loan from the Small Business Administration (SBA) totaling $1.9 million. The defendants guaranteed repayment of the loan. (Dkt. 1, Ex. 3). The SBA funds “were to be used solely as working capital to alleviate economic injury caused by the COVID-19 pandemic.” (Dkt. 1, Ex. 2). Contrary to its obligations under the SBA note, the Debtor did not use the SBA funds for working capital and instead used the funds to pay off an affiliate’s obligation to Heartland Bank, secured by a mortgage on the affiliate’s real property. Id. On July 30, 2025, the SBA assigned its note and associated rights to Seaver. (Bankr. Pro. Dkt. 177, Ex. A).
Seaver filed a complaint against the Guarantors on February 9, 2026 in DuPage County, seeking among other things, collection on the guarantees. (Seaver Complaint, Dkt. 1). Neither party provided evidence of the when the summons for the state court complaint was served.2 On March 11, 2026, exactly 30 days after the Seaver Complaint was filed, Seaver filed a Notice of Removal in the state court removing the case to the bankruptcy court. (Notice of Removal, Dkt. 1). It filed a Notice of Removal and other documents previously filed in state court in the bankruptcy court on March 23, 2026, forty-two days after the
A. The statutory authority for removal.
i. 28 U.S.C. 1446
Section 1446 of Title 28 governs the procedure for the removal of state court civil actions to federal court.
ii. 28 U.S.C. 1452
Seaver is the plaintiff in this case, and while “it is generally assumed that . . .
B. Rule 9027 of the Federal Rules of Bankruptcy Procedure.
Crucially,
C. Courts are split on when removal becomes effective.
Neither party’s arguments adequately captured the issue before the court. The primary issue is what the requirements are for removal to be effective. Neither party provides instructive case law, and the court’s own research reveals a circuit split that the
The Eighth Circuit succinctly explains the divide among courts, stating that some “courts hold that removal is effected by filing a copy of the notice of removal in the state court. Some . . . have held that removal is effected . . . by filing the notice of removal in the federal court. [Others] have held that the state and federal courts have concurrent jurisdiction until the notice of removal is filed with the state court.” Anthony v. Runyon, 76 F.3d 210, 213–14 (8th Cir. 1996). In other words, most circuits find that “Section 1446(d) contains three procedural elements—(1) filing notice with federal court, (2) providing written notice to all adverse parties, and (3) filing notice with the state court—and that defendants must satisfy all three elements for removal to take effect.”7 See Browning v. Am. Fam. Mut. Ins. Co., 396 F. App‘x 496, 505 (10th Cir. 2010) (“Under
Several courts within the Seventh Circuit have also stated that all three requirements must be met for removal to be effective. See Jeffery v. Cross Country Bank, 131 F. Supp. 2d 1067, 1069 (E.D. Wis. 2001) (“Under
At least one circuit has held that the state and federal court both have jurisdiction if there is a gap between the notice being filed in federal court and being filed in state court. See Berberian v. Gibney, 514 F.2d 790, 792 (1st Cir. 1975) (“[J]urisdiction of the federal court attaches as soon as the petition for removal is filed with it and . . . both state and federal courts have jurisdiction until the process of removal is completed.”)
The most recent amendments to
Disappointingly, the parties have not cited any of the above caselaw or presented arguments resolving the circuit split. While the issue of when a notice of removal is timely filed is not as black and white as both parties would have this court believe, this court finds that removal is effective when the removing party has completed the three steps outlined in
D. Seaver’s Notice of Removal was timely.
The timing of the notice of removal under Section 1446 and Rule 9027 is crucial.
From the briefing, it appears that both parties erroneously believe the 30 days begin when the complaint is filed in the state court. The Guarantors argue, “Plaintiff only had 30 days from the filing of the Complaint in the State Court Action to file a notice of removal.” (Motion for Remand, Dkt. 13). Similarly, Seaver argues, “On March 11, 2026, Seaver filed its Notice of Removal in . . . DuPage County . . . where the State Court Action was pending. The Complaint was filed on February 9, 2026. Therefore, the Notice of Removal was timely filed within 30 days of the filing of the Complaint.” Both parties not only misread
This outcome makes sense because notice is perhaps the most important aspect of the judicial process. Cosby v. Ward, 843 F.2d 967, 982 (7th Cir. 1988) (“It is universally agreed that adequate notice lies at the heart of due process.”) (quoting Gray Panthers v. Schweiker, 652 F.2d 146, 168 (D.C. Cir. 1980)). Indeed, without notice, the bankruptcy court could not operate as “[n]otice is the cornerstone underpinning Bankruptcy Code procedure.” Schwinn Cycling & Fitness Inc. v. Benonis, 217 B.R. 790, 797 (N.D. Ill. 1997); see also In re
E. The Motion for Remand was not timely filed.
While the case law is unclear about when removal is timely, the Supreme Court makes clear that a motion to remand must be filed within 30 days of the notice of removal. “After a case is removed, any motion to remand the case to state court must be filed within 30 days of the notice of removal [under]
F. This court has related to jurisdiction.
Finally, the Guarantors argue that this court does not have jurisdiction to hear this case because it lacks subject matter jurisdiction, and, more specifically, that it lacks “related to” jurisdiction. (Motion for Remand, Dkt. 13). Citing FedPak,15 they argue that this court lacks jurisdiction because the disposition of [Seaver’s] claim will have no impact on the “amount of property for distribution” or the “allocation of property among creditors.” (Motion to Remand, Dkt. 13 at 12). On the other hand, Seaver argues that this court does have related to jurisdiction because disposition of its claims could conceivably have an impact on distribution in the bankruptcy case. Seaver cites Bush v. United States, stating it holds that “a matter comes within the related-to jurisdiction if it could conceivably have any effect on the estate being administered in bankruptcy.” Bush v. United States, 100 F.4th 807, 813 (7th Cir. 2024).
While the Guarantors are correct that bankruptcy courts do not have jurisdiction over “proceedings that have no effect on the estate of the debtor” Celotex Corp. v. Edwards, 514 U.S. 300, 308 n.6 (1995), disposition of Seaver’s claim is likely to impact the amount available for other creditors. Should Seaver recover on its claim against the Guarantors for breach of the guaranty, contract, and misuse of funds, it may affect the amount of property available to other creditors of the Fuller Service Center estate.
CONCLUSION
The Notice of Removal was timely filed, and this court has related to jurisdiction. Additionally, the Guarantors’ Motion for Remand was filed too late. The Motion for Remand
Dated: August 7, 2026
Honorable Deborah L. Thorne
United States Bankruptcy Judge