Union Equipment Finance v. Colliers Equipment Trustee

Background

Plaintiff Union Equipment Finance, LLC ("Union") filed this action in Minnesota state court on January 29, 2026, against five defendants: Colliers Equipment Trustee, LLC ("Trustee"), Colliers Funding LLC ("Funding"), Colliers Securities LLC ("Securities"), Colliers International Group Inc. ("International") (collectively, "Colliers Defendants"), and Avalanche Energy Capital LLC ("Avalanche"). Union alleged fraud, breach of contract, breach of fiduciary duty, and a civil claim under the Racketeer Influenced and Corrupt Organizations Act (RICO), all arising from a financing transaction.

Union served all defendants on February 2, 2026, serving Avalanche through its registered agent in Delaware. Avalanche's counsel called Union's counsel, acknowledged receipt of the summons and complaint, and discussed an extension to answer. Avalanche ultimately declined to answer, citing its cancelled status with the Delaware Secretary of State.

On March 4, 2026, International removed the action to federal court, invoking federal-question and supplemental jurisdiction (meaning the court's authority to hear both the federal RICO claim and the related state-law claims together). The notice of removal stated that "[a]ll Defendants consent to the removal of this case." On March 13, 2026, the Colliers Defendants moved to dismiss on both jurisdictional and merits grounds. On March 26, 2026, Union moved to remand (send back) the case to state court, arguing that Avalanche had never consented to removal.

Legal Framework: The Rule of Unanimity

Under 28 U.S.C. § 1446(b)(2)(A), when a civil case is removed to federal court, "all defendants who have been properly joined and served must join in or consent to the removal." This is called the "rule of unanimity." If that requirement is not met, the case must be sent back to state court. Both Union and the Colliers Defendants agreed that Avalanche had not consented. The dispute was whether Avalanche's consent was actually required.

Colliers Defendants' Two Arguments and the Court's Responses

Argument 1: Avalanche No Longer Exists and Cannot Be Sued

The Colliers Defendants argued that because Avalanche's certificate of formation was cancelled, it no longer exists under Delaware law and "cannot sue or be sued." The court rejected this. Citing In re VBR Agency, LLC, 274 A.3d 1068 (Del. Ch. 2022), the court explained that Delaware law allows a cancelled limited liability company to be sued and served through publication. The court also found that the Colliers Defendants misrepresented a case they cited — In re Krafft-Murphy Co. — by quoting only the portion describing the old "civil death" rule for dissolved corporations, while omitting the very next sentence explaining that Delaware law had since modified that rule to allow suits to continue during and after winding up. The court stated plainly that Avalanche may still be sued.

Argument 2: Avalanche Was Not Properly Served, So Its Consent Was Not Required

The Colliers Defendants argued that even if Avalanche could be sued, proper service on a cancelled Delaware entity must be accomplished through publication, not through a registered agent. Because § 1446(b)(2)(A) requires consent only of defendants "properly joined and served," they argued Avalanche's consent was unnecessary.

The court identified a split among federal courts on this question: some courts hold that a removing defendant cannot invoke a co-defendant's defective service to excuse the lack of unanimous consent, because improper service is a personal, waivable defense that only the allegedly improperly served party may raise; other courts apply the literal text of § 1446(b)(2)(A) and find that consent is not required when service was defective.

The court sided with the former approach — that a removing defendant may not raise another defendant's service defect to bypass the unanimity requirement — for two reasons:

1. Improper service is personal and waivable. Under Federal Rule of Civil Procedure 12(b)(5), improper service is an affirmative defense belonging to the served party. Under Rule 12(h)(1), it can be waived. Avalanche had not challenged service; instead, it acted as though service was proper — maintaining a registered agent, having counsel contact Union, and discussing the complaint. The court found it "peculiar" to hold service was improper when Avalanche itself had not said so.

2. Doubts about removal must be resolved in favor of remand. Federal courts have limited jurisdiction, and removal statutes are strictly construed in favor of state court jurisdiction. Because the court could not determine with certainty whether Avalanche had been "properly joined and served," it resolved that uncertainty in favor of remand, as required by Eighth Circuit precedent (Dahl v. R.J. Reynolds Tobacco Co., 478 F.3d 965 (8th Cir. 2007)).

Arguments the Colliers Defendants Did Not Make

The court noted that the Colliers Defendants did not raise two arguments that might have supported removal: (1) the "nominal defendant" doctrine, which excepts from the unanimity requirement defendants against whom no real relief is sought (which can include dissolved entities), and (2) the "fraudulent joinder" doctrine, which some courts have applied to excuse a co-defendant's lack of consent where the plaintiff has no colorable claim against that defendant. Because neither argument was raised, the court declined to construct them on the defendants' behalf. The court noted this omission was especially puzzling given that Union's own briefing cited cases discussing both doctrines.

Disposition

- The Motion for Joinder filed by Trustee, Funding, and Securities (to join International's opposition brief) was granted. - Union's Motion to Remand was granted; the case is remanded to the District Court of the State of Minnesota, Fourth Judicial District, County of Hennepin. - International's Motion to Dismiss was denied as moot. - Trustee's, Funding's, and Securities' Motion to Dismiss was denied as moot.

The court also observed in a footnote that the statement in International's notice of removal that "[a]ll Defendants consent to the removal" was erroneous, as International's own counsel acknowledged at oral argument.