Dreamworks Motorsports, Inc. v. Jonathan Klein 2026 WL 837544 (4th Cir. 2026)
Removing a state-court case to federal court after the one-year diversity deadline is risky, and Dreamworks Motorsports, Inc. v. Jonathan Klein shows that an unsuccessful attempt can leave the removing party paying the other side’s fees.
Dreamworks originally sued Klein in North Carolina state court over unpaid auto-repair charges of about $19,663.57. About ten months later, still before the one-year removal deadline, Dreamworks moved to amend its complaint to add an unfair trade practices claim and seek treble damages. The hearing on that motion was delayed, at Klein’s counsel’s request, due to previously secured leave, until after the one-year removal deadline passed. Once the state court allowed the amendment, Klein removed the case to federal court, arguing that Dreamworks had acted in bad faith to prevent timely removal. The district court remanded the case and later awarded Dreamworks attorney’s fees incurred because of the removal.
The Fourth Circuit affirmed the award of attorney’s fees. The court applied the Supreme Court’s standard that fees may be awarded under 28 U.S.C. § 1447(c) when the removing party lacked an objectively reasonable basis for removal. Klein argued that Dreamworks acted in bad faith by waiting nearly a year to seek treble damages and by not obtaining an amendment until after the one-year deadline. But the record showed Dreamworks moved to amend roughly two months before the deadline and had originally calendared the hearing to be ready for a ruling before the deadline expired. The delay occurred after Klein’s counsel delayed the hearing. On that record, the court found no abuse of discretion in the district court’s conclusion that Klein’s bad-faith theory lacked factual support and that removal was therefore not objectively reasonable. The court also rejected Klein’s due process and excessiveness arguments, concluding that the district court properly used the lodestar method and reasonably awarded $13,170 in fees attributable to the improper removal.
For litigators and business clients weighing removal strategy, the lesson is clear: when attempting to invoke the bad-faith exception to the one-year diversity deadline, a court requires real evidence, not just suspicion or timing arguments.
This case also highlights how procedural decisions can undercut a later removal argument. Here, the continuance that pushed the amendment hearing past the deadline was requested by the defendant’s own counsel. And once a remand motion succeeds, courts may award fees when removal appears to have imposed unnecessary delay and expense.
This post is for informational purposes only and does not constitute legal advice. If you have questions about your specific situation, you should contact a lawyer for assistance. Nothing herein is intended to create any attorney-client relationship between you and DLM LAW.
