Opinion
Civil Action 23-cv-00083-NYW
01-11-2023
HI-POINT HOME BUILDERS, LLC, Plaintiff, v. JOHN PAUL LUMAN, and NICOLE L. LUMAN, Defendants.
ORDER TO SHOW CAUSE
Nina Y. Wang, United States District Judge
This matter is before the Court sua sponte. Upon review of the Notice of Removal [Doc. 1] and the Complaint [Doc. 5], the Court is not satisfied that Defendants have established this Court's subject matter jurisdiction.
A district court has an independent obligation to satisfy itself of its own jurisdiction. See City of Albuquerque v. Soto Enters., Inc., 864 F.3d 1089, 1093 (10th Cir. 2017). Accordingly, a court “may sua sponte raise the question of whether there is subject matter jurisdiction ‘at any stage in the litigation.'” 1mage Software, Inc. v. Reynolds & Reynolds Co., 459 F.3d 1044, 1048 (10th Cir. 2006) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006)). A court should not proceed in a case unless it has first assured itself that jurisdiction exists. See Cunningham v. BHP Petroleum Great Britain PLC, 427 F.3d 1238, 1245 (10th Cir. 2005).
“The party invoking federal jurisdiction bears the burden of establishing such jurisdiction as a threshold matter.” Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224 (10th Cir. 2004). Defendants assert that this Court has federal question jurisdiction over this case pursuant to U.S.C. § 1331. See [Doc. 1 at ¶ 4].Section 1331 states that “district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.
Defendants do not argue that the Court has diversity jurisdiction under 28 U.S.C. § 1332. See [Doc. 1].
“Under the longstanding well-pleaded complaint rule . . . a suit arises under federal law only when the plaintiff's statement of his own cause of action shows that it is based upon federal law.” Vaden v. Discover Bank, 556 U.S. 49, 60 (2009) (quotation omitted); see also Nicodemus v. Union Pac. Corp., 318 F.3d 1231, 1235 (10th Cir. 2003) (“A case arises under federal law if [the] well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.”). “[T]o support removal jurisdiction, the required federal right . . . must be an essential element of the plaintiff's cause of action, and . . . the federal controversy must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal.” Fajen v. Found. Rsrv. Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982) (quotation omitted). It “takes more than a federal element to open the ‘arising under' door” of § 1331. Empire Healthchoice Assurance, Inc. v McVeigh, 547 U.S. 677, 701 (2006).
“[T]he Court must analyze the complaint to determine whether it is based on federal law.” Gwilt v. Harvard Square Ret. & Assisted Living, 537 F.Supp.3d 1231, 1237 (D. Colo. 2021). In the Complaint, Plaintiff raises one state common-law breach of contract claim against Defendants. See [Doc. 5]. Broadly, Plaintiff alleges that it entered into a home construction contract with Defendants and that Defendants failed to perform their obligations under the contract. [Id. at ¶¶ 5, 27, 34]. Plaintiff does not allege that Defendants violated any federal law. See generally [id.].
Courts have often recognized that a breach of contract claim does not, on its face, implicate federal law. See, e.g., Long v. Petersen, No. 2:13-cv-260, 2014 WL 931045, at *2 (D. Utah Mar. 10, 2014); Tinner v. Farmers Ins. Co., 504 Fed.Appx. 710, 714 (10th Cir. 2012) (affirming dismissal of breach of contract claim for lack of subject matter jurisdiction, as “[f]ederal law neither created th[e] cause of action nor [was] federal law a necessary element of it”).
“[T]he mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction.” Becker v. Ute Indian Tribe of the Uintah & Ouray Rsrv., 770 F.3d 944, 947 (10th Cir. 2014). “As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim.” Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003). However, state law claims that raise a substantial question of federal law may be sufficient to establish federal question jurisdiction. Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005). “To invoke this so-called ‘substantial question' branch of federal question jurisdiction,” the party invoking a federal court's jurisdiction must establish that “a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Becker, 770 F.3d at 947 (quoting Gunn v. Minton, 568 U.S. 251, 258 (2013)). This “substantial question” branch of cases has “narrow boundaries,” id., and encompasses only a “special and small category” of cases. Gunn, 568 U.S. at 258.
In their Notice of Removal, Defendants assert that “[t]his case involves a loan that was guaranteed by the [United States Department of Veterans Affairs (“VA”)],” and “[t]hus, the State Court Action can be removed to this Court because it raises a federal question.” [Doc. 1 at ¶ 4]. Defendants do not cite legal authority in support of this proposition and do not address the whether this case raises a substantial question of federal law. See [id.]. At least one district court has dismissed a breach of contract case for lack of subject matter jurisdiction where the plaintiff alleged that the court had federal question jurisdiction because the subject property was purchased through a loan guaranteed by the VA. See Rosado v. Crafton Hills Mobile Ests., No. 5:17-cv-01582-CAS-SPX, 2017 WL 4570291, at *1, *4 (C.D. Cal. Oct. 11, 2017).
For these reasons, the allegations in the Notice of Removal are presently insufficient for the Court to conclude that it has subject matter jurisdiction over this case. Accordingly, IT IS ORDERED that:
(1) Defendants shall SHOW CAUSE, on or before January 23, 2023, why this case should not be remanded to state court for lack of federal subject matter jurisdiction.