Opinion
CV-24-02769-PHX-MTL
11-08-2024
LVNV Funding LLC, Plaintiff, v. Jerome Gatlin, et al., Defendants.
ORDER
Michael T. Liburdi, United Slates District Judge.
This matter is before the Court sua sponte. Because the Court lacks subject matter jurisdiction, the Court will remand this case to the Maricopa County Justice Courts in Arizona.
I.
Plaintiff LVNV Funding LLC filed its complaint in the Moon Valley Justice Court on September 20, 2024, alleging a single cause of action against Defendant Jerome Gatlin for breach of contract. (Doc. 1-1 at 2.) According to the complaint, Defendant failed to make monthly payments on a Credit One account assigned to Plaintiff, and Plaintiff now seeks a judgment in the amount of $1,000.88 plus fees and interest. (Id.)
Defendant filed an answer denying liability and raising various affirmative defenses. (Id. at 9-17.) Defendant also asserts two counterclaims against Plaintiff under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. (Id.) After filing his answer, Defendant timely removed to this Court arguing federal question jurisdiction is satisfied under 28 U.S.C. § 1331. (Doc. 1.) Plaintiff then filed a motion to remand (Doc. 7), which Defendant opposes (Docs. 9, 10).
II.
Before considering the motion, the Court must assess whether it has subject matter jurisdiction. Federal courts are courts of limited jurisdiction, possessing “only that power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994). As such, federal courts “have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it.” Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010). A federal court, therefore, “may dismiss sua sponte if jurisdiction is lacking.” Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983); see Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”).
Federal question jurisdiction is set forth in 28 U.S.C. § 1331 and grants federal courts jurisdiction to hear cases arising under the Constitution and federal law. The “presence or absence of federal question jurisdiction is governed by the ‘well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). As such, federal question jurisdiction cannot be based on a defense, counterclaim, cross-claim, or third-party claim raising a federal question. See Vaden v. Discover Bank, 556 U.S. 49, 62 (2009) (explaining that “counterclaims, even if they rely exclusively on federal substantive law, do not qualify a case for federal-court cognizance”); Hunter v. Philip Morris USA, 582 F.3d 1039, 1042-43 (9th Cir. 2009).
Diversity jurisdiction is found in 28 U.S.C. § 1332, which extends federal jurisdiction over cases arising under state law only where there is complete diversity of the parties, and the statutory amount-in-controversy (over $75,000) is satisfied. 28 U.S.C. § 1332(a)(1). This means that no defendant can be a resident of the same state as any plaintiff. Owen Equip. Co. v. Kroger, 437 U.S. 365, 373 (1978).
In his notice of removal, Defendant asserts federal question jurisdiction. (Doc. 1 at 1.) But the only claims “arising under” federal law are Defendant's counterclaims, and counterclaims are insufficient to qualify a case for federal question jurisdiction. Vaden, 556 U.S. at 62. Because Plaintiff's breach of contract claim is an Arizona-state law claim, jurisdiction can only exist if there is complete diversity of parties and the amount in controversy exceeds $75,000. This requirement is not satisfied, however, because the amount in controversy is $1,000.88-a far cry from the $75,000.01 necessary for diversity jurisdiction.
III.
Because subject matter jurisdiction is not satisfied, the Court must remand the case to the Maricopa County Justice Courts in Arizona. See 28 U.S.C. § 1447(c) (“If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.”).
Accordingly, IT IS ORDERED directing the Clerk of Court to remand this case back to the Maricopa County Justice Courts in Arizona.
IT IS FURTHER ORDERED that Plaintiff's Motion (Doc. 7) and Defendant's IFP Application (Doc. 2) are denied as moot.
IT IS FINALLY ORDERED directing the Clerk of Court to close this case.