Opinion
Civil No: 05CV1184-B(BLM).
September 27, 2005
I. INTRODUCTION
The present action involves (1) Plaintiff Mandarin's Motion to Remand the case to the California Superior Court; (2) Defendants Matthew Sinopoli; Syncom Industries, Inc.; Syncom Services, Inc.; VJM, Inc.; and Cincom's Motion to Set Aside Entry of Default; and (3) Defendant ACS Enterprise's Motion to Dismiss the cause of action against it pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. As discussed below, the Court GRANTS Plaintiff Mandarin's Motion to Remand as unopposed; DENIES Plaintiff's Motion for Attorney's fees and costs for the remand; SETS ASIDE the entry of default; AND DISMISSES Defendant's Rule 12(b)(6) Motion to Dismiss WITHOUT PREJUDICE, thereby terminating the case.
II. BACKGROUND
A. Factual Background
The present case arises under the state employment laws of California. Defendants Matthew Sinopoli; Syncom Industries, Inc. dba Syncom Services, Inc.; and VJM, Inc. dba Cincom (hereinafter referred to as the Removing Defendants) hired Plaintiff Valentin Mandarin in April 2001 to act as a San Diego Area Manager for a cleaning business that provided cleaning services to movie theaters. Mandarin's employment agreement contained a covenant not to compete clause.
In July 2004, Mandarin resigned from his position with the Removing Defendants. In August 2004, Mandarin started working for Defendant ACS Enterprises, Inc. (ACS). Thus, the present dispute arises from Mandarin's former employment with Removing Defendants and his subsequent employment with Defendant ACS.
B. Procedural Background
In a prior action in a New Hampshire state court, Removing Defendants filed a law suit on November 5, 2004, against Mandarin for breach of contract to enforce the non-competition clause in their employment agreement. Thus, the Removing Defendants in the present action are the Plaintiffs in the New Hampshire state court action.
Mandarin removed the case to the Federal District of New Hampshire on the basis of diversity jurisdiction (hereinafter the New Hampshire Action). Mandarin then moved to transfer the New Hampshire Action to this Court. However, before addressing the transfer request, the New Hampshire Court remanded the case to the New Hampshire state court on June 23, 2005, ruling sua sponte that it lacked diversity subject matter jurisdiction over the action because it had concluded that both opposing parties Mandarin and Syncom were citizens of the state of Florida. The New Hampshire state court action is thus pending.
1. Plaintiff's Motion to Remand
On May 3, 2005, without waiting for the ruling in New Hampshire on Plaintiff's motion to transfer the case to San Diego, Plaintiff Mandarin filed an action in the Superior Court of California San Diego County (Case No. GIS-20575) against the Removing Defendants and against new Defendant ACS. On June 7, 2005, the Removing Defendants timely removed the state case to this Court, without including Defendant ACS in the removal action. Thus, the Removing Defendants commenced their removal action to this Court prior to the New Hampshire Court's determination that there was no diversity between them and Mandarin. On June 27, 2005, Plaintiff Mandarin filed a motion to remand the present case to state court, requesting attorney's fees and costs for the remand. These motions were taken under submission on the papers.
2. Defendants' Motions
On July 6, 2005, Defendant ACS voluntarily appeared by filing a motion to dismiss the cause of action against it under Rule 12 (b) (6) of the Federal Rules of Civil Procedure. On July 11, 2005, Plaintiff Mandarin asked for a default to be entered against the Removing Defendants for failure to respond timely to the complaint in this action. On July 12, 2005, the clerk's office entered a default as to the Removing Defendants. On July 13, 2005, the Removing Defendants attempted to file an answer to the complaint, and on August 3, 2005, they filed a motion to set aside the default. The motions for dismissal and for setting aside the entry of default were also taken under submission on the papers.
III. DISCUSSION
A. Plaintiff's Motion to Remand
A motion to remand the case on the basis of any defect in the removal procedure must be made within 30 days after the filing of the notice of removal under 28 U.S.C. § 1446(a). However, if at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.See 28 U.S.C. § 1447(c) (2005).
On a motion to remand, the Court must determine whether the case was properly removed to the federal court in the first instance under 28 U.S.C. § 1441. See Emrich v. Touche Ross and Co., 846 F.2d 1190, 1194-95 (9th Cir. 1988). Section 1441(a) authorizes removal of "any civil action brought in a State Court of which the district courts of the United States have original jurisdiction." See also Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).
1. Removal
Defendants timely removed the case to federal court on the basis of diversity subject matter jurisdiction under 28 U.S.C. §§ 1332, 1441(b). Plaintiff Mandarin moved to remand, and removing Defendants do not oppose because of the New Hampshire Court's post-removal ruling that Mandarin and Syncom are citizens of the same state, namely Florida. Therefore, the Court GRANTS Plaintiff's unopposed motion for remand. The case is therefore terminated.
2. Subject Matter Jurisdiction
Additionally, the Court finds that it lacks subject matter jurisdiction over the case because there is no complete diversity of citizenship between the parties. A party's citizenship for jurisdictional analysis is determined as of the date the lawsuit was commenced. See Freeport-McMoran, Inc. v. K.N. Energy, Inc., 498 U.S. 426, 428 (1991). In the New Hampshire Action, which commenced in November 2004, the New Hampshire Court determined that Syncom was a citizen of Florida and that Mandarin was domiciled in Florida, despite the fact that Mandarin had alleged that he resided in and was a citizen of California. Therefore, the parties would be barred from denying their Floridian citizenship in the New Hampshire Action.
However, the present action was commenced in California in May 2005, i.e., some six months after the New Hampshire Action, against old Defendant Syncom, which is a citizen of Florida, and new Defendant ACS, which is a citizen of California. The issue is whether the parties in the present action are diverse as of May 2005. If Plaintiff Mandarin continues to be a citizen of Florida, he is not diverse from Defendant Syncom. If Plaintiff Mandarin is now a citizen of California, as he alleges in the present action, he is not diverse from Defendant ACS. Other than asserting it, Removing Defendants made no showing of the sham joinder of Defendant ACS, and for purposes of determining diversity here, the Court finds insufficient showing of the sham joinder of local defendant ACS. Therefore, there is no need for the Court to address whether Plaintiff Mandarin is a citizen of Florida or California because either way he is not completely diverse from the defendants in this action. Accordingly, the Court lacks diversity subject matter jurisdiction over the case.
3. Attorney's Fees
The Court has discretion to award attorney's fees for successful motions for remand. Moore v. Permanente Medical Group, Inc., 981 F.2d 443, 447-48 (9th Cir. 1992); Shuster v. Gardner, 319 F.Supp.2d 1159, 1165-66 (S.D. Cal. 2003). Plaintiff Mandarin contends that because Removing Defendants' Notice of Removal was procedurally and jurisdictionally defective, the Court should order Removing Defendants to pay $1450.00 in attorney's fees. Removing Defendants counter that they had a good faith belief that this case was removable when the case was filed.
Plaintiff Mandarin filed this case before the New Hampshire Court sua sponte found no diversity. Even Mandarin, the party that had originally sought the removal of the action to the New Hampshire Court followed by transfer to this Court, thought that there was diversity of citizenship among the parties in the New Hampshire Action. On the other hand, prior to the New Hampshire Court's ruling, Removing Defendants removed the present case to this Court, contending that Defendant ACS, as a citizen of California, was joined to destroy diversity. Removing Defendants made no attempt to prove sham joinder of Defendant ACS, which is their burden, and without which remand is assured.
Plaintiff Mandarin did not wait for the New Hampshire Court's ruling, and Removing Defendants did not demonstrate that ACS was a sham defendant. The parties are in pari delicto. Based on the totality of circumstances, the Court DENIES Plaintiff's Motion for attorney's fees and costs for the remand.
B. Motion to Set Aside Clerk's Default
Because the Court lacks subject matter jurisdiction over the case, the Court SETS ASIDE the entry of default against the Removing Defendants.
C. Fed.R.Civ.P. 12(b)(6) — Motion to dismiss for failure to state a claim
A motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of the claims in the complaint. Defendant ACS moves the Court to dismiss the cause of action against it under Rule 12(b)(6) of the Federal Rules of Civil Procedure because it alleges that Plaintiff Mandarin's claim for indemnification under California Labor Code Section 2802 has no basis in law or fact. Because the Court lacks diversity subject matter jurisdiction over this action, Court DISMISSES Defendant ACS's motion to dismiss WITHOUT PREJUDICE.
IV. CONCLUSION
As discussed above, the Court GRANTS Plaintiff Mandarin's unopposed Motion to Remand and DENIES Plaintiff's Motion for Attorney's fees and costs for the remand. Because the Court lacks subject matter jurisdiction, the Court SETS ASIDE the entry of default AND DISMISSES, WITHOUT PREJUDICE, Defendant's Rule 12(b)(6) Motion to Dismiss, thereby terminating the case.
IT IS SO ORDERED s