Summary
finding first prong met where defendants obtained title to real property through a United States Marshal's deed.
Summary of this case from Ottaviance v. AVS Props., LLCOpinion
No. CIV 2:08-CV-0018-PHX-RCB.
September 29, 2008
ORDER
Currently pending before the court are motions to remand pursuant to 28 U.S.C. § 1447(c) by plaintiffs James A. Monroe and Kimberley Monroe Clark (doc. 7), and by defendant/cross-claimant Ross Miljenovich (doc. 10). The moving parties posit that this action must be remanded to Arizona Superior Court, Maricopa County because this court lacks subject matter jurisdiction.
Since the commencement of this action, Ms. Monroe Clark's marital status has changed so she no longer goes by Kimberly M. Pirtle, as the caption indicates.
Background
This is the latest round in a dispute between Messrs. Monroe and Gagan, originating in a business venture which began more than a quarter of a century ago, in 1982. Eventually, Mr. Gagan obtained a judgment in Indiana of roughly $1.7 million dollars against Mr. Monroe, among others. Thereafter, for more than a decade this court presided over the related action of Gagan v. Sharar, 2:99-cv-1427-RCB ("Gagan"), wherein Mr. Gagan was seeking to enforce that Indiana judgment. The court assumes familiarity with all prior related proceedings. An abbreviated version of this protracted dispute is set forth below as necessary to frame the issues which these remand motions raise.
As part of the enforcement efforts in Gagan, eventually the United States Marshal conducted a sale of Mr. Monroe's real property located at 9795 East Caron Street, Scottsdale, Arizona 85258. Gagan, (doc. 347). At the time of that sale Mr. Monroe's daughter, Kimberly Monroe Clark, was residing there, but Mr. Monroe was not. See Amended Co. (doc. 5) at 3, ¶ 4. The proceeds of that sale were to be applied toward the satisfaction of the Indiana judgment. Gagan, (doc. 341) at 1. Defendant James Gagan was the highest bidder at that sale, bidding $560,000.00. Id. (doc. 341) at 2. On May 15, 2007, a "United States Marshal's Deed" was issued to Mr. Gagan. Id. (doc. 347). Thereafter, "[i]n June, 2007, [Mr.] Gagan entered into a contract with . . . [Mr.] Miljenovich to sell to him for $750,000 whatever right, title and interest the United States Marshal's Deed had vested in Gagan." Not. of Removal (doc. 1) at 3, ¶ 4.
Unwilling to concede defeat, on August 31, 2007, Mr. Monroe and his daughter, Kimberley Monroe Clark, filed the present action against Messrs. Gagan and Miljenovich and numerous fictitious individuals. Mr. Monroe now alleges that despite the Marshal's sale, he "is the lawful owner of a fee simple estate" in the subject property. Not. of Rem. (doc. 1), exh. A thereto (doc. 1-4) at 2, ¶ 2. Mr. Monroe further alleges that the United States Marshal, "act[ing] upon the advice and instructions of Defendants Gagan[,]" refused to pay Mr. Monroe the $150,000.00 statutory homestead exemption. Id. at 5, ¶ 17. The failure to pay that exemption, Mr. Monroe alleges, renders "invalid " Mr. Gagan's May 15, 2007 Marshal's deed. Id. at 5, ¶ 19.
Mr. Monroe is seeking two forms of declaratory judgment. First, he is seeking a declaration that the "Indiana Judgment against [him], domesticated in Arizona . . ., was not renewed and expired and was, therefore, of no further force or effect and that it was, and is, invalid in the State of Arizona [.]" Id. at 6, ¶ A(1). Second, he is seeking a declaration that the May 15, 2007, Marshal's Deed "is void and invalid." Id. at 6, ¶ A(2). Citing to Arizona statutes governing actions to quiet title, Mr. Monroe also seeks a declaration "establishing [his] estate" in the subject property, and "barr[ing] and forever estopp[ing]" defendants from claiming any right or title to that property. Id. at 6, ¶ B. Similarly, he seeking a judgment "barring and forever estopping" defendants from asserting an interest or lien upon the property which is adverse to his. Id. at 6, ¶ C. Plaintiff Monroe Clark seeks unspecified monetary damages based upon alleged "intentional wrongful eviction." Id. at 6, ¶¶ 20 and D.
Roughly a week after the Monroes filed their state court action, Mr. Miljenovich filed a separate state court action against "James L. Gagan and Jane Doe Gagan[.]". Doc. 26-2. Mr. Miljenovich alleges that he and the Gagans are residents of Maricopa County, Arizona. Id. at 1-2, ¶¶ 1-2. He further alleges that he entered into a contract with the Gagans to purchase the subject property for $750,000.00. As that contract required, Mr. Miljenovich deposited $25,000.00 as earnest money. In the event Mr. Miljenovich did not perform under the contract, that $25,000.00 was non-refundable.
In addition, Mr. Miljenovich alleges that while contracting with Mr. Gagan to purchase the subject property, Mr. Gagan "represented to [him] that the Property was free and clear of all encumbrances except for those listed in the Purchase Contract."Id. at 3, ¶ 13. Mr. Miljenovich subsequently learned, however, that Mr. Monroe has a $150,000.00 homestead exception recorded on the subject property. Id. at 3, ¶¶ 14-16. Because allegedly the Gagans have refused to pay that exemption, Mr. Miljenovich claims that he "is unable to complete the purchase of the Property and obtain title to the Property free and clear of all encumbrances[.]" Id. at 4, ¶ 19. Given that his "inability to close on the property is a result of the Gagans['] own actions[,]" Mr. Miljenovich claims an "entitle[ment] to the return of his [$25,000.00] earnest money." Id. Mr. Miljenovich sets forth state law claims for breach of contract; fraud; intentional/negligent misrepresentation; and consumer fraud under ARS § 44-1521 et seq.
The state court consolidated the Monroe and Miljenovich actions on October 26, 2007. Thereafter, Mr. Miljenovich filed a cross-claim against the Gagans on December 6, 2007. Doc. 11, exh. B thereto (doc. 1-4). That cross-claim mirrors his complaint inMiljenovich v. Gagan. Mr. Gagan then removed the matter to this court on January 4, 2008, where it was randomly assigned to the Honorable Earl. H. Carroll. Primarily for reasons of judicial economy, this court granted Mr. Gagan's motion to transfer that action to the undersigned. Gagan v. Estate of Sharar, 2008 WL 2810978 (D.Ariz. July 18, 2008). Prior to that transfer, plaintiffs filed this motion to remand (doc. 7), to which Mr. Miljenovich filed a "joinder" (doc. 10), arguing that this court lacks subject matter jurisdiction. Given that transfer, these remand motions are properly before this court.
Discussion
I. Governing Legal Standards
"A defendant may remove an action originally filed in state court only if the case originally could have been filed in federal court." In re NOS Communications, MDL No. 1357, 495 F.3d 1052, 1057 (9th Cir. 2007) (citing 28 U.S.C. § 1441(a), (b)). Consistent with the foregoing and because "federal courts are court of limited jurisdiction[,]" Vacek v. U.S. Postal Service, 447 F.3d 1248, 1250 (9th Cir. 2006) (internal quotation marks and citation omitted),cert. denied, 127 S.Ct. 2122 (2007), "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
It is beyond peradventure that "[i]n general, removal statutes are strictly construed against removal." Luther v. Countrywide Home Loans Servicing LP, 533 F.3d 1031, 1034 (9th Cir. 2008) (citing, inter alia, Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941)). Accordingly, "[i]t is to be presumed that a cause lies outside [the] limited jurisdiction [of the federal courts] and the burden of establishing the contrary rests upon the party asserting jurisdiction." Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 685 (9th Cir. 2006) (internal quotation marks and citation omitted). Therefore, "[a] defendant seeking removal has the burden to establish that removal is proper and any doubt is resolved against removability[,]" and, by extension, in favor of remand. Luther, 533 F.3d at 1034 (citation omitted).
II. Impact of Consolidation
At the outset it is necessary to address the impact of consolidation on the court's jurisdictional analysis. Despite consolidation, the Monroe action and the Miljenovich action retain their separate identities. See Continental Airlines v. Goodyear Tire Rubber Co., 819 F.2d 1519, 1523 n. 1 (9th Cir. 1987) (quoting Johnson v. Manhattan Ry., 289 U.S. 479, 497, 53 S.Ct. 721, 728, 77 L.Ed. 1331 (1933)) ("[T]he consolidation of the cases below did not `make those who are parties in one suit parties in another.'") As one court has so picturesquely put it, "[c]onsolidation is not like a marriage, producing one indissoluble union from two distinct cases." Chaara v. Intel Corp., 410 F.Supp.2d 1080, 1094 (D.N.M. 2005), aff'd without pub'd opinion, 245 Fed.Appx. 784 (10th Cir. 2007). "Instead, consolidation is an artificial link formed by a court for the administrative convenience of the parties; it fails to erase the fact that, underneath consolidation's facade, lie two individual cases." Id. (citations omitted). Given the fundamental nature of consolidation, courts have uniformly held that "[t]here must be separate jurisdictional bases for each action prior to any consolidation, and any case lacking a separate jurisdictional basis must be remanded." James v. CSX Transportation, Inc., 2007 WL 1100503, at *3 (S.D.Ga. April 9, 2007) (citing Johnson, 289 U.S. at 496-97, 53 S.Ct. 721); see also Chaara, 410 F.Supp.2d at 1095 (treating consolidated actions "[a]s separate actions," so that "each case must satisfy jurisdiction on its own") (emphasis added). This is equally true for cases where diversity is the jurisdictional basis. In re Ibasis, Inc. Deriv. Litig., 551 F.Supp.2d 122, 125 (D.Mass. 2008) (citing, inter alia, Cella v. Togum Constructeru Ensemleier en Industrie Alimentaire, 173 F.3d 909, 913 (3rd Cir. 1999)) ("Courts have recognized that analysis of diversity jurisdiction remains separate for cases even after they have been consolidated.") Thus, in the present case, the court must "analyze the jurisdictional basis of [the Monroe action and theMiljenovich action] independently." See Cella, 173 F.3d at 913 (citing Cole v. Schenley Industries, Inc., 563 F.2d 35, 38 (2d Cir. 1977)).
The fact that these two actions were consolidated in state court, prior to removal, does not change the result. Presumably those actions were consolidated pursuant to ARCP 42(a) which is virtually identical to Fed.R.Civ.P. 42(a). "`[B]ecause Arizona has substantially adopted the Federal Rules of Civil Procedure, [Arizona courts] give great weight to the federal interpretation of the rules.'" Cachet Residential Builders, Inc. v. Gemini Ins. Co., 547 F.Supp.2d 1028, 1030 (D.Ariz. 2007) (quoting Anserv Ins. Servs., Inc. v. Albrecht, 192 Ariz. 48, 960 P.2d 1159, 1160 (1998)). The foregoing "strengthen[s] the Court's conclusion that [Arizona] courts would not reach a different conclusion under the [Arizona] Rules." See Chaara, 410 F.Supp.2d at 1095 (citations omitted).
III. Subject Matter Jurisdiction
The court is compelled to comment upon two defects in defendant Gagan's removal. First, it violates the rule of unanimity which basically requires that all served defendants join in a notice of removal. Vasquez v. North County Transit Dist., 292 F.3d 1049, 1060 n. 5 (9th Cir. 2002) (citation omitted). Obviously, defendant Gagan did not join defendant Miljenovich in his Notice of Removal. This is a procedural defect, however, which is waived where no timely objection is made. Id. (citation omitted). By filing their motion to remand within 30 days of the Notice of Removal, plaintiffs would have been entitled to raise this procedural defect, but they did not. Hence it is waived. Defendant Miljenovich likewise waived his right to waive this procedural defect because he did not file his motion to remand until February 12, 2008, more than 30 days after the filing of Gagan's Notice of Removal.
Removal, to the extent it is based upon diversity of citizenship, also is defective here because it violates the forum defendant rule. That rule "confines removal on the basis of diversity jurisdiction to instances where no defendant is a citizen of the forum state." Lively v. Wild Oats Markets, Inc., 456 F.3d 933, 939 (9th Cir. 2006). Here, according to the Notice of Removal, defendant Miljenovich is a citizen of Arizona, the forum state. Not. of Rem. (doc. 1) at 4, ¶ 9. Like the unanimity rule, however, the forum defendant rule is procedural. Lively, 456 F.3d at 942. Thus, a violation of that rule "constitutes a waivable non-jurisdictional defect subject to the 30-day time limit imposed by § 1447(c)." Id.
As with the unanimity rule, plaintiffs' timely remand motion is silent as to the forum defendant rule. Accordingly, they waived the right to object to removal on that basis. And once again, defendant Miljenovich waived his right to raise this procedural defect because he did not file his remand motion within 30 days after the filing of the Notice of Removal.
A. Monroe v. Gagan
Defendant Gagan's Notice of Removal identifies what he views as several "uncontested grounds for removal" which alone or together "defeat" remand. Resp. (doc. 15) at 6. Defendant argues that there are four possible jurisdictional bases for the Monroe v. Gagan action: (1) diversity of citizenship pursuant to 28 U.S.C. § 1332; (2) federal question jurisdiction under 28 U.S.C. § 1331; (3) supplemental jurisdiction under 28 U.S.C. § 1367; and (4) pursuant to 28 U.S.C. § 1442(a)(2), the federal title dispute statute. The court will address in reverse order whether any of these statutes provide a basis for subject matter jurisdiction inMonroe.
1. Federal Title Dispute
The "rarely invoked" federal title dispute statute, Vanouwerker v. Owens-Corning Fiberglass Corp., 1999 WL 335960, at *13 (E.D.Tex. May 26, 1999), reads in relevant part as follows:
A civil action . . . commenced in a State court against any of the following may be removed by them to the district court of the United States for the district . . . embracing the place wherein it is pending:
. . . .
A property holder whose tile is derived from any such officer, where such action or prosecution affects the validity of any law of the United States.28 U.S.C. § 1442(a)(2) (West 2006). Reliance upon this statute "requires compliance with two prongs[.]" Benitez-Bithorn v. Rossello-Gonzalez, 200 F.Supp.2d 26, 31 (D.P.R. 2002). First, "the property in controversy must derive from an officer of the United States[.]" Id. Second, "the controversy regarding the property must affect the validity of any law of the United States." Id.
Mr. Gagan contends that Monroe's claims against him satisfy both prongs; hence, this court has subject matter jurisdiction under section 1442(a)(2). As to the first prong, Gagan asserts that because he obtained the subject property through a sale by the United States Marshal, he is a "property holder whose title derives from an officer of the United States" within the meaning of section 1442(a)(2). The court agrees. Indeed, in their complaint, the Monroes explicitly allege that the Gagans "claim an interest in and title to the Property . . . through . . . a [United States] Marshal's Deed, dated May 15, 2007[.]" Not. of Rem. (doc. 1), exh. B thereto (doc. 1-4) at 4, ¶ 13.
Nonetheless, Mr. Gagan cannot satisfy the second prong of section 1442(a)(2). Gagan baldly contends that the Monroes' allegations "affect the validity of a law of the United States" because they are "attack[ing] . . . the Marshal's fulfillment of [his] express statutory duties" under 28 U.S.C. § 566. Not. of Rem. (doc. 1) at 6, ¶ 12.; see also Resp. (doc. 15) at 5-6 (same). That statute delineates the "powers and duties" of the United States Marshal. 28 U.S.C. § 566 (West 2006 West Supp. 2008). Additionally, Gagan argues that this matter affects the validity of a law of the United States because it "draw[s] into issue the validity of Gagan's federal RICO Judgment as well as the validity of various Orders" by this court in Gagan. Id. at 6, ¶ 12.
Mr. Gagan too broadly construes the second prong of section 1442(a)(2). The Marshal's supposed failure to comply with his duties under federal law does not transform this action into one affecting the validity of a law of the United States. This is not a situation, for example, where the Monroes are arguing that section 566 is constitutionally infirm. Likewise, questioning the validity of a judgment and federal court orders does not transform this into a controversy affecting the validity of any law of the United States. See Town of Stratford v. City of Bridgeport, 434 F.Supp. 712, 715 (D.Conn. 1977) (citation omitted) ("None of the provisions of federal law cited in support of [defendant's] removal petition meets the § 1442 standard, since [plaintiff's] suit does not attack the validity of any of them.") In short, reciting that a controversy affects the validity of a law of the United States does not make is so. Because Monroe's claims do not affect the validity of any federal law, Gagan improperly relied upon the federal title dispute statute as a basis for removal here.
2. Supplemental Jurisdiction
Defendant Gagan relies upon 28 U.S.C. § 1367(a) as another possible jurisdictional basis. That statute states in pertinent part as follows:
[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.28 U.S.C. § 1367(a) (West 2006) (emphasis added). Gagan argues that pursuant to that statute this case is within the court's supplemental jurisdiction in Gagan. Gagan misconceives the scope of section 1367(a).
"Supplemental jurisdiction must be exercised in the same action that furnishes the basis for exercise of supplemental jurisdiction." Ortolf v. Silver Bar Mines, 111 F.3d 85, 86 (9th Cir. 1991) (emphasis added). As the Ninth Circuit explained inOrtolf, "[t]he phrases `in any civil action' and `in the action[,]'" as employed in section 1367(a), "require that supplemental jurisdiction be exercised in the same case, not a separate or subsequent case." Id. (emphasis added). Thus, Gagan cannot form the basis for the exercise of this court's supplemental jurisdiction in this separate, subsequent action.See Brummer v. Iasis Healthcare of Arizona, Inc., 2007 WL 2462174, at *1 (D.Ariz. Aug. 24, 2007) (and cases cited therein) (rejecting argument that removal was proper based upon supplemental jurisdiction because the state claims were related to federal claims pending in another district court); see also In re Enron Corp. Sec., 2002 WL 32107216, at *2 (S.D.Tex. Aug. 12, 2002) (citations omitted) (There can be no supplemental jurisdiction without the existence initially of original subject matter jurisdiction over at least some of the claim in the same suit, at the point it is either filed in or removed to federal court.") Accordingly, Gagan is improperly relying upon section 1367(a) as a basis for removal.
3. Federal Question Jurisdiction
The court will next examine whether Monroe v. Gagan raises a federal question so as to confer jurisdiction upon this court pursuant to 28 U.S.C. § 1331.
a. Well-Pleaded Complaint Rule
"`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.'" NOS Communications, 495 F.3d at 1047 (emphasis added) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)). "The well-pleaded complaint rule is a `powerful doctrine [that] severely limits the number of cases in which state law `creates the cause of action' that may be initiated in or removed to federal district court[.]'" Lippitt v. Raymond James Financial Services, Inc., 340 F.3d 1033, 1039-40 (9th Cir. 2003) (quoting Franchise Tax Bd. of California v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). As the Supreme Court long ago explained:
whether a case is one arising under the Constitution or a law or treaty of the United States . . . must be determined from what necessarily appears in the plaintiff's statement of his own claim . . ., unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant might interpose.Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914). As the foregoing makes clear, the court's first task is to determine whether on its face the Monroe complaint "contains any allegations that would render [their] cause of action one that `arises' under federal law." See Lippitt, 340 F.3d at 1040 (citation omitted).
Here, the parties disagree as to which complaint the court should look — the original consolidated state court complaint, or the amended complaint which was filed and served post-removal. In terms of alleged federal question jurisdiction, the complaints are identical. Thus, at this juncture, it matters not whether the court focuses on the original Monroe v. Gagan complaint or on the amended complaint.
The court hastens to add, however, that in ascertaining federal question jurisdiction, it will not consider defendant Miljenovich's cross-claim. That pleading does not come into play here because "[r]emoval, . . ., cannot be based on a counter-claim or cross-claim raising a federal question."Redevelopment Agency of the City of San Bernardino v. Alvarez, 288 F.Supp.2d 1112, 1114 (C.D.Cal. 2003) (citation omitted). Therefore, the court will limit its federal question inquiry to the Monroe plaintiffs' complaint.
When it does that, the court easily concludes that on its face the Monroe complaint does not arise under federal law. Rather, plaintiffs have cast their claims strictly in terms of Arizona state law. For example, plaintiffs argue, as they have repeatedly in related actions, that the Indiana judgment expired under Arizona law. Then, even assuming the validity of that judgment, plaintiffs accurately state that the issue of the validity of Gagan's sale of the subject property without paying the Arizona homestead exemption is solely a matter of state law. Finally, they point out that plaintiff Kimberley Monroe Clark's wrongful eviction claim also is strictly a creature of state law.
b. Artful Pleading Doctrine
Defendant Gagan does not dispute any of the foregoing. Instead, relying exclusively upon Sparta Surgical v. Nat. Ass'n of Sec. Dealers, 159 F.3d 1209 (9th Cir. 1998), he rejoins that plaintiffs are impermissibly omitting the "essentially federal underpinnings of their claims." Mot. (doc. 15) at 8. Those essential underpinnings, from defendant Gagan's standpoint, are plaintiffs' "attack[s] . . . [on a] federal Court Judgment[,] . . . numerous federal Court Orders, and the conduct of the United States Marshal[.]" Id. at 7. Had plaintiffs included the foregoing in their complaint, then federal question jurisdiction is "inevitable[,]" Gagan asserts. Id. at 8.
Plaintiffs counter that their claims do not "arise under" federal law because there are no applicable federal laws at issue, much less "complete preemption" of such laws. See Reply (doc. 16) at 4-5. Plaintiffs reiterate that there is no federal question jurisdiction because their right to relief under Arizona State law does not "necessarily depend on resolution of a substantial question of federal law." Id. at 4 (internal quotation marks and citations omitted).
Although not explicitly, defendant Gagan is invoking the artful pleading doctrine. Under that doctrine, a plaintiff "may not avoid federal jurisdiction by omitting from the complaint allegations of federal law that are essential to the establishment of his claim." Lippitt, 340 F.3d at 1041 (internal quotation marks and citations omitted). "The artful pleading doctrine allows courts to delve beyond the face fo the state court complaint and find federal question jurisdiction by recharacteriz[ing] a plaintiff's state-law claim as a federal claim." Id. (internal quotation marks and citations omitted). The Ninth Circuit has cautioned, however, that "[c]ourts should invoke the doctrine only in limited circumstances as it raises difficult issues of state and federal relationships and often yields unsatisfactory results." Id. (internal quotation marks and citations omitted).
Courts employ the artful pleading doctrine in two situations: (1) complete preemption cases; and (2) substantial federal question cases. Id. (citations omitted). Only the latter's a possibility here because this is not a case of complete preemption where a federal statute "provides the exclusive cause of action for the claim asserted and also set[s] forth procedures and remedies governing that cause of action[.]" See id. at 1042 (internal quotation marks and citations omitted) (emphasis omitted). And, indeed, Gagan is not making this argument.
Mindful, as the Lippitt Court put it, that the court is "treading in a doctrinal minefield," it must next determine whether plaintiffs' complaint raises a substantial federal question. See id. at 1041. If plaintiffs' state law claims "implicate a substantial federal question[,]" then this federal court may retain jurisdiction over such claims. See id. at 1042. A substantial federal question exists where "a substantial, disputed question of federal law is a necessary element of . . . the well-pleaded state claim[.]" Id. (internal quotation marks and citation omitted) (emphasis in original). Or, a substantial federal question can exist where "the right to relief depends on the resolution of a substantial, disputed federal question[.]" Id. (internal quotation marks and citation omitted). Neither exists here; and, tellingly, defendant Gagan did not address either of these possibilities in his motion.
Federal law is not intrinsic to any of plaintiffs' claims. Clearly federal law is not a necessary "element" of plaintiffs' claim that the Indiana judgment expired under Arizona state law. While defendant Gagan may intend to rely upon the preclusive effect of this court's judgment in Gagan or orders issued in connection therewith, or both, such reliance does not transform this otherwise state law claim into one arising under federal law. See Lighting Science Group Corp. v. Koninklijke Philips Electronics N.V., 2008 WL 2917602, at *5 n. 1 (E.D.Cal. June 3, 2008) (citing Metcalf v. City of Watertown, 128 U.S. 586, 9 S.Ct. 173, 32 L.Ed. 543 (1888)) ("That a defense may implicate federal law does not suffice to confer jurisdiction to the court.") Nor is federal law a "necessary element" of plaintiffs' claim that Gagan purportedly failed to comply with Arizona's statutory homestead exemption. Likewise, plainly, federal law is not an element of plaintiff Kimberley Monroe Clark's Arizona state law claim for wrongful eviction.
Sparta, the sole basis for Gagan's argument that this court has federal question jurisdiction is readily distinguishable, and hence does not compel a different result here. In Sparta, although plaintiffs' claims were "carefully articulated in terms of state law," the Ninth Circuit held that the district court had subject matter jurisdiction because those claims were predicated upon a violation of federal securities law. Sparta, 159 F.3d at 1212 (internal quotation marks and citation omitted). A similar federal law predicate is conspicuously absent from plaintiffs' claims. Thus, notwithstanding defendant Gagan's depiction of plaintiffs' claims, those claims are not federal claims disguised as state law causes of action. Consequently, Gagan cannot rely upon section 1331 — the federal question statute — as a jurisdictional basis for removal. Having found that there is no federal question jurisdiction as to Mr. Monroe's claims, Gagan's assertion that 28 U.S.C. § 1441(c) provides a jurisdictional basis for the claims of Ms. Monroe Clark is unavailing.
That statute provides in relevant part:
Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more other non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein[.]28 U.S.C. § 1441(c) (West 2006).
4. Diversity Jurisdiction
The only remaining possible basis for jurisdiction here is 28 U.S.C. § 1332. That statute provides in relevant part that district courts "shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States[.]" 28 U.S.C. 1332(a)(1) (West 2006) (emphasis added). To establish federal jurisdiction under that statute, two requirements must be met. First, " each defendant [must be] a citizen of a different state from each plaintiff."Owen Equip. Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978) (emphasis in original). Second, the complaint must include allegations that the amount in controversy "exceeds" $75,000.00. 28 U.S.C. § 1332(a).
For removal purposes, diversity "is determined (and must exist) as of the time the complaint is filed and removal is effected."Stroter Corp. v. Air Transport Ass'n. of America, 300 F.3d 1129, 1131 (9th Cir. 2002) (citations omitted). "A party invoking diversity jurisdiction must allege the actual citizenship of the relevant parties and the existence of complete diversity must be confirmable." Kanaan v. Freescale Semiconductor, Inc., 2007 WL 420241, at *2 (N.D.Cal. Feb. 5, 2007) (citing Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001)). Defendant Gagan's Notice of Removal is facially deficient because, as explained below, he does not "show . . . affirmatively and distinctly, the existence of what is essential to federal [diversity] jurisdiction" — complete diversity of citizenship.See Smith v. McCullough, 270 U.S. 456, 459, 46 S.Ct. 338, 339 (1926).
In his Notice of Removal, Gagan indicates that when this action was originally filed in state court, plaintiff James A. Monroe "was a citizen of the State of Texas." Not. of Rem. (doc. 1) at 7, ¶ 13 (citation omitted). To support this statement, Gagan cites to a "Notice of Change of Address" which Mr. Monroe filed in Gagan (doc. 346), on April 10, 2007, roughly four months prior to the commencement of his state court action. In that Notice, Mr. Monroe lists his "new mailing address" as follows:
Salt River Cablevision
San Carlos Cablevision
James A. Monroe,
P.O. Box 461264
Garland, TX 75046-1264Gagan (doc. 346) at 1.
Gagan's Notice of Removal further states that he is a citizen of Indiana, whereas Mr. Miljenovich is a citizen of Arizona. Not. of Rem. (doc. 1) at 7, ¶ 13. Then, although there is no mention of Ms. Monroe Clark's citizenship in his Notice of Removal, Gagan urges the court to "disregard" her citizenship. Id. Gagan reasons that the court should disregard her citizenship because supposedly she was "fraudulently joined as a plaintiff" in that her wrongful eviction claim is barred by res judicata or waiver.Id.
There is no need to determine whether or not Ms. Clark was fraudulently joined at this point. Likewise, there is no need to become mired down in whether, as Gagan also contends, Mr. Monroe has made a "transparent attempt to defeat diversity by changing his citizenship" from Texas to Arizona in his amended complaint, which was filed after removal. See Resp. (doc. 15) at 10. Delving into those issues now is not necessary because Gagan's Notice of Removal is deficient in that the existence of complete diversity is not confirmable given the lack of any affirmative statement as to the citizenship of Ms. Monroe Clark. See Kanter, 265 F.3d at 857-58 (citation omitted) (because "neither Plaintiffs' complaint nor [defendant's] notice of removal made any allegation regarding Plaintiffs' state citizenship[,]" and "[s]ince the party asserting diversity bears the burden of proof, . . ., [defendant's] failure to specify Plaintiff' state citizenship was fatal to [the] assertion of diversity jurisdiction").
It is impossible to ascertain whether or not there is complete diversity of citizenship from either the original Monroe v. Gagan complaint or from the amended complaint in this removed action. As to the former, there are allegations as to the parties' residences, but not as to their citizenship (although it is alleged that Mr. Monroe is domiciled in Texas). Allegations of residency are do not suffice to show diversity jurisdiction though because section 1332 "speaks of citizenship, not of residency[.]" See Kanter v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir. 2001). Similarly, while the amended complaint alleges that both of the Monroe plaintiffs are Arizona citizens, it does not allege the citizenship of Messrs. Gagan and Miljenovich. It only alleges their place of residence. Thus, there is no way of knowing from the face of that complaint whether there is complete diversity of citizenship.
Further frustrating the diversity inquiry is the fact that Gagan's claim that Mr. Monroe is a Texas citizen is based upon a change of address form which on its face lists what appear to be the name of two businesses, as well as a post office box in Texas. However, "[c]hanging the location of one's residence or work does not necessarily result in a change of domicile." Franco v. Empire Southwest Holdings, Inc., 2007 WL 951841, at *3 (S.D.Cal. March 12, 2007). Therefore, Mr. Monroe's citizenship likewise is not "affirmatively and distinctly" shown on the face of Gagan's Notice of Removal. See McCullough, 270 U.S. at 459, 46 S.Ct. 338. In short, on the record as presently constituted, defendant Gagan has not overcome the "strong presumption" against removability. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
At the same time, however, because these citizenship allegations could potentially be cured, in accordance with 28 U.S.C. § 1653, the court will allow defendant Gagan fifteen (15) days from the date hereof in which to cure these pleading deficiencies. The court will proceed in that way because "[a]n inadequate pleading does not in itself constitute an actual defect of federal jurisdiction." Kanter, 265 F.3d at 858 (internal quotation marks and citation omitted). Failure to timely comply with this order shall result in remand of this action for lack of subject matter jurisdiction without further notice.
B. Miljenovich v. Gagan
The court is now free to turn to the issue of whether, as Mr. Miljenovich argues, it must remand his action because there is neither diversity jurisdiction under § 1332, nor federal question jurisdiction under § 1331. Gagan responds that "Miljenovich's case is properly removed . . . on diversity grounds alone." Resp. (doc. 15) at 4 (emphasis added). Because that is the only jurisdictional basis which Gagan, the removing party, is asserting, the court will limit its analysis accordingly.
1. Diversity Jurisdiction
As just discussed, to establish federal jurisdiction under section 1322(a)(1), two requirements must be met. First, " each defendant [must be] a citizen of a different state from each plaintiff." Owen Equip., 437 U.S. at 373, 98 S.Ct. 2396 (emphasis in original). Second, the complaint must include allegations that the amount in controversy "exceeds" $75,000.00. 28 U.S.C. § 1332(a)(1).
a. Citizenship
Mr. Miljenovich contends that due to the "alignment of the parties[,]" diversity jurisdiction is not extant. Mot. (doc. 10) at 3:3. In making this argument, Mr. Miljenovich improperly takes into account the citizenship of Mr. Monroe. In particular, Mr. Miljenovich believes that like himself Mr. Monroe is an Arizona citizen, thus destroying diversity. As previously explained though, irrespective of consolidation, the Miljenovich action is separate and distinct from the Monroe action. Hence, as Mr. Monroe is not a party in the Miljenovich action, his citizenship has no bearing on the issue of existence of diversity jurisdiction in that action.
Gagan responds that he is an Indiana citizen and Miljenovich is an Arizona citizen. Gagan accurately states that in accordance with section 1441(a), the court must disregard the citizenship of defendants sued under fictitious names. When that is done, Gagan validly asserts that, as the notice of removal shows, there is complete diversity between plaintiff Miljenovich and defendant Gagan.
That section provides in relevant part that "[f]or purposes of removal . . ., the citizenship of defendants sued under fictitious names shall be disregarded." 28 U.S.C. § 1441(a) (emphasis added) (West 2006).
b. Amount in Controversy
Evidently confident that he would prevail on his lack of diversity of citizenship argument, Miljenovich did not address the second element of section 1332 jurisdiction — the amount in controversy. Because there cannot be diversity under that statute without satisfying the amount in controversy set forth therein, the court must next address that element.
As defendant Gagan interprets Mr. Miljenovich's action, he is refusing to perform the contract, which he had with Mr. Gagan, to purchase the subject property for $750,000.00 "until a $150,000 homestead claim by Monroe has been resolved." Resp. (doc. 15) at 4 (citation omitted); see also Not. of Removal (doc. 1) at 5, ¶ 9. Relying solely upon those allegations, in his Notice of Removal and in his response to these remand motions, Gagan contends that the amount in controversy exceeds the $75,000.00 statutory minimum, thereby conferring original jurisdiction on this court pursuant to section 1332(a).
Carefully parsing the Miljenovich complaint reveals that in his prayers for relief, despite Gagan's contrary suggestion, there are no specific allegations of an amount in controversy. At one point, Mr. Miljenovich alleges that he is "entitled to the return of his earnest money" from Mr. Gagan. Not. of Removal (doc. 1), exh. B thereto (doc. 1-4) at 21, ¶ 20. Earlier he alleges that in accordance with the terms of the purchase contract, he deposited $25,000.00 in earnest money, which is non-refundable in the event he breaches that contract. Id. at 19-20, ¶¶ 10 and 11. Throughout the remainder of his complaint, Mr. Miljenovich seeks unspecified damages in varying forms, i.e. "compensatory[,]" "actual[,]" "consequential[,]" and "punitive[.]" See, e.g., Not. of Removal (doc. 1), exh. B thereto (doc. 1-4) at 21; and at 23, ¶¶ (B)-(C). He also is seeking statutory attorneys' fees in an unspecified amount, as well as pre-judgment and post-judgment interest "at the maximum legal rate[.]" Id. at 22, ¶ (C).
Mr. Miljenovich's complaint can easily be read to support a finding that he is seeking at least $25,000.00 in damages — the amount of the purportedly non-refundable earnest money deposit. Obviously, that $25,000.00 falls far short of the $75,000.00 statutory minimum. As a general proposition, "[t]he amount-in-controversy requirement may be satisfied by claims of general and specific damages, punitive damages, and attorney's fees (if authorized by statute or contract." Colvin, 2007 WL 3306746 at *2 (citing, inter alia, Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th Cir. 2005)). Given the lack of specificity in the Miljenovich complaint, however, defendant Gagan cannot avail himself of such damage claims to meet the statutory threshold of $75,000.00.
First, because section 1332(a) specifically excludes interest from the amount in controversy, the court declines to consider any possible interest award in deciding whether the amount in controversy is met here. See Home Buyers Warranty Corp. v. Leighty, 2007 WL 4616687, at *7 (D.Ariz. Dec. 28, 2007) (declining to take into account claimed statutory interest due to § 1332(a)'s exclusion of interest from the amount in controversy calculation). Second, as this court thoroughly explained inLeighty, "the mere possibility of a punitive damage award is insufficient to prove that the amount in controversy requirement has been met[.]" Id. at *8 (internal quotation marks and citation omitted). Third, as in Leighty, the court will not include attorneys' fees in determining the amount in controversy here because it would be speculative given the complaint's silence as to the amount of any such award. See id. (citing cases).
As the foregoing shows, because the Miljenovich complaint is "unclear or fails to specify a total amount in controversy[,]" it is not apparent on the face of that complaint that the amount in controversy is above $75,000.00. See Colvin v. Conagra Foods, Inc., 2007 WL 3306746, at *2 (W.D.Wash. Nov. 5, 2007) (citingGuglielmino v. McKee Foods Corp., 506 F.3d 696 (9th Cir. 2007)). Therefore, as the removing defendant, Mr. Gagan has the burden of "establishing, by a preponderance of the evidence, that the amount in controversy requirement has been met." Id. Gagan has not met that burden, however. At most his Notice of Removal contains "conclusory allegations" as to the amount in controversy. See Albano v. Shea Homes Ltd. Partnership, 2008 WL 2941279, at *3 (D.Ariz. July 25, 2008) (citing Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 376 (9th Cir. 1997)). Mr. Gagan has not, as he "must[,] provide[d] some facts to support [hi]s claim that the amount in controversy requirement is satisfied." See id. Stated somewhat differently, Gagan has not met his burden of establishing by a preponderance of the evidence "that it is more likely than not that the amount in controversy exceeds that [$75,00.00] amount." Guglielmino, 506 F.3d at 699 (internal quotation marks and citation omitted). Thus, because defendant Gagan has not met his burden of proof in terms of satisfying the amount in controversy requirement in the Miljenovich action, jurisdiction over this action is not, as Gagan believes "obvious[.]" Mot. (Doc. 15) at 4.
2. Supplemental Jurisdiction
Even though the diversity statute cannot provide a basis for jurisdiction over the Miljenovich action, that does not necessarily mean that jurisdiction is lacking. If ultimately the court finds that it has jurisdiction over the Monroe action, then it will exercise supplemental jurisdiction over the Miljenovich action in accordance with 28 U.S.C. § 1367. The exercise of such jurisdiction would be proper if the court has jurisdiction over the Monroe action because Miljenovich is part of "the same case or controversy" as the Monroe action. By the same token, though, if the court eventually determines that it lacks subject matter jurisdiction over Monroe, clearly the exercise of supplemental jurisdiction over Miljenovich would be improper. Accordingly, the court conditionally denies defendant Miljenovich's motion to remand. However, if defendant Gagan fails to file an amended Notice of Removal within fifteen (15) days from the date of entry of this order, then the court will remand the Miljenovich action to Arizona Superior Court, Maricopa County without further notice.
For all of these reasons, the court hereby ORDERS that:
(1) plaintiffs' motion to remand (doc. 7) is DENIED without prejudice;
(2) defendant Ross Miljenovich's motion to remand (doc. 10) is DENIED on the condition that defendant James L. Gagan files an amended Notice of Removal within fifteen (15) days of the date hereof; if defendant Gagan does not timely file such notice, the court will GRANT defendant Ross Miljenovich's motion to remand for lack of subject matter jurisdiction; and
(3) defendant James L. Gagan has fifteen (15) days from the date of entry of this order in which to file an amended Notice of Removal. Failure to comply with this order shall result in the remand of Monroe v. Gagan without further notice for lack of subject matter jurisdiction.