Monroe et al v. Gagan et al

Filing 27

ORDER that pla's 7 Motion to Remand is denied without prejudice; dft Ross Miljenovich's 10 Motion to Remand is denied on the condition that dft James L. Gagan files an amended Notice of Removal within 15 days of the date hereof; if dft Gagan does not timely file such notice, the court will GRANT dft Ross Miljenovich's motion to remand for lack of subject matter jurisdiction; and dft James L. Gagan has 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. Signed by Judge Robert C Broomfield on 09/29/08. (ESL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

WO

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

James A. Monroe and Kimberly M. Pirtle,

) ) ) Plaintiffs ) ) vs. ) ) James L. Gagan, Jane Doe ) Gagan, Ross Miljenovich, ) John Does I through X, and ) Jane Does I through X, ) ) Defendants ) ) ) Ross Miljenovich, ) ) Defendant-Cross) Claimant ) ) ) vs. ) ) James L. Gagan and Jane Doe ) Gagan, John and Jane Does I ) through 10 and 11 through 20, ) XYZ Corporations 1 through 10,) ABC Partnerships 1 through 10,) and Black and White ) Unincorporated Associations 1 ) through 10, ) ) Cross-Defendants )

No. CIV 2:08-CV-0018-PHX-RCB ORDER

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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 Clark1 (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. 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. with all prior related proceedings. The court assumes familiarity 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

S i n c e the commencement of this action, Ms. Monroe Clark's marital s t a t u s has changed so she no longer goes by Kimberly M. Pirtle, as the caption indicates.

1

-2-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

judgment.

Gagan, (doc. 341) at 1.

Defendant James Gagan was the Id. (doc. 341)

highest bidder at that sale, bidding $560,000.00. at 2.

On May 15, 2007, a "United States Marshal's Deed" was issued Id. (doc. 347). Thereafter, "[i]n June, 2007, [Mr.]

to Mr. Gagan.

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. at 2, ¶ 2. Not. of Rem. (doc. 1), exh. A thereto (doc. 1-4)

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 [.]" A(1). Id. at 6, ¶

Second, he is seeking a declaration that the May 15, 2007, Id. at 6, ¶ A(2). Citing to

Marshal's Deed "is void and invalid."

Arizona statutes governing actions to quiet title, Mr. Monroe also -3-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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. In the event

Miljenovich deposited $25,000.00 as earnest money.

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[.]" -4-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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 crossDoc. 11, exh. B

claim against the Gagans on December 6, 2007. thereto (doc. 1-4). Miljenovich v. Gagan.

That cross-claim mirrors his complaint in 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 Prior to that transfer,

2810978 (D.Ariz. July 18, 2008).

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, Consistent

1057 (9th Cir. 2007) (citing 28 U.S.C. § 1441(a), (b)).

with the foregoing and because "federal courts are court of limited jurisdiction[,]" Vacek v. U.S. Postal Service, 447 F.3d 1248, 1250 -5-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

(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. (citation omitted). II. Impact of Consolidation At the outset it is necessary to address the impact of Despite Luther, 533 F.3d at 1034

21 consolidation on the court's jurisdictional analysis.

22 consolidation, the Monroe action and the Miljenovich action retain 23 their separate identities. See Continental Airlines v. Goodyear

24 Tire & Rubber Co., 819 F.2d 1519, 1523 n. 1 (9th Cir. 1987) (quoting 25 Johnson v. Manhattan Ry., 289 U.S. 479, 497, 53 S.Ct. 721, 728, 77 26 L.Ed. 1331 (1933)) ("[T]he consolidation of the cases below did not 27 `make those who are parties in one suit parties in another.'") As

28 one court has so picturesquely put it, "[c]onsolidation is not like -6-

1 a marriage, producing one indissoluble union from two distinct 2 cases." Chaara v. Intel Corp., 410 F.Supp.2d 1080, 1094 (D.N.M.

3 2005), aff'd without pub'd opinion, 245 Fed.Appx. 784 (10th Cir. 4 2007). "Instead, consolidation is an artificial link formed by a

5 court for the administrative convenience of the parties; it fails 6 to erase the fact that, underneath consolidation's facade, lie two 7 individual cases." Id. (citations omitted). Given the fundamental

8 nature of consolidation, courts have uniformly held that "[t]here 9 must be separate jurisdictional bases for each action prior to any 10 consolidation, and any case lacking a separate jurisdictional basis 11 must be remanded." James v. CSX Transportation, Inc., 2007 WL

12 1100503, at *3 (S.D.Ga. April 9, 2007) (citing Johnson, 289 U.S. at 13 496-97, 53 S.Ct. 721); see also Chaara, 410 F.Supp.2d at 1095 14 (treating consolidated actions "[a]s separate actions," so that 15 "each case must satisfy jurisdiction on its own[]") (emphasis 16 added). This is equally true for cases where diversity is the In re Ibasis, Inc. Deriv. Litig., 551

17 jurisdictional basis.

18 F.Supp.2d 122, 125 (D.Mass. 2008) (citing, inter alia, Cella v. 19 Togum Constructeru Ensemleier en Industrie Alimentaire, 173 F.3d 20 909, 913 (3rd Cir. 1999)) ("Courts have recognized that analysis of 21 diversity jurisdiction remains separate for cases even after they 22 have been consolidated.") Thus, in the present case, the court

23 must "analyze[] the jurisdictional basis of [the Monroe action and 24 the Miljenovich action] independently."2 25 26 27 28
T h e fact that these two actions were consolidated in state court, prior t o removal, does not change the result. Presumably those actions were consolidated p u r s u a n t to ARCP 42(a) which is virtually identical to Fed. R. Civ. P. 42(a). " ` [ B ] e c a u s e Arizona has substantially adopted the Federal Rules of Civil Procedure, [ A r i z o n a courts ] give great weight to the federal interpretation of the rules.'" C a c h e t Residential Builders, Inc. v. Gemini Ins. Co., 547 F.Supp.2d 1028, 1030 ( D . A r i z . 2007) (quoting Anserv Ins. Servs., Inc. v. Albrecht, 192 Ariz. 48, 960
2

See Cella, 173 F.3d at

-7-

1 913 (citing Cole v. Schenley Industries, Inc., 563 F.2d 35, 38 (2d 2 Cir. 1977)). 3 III. 4 5 Subject Matter Jurisdiction3 A. Monroe v. Gagan

Defendant Gagan's Notice of Removal identifies what he views

6 as several "uncontested grounds for removal" which alone or 7 together "defeat" remand. Resp. (doc. 15) at 6. Defendant argues

8 that there are four possible jurisdictional bases for the Monroe v. 9 Gagan action: (1) diversity of citizenship pursuant to 28 U.S.C. § 10 1332; (2) federal question jurisdiction under 28 U.S.C. § 1331; (3) 11 supplemental jurisdiction under 28 U.S.C. § 1367; and (4) pursuant 12 to 28 U.S.C. § 1442(a)(2), the federal title dispute statute. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
P . 2 d 1159, 1160 (1998)). The foregoing "strengthen[s] the Court's conclusion that [ A r i z o n a ] courts would not reach a different conclusion under the [Arizona] Rules." S e e Chaara, 410 F.Supp.2d at 1095 (citations omitted). The court is compelled to comment upon two defects in defendant Gagan's r e m o v a l . First, it violates the rule of unanimity which basically requires that a l l served defendants join in a notice of removal. Vasquez v. North County Transit D i s t . , 292 F.3d 1049, 1060 n.5 (9 th Cir. 2002) (citation omitted). Obviously, d e f e n d a n t Gagan did not join defendant Miljenovich in his Notice of Removal. This i s a procedural defect, however, which is waived where no timely objection is made. I d . (citation omitted). By filing their motion to remand within 30 days of the N o t i c e of Removal, plaintiffs would have been entitled to raise this procedural d e f e c t , but they did not. Hence it is waived. Defendant Miljenovich likewise w a i v e d his right to waive this procedural defect because he did not file his motion t o remand until February 12, 2008, more than 30 days after the filing of Gagan's N o t i c e of Removal. Removal, to the extent it is based upon diversity of citizenship, also is d e f e c t i v e here because it violates the forum defendant rule. That rule "confines r e m o v a l 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, 9 3 9 (9 th Cir. 2006). Here, according to the Notice of Removal, defendant M i l j e n o v i c h 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. L i v e l y , 456 F.3d at 942. Thus, a violation of that rule "constitutes a waivable n o n - j u r i s d i c t i o n a l 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 t h e forum defendant rule. Accordingly, they waived the right to object to removal o n that basis. And once again, defendant Miljenovich waived his right to raise t h i s procedural defect because he did not file his remand motion within 30 days a f t e r the filing of the Notice of Removal.
3

The

-8-

1 court will address in reverse order whether any of these statutes 2 provide a basis for subject matter jurisdiction in Monroe. 3 4 1. Federal Title Dispute

The "rarely invoked" federal title dispute statute, Vanouwerker

5 v. Owens-Corning Fiberglass Corp., 1999 WL 335960, at *13 (E.D.Tex. 6 May 26, 1999), reads in relevant part as follows: 7 8 9 10 11 12 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.

13 28 U.S.C. § 1442(a)(2) (West 2006). Reliance upon this statute 14 "requires compliance with two prongs[.]" Benitez-Bithorn v. 15 Rossello-Gonzalez, 200 F.Supp.2d 26, 31 (D.P.R. 2002). First, "the 16 property in controversy must derive from an officer of the United 17 States[.]" Id. Second, "the controversy regarding the property 18 must affect the validity of any law of the United States." Id. 19 Mr. Gagan contends that Monroe's claims against him satisfy

20 both prongs; hence, this court has subject matter jurisdiction 21 under section 1442(a)(2). As to the first prong, Gagan asserts 22 that because he obtained the subject property through a sale by the 23 United States Marshal, he is a "property holder whose title derives 24 from an officer of the United States[]" within the meaning of 25 section 1442(a)(2). The court agrees. Indeed, in their complaint, 26 the Monroes explicitly allege that the Gagans "claim an interest in 27 and title to the Property[] . . . through . . . a [United States] 28 Marshal's Deed, dated May 15, 2007[.]" Not. of Rem. (doc. 1), exh. -9-

1 B thereto (doc. 1-4) at 4, ¶ 13. 2 Nonetheless, Mr. Gagan cannot satisfy the second prong of Gagan baldly contends that the Monroes'

3 section 1442(a)(2).

4 allegations "affect the validity of a law of the United States" 5 because they are "attack[ing] . . . the Marshal's fulfillment of 6 [his] express statutory duties" under 28 U.S.C. § 566. Not. of

7 Rem. (doc. 1) at 6, ¶ 12.; see also Resp. (doc. 15) at 5-6 (same). 8 That statute delineates the "powers and duties" of the United 9 States Marshal. 28 U.S.C. § 566 (West 2006 & West Supp. 2008).

10 Additionally, Gagan argues that this matter affects the validity of 11 a law of the United States because it "draw[s] into issue the 12 validity of Gagan's federal RICO Judgment as well as the validity 13 of various Orders" by this court in Gagan. 14 Id. at 6, ¶ 12.

Mr. Gagan too broadly construes the second prong of section The Marshal's supposed failure to comply with his

15 1442(a)(2).

16 duties under federal law does not transform this action into one 17 affecting the validity of a law of the United States. This is not

18 a situation, for example, where the Monroes are arguing that 19 section 566 is constitutionally infirm. Likewise, questioning the

20 validity of a judgment and federal court orders does not transform 21 this into a controversy affecting the validity of any law of the 22 United States. See Town of Stratford v. City of Bridgeport, 434

23 F.Supp. 712, 715 (D.Conn. 1977) (citation omitted) ("None of the 24 provisions of federal law cited in support of [defendant's] removal 25 petition meets the § 1442 standard, since [plaintiff's] suit does 26 not attack the validity of any of them.") In short, reciting that

27 a controversy affects the validity of a law of the United States 28 does not make is so. Because Monroe's claims do not affect the - 10 -

1 validity of any federal law, Gagan improperly relied upon the 2 federal title dispute statue as a basis for removal here. 3 4 2. Supplemental Jurisdiction

Defendant Gagan relies upon 28 U.S.C. § 1367(a) as another That statute states in pertinent

5 possible jurisdictional basis. 6 part as follows: 7 8 9 10

[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. Gagan argues

11 28 U.S.C. § 1367(a) (West 2006) (emphasis added).

12 that pursuant to that statute this case is within the court's 13 supplemental jurisdiction in Gagan. 14 of section 1367(a). 15 "Supplemental jurisdiction must be exercised in the same Gagan misconceives the scope

16 action that furnishes the basis for exercise of supplemental 17 jurisdiction." Ortolf v. Silver Bar Mines, 111 F.3d 85, 86 (9th As the Ninth Circuit explained in

18 Cir. 1991) (emphasis added).

19 Ortolf, "[t]he phrases `in any civil action' and `in the 20 action[,]'" as employed in section 1367(a), "require that 21 supplemental jurisdiction be exercised in the same case, not a 22 separate or subsequent case." Id. (emphasis added). Thus, Gagan

23 cannot form the basis for the exercise of this court's supplemental 24 jurisdiction in this separate, subsequent action. See Brummer v.

25 Iasis Healthcare of Arizona, Inc., 2007 WL 2462174, at *1 (D.Ariz. 26 Aug. 24, 2007)(and cases cited therein) (rejecting argument that 27 removal was proper based upon supplemental jurisdiction because the 28 state claims were related to federal claims pending in another - 11 -

1 district court); see also In re Enron Corp. Sec., 2002 WL 32107216, 2 at *2 (S.D.Tex. Aug. 12, 2002) (citations omitted) (There can be no 3 supplemental jurisdiction without the existence initially of 4 original subject matter jurisdiction over at least some of the 5 claim in the same suit, at the point it is either filed in or 6 removed to federal court.") Accordingly, Gagan is improperly

7 relying upon section 1367(a) as a basis for removal. 8 9 3. Federal Question Jurisdiction

The court will next examine whether Monroe v. Gagan raises a

10 federal question so as to confer jurisdiction upon this court 11 pursuant to 28 U.S.C. § 1331. 12 13 a. Well-Pleaded Complaint Rule

"`The presence or absence of federal-question jurisdiction is

14 governed by the `well-pleaded complaint rule,' which provides that 15 federal jurisdiction exists only when a federal question is 16 presented on the face of the plaintiff's properly pleaded 17 complaint.'" NOS Communications, 495 F.3d at 1047 (emphasis added) 18 (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 19 2425, 96 L.Ed.2d 318 (1987)). "The well-pleaded complaint rule is

20 a `powerful doctrine [that] severely limits the number of cases in 21 which state law `creates the cause of action' that may be initiated 22 in or removed to federal district court[.]'" Lippitt v. Raymond
th 23 James Financial Services, Inc., 340 F.3d 1033, 1039-40 (9 Cir.

24 2003) (quoting Franchise Tax Bd. of California v. Construction 25 Laborers Vacation Trust, 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77 26 L.Ed.2d 420 (1983)). 27 28 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 . . . , - 12 -

1 2

unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant might interpose.

3 Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 4 (1914). As the foregoing makes clear, the court's first task is

5 to determine whether on its face the Monroe complaint "contains 6 any allegations that would render [their] cause of action one that 7 `arises' under federal law." 8 (citation omitted). 9 Here, the parties disagree as to which complaint the court See Lippitt, 340 F.3d at 1040

10 should look - the original consolidated state court complaint, or 11 the amended complaint which was filed and served post-removal. In

12 terms of alleged federal question jurisdiction, the complaints are 13 identical. Thus, at this juncture, it matters not whether the

14 court focuses on the original Monroe v. Gagan complaint or on the 15 amended complaint. 16 The court hastens to add, however, that in ascertaining

17 federal question jurisdiction, it will not consider defendant 18 Miljenovich's cross-claim. That pleading does not come into play

19 here because "[r]emoval, . . ., cannot be based on a counter-claim 20 or cross-claim raising a federal question." Redevelopment Agency

21 of the City of San Bernardino v. Alvarez, 288 F.Supp.2d 1112, 1114 22 (C.D.Cal. 2003) (citation omitted). Therefore, the court will

23 limit its federal question inquiry to the Monroe plaintiffs' 24 complaint. 25 When it does that, the court easily concludes that on its face Rather,

26 the Monroe complaint does not arise under federal law.

27 plaintiffs have cast their claims strictly in terms of Arizona 28 state law. For example, plaintiffs argue, as they have repeatedly - 13 -

1 in related actions, that the Indiana judgment expired under Arizona 2 law. Then, even assuming the validity of that judgment, plaintiffs

3 accurately state that the issue of the validity of Gagan's sale of 4 the subject property without paying the Arizona homestead exemption 5 is solely a matter of state law. Finally, they point out that

6 plaintiff Kimberley Monroe Clark's wrongful eviction claim also is 7 strictly a creature of state law. 8 9 b. Artful Pleading Doctrine

Defendant Gagan does not dispute any of the foregoing.

10 Instead, relying exclusively upon Sparta Surgical v. Nat. Ass'n of 11 Sec. Dealers, 159 F.3d 1209 (9th Cir. 1998), he rejoins that 12 plaintiffs are impermissibly omitting the "essentially federal 13 underpinnings of their claims." Mot. (doc. 15) at 8. Those

14 essential underpinnings, from defendant Gagan's standpoint, are 15 plaintiffs' "attack[s] . . . [on a] federal Court Judgment[,] . . . 16 numerous federal Court Orders, and the conduct of the United States 17 Marshal[.]" Id. at 7. Had plaintiffs included the foregoing in

18 their complaint, then federal question jurisdiction is 19 "inevitable[,]" Gagan asserts. 20 Id. at 8.

Plaintiffs counter that their claims do not "arise under"

21 federal law because there are no applicable federal laws at issue, 22 much less "complete preemption" of such laws. 23 at 4-5. See Reply (doc. 16)

Plaintiffs reiterate that there is no federal question

24 jurisdiction because their right to relief under Arizona State law 25 does not "necessarily depend[] on resolution of a substantial 26 question of federal law." 27 citations omitted). 28 Although not explicitly, defendant Gagan is invoking the - 14 Id. at 4 (internal quotation marks and

1 artful pleading doctrine.

Under that doctrine, a plaintiff "may

2 not avoid federal jurisdiction by omitting from the complaint 3 allegations of federal law that are essential to the establishment 4 of his claim." Lippitt, 340 F.3d at 1041 (internal quotation marks "The artful pleading doctrine allows

5 and citations omitted).

6 courts to delve beyond the face fo the state court complaint and 7 find federal question jurisdiction by recharacteriz[ing] a 8 plaintiff's state-law claim as a federal claim." 9 quotation marks and citations omitted). Id. (internal

The Ninth Circuit has

10 cautioned, however, that "[c]ourts should invoke the doctrine only 11 in limited circumstances as it raises difficult issues of state and 12 federal relationships and often yields unsatisfactory results." 13 Id. (internal quotation marks and citations omitted). 14 Courts employ the artful pleading doctrine in two situations:

15 (1) complete preemption cases; and (2) substantial federal question 16 cases. Id. (citations omitted). Only the latter s a possibility

17 here because this is not a case of complete preemption where a 18 federal statute "provides the exclusive cause of action for the 19 claim asserted and also set[s] forth procedures and remedies 20 governing that cause of action[.]" See id. at 1042 (internal

21 quotation marks and citations omitted) (emphasis omitted). And, 22 indeed, Gagan is not making this argument. 23 Mindful, as the Lippitt Court put it, that the court is

24 "treading in a doctrinal minefield," it must next determine whether 25 plaintiffs' complaint raises a substantial federal question. 26 id. at 1041. If plaintiffs' state law claims "implicate a See

27 substantial federal question[,]" then this federal court may retain 28 jurisdiction over such claims. See id. at 1042. - 15 A substantial

1 federal question exists where "a substantial, disputed question of 2 federal law is a necessary element of . . . the well-pleaded state 3 claim[.]" Id. (internal quotation marks and citation omitted) 4 (emphasis in original). Or, a substantial federal question can

5 exist where "the right to relief depends on the resolution of a 6 substantial, disputed federal question[.]" Id. (internal quotation 7 marks and citation omitted). Neither exists here; and, tellingly,

8 defendant Gagan did not address either of these possibilities in 9 his motion. 10 Federal law is not intrinsic to any of plaintiffs' claims.

11 Clearly federal law is not a necessary "element" of plaintiffs' 12 claim that the Indiana judgment expired under Arizona state law. 13 While defendant Gagan may intend to rely upon the preclusive effect 14 of this court's judgment in Gagan or orders issued in connection 15 therewith, or both, such reliance does not transform this otherwise 16 state law claim into one arising under federal law. See Lighting

17 Science Group Corp. v. Koninklijke Philips Electronics N.V., 2008 18 WL 2917602, at *5 n.1 (E.D.Cal. June 3, 2008) (citing Metcalf v. 19 City of Watertown, 128 U.S. 586, 9 S.Ct. 173, 32 L.Ed. 543 (1888)) 20 ("That a defense may implicate federal law does not suffice to 21 confer jurisdiction to the court.") Nor is federal law a "necessary 22 element" of plaintiffs' claim that Gagan purportedly failed to 23 comply with Arizona's statutory homestead exemption. Likewise,

24 plainly, federal law is not an element of plaintiff Kimberley 25 Monroe Clark's Arizona state law claim for wrongful eviction. 26 Sparta, the sole basis for Gagan's argument that this court

27 has federal question jurisdiction is readily distinguishable, and 28 hence does not compel a different result here. - 16 In Sparta, although

1 plaintiffs' claims were "carefully articulated in terms of state 2 law," the Ninth Circuit held that the district court had subject 3 matter jurisdiction because those claims were predicated upon a 4 violation of federal securities law. Sparta, 159 F.3d at 1212 A similar federal

5 (internal quotation marks and citation omitted).

6 law predicate is conspicuously absent from plaintiffs' claims. 7 Thus, notwithstanding defendant Gagan's depiction of plaintiffs' 8 claims, those claims are not federal claims disguised as state law 9 causes of action. Consequently, Gagan cannot rely upon section

10 1331 - the federal question statute - as a jurisdictional basis for 11 removal. Having found that there is no federal question Mr. Monroe's claims, Gagan's assertion that 28

12 jurisdiction as to

4 13 U.S.C. § 1441(c) provides a jurisdictional basis for the claims of

14 Ms. Monroe Clark is unavailing. 15 16 4. Diversity Jurisdiction

The only remaining possible basis for jurisdiction here is That statute provides in relevant part that

17 28 U.S.C. § 1332.

18 district courts "shall have original jurisdiction of all civil 19 actions where the matter in controversy exceeds the sum or value of 20 $75,000, exclusive of interest and costs, and is between ... 21 citizens of different States[.]" 28 U.S.C. 1332(a)(1) (West 2006) 22 (emphasis added). 23 24 25 26 27 28
4

To establish federal jurisdiction under that

T h a t 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 c l a i m s or causes of action, the entire case may be removed and the district court may determine all issues therein[.]

2 8 U.S.C. § 1441(c) (West 2006).

- 17 -

1 statute, two requirements must be met.

First, "each defendant

2 [must be] a citizen of a different state from each plaintiff." 3 Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 4 2396, 57 L.Ed.2d 274 (1978) (emphasis in original). Second, the

5 complaint must include allegations that the amount in controversy 6 "exceeds" $75,000.00. 7 28 U.S.C. § 1332(a).

For removal purposes, diversity "is determined (and must

8 exist) as of the time the complaint is filed and removal is 9 effected." Stroter Corp. v. Air Transport Ass'n. of America, 300 "A party

th 10 F.3d 1129, 1131 (9 Cir. 2002) (citations omitted).

11 invoking diversity jurisdiction must allege the actual citizenship 12 of the relevant parties and the existence of complete diversity 13 must be confirmable." Kanaan v. Freescale Semiconductor, Inc.,

14 2007 WL 420241, at *2 (N.D.Cal. Feb. 5, 2007) (citing Kanter v.
th 15 Warner-Lambert Co., 265 F.3d 853, 857 (9 Cir. 2001)).

Defendant

16 Gagan's Notice of Removal is facially deficient because, as 17 explained below, he does not "show . . . affirmatively and 18 distinctly, the existence of what is essential to federal 19 [diversity] jurisdiction" ­ complete diversity of citizenship. See

20 Smith v. McCullough, 270 U.S. 456, 459, 46 S.Ct. 338, 339 (1926). 21 In his Notice of Removal, Gagan indicates that when this

22 action was originally filed in state court, plaintiff James A. 23 Monroe "was a citizen of the State of Texas." 24 1) at 7, ¶ 13 (citation omitted). Not. of Rem. (doc.

To support this statement, Gagan

25 cites to a "Notice of Change of Address" which Mr. Monroe filed in 26 Gagan (doc. 346), on April 10, 2007, roughly four months prior to 27 the commencement of his state court action. In that Notice, Mr.

28 Monroe lists his "new mailing address" as follows: - 18 -

1 2 3

Salt River Cablevision San Carlos Cablevision James A. Monroe, P.O. Box 461264 Garland, TX 75046-1264

4 Gagan (doc. 346) at 1. 5 Gagan's Notice of Removal further states that he is a citizen Not.

6 of Indiana, whereas Mr. Miljenovich is a citizen of Arizona. 7 of Rem. (doc. 1) at 7, ¶ 13.

Then, although there is no mention of

8 Ms. Monroe Clark's citizenship in his Notice of Removal, Gagan 9 urges the court to "disregard" her citizenship. Id. Gagan reasons

10 that the court should disregard her citizenship because supposedly 11 she was "fraudulently joined as a plaintiff[]" in that her wrongful 12 eviction claim is barred by res judicata or waiver. 13 Id.

There is no need to determine whether or not Ms. Clark was Likewise, there is no need to

14 fraudulently joined at this point.

15 become mired down in whether, as Gagan also contends, Mr. Monroe 16 has made a "transparent attempt to defeat diversity by changing his 17 citizenship" from Texas to Arizona in his amended complaint,5 which 18 was filed after removal. See Resp. (doc. 15) at 10. Delving into

19 those issues now is not necessary because Gagan's Notice of Removal 20 is deficient in that the existence of complete diversity is not 21 confirmable given the lack of any affirmative statement as to the 22 citizenship of Ms. Monroe Clark. 23 24 25 26 27 28
I t is impossible to ascertain whether or not there is complete d i v e r s i t y of citizenship from either the original Monroe v. Gagan complaint or from t h e amended complaint in this removed action. As to the former, there are a l l e g a t i o n s as to the parties' residences, but not as to their citizenship ( a l t h o u g h it is alleged that Mr. Monroe is domiciled in Texas). Allegations of r e s i d e n c y are do not suffice to show diversity jurisdiction though because section 1 3 3 2 "speaks of citizenship, not of residency[.]" See Kanter v. Warner-Lambert Co., 2 6 5 F.3d 853, 857-58 (9 th Cir. 2001). Similarly, while the amended complaint a l l e g e s that both of the Monroe plaintiffs are Arizona citizens, it does not allege t h e 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 w h e t h e r there is complete diversity of citizenship.
5

See Kanter, 265 F.3d at 857-58

- 19 -

1 (citation omitted) (because "neither Plaintiffs' complaint nor 2 [defendant's] notice of removal made any allegation regarding 3 Plaintiffs' state citizenship[,]" and "[s]ince the party asserting 4 diversity bears the burden of proof, . . , [defendant's] failure 5 to specify Plaintiff' state citizenship was fatal to [the] 6 assertion of diversity jurisdiction[]"). 7 Further frustrating the diversity inquiry is the fact that

8 Gagan's claim that Mr. Monroe is a Texas citizen is based upon a 9 change of address form which on its face lists what appear to be 10 the name of two businesses, as well as a post office box in Texas. 11 However, "[c]hanging the location of one's residence or work does 12 not necessarily result in a change of domicile." Franco v. Empire

13 Southwest Holdings, Inc., 2007 WL 951841, at *3 (S.D.Cal. March 12, 14 2007). Therefore, Mr. Monroe's citizenship likewise is not

15 "affirmatively and distinctly" shown on the face of Gagan's Notice 16 of Removal. See McCullough, 270 U.S. at 459, 46 S.Ct. 338. In

17 short, on the record as presently constituted, defendant Gagan has 18 not overcome the "strong presumption" against removability.
th 19 Gaus v. Miles, Inc., 980 F.2d 564, 566 (9 Cir. 1992).

See

20

At the same time, however, because these citizenship

21 allegations could potentially be cured, in accordance with 28 22 U.S.C. § 1653, the court will allow defendant Gagan fifteen (15) 23 days from the date hereof in which to cure these pleading 24 deficiencies. The court will proceed in that way because "[a]n

25 inadequate pleading does not in itself constitute an actual defect 26 of federal jurisdiction." Kanter, 265 F.3d at 858 (internal Failure to timely comply

27 quotation marks and citation omitted).

28 with this order shall result in remand of this action for lack of - 20 -

1 subject matter jurisdiction without further notice. 2 3 B. Miljenovich v. Gagan

The court is now free to turn to the issue of whether, as Mr.

4 Miljenovich argues, it must remand his action because there is 5 neither diversity jurisdiction under § 1332, nor federal question 6 jurisdiction under § 1331. Gagan responds that "Miljenovich's case Resp. (doc.

7 is properly removed . . . on diversity grounds alone." 8 15) at 4 (emphasis added).

Because that is the only jurisdictional

9 basis which Gagan, the removing party, is asserting, the court will 10 limit its analysis accordingly. 11 12 1. Diversity Jurisdiction

As just discussed, to establish federal jurisdiction under First, "each

13 section 1322(a)(1), two requirements must be met.

14 defendant [must be] a citizen of a different state from each 15 plaintiff." 16 in original). Owen Equip., 437 U.S. at 373, 98 S.Ct. 2396 (emphasis Second, the complaint must include allegations that 28 U.S.C. §

17 the amount in controversy "exceeds" $75,000.00. 18 1332(a)(1). 19 20 a. Citizenship

Mr. Miljenovich contends that due to the "alignment of the Mot. (doc. 10)

21 parties[,]" diversity jurisdiction is not extant. 22 at 3:3.

In making this argument, Mr. Miljenovich improperly takes In particular, Mr.

23 into account the citizenship of Mr. Monroe.

24 Miljenovich believes that like himself Mr. Monroe is an Arizona 25 citizen, thus destroying diversity. As previously explained

26 though, irrespective of consolidation, the Miljenovich action is 27 separate and distinct from the Monroe action. Hence, as Mr. Monroe

28 is not a party in the Miljenovich action, his citizenship has no - 21 -

1 bearing on the issue of existence of diversity jurisdiction in that 2 action. 3 Gagan responds that he is an Indiana citizen and Miljenovich Gagan accurately states that in accordance

4 is an Arizona citizen.

5 with section 1441(a), the court must disregard the citizenship of
6 6 defendants sued under fictitious names.

When that is done, Gagan

7 validly asserts that, as the notice of removal shows, there is 8 complete diversity between plaintiff Miljenovich and defendant 9 Gagan. 10 11 b. Amount in Controversy

Evidently confident that he would prevail on his lack of

12 diversity of citizenship argument, Miljenovich did not address the 13 second element of section 1332 jurisdiction - the amount in 14 controversy. Because there cannot be diversity under that statute

15 without satisfying the amount in controversy set forth therein, the 16 court must next address that element. 17 As defendant Gagan interprets Mr. Miljenovich's action, he is

18 refusing to perform the contract, which he had with Mr. Gagan, to 19 purchase the subject property for $750,000.00 "until a $150,000 20 homestead claim by Monroe has been resolved." Resp. (doc. 15) at 4

21 (citation omitted); see also Not. of Removal (doc. 1) at 5, ¶ 9. 22 Relying solely upon those allegations, in his Notice of Removal and 23 in his response to these remand motions, Gagan contends that the 24 amount in controversy exceeds the $75,000.00 statutory minimum, 25 thereby conferring original jurisdiction on this court pursuant to 26 section 1332(a). 27 28
T h a t section provides in relevant part that "[f]or purposes of removal . . . , the citizenship of defendants sued under fictitious names shall be d i s r e g a r d e d . " 28 U.S.C. § 1441(a) (emphasis added) (West 2006).
6

- 22 -

1

Carefully parsing the Miljenovich complaint reveals that in

2 his prayers for relief, despite Gagan's contrary suggestion, there 3 are no specific allegations of an amount in controversy. At one

4 point, Mr. Miljenovich alleges that he is "entitled to the return 5 of his earnest money" from Mr. Gagan. 6 exh. B thereto (doc. 1-4) at 21, ¶ 20. Not. of Removal (doc. 1), Earlier he alleges that in

7 accordance with the terms of the purchase contract, he deposited 8 $25,000.00 in earnest money, which is non-refundable in the event 9 he breaches that contract. Id. at 19-20, ¶¶ 10 and 11. Throughout

10 the remainder of his complaint, Mr. Miljenovich seeks unspecified 11 damages in varying forms, i.e. "compensatory[,]" "actual[,]" 12 "consequential[,]" and "punitive[.]" See, e.g., Not. of Removal 13 (doc. 1), exh. B thereto (doc. 1-4) at 21; and at 23, ¶¶ (B)-(C). 14 He also is seeking statutory attorneys' fees in an unspecified 15 amount, as well as pre-judgment and post-judgment interest "at the 16 maximum legal rate[.]" Id. at 22, ¶ (C). 17 Mr. Miljenovich's complaint can easily be read to support a

18 finding that he is seeking at least $25,000.00 in damages ­ the 19 amount of the purportedly non-refundable earnest money deposit. 20 Obviously, that $25,000.00 falls far short of the $75,000.00 21 statutory minimum. As a general proposition, "[t]he amount-in-

22 controversy requirement may be satisfied by claims of general and 23 specific damages, punitive damages, and attorney's fees (if 24 authorized by statute or contract." Colvin, 2007 WL 3306746 at *2

25 (citing, inter alia, Kroske v. U.S. Bank Corp., 432 F.3d 976, 980
th 26 (9 Cir. 2005)).

Given the lack of specificity in the Miljenovich

27 complaint, however, defendant Gagan cannot avail himself of such 28 damage claims to meet the statutory threshold of $75,000.00. - 23 -

1

First, because section 1332(a) specifically excludes interest

2 from the amount in controversy, the court declines to consider any 3 possible interest award in deciding whether the amount in 4 controversy is met here. See Home Buyers Warranty Corp. v.

5 Leighty, 2007 WL 4616687, at *7 (D.Ariz. Dec. 28, 2007) (declining 6 to take into account claimed statutory interest due to § 1332(a)'s 7 exclusion of interest from the amount in controversy calculation). 8 Second, as this court thoroughly explained in Leighty, "the mere 9 possibility of a punitive damage award is insufficient to prove 10 that the amount in controversy requirement has been met[.]" 11 *8 (internal quotation marks and citation omitted). Id. at

Third, as in

12 Leighty, the court will not include attorneys' fees in determining 13 the amount in controversy here because it would be speculative 14 given the complaint's silence as to the amount of any such award. 15 See id. (citing cases). 16 As the foregoing shows, because the Miljenovich complaint is

17 "unclear or fails to specify a total amount in controversy[,]" it 18 is not apparent on the face of that complaint that the amount in 19 controversy is above $75,000.00. See Colvin v. Conagra Foods,

20 Inc., 2007 WL 3306746, at *2 (W.D.Wash. Nov. 5, 2007) (citing
th 21 Guglielmino v. McKee Foods Corp., 506 F.3d 696(9 Cir. 2007)).

22 Therefore, as the removing defendant, Mr. Gagan has the burden of 23 "establishing, by a preponderance of the evidence, that the amount 24 in controversy requirement has been met." 25 that burden, however. Id. Gagan has not met

At most his Notice of Removal contains See

26 "conclusory allegations" as to the amount in controversy.

27 Albano v. Shea Homes Ltd. Partnership, 2008 WL 2941279, at *3 28 (D.Ariz. July 25, 2008) (citing Singer v. State Farm Mut. Auto. - 24 -

th 1 Ins. Co., 116 F.3d 373, 376 (9 Cir. 1997)).

Mr. Gagan has not, as

2 he "must[,] provide[d] some facts to support [hi]s claim that the 3 amount in controversy requirement is satisfied." See id. Stated

4 somewhat differently, Gagan has not met his burden of establishing 5 by a preponderance of the evidence "that it is more likely than not 6 that the amount in controversy exceeds that [$75,00.00] amount." 7 Guglielmino, 506 F.3d at 699 (internal quotation marks and citation 8 omitted). Thus, because defendant Gagan has not met his burden of

9 proof in terms of satisfying the amount in controversy requirement 10 in the Miljenovich action, jurisdiction over this action is not, as 11 Gagan believes "obvious[.]" Mot. (Doc. 15) at 4. 12 13 2. Supplemental Jurisdiction

Even though the diversity statute cannot provide a basis for

14 jurisdiction over the Miljenovich action, that does not necessarily 15 mean that jurisdiction is lacking. If ultimately the court finds

16 that it has jurisdiction over the Monroe action, then it will 17 exercise supplemental jurisdiction over the Miljenovich action in 18 accordance with 28 U.S.C. § 1367. The exercise of such

19 jurisdiction would be proper if the court has jurisdiction over the 20 Monroe action because Miljenovich is part of "the same case or 21 controversy" as the Monroe action. By the same token, though, if

22 the court eventually determines that it lacks subject matter 23 jurisdiction over Monroe, clearly the exercise of supplemental 24 jurisdiction over Miljenovich would be improper. Accordingly, the

25 court conditionally denies defendant Miljenovich's motion to 26 remand. However, if defendant Gagan fails to file an amended

27 Notice of Removal within fifteen (15) days from the date of entry 28 of this order, then the court will remand the Miljenovich action to - 25 -

1 Arizona Superior Court, Maricopa County without further notice. 2 3 4 5 6 7 8 9 10 11 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. day of September, 2008.

12 DATED this 29th 13 14 15 16

17 Copies to counsel of record 18 19 20 21 22 23 24 25 26 27 28 - 26 -