California Bank & Trust v. Gary M. Safady et al

Filing 33

MINUTES (IN CHAMBERS): Order re: Plaintiff's Motion to Remand (DE 18) by Judge R. Gary Klausner: On September 26, 2014, California Bank & Trust (Plaintiff) filed a Petition to ConfirmContractual Arbitration Award (the Petition) pursuant to Calif ornia Code of Civil Procedure Sections1285 et seq. in Los Angeles County Superior Court against two defendants: Gary Safady (Safady) andJohn Bersci (Bersci) (collectively, Defendants). On October 1, 2014, Safady removed the action tothis Court. For the foregoing reasons, the Court GRANTS Plaintiffs Motion to Remand, with the exceptionof Plaintiffs request for an award of fees and costs. MD JS-6. Case Terminated. (Attachments: # 1 Remand) (bp)

JS-6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-07639-RGK (PLA)

Title

CALIFORNIA BANK & TRUST v. SAFADY, et al.

Present: The
Honorable

Date

December 9, 2014

R. GARY KLAUSNER, U.S. DISTRICT JUDGE

Sharon L. Williams (Not Present)

Not Reported

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:
I.

(IN CHAMBERS) Order re: Plaintiff’s Motion to Remand (DE 18)

INTRODUCTION

On September 26, 2014, California Bank & Trust (“Plaintiff”) filed a Petition to Confirm
Contractual Arbitration Award (the “Petition”) pursuant to California Code of Civil Procedure Sections
1285 et seq. in Los Angeles County Superior Court against two defendants: Gary Safady (“Safady”) and
John Bersci (“Bersci”) (collectively, “Defendants”). On October 1, 2014, Safady removed the action to
this Court.
II.

STANDARD OF REVIEW

Removal jurisdiction is governed by statute. See 28 U.S.C. §§ 1441, et seq. The Ninth Circuit
has held unequivocally that the removal statute is construed strictly against removal. Ethridge v. Harbor
House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). The strong presumption against removal jurisdiction
means that “the defendant always has the burden of establishing that removal is proper.” Gaus v. Miles,
Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d
709, 712 n.3 (9th Cir. 1990)); see also In re Ford Motor Co./Citibank (South Dakota), N.A., 264 F.3d
952, 957 (9th Cir. 2001) (“The party asserting federal jurisdiction bears the burden of proving the case is
properly in federal court.”).
III.

DISCUSSION

Where a petition to confirm an arbitration award is brought under a state arbitration statute, “the
parties must establish either diversity or federal question jurisdiction before a federal court may hear
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JS-6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-07639-RGK (PLA)

Title

Date

December 9, 2014

CALIFORNIA BANK & TRUST v. SAFADY, et al.

their claims.” Carter v. Health Net of Cal., Inc., 374 F.3d 830, 833-34 (9th Cir. 2004).
A.

Federal Question Jurisdiction

Safady removed the action to this Court on the basis of federal question jurisdiction. “Under the
longstanding well-pleaded complaint rule . . . a suit ‘arises under’ federal law ‘only when the plaintiff’s
statement of his own cause of action shows that it is based upon [federal law].’” Vaden v. Discover
Bank, 556 U.S. 49, 60 (2009) (citing Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152
(1908)). In the context of a petition to confirm or vacate an arbitration award, “a federal question for
purposes of subject matter jurisdiction must be presented in a well-pleaded petition.” Luong v. Circuit
City Stores, Inc., 368 F.3d 1109, 1111 (9th Cir. 2004); see Carter, 374 F.3d at 836 (“[I]t is not the
presence of federal issues in an underlying arbitration that determines whether federal question
jurisdiction exists, but rather the grounds asserted for federal review in a well-pleaded petition.”). In
Carter, the Ninth Circuit held that no federal question was raised by a petition to confirm an arbitration
award brought in California Superior Court where it “primarily invoked provisions of the California
Arbitration Act.” Carter, 374 F.3d at 837. This was despite the fact that the underlying arbitration
involved issues pertaining to the proper application of the federal Employee Retirement Income Security
Act. Id. at 837-39.
Similarly, here Plaintiff filed its Petition in California Superior Court pursuant to the California
Arbitration Act. The Petition, which is simply a completed version of the Judicial Council of
California’s form ADR-106, does not invoke or otherwise reference federal law.
Safady argues that the arbitrator manifestly disregarded federal law and policy, and that Safady
“precisely pled” such disregard in a Petition to Vacate Arbitration Award he filed in a separate case
before this Court on September 29, 2014. (See Safady v. California Bank & Trust, No. 14-cv-07546
RGK (PLAx), ECF No. 1.) However, Safady cites no authority for the proposition that in determining
whether the Court has federal question jurisdiction over a party’s petition to confirm, the Court may
consider the allegations of an opposing party’s petition to vacate, filed in a separate (though related)
case. Such a reading would appear to contradict the Supreme Court’s holding that federal question
jurisdiction is predicated upon a party’s statement of its own cause of action. Vaden, 556 U.S. at 60.
Safady also asserts that the arbitrator’s manifest disregard of federal law can be seen from the
text of the arbitration award itself, which Plaintiff attached to its Petition. Yet as the District Court for
the Northern District of California noted in Sharlands Terrace, LLC v. 1930 Wright Street, LLC, “it is
unclear how statements in the . . . [arbitration] award - even though they mention the [federal statute] support federal jurisdiction where the petition to confirm is not based on . . . these statements.” No. C11-2503-EDL, 2011 WL 3566816, at *5 (N.D. Cal. Aug. 12, 2011) (citing Luong, 368 F.3d at 1111).
Safady cites no authority in support of his position here, either, and thus fails to demonstrate federal
question jurisdiction.
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JS-6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-07639-RGK (PLA)

Title

CALIFORNIA BANK & TRUST v. SAFADY, et al.

B.

Date

December 9, 2014

Diversity Jurisdiction

Safady does not allege diversity jurisdiction in his Notice of Removal, and alleges that he is
“without knowledge or information sufficient to form a belief as to Mr. Berscri’s [sic] citizenship.”
(Notice of Removal ¶ 3, ECF No. 1.) This falls short of the requirement, absent unusual circumstances,
that a party seeking to invoke diversity jurisdiction “allege affirmatively the actual citizenship of the
relevant parties.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).
Safady does not dispute that he fails to show Bersci is a diverse party. Instead, he argues that the
Court may “ignore Bersci’s alleged California residency, because Bersci is a mere nominal defendant . .
. .” (Def.’s Opp’n 11:1-4.) As Safadi admits, a “nominal” party is one who has “no interest in the
action.” (See id. at 11:10-13 (citing Perez v. Wells Fargo Bank, N.A., 929 F. Supp. 2d 988, 1002 (N.D.
Cal. 2013).) Here, Bersci has a large interest in present action, as the underlying arbitration award
ordered Bersci to pay damages to Plaintiff not to exceed “$4,605,522.19,” plus interest.
Safady asserts that Bersci’s default in the arbitration proceedings somehow renders him a
“nominal” party. However, once again, Safady does not cite any authority for this proposition. While
courts within the Ninth Circuit do not appear to have squarely addressed this issue, persuasive authority
from other circuits has rejected such an argument. See Am. Asset Finance, LLC v. Corea Firm, 821 F.
Supp. 2d 698, 700-02 (D.N.J. 2011) (finding that default judgment did not render defendants nominal
parties and granting plaintiff’s motion to remand); Schlegle & Sons Printing v. United English Breeders
& Fanciers Ass’n, Inc., 682 F. Supp. 36, 37 (C.D. Ill. 1988) (“The Court, however, does not find that
Kinsolving is a nominal party. Although Defendant Kinsolving has been defaulted, this Court would
nevertheless have to enforce the default judgment against him.”). The Court rejects this argument here
as well.
Therefore, Safady has failed to show that the Court has subject matter jurisdiction over this case.
C.

Plaintiff’s Request for Fees and Costs

The Court does not find removal objectively unreasonable, and thus declines to award attorney’s
fees or costs.
IV.

CONCLUSION

For the foregoing reasons, the Court GRANTS Plaintiff’s Motion to Remand, with the exception
of Plaintiff’s request for an award of fees and costs.
IT IS SO ORDERED.

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JS-6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-07639-RGK (PLA)

Date

Title

December 9, 2014

CALIFORNIA BANK & TRUST v. SAFADY, et al.
:

Initials of Preparer

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