Dhillon et al v. Edwards et al

Filing 35

FINDINGS and RECOMMENDATIONS to Grant in Part Defendant William Edwards' Motion to Set Aside Entry of Default and to Dismiss for Lack of Subject Matter Jurisdiction, signed by Magistrate Judge Christopher D. Baker on 7/3/2024. Referred to Judge Kirk E. Sherriff. Objections to F&R due within 14 days. (Hall, S)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 RANDEEP SINGH DHILLON, et al., 12 Plaintiffs, 13 v. 14 WILLIAM EDWARDS, et al. 15 Defendants. 16 Case No. 1:23-cv-00416-KES-CDB FINDINGS AND RECOMMENDATIONS TO GRANT IN PART DEFENDANT WILLIAM EDWARDS’ MOTION TO SET ASIDE ENTRY OF DEFAULT AND TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION (Doc. 15) 14-DAY DEADLINE 17 18 Pending before the Court is Defendant William Edwards’ (“Edwards”) motion to set aside the 19 20 entry of defaults and to dismiss for lack of subject matter jurisdiction, filed May 3, 2023. (Doc. 15). 21 Plaintiffs Randeep Singh Dhillon, Pinder Singh, Gurpreet Singh, and Balwinder Singh (hereinafter 22 collectively “Plaintiffs”) filed an opposition to the motion on May 17, 2023. (Doc. 25). That same 23 day, Plaintiffs Pinder Singh and Randeep Singh Dhillon filed declarations in opposition to the motion. 24 (Docs. 23-24). For the reasons set forth herein, the Undersigned will recommend Defendant Edwards’ 25 motion to set aside entry of defaults and to dismiss for lack of subject matter jurisdiction be granted in 26 part. 27 /// 28 /// 1 1 2 Background On March 21, 2023, Plaintiffs initiated this action with the filing of a complaint against 3 Defendants Edwards and Forrest Miller (“Miller”). (Doc. 1). Plaintiffs assert claims against 4 Defendants for negligence, conversion, malpractice, financial elder abuse, racial discrimination, 5 defamation-libel, defamation-slander per se, and disability discrimination. Id. at 1, 10-21. Plaintiffs 6 allege the Court possesses subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1346(b)(1) because 7 the claims arise under federal law and implicate the Fourteenth Amendment of the United States 8 Constitution. Id. at 5. 9 On April 5, 2023, the Honorable District Judge Ana I. de Alba issued an order to show cause 10 why Plaintiffs’ action should not be dismissed for want of subject matter jurisdiction. (Doc. 5).1 11 Judge de Alba determined Plaintiffs appeared to assert federal question jurisdiction by alleging 12 violations of the Fourteenth Amendment. Id. at 1. Judge de Alba noted the Fourteenth Amendment 13 does not itself provide for a private right of action. Id. Judge de Alba advised Plaintiffs if they 14 intended to invoke 42 U.S.C. § 1983, they must allege state action, something that is not apparent on 15 the face of the complaint. Id. Further, Judge de Alba admonished Plaintiffs that if they intend to 16 invoke a different statute, they must identify it. Id. at 2. Plaintiffs were provided 14 days to file an 17 amended complaint asserting the basis for subject matter jurisdiction in federal court. Id. 18 On April 10, 2023, Plaintiffs filed an executed proof of service of summons as to Defendant 19 Edwards. (Doc. 6). On April 30, 2023, Plaintiffs filed a request for entry of default against Defendant 20 Edwards. (Doc. 8). The Clerk of Court issued an entry of default against Mr. Edwards on May 1, 21 2023. (Doc. 9). 22 On May 2, 2023, Defendant Miller filed a motion to dismiss for lack of subject matter 23 jurisdiction. (Doc. 11). On May 2, 2023, Plaintiffs filed an untimely response to Judge de Alba’s 24 April 5, 2023, order to show cause asserting the Court has subject matter jurisdiction. (Doc. 13). On 25 26 27 28 1 On December 1, 2023, this matter was temporarily reassigned to no district court judge following the elevation of Judge de Alba to the Ninth Circuit Court of Appeals. (Doc. 31). On March 14, 2024, this matter was reassigned to U.S. District Judge Kirk E. Sherriff. (Doc. 33). 2 1 May 3, 2023, Defendant Miller filed a reply to the Court’s order to show cause and Plaintiffs filed a 2 sur-reply. (Docs. 16-17). 3 That same day, Defendant Edwards filed the instant motion to set aside the entry of default and 4 to dismiss for lack of subject matter jurisdiction. (Doc. 15). In his motion, Defendant Edwards asserts 5 he did not purposefully fail to answer Plaintiffs’ complaint. Id. at 2. Defendant Edwards claims he 6 was aware of the Court’s April 4, 2023, order to show cause and believed the Court would dismiss 7 Plaintiffs’ complaint when Plaintiffs failed to follow the Court’s order. Id. Defendant Edwards argues 8 good cause exists to set aside the entry of default as he “mistakenly believed that the complaint would 9 be dismissed immediately.” Id. at 3. Defendant Edwards notes he should have responded and filed a 10 motion for lack of jurisdiction and mistakenly did not. Id. 11 Further, Defendant Edwards contends there is no time limit for moving to set aside void 12 judgments and Plaintiffs have failed to demonstrate the Court has subject matter jurisdiction. Id. at 4- 13 5. Defendant Edwards asserts Plaintiffs’ complaint fails to set forth any violation of federal law as it 14 relates to him, as a private person. Id. at 5. Defendant Edwards asks the court to set aside the entry of 15 default and to dismiss the case for lack of subject matter jurisdiction. Id. at 6. 16 On May 17, 2023, Plaintiffs filed an opposition to Defendant Edwards’ motion. (Doc. 25). 17 Plaintiffs Pinder Singh and Randeep Singh Dhillon also filed declarations in opposition to Defendant 18 Edwards’ motion. (Docs. 23-24). 19 Plaintiffs argue Defendant Edwards has failed to meet the burden of establishing excusable 20 neglect and reasonable diligence under California Code of Civil Procedure § 473. (Doc. 25 at 2, 16- 21 17. Plaintiffs contend that this court has subject matter jurisdiction. Id. at 10. Next, Plaintiffs argue 22 Defendant Edwards could have emailed Plaintiffs’ counsel for an extension but failed to do so. Id. 23 Plaintiffs’ counsel claims she would gladly have stipulated to extending any kind of responsive 24 pleading deadline. Id. at 10-11. Plaintiffs also claim Defendant Edwards “did not meet-and-confer 25 that he was waiting on any kind of amended complaint.” Id. at 11. Plaintiffs claim they will be 26 prejudiced if the default is set aside. Id. 27 28 Next, Plaintiffs note Defendant Edwards was personally served the summons, complaint, and related case-initiating documents, had sufficient notice of the lawsuit, and was aware of the lawsuit. 3 1 Id. at 12-15. Plaintiffs also allege Defendant Edwards missed many deadlines in a different case and 2 his present non-response leading to default is only attributable to his negligence. Id. at 18. Plaintiffs 3 argue that the “default must be trailed to the trial date” [sic]. Id. at 19-20. 4 Separately, Plaintiffs assert subject matter jurisdiction has been established in this case. Id. at 5 21. Specifically, Plaintiffs argue the Court has jurisdiction under the Americans with Disabilities Act 6 (“ADA”) because Plaintiff Pinder Singh is a senior citizen, severely disabled, and “has suffered at the 7 hands of Defendant [Edwards].” Id. Plaintiffs argue Defendants’ “state action” gives rise to 8 jurisdiction under the Fourteenth Amendment. Id. at 22. Plaintiffs claim “Defendant Edwards was the 9 Kern County public defender, as well as has a sufficient conflict of interest with the state court. He 10 should have not taken the cases—however, he continued even when he had knowledge of such 11 conflict.” Id. at 23. Plaintiffs argue if the Court finds no federal subject matter jurisdiction, then this 12 matter must be remanded to the state court. Id.2 13 Legal Standard 14 A clerk’s entry of default may be set aside for “good cause.” Fed. R. Civ. P. 55(c). “To 15 determine ‘good cause,’ a court must ‘consider three factors: (1) whether [the party seeking to set 16 aside the default] engaged in culpable conduct that led to the default; (2) whether [it] had [no] 17 meritorious defense; or (3) whether reopening the default judgment would prejudice the other party.” 18 United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010). 19 Although the “good cause” standard is the same that applies to motions to set aside default judgment 20 under Rule 60(b), “the test is more liberally applied in the Rule 55(c) context.” Id. at 1091 n.1 21 (internal quotations and citations omitted); see Brady v. United States, 211 F.3d 499, 504 (9th Cir. 22 23 24 25 26 27 28 2 Plaintiffs’ request for remand is without merit. Federal courts may only issue an order to remand “[i]n any case removed from a State court…” 28 U.S.C. § 1447(a); See Ngoc Lam Che v. San Jose/Evergreen Cmty. College. Dist. Found., No. 17-cv-00381-BLF, 2017 WL 2954647, at *3 (N.D. Cal. July 11, 2017) (“As an initial matter, this Court could not remand Che’s state law claim even if it were to dismiss Che’s ADA claim, because this action was originally filed in federal court.”); Fuse v. Ariz. Bd. of Regents, No. CV 07-2351-PHX-FJM, 2009 WL 837645, at *1 (D. Ariz. Mar. 27, 2009) (“[W]e cannot remand plaintiff’s claims to state court because this action was originally filed in federal court.”). Here, Plaintiffs initiated this action by filing a complaint in federal court. (Doc. 1). This case was not removed by Defendants to this Court. Therefore, this Court lacks the authority to remand the case to state court. 4 1 2000) (finding the district court’s discretion is “especially broad” when setting aside entry of default, 2 rather than default judgment). 3 Discussion 4 5 1. Culpable Conduct “[A] defendant’s conduct is culpable if he has received actual or constructive notice of the 6 filing of the action and intentionally failed to answer.” Mesle, 615 F.3d at 1092 (emphasis in original) 7 (quoting TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 2001)). “Intentional” 8 conduct in this sense means “willful, deliberate, or…[in] bad faith,” rather than neglectful. TCI Grp., 9 244 F.3d at 697-98. A “[n]eglectful failure to answer as to which the defendant offers a credible, good 10 faith explanation negating any intention to take advantage of the opposing party, interfere with judicial 11 decision-making, or otherwise manipulate the legal process is not ‘intentional.’” Id. at 697. 12 The Undersigned finds Defendant Edwards’ explanation of events (supra 3) constitutes at most 13 neglectful conduct. On April 5, 2023, the Court recognized Plaintiffs had failed to adequately plead 14 subject matter jurisdiction. (Doc 5). The Court provided Plaintiffs fourteen days to file an amended 15 complaint asserting the basis for subject matter jurisdiction in federal court. Id. at 2. The Court 16 warned Plaintiffs if they failed to file an amended complaint, the Court would dismiss this action for 17 lack of jurisdiction without further notice. Id. Plaintiffs did not timely respond to the Court’s order to 18 show cause. See generally (Doc.). Therefore, it was reasonable for Defendant Edwards to believe that 19 the Court would have dismissed the complaint following Plaintiffs’ failure to follow the Court’s orders 20 before his response was due. Accordingly, this factor weighs in favor of setting aside the entry of 21 default. 22 23 2. Meritorious Defense In order to have an entry of default set aside, a defendant must also present specific facts that 24 would constitute a meritorious defense. TCI Grp., 244 F.3d at 700. However, the burden on defendant 25 is not extraordinarily heavy. Id. Indeed, a defense is considered meritorious if “there is some 26 possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the 27 default.” Haw v. Carpenters' Tr. Funds v. Stone, 794 F.3d 508, 513 (9th Cir. 1986). 28 5 1 Defendant Edwards argues he has a meritorious defense as Plaintiffs’ complaint fails to invoke 2 subject matter jurisdiction and identify any controversy arising under federal law as it relates to a 3 private individual. (Doc. 15 at 5). 4 As discussed above, Plaintiffs contend this Court has jurisdiction through the ADA and under 5 the Fourteenth Amendment because of Defendant Edwards’ “state action.” (Doc. 25 at 21-24). 6 Plaintiffs’ argument on this point is without merit because they have not pleaded a claim under the 7 ADA in their operative complaint. See generally (Doc. 1). In fact, Plaintiffs’ complaint makes no 8 mention of the ADA. Id. 9 Likewise, Plaintiffs’ claim under the Fourteenth Amendment also fails. Plaintiffs attempt to 10 argue that, at some point, Defendant Edwards was the Kern County public defender and “he has a 11 sufficient conflict of interest with the state court.” (Doc. 25 at 23). Plaintiffs appear to claim 12 Defendant Edwards’ alleged malpractice was in essence state action. Id. at 22-23. However, none of 13 these claims appear in Plaintiffs’ complaint (see Doc. 1). See also (Doc. 5 at 1) (“If Plaintiffs intend to 14 invoke 42 U.S.C. § 1983, they must allege state action, something that is not apparent on the face of 15 the complaint as filed.”); Garnier v. O’Connor-Ratcliff, 41 F.4th 1158, 1169 (9th Cir. 2022). 16 Therefore, the Undersigned finds that Defendant Edwards has presented a meritorious defense to this 17 action and that this factor weighs in favor of setting aside the entry of default. 18 19 3. Prejudice “To be prejudicial, the setting aside of an entry of default must result in greater harm than 20 simply delaying the resolution of the case.” TCI Grp., 244 F.3d at 701 (quoting Falk v. Allen, 739 21 F.2d 461, 463 (9th Cir. 1984)); Thompson v. Am. Home Assur. Co., 95 F.3d 429, 433-34 (6th Cir. 22 1996). “Merely being forced to litigate on the merits cannot be considered prejudicial” for purposes of 23 setting aside the default. Id. Rather, the standard is “whether [a plaintiff’s] ability to pursue his claim 24 will be hindered.” Falk, 739 F.2d at 463; see Thompson, 95 F.3d at 433-34 (to be considered 25 prejudicial, “the delay must result in tangible harm such as loss of evidence, increased difficulties of 26 discovery, or greater opportunity for fraud or collusion”). 27 Here, Plaintiffs have failed to identify any prejudice if the entry of default is set aside beyond 28 the conclusory statement that granting Defendant Edwards relief “will prejudice Plaintiffs.” (Doc. 25 6 1 at 11). Moreover, the Undersigned can find no prejudice to Plaintiffs when the operative complaint 2 fails to demonstrate subject matter jurisdiction. Thus, the Undersigned finds this final factor also 3 weighs in favor of setting aside the entry of default. 4 Separately, Defendant Edwards asks the Court to dismiss this case for lack of subject-matter 5 jurisdiction. (Doc. 15 at 6). However, this request was not properly noticed before the assigned 6 district judge as required under the Eastern District of California Local Rule 230(b). E.D. Cal. L.R. 7 230(b) (“Except as otherwise provided in these Rules or as ordered or allowed by the Court, all 8 motions shall be noticed on the motion calendar of the assigned Judge or Magistrate Judge.”). The 9 Undersigned will recommend that Defendant Edwards’ request to dismiss this action be denied 10 without prejudice, subject to refiling in compliance with this Court’s Local Rules, noting that the issue 11 of subject-matter jurisdiction is already before the assigned district judge. (Docs. 5, 11). 12 Conclusion and Recommendations 13 For the reasons discussed above, the Undersigned RECOMMENDS that Defendant Edwards’ 14 motion to set aside default and to dismiss for lack of subject matter jurisdiction (Doc. 15) be 15 GRANTED IN PART to the following extent: 16 17 18 19 i. The motion is GRANTED to the extent of setting aside the Clerk’s entry of default (Doc. 9); and ii. The motion is DENIED WITHOUT PREJUDICE as to Defendant Edwards’ request that this action be dismissed for lack of subject matter jurisdiction. 20 21 Remainder of This Page Intentionally Left Blank 22 23 24 25 26 27 28 7 1 These findings and recommendations will be submitted to the United States district judge 2 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within 14 days after being 3 served with these findings and recommendations, Plaintiffs may file written objections with the Court. 4 The document should be captioned “Objections to Magistrate Judge’s Findings and 5 Recommendations.” Failure to timely file objections may result in the waiver of rights on appeal. 6 Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 7 1394 (9th Cir. 1991)). 8 IT IS SO ORDERED. 9 10 Dated: July 3, 2024 ___________________ _ UNITED STATES MAGISTRATE JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8

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