San Francisco Police Credit Union v. Stewart

Filing 134

ORDER BY JUDGE JEREMY FOGEL GRANTING 25 , 41 PLAINTIFF'S MOTION FOR REMAND. (jflc2, COURT STAFF) (Filed on 10/31/2008)

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

SAN FRANCISCO POLICE CREDIT UNION, Plaintiff, v. WILLIAM BULLOCK STEWART III, and DOES 1-50, inclusive Defendant.

Case No. C 08-2996 JF (RS) ORDER1 GRANTING PLAINTIFF'S MOTION FOR REMAND [Re: docket no. 25, 41]

On July 31, 2007, Plaintiff San Francisco Police Credit Union ("SFPCU") filed the instant action in the Santa Clara Superior Court, asserting claims against Defendant William Bullock Stewart III ("Stewart") for breach of contract, monies had and received, and fraud. Stewart removed the action to this Court on June 17, 2008. SFPCU moves to remand the action

This disposition is not designated for publication in the official reports.

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on the basis that the Notice of Removal was procedurally defective and for lack of subject matter jurisdiction. SFPCU also moves to dismiss Stewart's counterclaims for failure to state a claim upon which relief may be granted, or in the alternative, for an order requiring a more definite statement. The Court has considered the briefing submitted by the parties as well as the oral arguments presented at the hearing on October 10, 2008. For the reasons set forth below, the motion for remand will be granted, and the motion to dismiss will be terminated as moot. I. BACKGROUND On January 23, 2007, SFPCU loaned Stewart $25,000. To obtain the loan, Stewart represented that he was employed by Larkspur Consultants, Inc., that he had earned more than $152,000 in 2006, and that he planned to use the loan funds to purchase stocks. After making one partial payment, Stewart defaulted on the loan in March of 2007. SFPCU discovered that Stewart's alleged employer did not exist. When Stewart was confronted, he claimed that he worked for an organization named Larkspur. SFPCU alleges that after thorough investigation of Larkspur, there was nothing to indicate that the company had been actively engaged in business or that it was sufficiently active to pay any employee $152,000. SFPCU also discovered that Stewart had used the loan money to fund his business, "Stewart University of America," rather than to purchase stocks. On July 31, 2007, SFPCU filed the instant action in the Santa Clara Superior Court (the "Collections/Fraud Action") for (1) breach of contract based upon Stewart's failure to make loan payments, (2) the unpaid amount of the loan with interest, and (3) fraud, based on Stewart's allegedly false representations to induce SFPCU to loan him the money. On November 26, 2007, SFPCU filed and served the Second Amended Complaint (SAC). The superior court set the case for trial on July 14, 2008. While the instant action was pending in the state court, Stewart failed to provide discovery responses with respect to his employment, and SFPCU filed a motion to compel. On April 25, 2008, the state court granted the motion and imposed sanctions on Stewart in the amount of $1,235. SFPCU then subpoenaed documents directly from Stewart's alleged employer, but the employer also failed to comply. SFPCU again filed a motion to compel, and 2
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on June 13, 2008, the state court granted the motion and imposed additional sanctions on Stewart. On June 17, 2008, less than one month before trial was set to begin in state court, Stewart removed the action to this Court. In the Notice of Removal, Stewart alleged that SFPCU provided a report to the San Mateo Police with respect to his alleged loan fraud. Stewart Removal ¶ 3(c). He also claimed that based on SFPCU's allegations, he was "stalked, wiretapped, slandered, and libeled" by San Mateo Police Officers acting as collections agents. Stewart Removal ¶ 3(b). He asserted that the San Mateo Police provided fraudulent testimony to obtain an arrest warrant and an excessive bail amount of $100,000. Stewart Removal ¶ 3(c). Finally, he alleged that San Mateo Police unlawfully invaded his home without presenting a warrant, and that he was incarcerated for approximately twelve days and was denied his fundamental rights. Stewart Removal ¶¶ 3(c), (d), (f). Stewart alleged that all copies of the state court proceedings were attached to the Notice and that the case was in the discovery phase. SFPCU asserts that in fact much of the state court file was missing, including the SAC, Stewart's answer thereto, discovery orders, and the trialsetting order. Decl. Of Jonathan Seigel in Supp. of Mot. to Remand ("Seigel Decl.") ¶ 12. Moreover, SFPCU asserts that Stewart fraudulently attached a document entitled "First Amended Answer to Unverified Second Amended Complaint,"and presented that document as though it had been filed in state court. Seigel Decl. ¶ 12. The document was not filed in state court, and Stewart did not obtain leave to file it in this Court. SFPCU asserts that discovery had closed prior to removal. Seigel Decl. ¶ 13. On June 23, 2008, Stewart and thirteen other defendants, including family members and entities with business ties to Stewart, filed a "Counter Claim Cross Complaint" ("Counterclaim") in the instant action. The Counterclaim asserts civil rights violations in connection with Stewart's alleged false arrest against SFPCU and forty-seven other counter defendants, including a state court judge, the San Mateo and San Jose Police Departments, the Counties of Santa Clara

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and San Mateo, and various other police departments, officers, and councilpersons.2 On October 8, 2008, Stewart represented that he retained counsel to represent him in the instant action. II. MOTION TO REMAND The Federal Rules of Civil Procedure mandate that a defendant seeking to remove a civil action from a state court must provide "a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant" in the action. 28 U.S.C. § 1446(a). Additionally, "the notice of removal of a civil action . . . shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which action is based . . . or if the case stated by the original pleading is not removable, within thirty days after receipt of an amended pleading from which it may be ascertained that the case is removable." 28 U.S.C. § 1446 (b) (emphasis added). Unless a subsequent, amended complaint raises additional claims for relief, the original complaint triggers the time for removal. See id. The statute is to be narrowly construed. United States ex rel Walker v. Gunn, 511 F.2d 1024 (9th Cir. 1975); see California v. Banks, 1996 U.S. Dist. LEXIS 5939, *5 (C.D. Cal.1996). SFPCU filed its initial complaint on July 31, 2007 and filed the SAC on November 26, 2007. Stewart did not remove this case until June 17, 2000, more than eleven months after receiving the initial complaint and more than six months after receiving the SAC. Stewart alleges that SFPCU did not serve the SAC properly because copies of the summons and complaint "were thrown on [his] porch." Stewart Removal ¶ 2. However, as SFPCU does not allege additional causes of action against Stewart in the SAC, the time for removal ran from the filing of the original complaint on July 31, 2007. The removal thus is untimely. Even if the SAC was the pleading that triggered the time for removal, the federal rules require only the defendant's "receipt" of the initial pleading, not personal service thereof, in order to trigger the

Stewart and two additional plaintiffs had filed a separate action in this Court on April 24, 2008, while the instant action was pending in state court. (Case No. C-08-2143) ("the Civil Rights Action"). Stewart asserted claims against SFPCU and thirty-four other defendants in the Civil Rights Action, alleging violations similar to those he asserts in in his Counterclaim. On June 26, 2008, this Court dismissed the Civil Rights Action. 4
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thirty-day removal period. Accordingly, the removal was untimely.3 Because the removal was untimely, the Court need not reach the issue of subject matter jurisdiction. However, the Court notes that because both of the original parties to the action are residents of California, diversity jurisdiction does not exist. See Munoz v. Small Business Admin., 644 F.2d 1361, 1365 (9th Cir. 1981) ("Diversity jurisdiction requires that the plaintiffs and each defendant be citizens of different states."). Further, although Stewart alleges numerous federal claims in his Counterclaim, analysis of a remand motion focuses on whether the allegations contained in the complaint pose a federal question. See Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1394 (9th Cir.1988) ("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."). Since the allegations contained in SFPCU's original complaint and SAC are based entirely on state law, federal question jurisdiction is absent as well. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10 (1983) ("A federal court does not have original jurisdiction over a case in which the complaint presents only a state-law cause of action."). III. MOTION FOR CONTINUANCE The Court has considered whether to grant a continuance to Stewart in light of his recent retention of counsel. However, because removal clearly was untimely, no purpose would be served by such a continuance.

Stewart filed an Amicus Curiae Brief ("ACB") on October 22, 2008 and a Second Amended Opposition to Plaintiff's Motion to Dismiss ("SAO") on October 29, 2008. SFPCU filed a Reply Brief to Stewart's SAO on October 30, 2008. After reviewing these documents, the Court concludes that neither the ACB or the SAO provide facts demonstrating that removal was timely. 5
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IV. ORDER (1) The motion for remand is GRANTED; (2) the motion for a continuance is DENIED; and (3) the motion to dismiss is terminated as moot..

Dated: October 31, 2008

_____________________________ JEREMY FOGEL United States District Judge

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This Order has been served upon the following persons: Austin D. Garner: [e-mail] Jonathan Seigel: [e-mail] Leora R. Ragones: [e-mail], [e-mail] Reilly Dennis Wilkinson: [e-mail] Joshua Louis Scheer Scheer Law Group 155 N. Redwood Drive Suite 100 San Rafael, CA 94903 Rosalie A Guancione 15732 Los Gatos Blvd Los Gatos, CA 95032 Spencer Paul Scheer Scheer Law Group 155 N. Redwood Drive Suite 100 San Rafael, CA 94903-1994 William Bullock Stewart, III 2094 El camino Real #218 Santa Clara, CA 95050

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