Lundy v. Bradach

Filing 9

ORDER granting 2 Application to Proceed In Forma Pauperis. Clerk to reassign case to a District Judge with REPORT AND RECOMMENDATIONS re 1 , 6 Remand to State Court. Objections due by 2/19/2014. Signed by Magistrate Judge Howard R. Lloyd on 2/5/2014. (hrllc2, COURT STAFF) (Filed on 2/5/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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THOMAS LUNDY,
Plaintiff,

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v.
BETH BRADACH,

Case No. 5:14-cv-00430 HRL
ORDER GRANTING APPLICATION
TO PROCEED IN FORMA PAUPERIS
REPORT AND RECOMMENDATION
RE REMAND TO STATE COURT

Defendant.
Beth Bradach rented a home in Palo Alto owned by Thomas Lundy. She is a participant in

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a federal rent subsidy program under Section 8 of the National Housing Act, 42 U.S.C. § 1437f.

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Lundy says that he has decided to remodel and renovate the subject property and to use it as a

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conventional rental; and thus, he will no longer accept Section 8 tenancy. Lundy further alleges

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that he gave Bradach a 90-day termination notice. When she failed to quit the premises, he filed

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the instant unlawful detainer action against her in Santa Clara County Superior Court.

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On January 29, 2014, the eve of trial set by the state court, Bradach removed the matter

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here, asserting federal question jurisdiction. She also requests permission to proceed in forma

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pauperis (IFP). Lundy moves for an order remanding this matter to the Santa Clara County

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Superior Court and requiring defendant to pay his attorney’s fees incurred in connection with the

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motion. Bradach opposes the motion. This court finds no need for oral argument. Civ. L.R. 7-

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1(b). For the reasons discussed below, the undersigned recommends that this case be remanded to

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state court and that Lundy’s request for fees be denied.

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A court may authorize the commencement of a civil action in forma pauperis (“IFP”) if the

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court is satisfied that the applicant cannot pay the requisite filing fees. 28 U.S.C § 1915(a)(1). In

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evaluating such an application, the court should “gran[t] or den[y] IFP status based on the

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applicant’s financial resources alone and then independently determin[e] whether to dismiss the

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complaint on the grounds that it is frivolous.” Franklin v. Murphy, 745 F.2d 1221, 1226-27 n.5

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(9th Cir. 1984). A court may dismiss a case filed without the payment of the filing fee whenever it

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determines that the action “(i) is frivolous or malicious; (ii) fails to state a claim on which relief
may be granted; or (iii) seeks monetary relief against a defendant who is immune from such

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United States District Court
Northern District of California

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relief.” 28 U.S.C. § 1915(e)(2)(B)(i)-(iii). Having reviewed defendant’s financial affidavit, the

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court finds that she lacks sufficient resources to pay the filing fee, and her IFP application is

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granted.

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Even so, Bradach fails to establish subject matter jurisdiction over this case. Removal to

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federal court is proper where the federal court would have original subject matter jurisdiction over

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the complaint. 28 U.S.C. § 1441. The removal statutes are strictly construed against removal and

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place the burden on the removing party to demonstrate that removal was proper. Moore-Thomas

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v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (citing Gaus v. Miles, Inc., 980 F.2d

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564, 566 (9th Cir. 1992)). Additionally, the court has a continuing duty to determine whether it

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has subject matter jurisdiction. Fed. R. Civ. P. 12(h). A case must be remanded to the state court

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if it appears at any time before final judgment that the court lacks subject matter jurisdiction. 28

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U.S.C. § 1447(c).

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Federal courts have original jurisdiction over civil actions “arising under the Constitution,

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laws, or treaties of the United States.” 28 U.S.C. § 1331. A claim “arises under” federal law if,

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based on the “well-pleaded complaint rule,” the plaintiff alleges a federal claim for relief. Vaden

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v. Discovery Bank, 129 S. Ct. 1262, 1272 (2009). Defenses and counterclaims asserting a federal

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question do not satisfy this requirement. Id. Here, plaintiff’s complaint presents a claim arising

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only under state law. It does not allege any federal claims whatsoever. Defendant points out that
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the complaint says that plaintiff is a Section 8 tenant and appends a copy of the parties’ agreement

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used in such tenancies. (See Sotelo Decl., Ex. A). But the allegations indicate only that the

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parties’ rental agreement is based on Section 8 and that defendant receives benefits under that

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statute. See, e.g., MHS-Rossmore, LLC v. Lopez, No. CV 08-2001-RGK (FMOx), 2008 WL

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2397498 at *2 (C.D. Cal., June 5, 2008) (finding that allegations that the subject rental agreement

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is based on Section 8 and that defendant receives Section 8 benefits were “insufficient to covert

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[plaintiff’s] action for unlawful detainer, generally a state court cause of action, into one arising

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under federal law.”). Bradach nevertheless contends that Lundy’s claims arise under federal law

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because his termination of her Section 8 tenancy violates federal housing laws. However,
allegations in a removal notice or in a response to the complaint cannot provide this court with

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United States District Court
Northern District of California

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federal question jurisdiction.

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Bradach argues that Section 8 completely preempts state law, but the court finds no basis

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for this contention. “[U]nder the artful pleading rule, ‘a plaintiff may not defeat removal by

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omitting to plead necessary federal questions in a complaint.’” Arco Environmental Remediation,

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LLC v. Dep’t of Health & Environmental Quality of the State of Montana, 213 F.3d 1108, 1114

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(9th Cir. 2000) (quoting Franchise Tax Bd. of California v. Construction Laborers Vacation Trust

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for S. California, 463 U.S. 1, 22, 103 S. Ct. 2841, 77 L.Ed.2d 420 (1983)). Thus, a state law claim

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for relief may be deemed to arise under federal law where (1) federal law completely preempts

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state law; (2) the claim is necessarily federal in character; or (3) the right to relief depends on the

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resolution of a substantial, disputed federal question. Id. The artful pleading rule is, however,

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limited in scope “for it is ‘long-settled . . . that the mere presence of a federal issue in a state cause

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of action does not automatically confer federal-question jurisdiction.’” Wise v. Suntrust

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Mortgage, Inc., No. C11-01360LHK, 2011 WL 1466153 *2 (N.D. Cal., Apr. 18, 2011) (quoting

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Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 813, 106 S. Ct. 3229, 92 L.Ed.2d

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650 (1986)). Moreover, “the ‘mere need to apply federal law in a state law claim’ does not

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‘suffice to open the arising under door’ to federal jurisdiction.” Id. (quoting Grable & Sons Metal

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Products, Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 313, 125 S. Ct. 2363, 162 L.Ed.2d 257

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(2005)).
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As discussed above, plaintiff’s unlawful detainer claim is a creature of state, not federal,

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law. And, there is no basis for complete preemption here. “Preempted state law claims may be

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removed to federal court only in the rare instances where Congress has chosen to regulate the

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entire field.” Arco Environmental Remediation, LLC, 213 F.3d at 1114. “Complete preemption,

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however, arises only in ‘extraordinary’ situations. The test is whether Congress clearly manifested

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an intent to convert state law claims into federal question claims.” Ansley v. Ameriquest

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Mortgage Co., 340 F.3d 858, 862 (9th Cir.2003) (citations omitted). Thus far, the Supreme Court

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has identified only three federal statutes that completely preempt state law claims, and the

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National Housing Act is not one of them. See Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6-7,
123 S. Ct. 2058, 156 L.Ed.2d 1 (2003) (noting that complete preemption has been limited to the

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United States District Court
Northern District of California

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Labor Management Relations Act, the Employee Retirement Income Security Act, and the

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National Bank Act).

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Nor is there a substantial federal question that would give rise to jurisdiction. Indeed,

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courts have held that “termination proceedings under Section 8’s existing housing program are left

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by Congress and HUD to state law.” Gallman v. Pierce, 639 F. Supp. 472, 478 (N.D. Cal. 1986);

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MHS-Rossmore, LLC, 2008 WL 2397498 at *2 (same).

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Bradach does not invoke the court’s diversity jurisdiction, and there is no basis for it

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anyway. Federal district courts have jurisdiction over civil actions in which the matter in

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controversy exceeds the sum or value of $75,000 (exclusive of interest and costs) and is between

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citizens of different states. 28 U.S.C. §1332. The instant action was filed as a “Limited Civil

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Jurisdiction” matter in which plaintiff indicated that the amount in controversy is less than

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$10,000. (Dkt. No. 1 at ECF p. 8). Moreover, “the presence of a local defendant at the time

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removal is sought bars removal.” Spencer v. U.S. Dist. Ct., 393 F.3d 867, 870 (9th Cir. 2004); see

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also 28 U.S.C. § 1441(b)(2) (an action may not be removed “if any of the parties in interest

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properly joined and served as defendants is a citizen of the State in which such action is

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brought.”).

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“An order remanding the case may require payment of just costs and any actual expenses,
including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). “Absent
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unusual circumstances, courts may award attorney’s fees under § 1447(c) only where the

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removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an

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objectively reasonable basis exists, fees should be denied.” Martin v. Franklin Capital Corp., 546

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U.S. 132, 141, 126 S. Ct. 704, 163 L.Ed.2d 547 (2005). “In applying this rule, district courts retain

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discretion to consider whether unusual circumstances warrant a departure from the rule in a given

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case.” Id. The objective reasonableness of removal depends on the clarity of the applicable law

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and whether such law “clearly foreclosed” the arguments in support of removal. Lussier v. Dollar

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Tree Stores, Inc., 518 F.3d 1062, 1066-67 (9th Cir. 2008).
Pointing out that defendant removed this matter one day before the case was set for trial in

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the state court, plaintiff argues that defendant acted solely to delay the proceedings. As discussed

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United States District Court
Northern District of California

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above, there is no basis for removal. Defendant is represented by counsel. And, the timing of

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removal suggests that defendant might have been motivated, at least in part, by a desire to

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postpone eviction. Nevertheless, no one has brought to this court’s attention any binding

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decisions clearly precluding defendant’s position. And, “removal is not objectively unreasonable

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solely because the removing party’s arguments lack merit, or else attorney’s fees would always be

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awarded whenever remand is granted.” Lussier, 518 F.3d at 1065 (9th Cir. 2008). As such, the

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court recommends that plaintiff’s request for attorney’s fees be denied. Defendant is cautioned,

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however, that the court will impose sanctions if she improperly removes this action to federal

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court in the future.

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Because not all parties have consented to the undersigned’s jurisdiction, this court

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ORDERS the Clerk of the Court to reassign this case to a District Judge. The undersigned further

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RECOMMENDS that the newly assigned judge remand the state court case to the Santa Clara

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County Superior Court and deny plaintiff’s request for fees. Any party may serve and file

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objections to this Report and Recommendation within fourteen days after being served. 28 U.S.C.

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§ 636(b)(1); Fed. R. Civ. P. 72.

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Dated: February 5, 2014

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______________________________________
HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE
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5:14-cv-00430-HRL Notice has been electronically mailed to:
Ginger L. Sotelo

[e-mail], [e-mail]

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Miguel Soto

[e-mail]

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United States District Court
Northern District of California

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