State of Idaho Department of Health & Welfare v. Khurana et al

Filing 4

MEMORANDUM DECISION AND ORDER. Removal of this action was not proper. This Court does not have subject matter jurisdiction. This case is, therefore, REMANDED to the District Court of the Second Judicial District of the State of Idaho, in and for the County of Nez Pearce, for further proceedings. Khurana's application for leave to file in forma pauperis 1 is DENIED as moot. Signed by Judge David C. Nye. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
STATE OF IDAHO, DEPARTMENT
OF HEALTH AND WELFARE,
Plaintiff.

Case No. 3:18-cv-00121-DCN
MEMORANDUM DECISION AND
ORDER

v.
PRAVEEN K. KHURANA and JOHN
W. PERRY,
Defendants.

I. INTRODUCTION
On March 13, 2018, Defendant Praveen Khurana removed this action from state
court invoking this Court’s jurisdiction. Dkt. 2. Khurana also filed an Application for
Leave to Proceed in Forma Pauperis. Dkt. 1.
The Court undertakes a sua sponte examination of whether it has subject matter
jurisdiction over this case. Khurana does not cite any provisions of the United States
Code that would allow him to remove this action, but simply states that the original
question is federal because it deals with bankruptcy.1 Upon review, it appears that there
are no applicable code sections and that this Court lacks jurisdiction. Therefore, the Court

1

Khurana claims that the instant case is somehow connected to his recently re-opened
bankruptcy case; however, it does not appear that the two cases are related.

MEMORANDUM DECISION AND ORDER - 1

will REMAND the case to state court for further proceedings. Khurana’s Motion to
proceed in Forma Pauperis is DENIED AS MOOT.
II. BACKGROUND
Pro Se Defendant Praveen Khurana removed this action from the District Court of
the Second Judicial District of the State of Idaho, in and for the County of Nez Pearce, on
March 13, 2018. In its Complaint, the State of Idaho, Department of Health and Welfare
(“the Department”), seeks to set aside the transfer of certain assets.
The Department alleges that an individual named Delores Adamson (now
deceased) fraudulently transferred real property without adequate consideration to
Defendants in order to receive Medicaid benefits and that Adamson made these transfers
within the “lookback” period and are thus void. The Department seeks to have the
various deeds to these properties set aside and declared null and void under Idaho Law.
III. LEGAL STANDARD
The Court may sua sponte review removed actions to confirm that federal
jurisdiction is proper. See Snell v. Cleveland, Inc., 316 F.3d 822, 824, 826 (9th Cir. 2002)
(explaining that a “court may raise the question of subject matter jurisdiction, sua sponte,
at any time”); Galvez v. Kuhn, 933 F.3d 773, 775 n.4 (9th Cir. 1991) (holding that the
Court can raise defects in jurisdiction sua sponte, whether the parties raise the issue or
not). The “burden of establishing federal jurisdiction is on the party seeking removal, and
the removal statute is strictly construed against removal jurisdiction.” Prize Frize, Inc. v.

MEMORANDUM DECISION AND ORDER - 2

Matrix Inc., 167 F.3d 1261, 1265 (9th Cir. 1999). Any doubt as to the right of removal is
resolved in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
IV. DISCUSSION
A. Diversity Jurisdiction
“[A]ny civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed by the defendant or the
defendants, to the district court of the United States for the district and division
embracing the place where such action is pending.” 28 U.S.C. § 1441(a). Federal courts
have original jurisdiction over an action if the citizenship of the parties is completely
diverse and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). The
citizenship of the parties is completely diverse if none of the plaintiffs is a citizen of the
same state as any of the defendants. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).
A state is not a citizen for diversity purposes and, absent a federal question, the
district courts are not possessed of jurisdiction of suits by or against a state. Postal Tel.
Cable Co. v. Alabama, 155 U.S. 482 (1894); see also Broadwater-Mo. Water Users’
Ass’n v. Mont. Power Co, 139 F.2d 998, 999 (9th Cir. 1944); Judicial Code Sec. 24, as
amended, 28 U.S.C.A. § 41(1). “At the same time, however, [the U.S. Supreme Court]
has recognized that a political subdivision of a State, unless it is simply the arm or alter
ego of the State, is a citizen of the State for diversity purposes.” Moor v. Alameda Cty.,
411 U.S. 693, 717 (1973). If confusion still exists, the Court must determine who the real
party in interest is. Fed. R. Civ. P. 17(a).

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Based on the Complaint, Plaintiff is the State of Idaho—or a Department of the
State of Idaho—and Defendants are both citizens of Idaho residing in Lewiston, Idaho.
First, if the Court views the State of Idaho as the true Plaintiff in this case, the
state has no citizenship and the Court does not have jurisdiction to hear this case absent a
federal question.
Second, although the Court could undertake a lengthy analysis to determine if the
Department is a citizen or the real party in interest, the outcome of that determination
does not matter because, either way, there is no diversity. If the Court determined the
Department is a citizen, then all parties are Idaho residents and diversity is destroyed. If,
on the other hand, the Court determined that the Department is not a citizen or not the
real party in interest, the State of Idaho would be the default Plaintiff, no citizenship
would be present, and the Court would move to the federal question analysis anyway.
Accordingly, Khurana is not entitled to remove this case based upon diversity
jurisdiction. The Court next turns to whether a federal question exists that would allow
Khurana to remove the action.
B. Federal Question
Federal courts also have original jurisdiction over cases “arising under the
Constitution, laws or treaties of the United States.” 28 U.S.C. § 1331. To remove a case
arising under federal law, the case, as set forth in the initial pleading must be removable.
28 U.S.C. § 1446(b). A counterclaim cannot form the basis of federal question
jurisdiction. See Takeda v. Nw. Nat’l Life Ins. Co., 765 F.2d 815, 822 (9th Cir. 1985)

MEMORANDUM DECISION AND ORDER - 4

(“The federal question defendants raise in their counterclaims does not provide a basis for
removal.”).
Thus, although Khurana asserts that he has filed counterclaims alleging various
civil rights violations in state court, his counterclaims cannot serve as the basis for
invoking federal jurisdiction upon removal.
The Complaint here seeks to set aside the fraudulent transfer of real property
under Idaho law. The Department has not alleged that Khurana violated any federal
statute.2 Therefore, the action does not “arise under” federal law and Khurana is not
entitled to remove the action to federal court based upon a federal question.
Removal appears to be nothing more than a delaying tactic by Khurana to avoid
state court proceedings. The Court does not have jurisdiction over this case and removal
was wholly improper.
IV. ORDER
1. For the reasons outlined above, removal of this action was not proper. This Court
does not have subject matter jurisdiction. This case is, therefore, REMANDED to
the District Court of the Second Judicial District of the State of Idaho, in and for
the County of Nez Pearce, for further proceedings.

2

The Department does allege that the grantor of the property (Delores Adamson) violated the
lookback period under federal Medicaid law, but the Department seeks to set aside the transfer of
the properties under Idaho law.

MEMORANDUM DECISION AND ORDER - 5

2. Khurana’s application for leave to file in forma pauperis (Dkt. 1) is DENIED as
moot.
3. The Court will enter a separate Judgment in accordance with Fed. R. Civ. P. 58.

DATED: April 4, 2018
_________________________
David C. Nye
U.S. District Court Judge

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