Zions First National Bank v. Stone Systems, Inc et al

Filing 8

MEMORANDUM DECISION AND ORDER granting in part and denying in part 5 Motion to Remand to State Court. Plaintiff Zions First National Banks motion to remand is granted but the Zions request for attorney fees is denied. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

ZIONS FIRST NATIONAL BANK, a
national banking association,

Case No. 4:11-cv-000459-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
STONE SYSTEMS, INC., an Idaho
corporation; CUSTOM INTERIORS
UNLIMITED, INC., an Idaho
corporation; TORTEL PROPERTIES,
LLC, an Idaho limited liability
corporation; MYLES TORTEL,
individually; VENITA TORTEL,
individually;
Defendants.

INTRODUCTION
Before the Court is Plaintiff Zions First National Bank’s Motion to Remand (Dkt.
5). Having reviewed the record, the Court has determined that oral argument will not
significantly aid the decisional process. For the reasons set forth below, the Court will
grant the Motion.

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BACKGROUND
In 2006, Plaintiff Zions First National Bank loaned money to Defendants Stone
Systems, Inc., Custom Interiors Unlimited, Inc., Tortel Properties, LLC, Myles Tortel,
and Venita Tortel. Defendants defaulted on the loans, and on January 29, 2010, Zions
filed a lawsuit against them in state court in Bonneville County to collect the sums Zions
alleges they owed it. The complaint filed by Zions in state court stated that Zions is a
national banking association located in Utah and established that the amount in
controversy exceeded $75,000. State Ct. Compl. ¶¶ 1-6, Ex. A to Notice of Removal,
Dkt. 1-2.
On February 16, 2010, Myles Tortel and Venita Tortel appeared pro se in the
Bonneville County case and filed a counterclaim against Zions. State Ct. Dkt., Ex. A to
Erickson Aff., Dkt. 5. Stone Systems, Custom Interiors Unlimited, and Tortel Properties
failed to respond or appear, however, and a default judgment was entered against them.
Default Judgment, Ex. C to Erickson Aff, Dkt. 5.
In September 2010, The Tortels’ counterclaim against Zions was dismissed when
they failed to respond to Zions’ motion to dismiss. Order Granting Motion to Dismiss
Counterclaim, Ex. D. to Erickson Aff, Dkt. 5. Six months later, in March 2011, summary
judgment was entered against Myles Tortel. Judgment, Ex. F to Erickson Aff, Dkt. 5.
Zions did not file summary judgment against Venita Tortel because she had filed for
Chapter 7 bankruptcy in December 2010.
In August 2011, after Venita Tortel voluntarily dismissed her bankruptcy
proceedings, Zions filed a motion for summary judgment against her. The state court
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scheduled a hearing on that motion for October 3, 2011. On September 30, 2011– over a
year and a half after Zions filed its original complaint – all Defendants joined in filing a
Notice of Removal from state court to federal court. Now Zions asks the Court to
remand this action to state court.
ANALYSIS
Defendants seek to remove this action based both on diversity and federal question
jurisdiction.
28 U.S.C. § 1446(b) prohibits removal on the basis of jurisdiction conferred by
Section 1332 more than one year after commencement of the action. Section 1332 refers
to diversity jurisdiction. More than one year has passed since the action was filed in state
court, and it was evident from the face of the state court complaint that diversity
jurisdiction existed at the time the complaint was filed. Therefore, to the extent
Defendants seek to remove this action based on diversity, their removal petition is not
timely.
Moreover, Defendants’ attempt to remove this case based on a federal question is
equally flawed. Zions assert no federal claims in their state court complaint. And even if
the Tortels’ counterclaim had not been dismissed and the Tortels asserted counterclaims
“arising under” federal law as they purport, it would not give the Court subject matter
over the action. Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826,
830-31 (2002). In Holmes, the Supreme Court reiterated that the “well-pleaded” rule,
which provides that whether a case “arises under” federal law, must be determined from
the plaintiff's statement of his own claim in the complaint. Id. at 830-31. It concluded
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“that a counterclaim – which appears as part of a defendant's answer, not as part of the
plaintiff's complaint – cannot serve as the basis for ‘arising under’ jurisdiction.” Id. at
831. Similarly, in this case, Tortels’ counterclaim – asserted in its answer in state court –
cannot serve as the basis for ‘arising under’ jurisdiction.
Defendants’ argument that this case involves “civil rights issues” and these issues
confer jurisdiction on this Court also fails. Defendants contend that this case raises
“unlawful detainer” issues. But that is simply untrue. Zions does not make any unlawful
detainer claims. Rather, it alleges that Zions loaned Defendants money, and Defendants
failed to pay it back. Contrary to any suggestion by Defendants, such a claim does not
raise civil rights issues. Accordingly, the Court will grant Zions’ motion to remand.
The Court, however, will deny Zions’ request for attorney fees under 42 U.S.C.
§ 1988. Courts may only award attorney fees under 42 U.S.C. § 1988 to a prevailing
party if “the action was frivolous, unreasonable, or without foundation, even though not
brought in subjective bad faith.” Hughes v. Rowe, 449 U.S. 5, 14, 101 (1980) (citations
omitted). Court do not routinely award attorneys' fees to prevailing defendants – routine
awards would have an overly deterrent effect on civil rights plaintiffs and would
discourage the vigorous private enforcement of the civil rights laws. Christiansburg
Garment Co. v. Equal Employment Opportunity Commission, 434 U.S. 412, 421 (1978).
This admonishment applies with special force in actions initiated by uncounseled
plaintiffs. Hughes, 449 U.S. at 14. Attorney fees should be awarded against a pro se
plaintiff only in rare cases Id. But, for example, if the pro se plaintiff makes repeated
attempts to bring a claim that has been previously found frivolous, an award to
MEMORANDUM DECISION AND ORDER - 4

defendants may be appropriate. Miller v. L.A. Board of Education, 827 F.2d 617, 620 (9th
Cir.1987).
In this case, given the admonishment that attorney fees should be awarded against
a pro se litigant only in rare cases and Defendants are pro se, the Court does not find that
an award of attorney fees is warranted. This, however, does not mean the Court
condones Defendants’ actions. It seems Defendants repeatedly failed to respond to
Zions’ motions, and then at the eleventh hour sought to remove this action to federal
court – based on very weak grounds – to avoid a summary judgment hearing against
Venita Tortel. If Defendants persist in this course of conduct in federal court, an award
of attorney fees may become appropriate.
ORDER
IT IS ORDERED Plaintiff Zions First National Bank’s motion to remand (Dkt. 5)
is GRANTED but the Zions’ request for attorney fees is DENIED.

DATED: January 6, 2012

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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