Ally Bank v. Godar et al

Filing 9

MEMORANDUM AND ORDER OF REMAND: Case remanded to Jersey County, IL. Signed by Judge J. Phil Gilbert on 8/28/2024. (jdh)

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ALLY BANK,
Plaintiff,
v.

Case No. 24-cv-1776-JPG

DOUGLAS GODAR and AMY GODAR,
Defendant.
MEMORANDUM AND ORDER
This matter comes before the Court on the response of defendants Douglas Godar and
Amy Godar (Doc. 5) to the Court’s July 26, 2024, order to show cause (Doc. 4) why the Court
should not remand this case to the Circuit Court for the Seventh Judicial Circuit, Jersey County,
Illinois, for lack of subject matter jurisdiction. Plaintiff Ally Bank has replied to the response
(Doc. 7).
Ally Bank sued the defendants in state court alleging they defaulted on an installment
sales contract for a 2022 Ram truck. The state court entered an order for replevin and dismissed
the defendants’ counterclaims and all but one affirmative defense. Then the defendants removed
the case to this Court on the basis of original federal question jurisdiction under 28 U.S.C.
§ 1331. In the order to show cause, the Court noted that the complaint alleges only state law
causes of action for replevin and breach of contract, so it does not state a cause of action raising a
federal question.
In response to the order to show cause, the defendants argue that Ally Bank has violated
“federal statutes governing fraudulent practices by financial institutions,” thereby raising
“significant federal legal questions that fall with[in] the jurisdiction of this Court.” Defs.’ Resp.
1 (Doc. 5). They further note that as a bank, the plaintiff is regulated by various federal

agencies. They ask this Court to resolve its dispute with Ally Bank regarding whether their
security interest in the 2022 Ram truck was perfected, whether Ally Financial Inc. gave proper
notice of the transfer of its security interest to Ally Bank, and whether Ally Bank’s conduct has
been fraudulent and in compliance with the Electronic Signatures in Global and National
Commerce (E-SIGN) Act, 15 U.S.C. § 7001(c)(1). They further assert that the Court has
diversity jurisdiction over this case under 28 U.S.C. § 1332(a).
In reply, Ally Bank argues that this case arises only under state law, not under “the
Constitution, laws, or treaties of the United States,” as is required for original federal question
jurisdiction under 28 U.S.C. § 1331. Specifically, its cause of action for replevin arises under
735 ILCS 5/19-101 et seq., and its cause of action for breach of contract arises under Illinois
common law. Ally Bank also contests diversity jurisdiction because it is registered to do
business in Illinois, where the defendants reside. Finally, it argues the defendants’ notice of
removal is untimely because they filed it more than 30 days after they were served with the
summons and complaint.
A defendant may remove to federal court a case filed in state court if the federal court
would have had original jurisdiction to hear the case when the plaintiff filed it. 28 U.S.C.
§ 1441(a); Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 758 (7th Cir. 2009). “The party
seeking removal has the burden of establishing federal jurisdiction, and federal courts should
interpret the removal statute narrowly, resolving any doubt in favor of the plaintiff’s choice of
forum in state court.” Schur, 577 F.3d at 758 (citing Doe v. Allied-Signal, Inc., 985 F.2d 908,
911 (7th Cir. 1993)).
The defendants rely on the Court’s having original federal question jurisdiction under 28
U.S.C. § 1331. Generally, “[t]he presence or absence of federal-question jurisdiction is governed

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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.”
Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); accord Merrell Dow Pharms. Inc. v.
Thompson, 478 U.S. 804, 808 (1986). A federal question is presented most often where “federal
law creates the cause of action” asserted, and occasionally where the “state-law claim necessarily
raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may
entertain without disturbing any congressionally approved balance of federal and state judicial
responsibilities.” Grable & Sons Metal Prods. v. Darue Eng’g & Mfg., 545 U.S. 308, 314
(2005), quoted by Gunn v. Minton, 568 U.S. 251, 257 (2013); see Sarauer v. Int’l Ass’n of Mach.
& Aero. Workers, Dist. No. 10, 966 F.3d 661, 673 (7th Cir. 2020). “[A] case may not be
removed to federal court on the basis of a federal defense, including the defense of pre-emption,
even if the defense is anticipated in the plaintiff’s complaint, and even if both parties concede
that the federal defense is the only question truly at issue.” Caterpillar, 482 U.S. 393 (citing
Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for So. Cal., 463 U.S. 1, 12
(1983)); accord Merrell Dow Pharms., 478 U.S. at 808.1
It is clear that no federal question is presented in Ally Bank’s complaint. Its causes of
action for replevin and breach of contract were not created by federal law but by state statute, in
the case of replevin, or state common law, in the case of breach of contract. Nor do those state
law claims necessarily raise a federal issue that this Court could consider without disturbing the
well-establish balance of federal and state judicial responsibilities that relegates basic state

There is an exception to this general rule where the purported state cause of action is one that
federal law has completely pre-empted such that it essentially can only present a federal claim.
Caterpillar, 482 U.S. at 393. That is not the case with Ally Bank’s replevin or breach of contract
causes of action.
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statutory and common-law actions to state court. This appears to be a run-of-the-mill case about
debtors who allegedly failed to pay on a retail installment contract and a creditor who seeks to
repossess the collateral securing the contract, a quintessential matter of state concern. The
hodge-podge of federal connections—including the plaintiff’s regulation by federal agencies, the
existence of federal statutes that may provide a defense to the actions pled, and the defendants’
vague references to “significant federal legal questions”—do not amount to a federal question for
federal jurisdiction purposes. No federal question is presented in this case.
As for diversity jurisdiction under 28 U.S.C. § 1332(a), the defendants did not assert this
basis for federal jurisdiction in their notice of removal. Jurisdiction may not be sustained on a
theory that was not advanced in the relevant pleading. Merrell Dow Pharms., 478 U.S. at 810.
Therefore, the Court will not inquire into diversity jurisdiction over this case.2
For the foregoing reasons, the Court finds that the defendants have failed to show the
Court has subject matter jurisdiction over this case and therefore REMANDS it to the Circuit
Court for the Seventh Judicial Circuit, Jersey County, Illinois.
IT IS SO ORDERED.
DATED: August 28, 2024

s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE

In light of the Court’s lack of subject matter jurisdiction over this case and the defendants’ lack
of an opportunity to respond to the plaintiff’s procedural argument, the Court declines to address
procedural removal errors.
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