Savoy v. Savoy et al

Filing 31

ORDER - This case is remanded (to Second Judicial District Court) consistent with this order. The Clerk is instructed to close this case. Signed by Judge Miranda M. Du on 4/26/2017. (Certified copies of instant Order and PACER docket sheet mailed to 2nd Judicial Court Clerk on 4/26/2017.) (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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CHRISTOPHER SEAN SAVOY,
individually and derivatively on behalf
of INTERNATIONAL COMMUNITY OF
CHRIST, CHURCH OF THE SECOND
ADVENT, a Nevada Non-Profit
corporation,

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ORDER

Plaintiff,
v.

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***
Case No. 3:17-cv-00058-MMD-VPC

DOUGLAS EUGENE SAVOY, JR. an
individual; THE HEAD OVERSEER
(BISHOP) OF THE INTERNATIONAL
COMMUNITY OF CHRIST, CHURCH OF
THE SECOND ADVENT, AND HIS
SUCCESSORS, A CORPORATION SOLE,
a Nevada Corporation Sole;
INTERNATIONAL COMMUNITY OF
CHRIST, CHURCH OF THE SECOND
ADVENT, a Nevada Non-Profit Corporation
and Nominal Defendant, and DOES I-V,
inclusive,

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Defendants.

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I.

SUMMARY AND BACKGROUND

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This case comes before the Court through Defendants Douglas Eugene Savoy, Jr.

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and International Community of Christ, Church of the Second Advent’s (“the Church”)

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Petition for Removal. (ECF No. 1.) Plaintiff Christopher Sean Savoy filed this derivative

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action on January 26, 2017 in the Second Judicial District Court in Washoe County,

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Nevada, to assert claims for accounting, breach of fiduciary duties, and injunctive and

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declaratory relief under state law. (ECF No. 1-1 at 2-18.) Defendants removed the action

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pursuant to 28 U.S.C. § 1331 on the ground that Plaintiff “seeks, in at least part, to interfere

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in the ecclesiastical matters of the Church, as prohibited by the First and Fourteenth

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Amendments to the United States Constitution.” (ECF No. 1 at 2.) On February 1, 2017,

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the Court ordered Defendants to show cause as to why this Court has federal question

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jurisdiction (ECF No.12), as removal appears to be based on an affirmative defense. See

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Vaden v. Discovery Bank, 556 U.S. 49, 59 (2009) (“Federal jurisdiction cannot be

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predicated on an actual or anticipated defense, [ ] or rest upon an actual or anticipated

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counterclaim[.]”) Defendants responded (ECF No. 16) and Plaintiff replied (ECF No. 20).

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For the reasons discussed below, Defendants have failed to provide a basis for

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federal jurisdiction, and therefore the case will be remanded to the Second Judicial District

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Court.1

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II.

LEGAL STANDARD

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Federal courts are courts of limited jurisdiction, having subject matter jurisdiction

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only over matters authorized by the Constitution and Congress. U.S. Const. art. III, § 2, cl.

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1; e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A suit filed

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in state court may be removed to federal court if the federal court would have had original

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jurisdiction over the suit. 28 U.S.C. § 1441(a). However, courts strictly construe the

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removal statute against removal jurisdiction, and “[f]ederal jurisdiction must be rejected if

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there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980

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F.2d 564, 566 (9th Cir. 1992). The party seeking removal bears the burden of establishing

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federal jurisdiction. See Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1251 (9th Cir.

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2006).

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Federal district courts have “original jurisdiction of all civil actions arising under the

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... laws ... of the United States.” 28 U.S.C. § 1331. “The presence or absence of federal-

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question jurisdiction is governed by the ‘well-pleaded complaint rule,’ which provides that

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Court initially planned to set a hearing, but determined that a hearing is not
necessary after reviewing the relevant documents and cases cited in Defendants’
response.

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federal jurisdiction exists only when a federal question is presented on the face of the

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plaintiff's properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392,

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(1987). But “a case may not be removed to federal court on the basis of a federal

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defense[.]” Id. at 393.

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III.

ANALYSIS

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Defendants argue that this Court has jurisdiction because the “federal question

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affects the elements of the tort” (ECF No. 16 at 23) and to “establish his prima facie case,

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[Plaintiff] must first identify which Church laws were broken, and what acts or omissions

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to act violated which laws,” which “necessarily requires the Court to examine the Church

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canons.” (Id. at 2.) The Court disagrees and finds that it cannot exercise jurisdiction over

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this case.

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The Complaint contains four “claims for relief,”2 which appear to be predicated upon

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state law. The first claim is for accounting under NRS § 82.186, which allows shareholders

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to obtain copies of a corporation’s books and records upon request. (ECF No. 1-1 at 15.)

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The second claim alleging breach of fiduciary duty is based on the duties imposed under

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NRS § 82.221 on corporate directors and officers to act in good faith and in the interests

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of the corporation. (Id. at 16.) The other two claims are requests for relief rather than

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independent causes of action, and, according to Plaintiff, implicate NRS §§ 30 and 33.

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(Id.) Thus, the face of Plaintiff’s complaint contains claims based only on state law.

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Defendants contend that the omitted but necessary federal question in the

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Complaint is: “[t]o what extent may the Court inquire into Church doctrine in order to

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determine whether the Bishop has violated the Church’s codes of canon law and thereby

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appear to be only two causes of action alleged in the Complaint. The other
two “claims” are requests for specific kinds of relief—injunctive and declaratory relief. See
In re Wal-Mart Wage and Hour Employment Practices Litig., 490 F. Supp. 2d 1091, 1130
(D. Nev. 2007) (clarifying that “[a]lthough denominated as a separate claim, count nine is
not a separate cause of action but a request for relief” and “is not an independent ground
for relief”.); see also Fung Ying Leung v. Mortg. Elec. Registration Sys., Inc., No. 2:12-CV1393 JCM VCF, 2013 WL 237225, at *6 (D. Nev. Jan. 22, 2013) (“[D]eclaratory relief is
not an independent cause of action … [m]oreover, the declaratory relief ‘claim’ fails
because it is duplicative and only asserts violations alleged in the other causes of action
already contained in the complaint.”)

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breached his fiduciary duties?” (Id. at 11.) However, this “federal question” merely

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implicates a potential defense of ecclesiastical abstention and does not affect the Court’s

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analysis of subject matter jurisdiction. Under the ecclesiastical abstention doctrine, courts

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may decide disputes involving religious organizations only if they do not resolve underlying

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controversies about religious doctrine, such as church liturgy or tenets of faith. See Puri

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v. Khalsa, 844 F3d 1152, 1164 (9th Cir. 2017). Thus, this doctrine would require a court

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to consider only whether the Church, as a corporation, and the Head Bishop, as a

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corporate officer, complied with both Nevada law and the corporation’s articles of

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incorporation and by-laws. The doctrine may be invoked by a defendant or the court to

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limit the court’s analysis once subject matter jurisdiction has been established. See

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Serbian Eastern Orthodox Diocese for the U.S. of America and Canada v. Milivojevich,

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426 U.S. 696 (1976) (holding that where, in adjudicating an intrachurch dispute a court

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evaluated whether decisions of the highest ecclesiastical tribunal complied with internal

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church laws, such an analysis contravened the First and Fourteenth Amendments); see

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also Puri, 844 F.3d at 1164 (finding that the ecclesiastical abstention doctrine acts as a

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qualified limitation to preclude a court from resolving underlying controversies over

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religious doctrine when deciding a case). Despite Defendants’ protestations to the

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contrary, Plaintiff’s references to “church canon” and “church law” do not change the

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character of the underlying claims, which are based solely on violations of Nevada law.

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Defendants rely on three cases to support their contention that a court’s analysis of

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the Head Bishop’s duties under Church canon law will raise a unique federal question.

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(See ECF No. 16 at 15-16.) However, these cases are distinguishable, as the complaint

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in each of these cases contained at least a claim that could be resolved only through

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considerations of federal law, not state law. In Oneida Indian Nation v. County of Oneida,

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the plaintiffs alleged that the sale of land to New York state in 1795 was void because it

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was made without the consent of the United States, as was required by federal law.

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Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 664 (1974). Because the

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possessory interest for which the plaintiffs brought suit was established by federal treaty,

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the threshold analysis of whether the 1795 sale was valid was governed by federal law.

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See id. at 677. Similarly, in Chilkat Indian Village v. Johnson, the plaintiffs, in part, sought

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enforcement of an ordinance against non-Indian defendants, which had been enacted

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pursuant to the Indian Reorganization Act. Chilkat Indian Village v. Johnson, 870 F.2d

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1469, 1473 (9th Cir. 1989). The court determined that adjudication of this claim required

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considerations of federal common law. See id. at 1474 n.9. In Morongo Band of Mission

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Indians v. Rose, the plaintiffs brought suit against a non-Indian resident, which required

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the court to rely exclusively on principles of federal common law. Morongo Band of Mission

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Indians v. Rose,1893 F.2d 1073, 079 (9th Cir. 1990). By contrast, here, the ecclesiastical

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abstention doctrine acts only as a limitation on what evidence a court may look at in its

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analysis; subject matter jurisdiction still requires that at least one claim in the Complaint

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be analyzed solely under considerations of federal law. In this case, a court will analyze

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Plaintiff’s claims for accounting and breach of fiduciary duty solely under the framework of

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state law.

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Defendants further argue that the fourth claim for relief implicates federal law. The

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fourth claim seeks declaratory relief that establishes the “extent and nature of [Plaintiff’s]

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property and civil rights in relation to the Church.” (ECF No. 1-1 at 17.) Defendants’

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argument assumes that the fourth claim for declaratory relief is a standalone claim, and

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Defendants contend that such a declaration requires the Court to consider the

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permissibility of the Church’s determination as to who can act as its ministers. (See ECF

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No. 16 at 6.) Even assuming that the ministerial exception would apply to such a claim,

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this exception acts as an affirmative defense, not as a conferral of federal question

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jurisdiction. See Hosana-Tabor Evangelical Lutheran Church and School v. EEOC, 565

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U.S. 171, 195 n.4 (2012) (finding that the ministerial exception operates as an affirmative

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defense); see also Puri, 844 F.3d at 1168 (“The ministerial exception is an affirmative

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defense.”).

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Because Defendants have not shown an exception to the well-pleaded complaint

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rule, the Court finds that Defendants, who bear the burden of establishing federal

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jurisdiction, have failed to show cause why the case should not be remanded.

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IV.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several cases

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not discussed above. The Court has reviewed these arguments and cases and determines

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that they do not warrant discussion as they do not affect the Court’s determination of

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subject matter jurisdiction.

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It is therefore ordered that this case be remanded consistent with this order.
The Clerk is instructed to close this case.

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DATED this 26th day of April 2017.

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MIRANDA DU
UNITED STATES DISTRICT JUDGE

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