180 Varick,LLC, v. Think Passenger,Inc.,

Filing 19

MEMORANDUM OPINION AND ORDER: #103315 re: #5 MOTION to Remand to State Court. For the reasons set forth above, plaintiffs motion to remand is GRANTED. Its motion for attorney's fees and costs is DENIED. The Clerk of Court is directed to close the motion at ECF No.5 and to remand this case to the Civil Court of the City of New York. (Signed by Judge Katherine B. Forrest on 6/20/2013) (js) Modified on 6/27/2013 (jab).

USDC SDNY
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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ELECTJH):\ICALLY FILED
DOC#:
DATE F-IL-E-'dJ"'7IUiTiN~2~O-=?='O1n.-g

180 VARICK, LLC,
13 Civ. 2138 (KBF)
Plaintiff,
MEMORANDUM
OPINION & ORDER

-vTHINK PASSENGER, INC.,

Defendant.
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KATHERINE B. FORREST, District Judge:
This commercial landlord-tenant dispute alleging nonpayment of rent for a
commercial property is a summary proceeding that is better heard in state court.
Defendant Think Passenger, Inc. ("Think") removed this action on the basis of
diversity jurisdiction from the Civil Court for the City of New York (the "Civil
Court") on April 1, 2013. (Not. of Removal, ECF No. 1.) Plaintiff 180 Varick, LLC
("Varick") now seeks remand to the Civil Court and attorneys fees incurred in the
preparation of its motion.
For the reasons stated below, plaintiffs motion to remand is GRANTED. Its
request for attorneys fees and costs is DENIED.
Factual and Procedural Background
Defendant is a Delaware corporation headquartered in Los Angeles, CA.
(Not. of Removal

'17.)

Plaintiff is a New York Limited Liability Company

headquartered in New York City. (Id.

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6.) Plaintiffs sole member is a citizen of

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New York. (See Letter from Jeffrey Klarsfeld, Esq., to Hon. Katherine B. Forrest
CKlarsfeld Letter"), June 18, 2013, ECF No. 18.)
On July 28, 2008, the parties entered into a commercial lease for space at 180
Varick St. in Manhattan, covering the period September 15, 2008 - September 30,
2013. (Aff. of Steven Martin in Suppt. of Mot. to Remand ("Martin Aff.") Ex. A, ECF
No.6.) Plaintiff alleges that defendant has failed to pay rent and expenses since
January 1, 2013. (Compl., Martin Aff. Ex. C.) Plaintiff seeks $46,757.34 in rent
arrears, as well as defendant's eviction. (ld.

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4.) The parties agree that the value

of the relief requested exceeds $75,000. (See Not. of Removal

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8, Klarsfeld Letter.)

On April 1, 2013, defendant filed a Notice of Removal on the basis of diversity
jurisdiction, pursuant to 28 U.S.C.A. § 1332(a)(I). In its answer, defendant asserted
counterclaims for unjust enrichment and promissory estoppel, related to the
$194,400 security deposit retained by plaintiff. (Not. of Removal

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8; id. Ex. E.)

Remand to State Court
Plaintiff seeks to remand this action to state court, arguing that this Court
lacks subject matter jurisdiction and should follow a tradition of federal court
abstention in landlord-tenant matters. Defendant argues that once the statutory
requirements for federal diversity jurisdiction - complete diversity and an amount
in controversy in excess of $75,000

are satisfied, this Court must hear the case. In

the landlord-tenant context, however, the Court will abstain.
Removal of an action filed in state court to federal court is proper in "any
civil action ... of which the district courts of the United States have original

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jurisdiction." 28 U.S.C.A. § 1441(a). If a case is not properly before the district
court for lack of jurisdiction, "the case shall be remanded." 28 U.S.C.A. § 1447(c). A
case where diversity jurisdiction is proper

"where the matter in controversy

exceeds the sum or value of $75,000, exclusive of interest and costs, and is between
- (1) citizens of different States " - is one type of original jurisdiction. 28 U.S.C.A. §
1332(a)(1).
"Even if diversity jurisdiction exists, removal is proper only if the court had
original jurisdiction of the matter. Removal acts to the prejudice of state court
jurisdiction and the privilege, therefore, is to be strictly construed. " Glen 6
Associates, Inc. v. Dedaj, 770 F. Supp. 225, 227-28 (S.D.N.Y. 1991).
Defendant here argues that removal was proper because diversity
jurisdiction exists (i.e., the parties are completely diverse and the amount in
controversy exceeds $75,000). 28 U.S.C.A. § 1332(a)(1).
Plaintiff does not dispute that prerequisites for diversity jurisdiction are
satisfied. 1 However, plaintiff argues - and the Court agrees

that this Court lacks

original jurisdiction to hear summary proceedings, such as New York eviction
actions. This court agrees with the analysis of the District Court in Dedaj, which
held:
[A] summary process and a plenary civil trial, shaped by the federal rules,
are very different. In light of Hanna v. Plumer and its progeny, unless there
1 At the request ofthe Court, plaintiff LLC submitted a letter confirming that its sole member is a
citizen of New York, meaning that the parties are completely diverse. (See Klarsfeld Letter.)
Handelsman v. Bedford ViII. Associates Ltd. P'ship, 213 F.3d 48, 51-52 (2d Cir. 2000)("[F]or
purposes of diversity jurisdiction, a limited liability company has the citizenship of its
membership."). In addition, it does not dispute that it seeks recovery in excess of $75,000.

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express statutory authorization ... or compelling reasons ... a federal
court cannot allow proceedings more summary than the full court trial at
common law.
IS

Dedaj, 770 F. Supp. at 227-28.
Plaintiff here brought its action in the New York City Civil Court pursuant to
a summary procedure unique to the state courts. The procedure is designed to
afford landlords a streamlined process by which to resolve nonpayment of rent
cases, without the expense of discovery and motion practice as would be permitted
in federal court. Defendant's assertion of common law counterclaims does not alter
this analysis; the propriety of removal jurisdiction is determined from the face of
the complaint, not from any counterclaims. 2 See, e.g., Holmes Grp., Inc. v. Vornado
Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002)(defendant's counterclaim cannot
provide basis for federal question removal); Kaplan v. Computer Sciences Corp., 148
F. Supp. 2d 318, 321 (S.D.N.Y. 2001)(it is "inappropriate in a removed case to
consider the amount of Defendant's counterclaim in assessing the amount in
controversy for jurisdictional purposes."). Therefore, as a summary action such as
that brought by plaintiff could not have been brought originally in this Court,
remand is appropriate. 28 U.S.C. § 1441(a).

2 Further, the lease between the parties contains a clause disclaiming the right to bring
counterclaims, which may render moot any jurisdiction-conferring aspect of those counterclaims.
(Lease Art. 32, Marvin Aff. Ex. A) Given its analysis above, the Court shall not decide whether that
provision is enforceable.

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Abstention
Even if removal were proper under § 1441, the Court would abstain from
hearing this action. It is true that abstention is "an extraordinary and narrow
exception to the duty of a District Court to adjudicate a controversy properly before
it." County of Alleghenv v. Frank Mashuda Co., 360 U.S. 185, 188-89 (1959).
However, it is the widespread view of courts in this District that "landlord/tenant
disputes concerning failure to pay rent ... do not implicate, in any way, federal
rights. :YIoreover, the state of New York has, through its legislature and its courts,
developed a system of administering its law governing possession of real estate
which is both fair and efficient." Dedaj, 770 F. Supp. 225, 228 (S.D.N.Y. 1991); see
also United Mut. Houses, L.P. v. Andujar, 230 F. Supp. 2d 349, 354 (S.D.N.Y. 2002)
(noting that H[t]ime and again, district courts have disclaimed jurisdiction over
landlord-tenant disputes and returned them to Housing Court"). Thus, even if the
statutory requirements for removal jurisdiction (i.e., an action with original
jurisdiction in this Court, complete diversity of the parties, and an amount in
controversy in excess of $75,000) had been met, the Court would abstain in
deference to the state courts.
Attorneys Fees and Costs
As a final matter, plaintiff seeks an award of attorneys fees and costs
incurred due to removal. While the Court has discretion to award attorneys fees in
association with an order of remand, see 28 U.S.C. § 1447(c), it declines to do so
here. Plaintiff has not demonstrated that the "nature of the case, the circumstances

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of the remand, and the effect on the parties" merit a fee award. Morgan Guar.
Trust Co. of New York v. Republic of Palau, 971 F.2d 917, 924 (2d Cir. 1992)
(citation and quotation marks omitted). Rather, this is a case involving a
commercial relationship between two sophisticated business entities, and plaintiff
has not shown any prejudice will result by the delays incurred whilst awaiting this
Order.
CONCLUSION
For the reasons set forth above, plaintiffs motion to remand is GRANTED.
Its motion for attorney's fees and costs is DENIED.
The Clerk of Court is directed to close the motion at ECF No.5 and to
remand this case to the Civil Court of the City of New York.
SO ORDERED.
Dated: New York, New York
June 1<>,2013

KATHERINE B. FORREST

United States District Judge

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