Bottom et al v. Bailey et al
ORDER denying Pltfs' 6 Motion to Remand or in the Alternative for Leave to Amend Complaint and Decline Supplemental Jurisdiction and for Attorney Fees and Costs. FURTHER ORDERED the Court has determined, sua sponte< /i>, it lacks subject matter jurisdiction in this matter and therefore removal was improper, and based thereon this matter is REMANDED to The General Court of Justice, Superior Court Division of Buncombe County. Signed by District Judge Martin Reidinger on 2/4/13. (ejb)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CIVIL CASE NO. 1:12cv97
DAVID BOTTOM and KRYSTAL )
DAWN SANCHEZ BOTTOM,
JAMES W. BAILEY, JR.,
1031 EXCHANGE SERVICES,
LLC and HOMETRUST BANK, )
THIS MATTER is before the Court on the Plaintiffs’ Motion to
Remand or in the Alternative for Leave to Amend the Complaint and
Decline Supplemental Jurisdiction and for Attorney Fees and Costs [Doc.
On February 15, 2011, the Plaintiffs filed suit against the Defendants
in the General Court of Justice, Superior Court Division for Buncombe
County, North Carolina. [Doc. 1-5 at 10-27]. In that Complaint, the Plaintiffs
alleged that in November 2010, they contracted with the Defendant 1031
Exchange Services, LLC (Exchange), which is solely owned by Defendant
James Bailey (Bailey), to conduct a tax deferred exchange of real estate.
[Id. at 10-11].
Pursuant to an Exchange Agreement, Exchange, as a
trustee, deposited $224,529.75 into an account held at the Defendant
HomeTrust Bank (HomeTrust). [Id.].
It is alleged that HomeTrust
inappropriately removed the funds from the fiduciary account and placed
them into a money market account held in the name of Exchange. [Id. at
It is further alleged that the United States Government
subsequently sought forfeiture of the funds in connection with the criminal
prosecution of Bailey. [Id. at 13]. The Plaintiffs were advised by Bailey in
December 2010 that the account had been frozen and they have been
unable to access the funds since that time. [Id.]. In their initial Complaint,
the Plaintiffs alleged claims for breach of contract, negligence, negligent
misrepresentation, and breach of fiduciary duty against Bailey and
[Id. at 13-16].
They alleged claims for breach of implied
contract, negligence, and breach of fiduciary duty against HomeTrust. [Id.
at 16-18]. Finally, they alleged claims for constructive trust and equitable
lien against all Defendants. [Id. at 18-19].
The parties litigated the matter in state court throughout 2011. [Doc.
1-1, Doc. 1-2, Doc. 1-3, Doc. 1-4, Doc. 1-5]. On March 19, 2012, the
Plaintiffs moved in state court for leave to amend the Complaint. [Doc. 1-1
at 25]. Plaintiffs’ counsel noticed a hearing on the motion for May 2, 2012.
[Id. at 4]. The hearing notice was filed on April 13, 2012. [Id.]. On May 2,
2012, with the consent of HomeTrust, the state court judge granted the
motion and the Plaintiffs’ Complaint was amended to assert claims against
HomeTrust for aiding and abetting, violations of the Uniform Fiduciaries
Act, N.C. Gen. Stat. §32-9, conversion and violations of the Bank Secrecy
Act, 31 U.S.C. §§5311, et. seq. [Id. at 2-3, 14-27].
The Plaintiffs also
added claims against all Defendants for violations of North Carolina’s
Unfair and Deceptive Trade Practices Acts, N.C. Gen. Stat. §§75-1.1, et.
seq., and civil conspiracy. [Id. at 22-23].
On May 15, 2012, HomeTrust, with the consent of the other two
Defendants, removed the state court action to this Court based on federal
question jurisdiction due to the amendment which added the claim pursuant
to the Bank Secrecy Act. [Doc. 1]. The Plaintiffs timely moved to remand
the action to state court. [Doc. 6]. On June 11, 2012, HomeTrust moved to
dismiss the action for failure to state a claim upon which relief may be
granted.1 [Doc. 8]. The time within which the Plaintiffs may respond to that
motion has been tolled pending a ruling on the motion to remand. [Doc. 13].
On February 1, 2011, Bailey was charged in this Court with securities
fraud, mail fraud, and filing false tax returns, in violation of 15 U.S.C.
§78j(b), 18 U.S.C. §§1341 & 2 and 26 U.S.C. §7206. [United States v.
Bailey, Criminal Case No. 1:11cr10 at Doc. 1].
The Bill of Information
contained a forfeiture notice which included the bank account at HomeTrust
which is the subject of this civil case. [Id.]. Bailey entered into a Plea
Agreement with the Government on February 1, 2011. [Id. at Doc. 3].
Bailey entered his plea of guilty to each charge and consented to an Order
of Forfeiture which included the bank account at issue. [Id. at Doc. 15,
Doc. 16]. HomeTrust filed a Claim as to the forfeiture charge which did not
include a claim to the bank account at issue.
[Id. at Doc. 122].
Plaintiffs also filed a Claim but subsequently moved to withdraw it, [Id. at
Doc. 131, Doc. 461], which was allowed by the Court. [Id. at Doc. 548].
The issue of any entitlement to a claim in the forfeiture matter having
been resolved, the Court will address the pending motion in this civil action.
The motion, among other relief, seeks dismissal with prejudice of the federal
claim. [Doc. 8].
STANDARD OF REVIEW
Section 1446 of Title 28 of the United States Code provides in
[I]f the case [filed in state court as] stated by the initial pleading
is not removable, a notice of removal may be filed within 30
days after receipt by the defendant, through service or
otherwise, of a copy of an amended pleading, motion or order
or other paper from which it may first be ascertained that the
case is one which is or has become removable.
28 U.S.C. §1446(b)(3).
The motion to remand.
It is undisputed by the parties that the initial Complaint was not
removable because it asserted only state law claims and the parties in this
matter are not diverse. The only issue is whether the thirty day period
within which the Defendants could remove began (1) on March 19, 2012
when the Plaintiffs filed their motion for leave to amend, along with the
proposed Amended Complaint (Doc. 1-1 at 6, 25); (2) on April 13, 2012
when the Plaintiffs filed their notice of hearing (Doc. 1-1 at 4); or (3) on May
2, 2012 when the state court judge, with the Defendants’ consent, granted
the motion for leave to amend and the Amended Complaint was deemed
filed (Doc. 1-1 at 3).2
The Plaintiffs argue that the thirty day period within which to remove
began at the earliest on March 19 or the latest on April 13, 2012 because,
as of each date, the Defendants were on notice that they sought to amend
the Complaint. Plaintiffs candidly admit that their position is the minority
view and cite no case law from the United States Court of Appeals for the
Fourth Circuit or the District Courts therein in support of their position. [Doc.
7 at 5].
In Savilla v. Speedway SuperAmerica, LLC, 91 F. App’x. 829 (4th Cir.
2009), the Fourth Circuit held that a proposed amended complaint which is
filed with the motion to amend is deemed filed as of the date the court
grants the motion to amend.
When the “proposed amendments were
served on the opposing party, a court order allowing the amendments
operated to amend the pleading” with no further action required by the
party which was granted leave to amend.
Id. (internal quotation and
citation omitted). Thus, in that case, a motion to amend to which had been
The Plaintiffs claim that HomeTrust consented to the amendment and signed a
consent order on April 13, 2012. [Doc. 7 at 6]. The only document showing such
consent, however, is the state court judge’s order granting leave to amend which was
signed by him on May 2, 2012 and filed on that same date. [Doc. 1-1 at 2-3].
attached the proposed amended complaint was filed on July 31, 2002.3 Id.
The thirty day period within which to remove the action from state court did
not begin to run, however, until August 7, 2002 when the state court judge
granted the motion to amend. Id. The same reasoning applies here.
Regardless of when the Defendants knew the Plaintiffs intended to
move for leave to amend or when the proposed amendment was filed, the
Amended Complaint did not become the amended pleading until the judge
so held; that is, on May 2, 2012. Sullivan v. Conway, 157 F.3d 1092, 1094
(7th Cir. 1998).
Until the state judge granted the motion to amend, there was no
basis for removal. Until then, the complaint did not state a
federal claim. It might never state a claim, since the state judge
might deny the motion. The statutory language [of §1446(b)(3)]
speaks of a motion or other paper that discloses that the case
is or has become removable, not that it may sometime in the
future become removable if something happens, in this case
the granting of a motion by the state judge. When the motion
was granted, the case first became removable, and it was
promptly removed. It would be fantastic to suppose that the
time for removing a case could run before the case became
Id. (emphasis in original); Freeman v. Blue Ridge Paper Products, Inc., 551
F.3d 405, 410 (6th Cir. 2008) (“The complaint was amended only upon
Indeed, the lower court in Savilla held that the Defendant’s removal was
premature because it did not await the order allowing the amendment. That is not at
issuance of the written order.”).
Thus, the thirty day period within which to remove the case did not
begin to run until May 2, 2012 when the order was entered. Allison v.
Meadows, 2005 WL 2016815 (S.D.W.Va. 2005). This is because
the thirty-day removal period is not triggered at the instant the
case becomes removable, or even when the defendant has
enough evidence to surmise that the cause might have become
removable. Rather, the amended pleading, motion, order or
other paper must be unequivocally clear and certain to start the
[thirty -day] time limit running for a notice of removal under
Paschall v. CBS Corporation, 2011 WL 4345283 **4 (E.D.Va. 2011)
(internal quotations and citations omitted).
“[Section] 1446(b) starts the
thirty-day period running from the date that a defendant has solid and
unambiguous information that the case is removable.” Walker v. Philip
Morris USA, Inc., 443 F. App’x. 946, 950 (6th Cir. 2011) (internal quotation
and citation omitted); Bramlett v. Bajric, 2012 WL 4329242 (N.D.Ga. 2012);
State Farm Mut. Auto. Ins. Co. v. Camco Mfg., Inc., 2012 WL 3962470
(D.Nev. 2012). “Where leave to amend is required, an amended complaint
cannot be operative until that leave has been granted.
Simply put, in
federal court, there is simply no such thing as ‘contingent’ subject matter
McDonough v. UGL UNICCO, 766 F.Supp.2d 544, 546
(E.D.Pa. 2011); Barwick v. Eslinger, 2012 WL 1656736 (M.D.Fla. 2012)
(defendant should have waited until state judge granted motion to amend);
Zamora v. Wells Fargo Home Mortg., 831 F.Supp.2d 1284, 1299 (D.N.M.
2011) (in federal question case, state court must grant motion to amend
before removal time begins); Lion Raisins, Inc. v. Fanucchi, 788 F.Supp.2d
1167, 1172-73 (E.D.Cal. 2011) (the majority of courts have concluded that
removal ripens only after the state judge grants the motion to amend)
(collecting cases). For these reasons, the basis upon which the Plaintiffs
rely in the motion is insufficient to warrant remand, and therefore the
Motion to Remand must be denied.
The motion to amend.
The Plaintiffs argue in the alternative for leave to amend the
Complaint to delete the sole claim upon which the Defendants assert that
federal question is predicated. [Doc. 7 at 8-10].
Once that claim is
dismissed, they argue, this Court should decline to exercise its
supplemental jurisdiction and remand this action to state court. [Id. at 1115]. In other words, if their motion to remand is denied then the Plaintiffs
do not wish to pursue the federal claim.
“Motions to amend are typically granted in the absence of an
improper motive[.]” Harless v. CSX Hotels, Inc., 389 F.3d 444, 447 (4th Cir.
Where the plaintiff has no other “substantive and meritorious
reason” to amend the complaint, other than the desire to defeat federal
jurisdiction by eliminating the federal claim, an improper motive may be
Here, the Plaintiffs candidly admit the desired amendment is
solely to avoid federal jurisdiction and to obtain a remand to state court.
This Court therefore must take into account whether they are attempting to
manipulate the forum. Payne v. Parkchester North Condominiums, 134
F.Supp.2d 582, 584 (S.D.N.Y. 2001).
After litigating in state court for more than a year, the Plaintiffs sought
in March 2012 to add the claim at issue in the state court action. The
Defendants’ subsequent removal was based entirely on the Plaintiffs’
choice to add that claim.
Once removed, however, the Plaintiffs now
attempt to return to state court. It is clear that their current posture, which
is entirely of their own doing, is merely an attempt to avoid being in federal
court; that is, to forum shop.
When a plaintiff chooses a state forum, yet also elects to press
federal claims, he runs the risk of removal. A federal forum for
federal claims is certainly a defendant’s right. If a state forum is
more important to the plaintiff than his federal claims, he should
have to make that assessment before the case is jockeyed from
state court to federal court and back to state court. The
jockeying is a drain on the resources of the state judiciary, the
federal judiciary and the parties involved; tactical manipulation
[by the] plaintiff ... cannot be condoned.
Boelens v. Redman Homes, Inc., 759 F.2d 504, 507 (5th Cir. 1985). The
Court does not find that the Plaintiffs’ transparent attempt to avoid federal
jurisdiction is an appropriate ground for amendment since they have stated
no other legitimate reason for the proposed amendment. Payne v.
Parkchester North Condominiums, 134 F.Supp.2d 582 (S.D.N.Y. 2001);
Hatcher v. Lowe’s Home Centers, Inc., 718 F.Supp.2d 684 (E.D.Va. 2010);
Bennett v. Beiersdorf, Inc., 889 F.Supp. 46, 48 (D.Conn. 1995) (“This is not
an acceptable maneuver. A plaintiff whose case has been removed to
federal court cannot defeat federal jurisdiction by amending her complaint
to excise the federal claims.”).4 For these reasons the Plaintiffs Motion to
Amend must be denied.
The Plaintiff’s also seek an award of attorneys fees and costs due to
removal. In light of the Court’s denial of the motion to remand and the
motion to amend, there is no basis on which Plaintiffs can seek such fees
The Court also notes that the Plaintiffs’ motion to amend would delete the claim
at issue without prejudice to renewing it. There is pending, however, the Defendants’
motion to dismiss that claim with prejudice. “The court cannot allow Plaintiff[s] to amend
simply to defeat Defendant[s’] motion to dismiss.” Googerdy v. North Carolina Agr. and
Technical State University, 386 F.Supp.2d 618, 623 (M.D.N.C. 2005).
and costs. Therefore, this motion must be denied as well.
Subject Matter Jurisdiction
The denial of the Plaintiff’s motions is not the end of the analysis as
to whether this matter is properly before this Court. Federal District courts
are courts of limited jurisdiction. United States ex rel. Vuyyuru v. Jadhav,
555 F.3d 337, 347 (4th Cir. 2009).
“Thus, when a district court lacks
subject matter jurisdiction over an action, the action must be dismissed.”
Id. The lack of subject matter jurisdiction is an issue that may be raised at
any time. See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192,
196 (4th Cir. 2008).
“If the court determines at any time that it lacks
subject-matter jurisdiction, the court must dismiss the action.” Fed. R. Civ.
Except as otherwise provided by law, a defendant may remove a
state civil action to federal district court where the action is one “of which
the district courts of the United States have original jurisdiction.” 28 U.S.C.
§ 1441(a). Among those cases of which the district courts have original
jurisdiction are civil cases “arising under the Constitution, laws, or treaties
of the United States.” 28 U.S.C. § 1331.
Removal jurisdiction is not favored, and thus the Court must
“construe it strictly in light of the federalism concerns inherent in that form
of federal jurisdiction.” In re Blackwater Sec. Consulting, LLC, 460 F.3d
576, 583 (4th Cir. 2006). The burden is on the party seeking removal to
demonstrate that federal jurisdiction is proper.
Mulcahey v. Columbia
Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).
“The presence or absence of [a] federal question is governed by the
‘well-pleaded complaint rule,’ which provides that federal question
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, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). As a general
rule, federal question jurisdiction exists only if the complaint pleads a
federal cause of action. See Merrell Dow Pharms. Inc. v. Thompson, 478
U.S. 804, 808, 106 S.Ct. 3229, 3232, 92 L.Ed.2d 650 (1986); Dixon v.
Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004). “In other words, the
well-pleaded complaint rule generally bars federal jurisdiction where a
plaintiff’s complaint on its face states only state law causes of action, even
though issues of federal law may be involved.” Fagin v. Gilmartin, No. 032631 (SRC), 2007 WL 419286, at *3 (D.N.J. Feb. 1, 2007).
The one claim that gives rise to the Defendants’ removal of this action
is one that asserts a violation of the Bank Secrecy Act, 31 U.S.C. §5311 et
seq., and certain regulations implementing that act. 12 C.F.R. §§ 21.11 and
21.21. These pertain to the requirement that a bank file certain “Suspicious
Activity Reports” with the government and implement programs to detect
bank fraud. Though the Plaintiffs identify the particular sections that they
contend were violated, they do not specify the nature of their claim against
the bank based upon such violations. None of these provisions provide for
a private cause of action. See AmSouth Bank v. Dale, 386 F.3d 763, 777
(6th Cir. 2004) (noting that Bank Secrecy Act does not create a private right
of action); Public Serv. Co. of Oklahoma v. A Plus, Inc., No. CIV-10-651-D,
2011 WL 3329181, at *8 (W.D. Okla. Aug. 2, 2011) (noting that Bank
Secrecy Act and its implementing regulations “obligate banks to report
certain customer activity to the government but do not create a private
cause of action”).
While not dispositive of the issue, Congress’s
determination not to provide a private cause of action under a federal
statute is evidence of “a congressional conclusion that the presence of a
claimed violation of the statute as an element of a state cause of action is
insufficiently ‘substantial’ to confer federal question jurisdiction.” Merrell
Dow, 478 U.S. at 814, 106 S.Ct. at 3235; Dale, 386 F.3d at 777 (“Because
the Bank Secrecy Act does not create a private right of action, the
Receivers’ incorporation of its standards into a state-law cause of action
cannot transform their complaint into one that raises a federal question.”).
Therefore, to the extent that any cause of action may arise from a violation
of these federal provisions, they would be state causes of action, not
federal. Under North Carolina law, the violation of a federal law may serve
as a basis for a state law negligence action. See Guyton v. FM Lending
Servs., Inc., 199 N.C. App. 30, 40, 681 S.E.2d 465, 474 (2009) (noting that
“utilizing federal statutes as the basis for recognizing a state law duty is
undoubtedly appropriate in some instances”). “That a court may be called
upon to evaluate the offending conduct in light of what federal [banking]
laws and regulations require does not federalize the [Plaintiffs’] claims . . . .”
Fagin, 2007 WL 419286, at *4; see also Shawver v. Bradford Square
Nursing, LLC, No. 3:08-13-DCR, 2008 WL 2355803, at *5 (E.D. Ky. June 5,
2008) (“Although resolution of the Plaintiff’s state law claims may require
examination of federal law, the Court cannot conclude that this case
involves a federal issue that is substantial and dispositive.
Plaintiff has referenced federal Medicare and Medicaid statutes and
regulations, he has done so simply to establish the relevant standard of
care and to allege that the defendants breached that duty of care.”); Pirie v.
Broadview Multi-Care Ctr., No. 1:08 CV 1427, 2008 WL 2745977, at *2
(N.D. Ohio July 11, 2008) (noting that “references to federal regulations [in
the plaintiff’s complaint] are asserted in the context of an applicable
standard of care, not an independent cause of action”); Sercye-McCollum
v. Ravenswood Hosp. Med. Ctr., 140 F.Supp.2d 944, 946 (N.D. Ill. 2001)
(declining to find substantial federal question where plaintiff cited, inter alia,
federal Emergency Medical Treatment and Active Labor Act in order to
establish applicable standard of care for medical negligence claim under
Illinois state law).
Therefore, the legal focus of this one claim is not
whether the Defendants violated federal banking laws, but rather whether
their conduct violated a duty owed to the Plaintiffs under state law. Thus,
“[t]he fact that a court may have to look to federal law to evaluate whether
Defendants’ alleged misconduct violated their state law obligations does
not, in this case, elevate the federal law aspect of the alleged misconduct
into a substantial question of federal law.” Fagin, 2007 WL 419286, at *6.
This, however, does not necessarily end the analysis. In a “small
class of cases” a complaint asserting a state law cause of action may
nevertheless “arise under federal law” where “the case’s resolution
depends on resolution of a federal question sufficiently substantial to arise
under federal law within the meaning of 28 U.S.C. § 1331.” Ormet Corp. v.
Ohio Power Co., 98 F.3d 799, 806 (4th Cir. 1996). The “mere presence” of
a federal issue, however, “does not automatically confer federal-question
jurisdiction.” Merrell Dow, 478 U.S. at 813, 106 S.Ct. at 3234. Rather,
“federal jurisdiction demands not only a contested federal issue, but a
substantial one, indicating a serious federal interest in claiming the
advantages thought to be inherent in a federal forum.” Grable & Sons
Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 313, 125 S.Ct.
2363, 2367, 162 L.Ed.2d 257 (2005). Even where a state claim involves a
contested and substantial federal question, federal jurisdiction may still be
improper if the exercise of such would not be “consistent with
congressional judgment about the sound division of labor between state
and federal courts governing the application of § 1331.” Id. at 313-14, 125
S.Ct. at 2367. Thus, the question to be resolved in determining whether to
exercise federal jurisdiction over a state-law claim is whether such 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 responsibilities.” Id.
at 314, 125 S.Ct. at 2368.
In accordance with Grable, the Court will first consider whether the
Plaintiffs’ Second Amended Complaint raises an “actually disputed and
substantial” issue of federal law. Id. Even though the Plaintiffs’ Second
Amended Complaint does not assert whether this claim is one under
federal or state law, as shown above if it states a cognizable claim at all it
must be pursuant to state law. The claim may necessarily raise disputed
and substantial federal issues, as the Plaintiffs base this claim upon the
breach of duties allegedly owed to them under the federal statutes and
This, however, does not necessarily render this
claim to be “arising under” federal law. On this point the Supreme Court’s
decision in Grable is instructive. [Doc. 22 at 9-10]. In Grable, the Internal
Revenue Service (“IRS”) seized real property owned by the plaintiff to
satisfy a federal tax delinquency. Grable, 545 U.S. at 310, 125 S.Ct. at
2366. Following the tax sale, the plaintiff brought a state action against the
purchaser of the land to quiet title, claiming that the new purchaser’s title
was invalid because the IRS failed to give the plaintiff proper notice of the
sale as required by federal law.
Id. at 311, 125 S.Ct. at 2366.
purchaser removed the case to federal court on the grounds that the action
required an interpretation of federal tax law and thus presented a federal
question pursuant to section 1331. Id. The Supreme Court concluded that
the case warranted the exercise of federal jurisdiction, as the plaintiff had
premised its claim of superior title on the failure of the IRS to provide him
adequate notice as required by federal law. Thus, the issue of whether the
plaintiff had received proper notice within the meaning of the federal statute
was “an essential element of its quiet title claim,” and the interpretation of
the federal statute was actually in dispute. Id. at 315, 125 S.Ct. at 2368.
Indeed, the Court noted that the interpretation of the federal notice
requirement “appear[ed] to be the only legal or factual issue contested in
the case.” Id. Noting that “[t]he meaning of the federal tax provision is an
important issue of federal law that sensibly belongs in a federal court,” and
citing the government’s interest in having a federal forum available to
vindicate its administrative actions, the Court concluded that a substantial
federal issue was presented warranting the exercise of federal jurisdiction.
Unlike Grable, which involved the actions of the IRS and its
compliance with a federal statute, the present case was triggered by the
conduct of private actors and did not involve the action or decision of any
federal agency. See Empire Healthchoice Assurance, Inc. v. McVeigh, 547
U.S. 677, 700, 126 S.Ct. 2121, 2137, 165 L.Ed.2d 131 (2006) (explaining
that Grable “centered on the action of a federal agency (IRS) and its
compatibility with a federal statute”). Moreover, while Grable presented a
sole contested issue of federal law, the Plaintiffs’ claims in the present case
raise numerous factual and legal issues of both state and federal law.
[See, e.g., Second Amended Complaint, Doc. 1-1 at ¶ 134 (alleging that
Defendant Home Trust failed to file a Suspicious Activity Report)].
Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 108 S.Ct. 2166,
100 L.Ed.2d 811 (1988), the Supreme Court held that where federal law
was essential to only one of several alternative theories of relief, the
invocation of federal law was not sufficient to confer federal question
jurisdiction. See id. at 810, 108 S.Ct. at 2174; see also Mulcahey, 29 F.3d
at 153 (“Christianson teaches us that, if a claim is supported not only by a
theory establishing federal subject matter jurisdiction but also by an
alternative theory which would not establish such jurisdiction, then federal
subject matter jurisdiction does not exist.”). Most importantly, however, is
the fact that even if the Plaintiffs were to conclusively prove that Home
Trust violated the federal provisions at issue, that would not dispose of the
threshold question of whether such violation gives rise to a private cause of
action under North Carolina law.
Upon careful consideration of the Plaintiffs’ claims, and particularly
the legal and factual issues raised thereby, the Court concludes that the
present case “does not fit within the special and small category” of state
law claims presenting contested federal issues described by Grable. See
Empire, 547 U.S. at 699, 126 S.Ct. at 2136.
Further, even if such
substantial issues of federal law did exist, the exercise of federal
jurisdiction in this case would result in a significant transfer of state law
claims to federal courts, thereby disrupting the balance of federal and state
Even where substantial federal issues are
presented by state law claims, the Court must decline to entertain a lawsuit
if doing so would disturb the “congressionally approved balance of federal
and state judicial responsibilities.” Grable, 545 U.S. at 314, 125 S.Ct. at
When possible it is best left to the North Carolina Courts to
determine what causes of action are recognized pursuant to North Carolina
IT IS, THEREFORE, ORDERED that the Plaintiffs’ Motion to Remand
or in the Alternative for Leave to Amend the Complaint and Decline
Supplemental Jurisdiction and for Attorney Fees and Costs [Doc. 6] is
IT IS FURTHER ORDERED that the Court has determined, sua
sponte, that it lacks subject matter jurisdiction in this matter and therefore
removal was improper, and based thereon this matter is REMANDED to
The General Court of Justice, Superior Court Division of Buncombe
This Order was entered by the Court on October 11, 2012, but due to
a computer issue was not entered into the ecf system and the attorneys
were not notified. Therefore, this order is being reentered on this date.
Signed: February 4, 2013
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