Opinion
CIVIL 22-00102 HG-KJM
05-11-2022
CONTINENTAL PACIFIC, LLC, Plaintiff, v. VANCE PHILLIP DUBUCLET; PORTFOLIO RECOVERY ASSOCIATES LLC, a Delaware limited liability company; DOE DEFENDANTS 1-10; BYVW EXCHANGE SERVICES, LLC; FIRST AMERICAN TITLE GUARANTEE CO (FATCO); HAWAII ELECTRIC LIGHT CO. (HELCO); HENRY CORREA, JR. “Hank”; and PETER K. KUBOTA, Defendants.
FINDINGS AND RECOMMENDATION TO: (1) GRANT PLAINTIFF'S MOTION TO REMAND CASE TO STATE COURT; AND (2) DENY DEFENDANT'S SECOND APPLICATION TO PROCEED IN DISTRICT COURT WITHOUT PREPAYING FEES OR COSTS
Kenneth J. Mansfield, United States Magistrate Judge
INTRODUCTION
On March 16, 2022, Defendant Vance Phillip DuBuclet (“Defendant”), proceeding pro se, removed a foreclosure action from the Third Circuit Court, State of Hawai‘i (“State Action”). ECF No. 1. On that same date, Defendant filed an Application to Proceed in District Court Without Prepaying Fees or Costs (“First IFP Application”). ECF No. 2. The Court denied Defendant's First IFP Application as incomplete and permitted Defendant to file a fully completed IFP Application, along with an amended notice of removal that complies with 28 U.S.C. § 1446(a). See ECF No. 4. On April 8, 2022, Defendant filed an Amended Notice of Removal and a second IFP Application (“Second IFP Application”). ECF Nos. 6, 7.
Defendant had not attached to the original Notice of Removal “a copy of all process, pleadings, and orders served upon” him in the State Action. 28 U.S.C. § 1446(a). See ECF No. 1.
On April 14, 2022, Plaintiff Continental Pacific, LLC (“Plaintiff”), filed a Motion to Remand Case to State Court (“Motion to Remand”). ECF No. 13. On May 2, 2022, Defendant filed “Petitioner's Support of Continued Removal to Stay in Federal Court Jurisdiction, ” “Declaration of Opposition to Remand to Lower Court's Jurisdiction, ” and exhibits (collectively, “Opposition”). ECF Nos. 15-17. On May 6, 2022, Plaintiff filed a Reply. ECF No. 19.
The Court elects to decide Plaintiff's Motion to Remand and Defendant's Second IFP Application without a hearing pursuant to Rule 7.1(c) and (d) of the Local Rules of Practice for the United States District Court for the District of Hawaii. After carefully considering the parties' submissions, the record, and applicable law, the Court FINDS that the Court lacks subject matter jurisdiction. For the reasons set forth below, the Court thus RECOMMENDS that the district court: (1) GRANT Plaintiff's Motion to Remand; and (2) DENY as moot Defendant's Second IFP Application.
DISCUSSION
Under the federal removal statute, 28 U.S.C. § 1441, a defendant “may remove ‘any civil action brought in a State court of which the district courts . . . have original jurisdiction[, ]'” meaning “so long as federal subject-matter or diversity jurisdiction exists.” Grancare, LLC v. Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018); Trotta v. URS Fed. Servs., Inc., 532 F.Supp.3d 985, 988 (D. Haw. 2021) (citing 28 U.S.C. § 1441). Courts “‘strictly construe the removal statute against removal jurisdiction.'” Sharma v. HSI Asset Loan Obligation Tr. 2007-1 by Deutsche Bank Nat'l Tr. Co., 23 F.4th 1167, 1170 (9th Cir. 2022) (quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)). Accordingly, “[i]f a district court determines at any time that less than a preponderance of the evidence supports the right of removal, it must remand the action to the state court.” Hansen v. Grp. Health Coop., 902 F.3d 1051, 1057 (9th Cir. 2018) (citing Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010); Cal. ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004)).
“The removing defendant bears the burden of overcoming the ‘strong presumption against removal jurisdiction.'” Id. (quoting Geographic Expeditions, 599 F.3d at 1107). The “strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper, and that the court resolves all ambiguity in favor of remand to state court.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (internal quotation marks omitted) (quoting Gaus, 980 F.2d at 566).
Defendant purports to remove the State Action based on diversity and federal question jurisdiction under 28 U.S.C. §§ 1332, 1441(a), (b). ECF No. 61 at 2, 4. Plaintiff asserts that the State Action should be remanded because Defendant's removal is untimely and the court lacks subject matter jurisdiction. This Court agrees with Plaintiff and addresses these assertions in turn.
I. Untimely Removal
Defendant's removal is untimely and, thus, procedurally flawed. The federal removal statute provides two 30-day pathways for removal: (1) “during the first thirty days after the defendant receives the initial pleading”; or (2) “during the first thirty days after the defendant receives a paper ‘from which it may first be ascertained that the case is one which is or has become removable' if ‘the case stated by the initial pleading is not removable.'” Dietrich v. Boeing Co., 14 F.4th 1089, 1090 (9th Cir. 2021); Harris v. Bankers Life and Cas. Co., 425 F.3d 689, 692 (9th Cir. 2005) (quoting 28 U.S.C. § 1446(b)).
Removal based on diversity also presents three removal scenarios depending on whether an action is removable based upon the face of the complaint:
1) the case clearly is removable on the basis of jurisdictional facts apparent from the face of the complaint, i.e., complete diversity of citizenship; 2) the case clearly is not removable on the basis of jurisdictional facts apparent from the face of the complaint, i.e., lack of complete diversity; or 3) it is unclear from the complaint whether the case is removable, i.e., the citizenship of the parties is unstated or ambiguous.Harris, 425 F.3d at 692-93. Based on the State Action's procedural posture, the first scenario applies, and § 1446(b)(1) required Defendant to remove via the first pathway-within the first 30 days after the Defendant received the initial pleading.
The Court takes judicial notice of the State Action and documents filed therein. See Micha v. Sun Life Assurance of Canada, Inc., 874 F.3d 1052, 1055 n.5 (9th Cir. 2017) (citing Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take judicial notice of undisputed matters of public record, including documents on file in federal or state courts.”)).
On April 30, 2021, Defendant was served with the Complaint and Summons. ECF No. 13-6 at 2. In the Complaint, Plaintiff alleges: the citizenship of the parties; that Defendant purchased two parcels of real property located at “Keahialaka, District of Puna, Island and County of Hawaii, State of Hawaii” (“Subject Property”); that Defendant is indebted to Plaintiff pursuant to two promissory notes; and that, due to Defendant's default to pay Plaintiff under the terms of these notes, Plaintiff seeks to foreclose on two corresponding mortgages against the Subject Property. ECF No. 13-3 at 3-6 ¶¶ 6-15.
On May 19, 2021, Defendant filed a “Response for Filing, ” in which Defendant “contest[s] jurisdiction” and asserts that “[t]he correct venue for this claim, if this claim is in reference to Keahialaka, is the federal court ....” ECF No. 13-7 at 3. Defendant thus had, as apparent from the face of the Complaint, “sufficient knowledge of the existence of grounds for removal ....” Harris, 425 F.3d at 696 n.7 (quoting Moore's Federal Practice 3d, § 107.30[3](a)(ii)(A) (3d ed. 2005) (footnotes omitted)).
Accordingly, Defendant had until May 31, 2021, to remove the State Action under § 1446(b)(1); instead, Defendant removed over nine-and-a-half months later, on March 16, 2022. ECF No. 1. Defendant's failure to remove the State Action within 30 days of being served with the Complaint, together with Plaintiff's timely Motion to Remand, defeats removal. See Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir. 1980) (noting that the time limit is mandatory and a timely objection to a late petition will defeat removal). The Court thus finds that Defendant's removal is untimely and recommends that the district court grant Plaintiff's Motion to Remand.
The thirtieth day would have been on Sunday, May 30, 2021. Under Local Rule 6(a)(1)(C), however, the deadline is extended to Monday, May 31, 2020.
II. Lack of Subject Matter Jurisdiction
Substantively, Defendant fails to establish that removal is proper because the Court lacks federal question jurisdiction and diversity jurisdiction under 28 U.S.C. §§ 1331 and 1332. “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A court must examine its own subject matter jurisdiction and may remand a case summarily if there is an obvious jurisdictional issue. Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006); Scholastic Ent., Inc. v. Fox Ent. Grp., Inc., 336 F.3d 982, 985 (9th Cir. 2003) (“While a party is entitled to notice and an opportunity to respond when a court contemplates dismissing a claim on the merits, it is not so when the dismissal is for lack of subject matter jurisdiction.”) (internal citations omitted).
A. Federal Question Jurisdiction
Defendant fails to establish federal question jurisdiction. Federal courts have original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. To determine whether an action arises under federal law, a court applies the “well-pleaded complaint rule.” Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1243 (9th Cir. 2009) (internal quotation marks omitted) (quoting Toumajian v. Frailey, 135 F.3d 648, 653 (9th Cir. 1998)). “Under this rule, a claim arises under federal law ‘only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.'” Id. (quoting Valles v. Ivy Hill Corp., 410 F.3d 1071, 1075 (9th Cir. 2005)). Moreover, a defendant cannot “create” federal subject matter jurisdiction based on claims asserted in the notice of removal. “The federal question ‘must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal.'” Takeda v. Nw. Nat. Life Ins. Co., 765 F.2d 815, 822 (9th Cir. 1985) (quoting Gully v. First Nat'l Bank, 299 U.S. 109, 113 (1936)).
Plaintiff filed a Hawaii state law foreclosure Complaint. See generally ECF No. 13-3. The Complaint does not present a federal question and, as a result, does not give rise to federal question jurisdiction. Consequently, the Court does not have federal question jurisdiction over the State Action. Furthermore, insofar as Defendant seeks to raise a federal question in defense- by querying, “Who owns these lands?”-Defendant cannot remove the State Action based on asserted claims or defenses that purportedly raise questions of federal law. See, e.g., Saldana v. Glenhaven Healthcare LLC, 27 F.4th 679, 688 (9th Cir. 2022) (“[A] federal defense is not a sufficient basis to find embedded federal question jurisdiction.”) (citing Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1090-91 (9th Cir. 2009)). See ECF No. 6-1 at 4. The Court finds that it lacks federal question jurisdiction over this matter and recommends that the district court grant Plaintiff's Motion to Remand.
B. Diversity Jurisdiction
Defendant has not satisfied diversity jurisdiction requirements for removal. Diversity jurisdiction exists where the matter in controversy is between citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a)(1). Removal based on diversity jurisdiction requires complete diversity, meaning that each plaintiff must be of a different citizenship from each defendant. Grancare, 889 F.3d at 548 (citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996)).
An additional limitation on removal, the forum defendant rule, prevents removal “‘if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought ....'” Trotta, 532 F.Supp.3d at 989 (quoting 28 U.S.C. § 1441(b)(2)). One of the purposes of allowing removal is to “protect out-of-state defendants from possible prejudices in state court.” Id. (quoting Lively v. Wild Oats Mkts., Inc., 456 F.3d 933, 940 (9th Cir. 2006)). Because “[t]he need for such protection is absent . . . in cases where the defendant is a citizen of the state in which the case is brought, ” the forum defendant rule “allows the plaintiff to regain some control over forum selection by requesting that the case be remanded to state court.” Lively, 456 F.3d at 940.
“To be a citizen of a state, a natural person must first be a citizen of the United States .... The natural person's state citizenship is then determined by . . . state of domicile ....” Adams v. W. Marine Prod., Inc., 958 F.3d 1216, 1221 (9th Cir. 2020) (quoting Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001)). “One's domicile is [his] ‘permanent home' . . . where (i) [he] resides, (ii) ‘with the intention to remain or to which [he] intends to return.'” Id. (quoting Kanter, 265 F.3d at 857).
The forum defendant rule defeats Defendant's removal of the State Action. Plaintiff “is a Delaware limited liability company with its principal place of business in . . . Florida.” ECF No. 13-3 at 2 ¶ 1. As for Defendant, nothing in this record suggests that he is domiciled in or is a citizen of a state other than Hawaii. Defendant identifies as a “Sovereign Hawaiian.” See ECF No. 15 at 4. Defendant indicates as his address “13-1368 Launahele Rd/Pahoa, HI(n) 96778.” See, e.g., ECF No. 1 at 1; ECF No. 2 at 3; ECF No. 6-1 at 1; ECF No. 13-7 at 3. Defendant states that this address “is located on the property in question ....” ECF No. 6-1 at 12. Defendant alludes to the Subject Property as real property upon which he has “built [his] house, and the future of [his] family ....” ECF No. 1 at 9; ECF No. 6-1 at 12. Defendant also declares that the “2018 Leilani flow [is] (5 minutes from my house) ....” and that he has been paying the “disputed ‘mortgage payment' in this case . . . since 2005.” ECF No. 7 at 1, 2.
“Sovereign citizen claims are claims from individuals who, even though they physically reside in the United States, do not recognize the authority of the federal government and believe that they are not subject to the laws or jurisdiction of governmental entities.” Ceja v. Birkholz, NO. CV 22-1636-FWS(E), 2022 WL 1406904, at *3 n.4 (C.D. Cal. May 3, 2022) (quoting Woodruff v. Mason McDuffie Mortg. Corp., Case No. 19-cv-04300-WHO, 2020 WL 5210920, at *4 n.5 (N.D. Cal. Sept. 1, 2020)).
The Court finds that, for purposes of diversity jurisdiction, Defendant is domiciled in and a citizen of Hawaii. Furthermore, Defendant is not a sovereign or member of the Kingdom of Hawaii. The district court does not recognize the Kingdom of Hawaii at this time, and Defendant cannot claim that he is a member for purposes of establishing diversity of citizenship jurisdiction. See, e.g., U.S. v. Benabe, 654 F.3d 753, 767 (7th Cir. 2011) (“Regardless of an individual's claimed status of descent, be it as a ‘sovereign citizen,' a ‘secured-party creditor,' or a ‘flesh-and-blood human being,' that person is not beyond the jurisdiction of the courts.”); U.S. v. Lorenzo, 995 F.2d 1448, 1456 (9th Cir. 1993) (finding that Hawaii residents were subject to jurisdiction of the federal courts and refusing to recognize immunity for the “Sovereign Kingdom of Hawaii”)). Consequently, under the forum defendant rule, Defendant, a citizen of Hawaii, cannot remove the foreclosure State Action to this district court based on diversity jurisdiction. 28 U.S.C. § 1441(b)(2). The Court thus finds that there is no diversity of citizenship and recommends that the district court grant Plaintiff's Motion to Remand.
The Court also agrees with Plaintiff that additional grounds destroy diversity of citizenship. First, Plaintiff and Defendant Portfolio Recovery Associates, LLC, are both incorporated in, and therefore are citizens of, Delaware. See Ryan v. Salisbury, 380 F.Supp.3d 1031, 1047 (D. Haw. 2019) (noting that for purposes of diversity jurisdiction and under 28 U.S.C. § 1332(c)(1), a corporation is deemed a citizen of both its state of incorporation and its principal place of business). Second, Defendant Portfolio Recovery Associates, LLC, which was the only other properly joined and served defendant in the State Action, did not consent or join in removal as required by 28 U.S.C. § 1446(b)(2)(A) (“When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.”). See ECF No. 13-4.
Given this Court's findings and recommendation that the district court grant the Motion to Remand, and to the extent Defendant seeks to proceed without prepaying fees and costs, the Court recommends that the district court deny as moot Defendant's Second IFP Application.
III. Request for Attorneys' Fees and Costs
Plaintiff requests an award of the attorneys' fees and costs incurred due to removal of this case, as authorized by 28 U.S.C. § 1447(c) (“An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.”). See ECF No. 13-1 at 20. “Absent unusual circumstances, a court may award costs and attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal.” Carpenter v. PNC Bank, N.A., 386 F.Supp.3d 1339, 1351 (D. Haw. 2019) (citing Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)). “Removal is not objectively unreasonable ‘solely because the removing party's arguments lack merit, or else attorney's fees would always be awarded whenever remand is granted.'” Id. (quoting Grancare, 889 F.3d at 552) (other citation omitted).
The Court finds that awarding Plaintiff attorneys' fees and costs is appropriate. This matter presents no unusual circumstances, and Defendant lacked “an objectively reasonable basis for seeking removal” of the State Action. Carpenter, 386 F.Supp.3d at 1351. Defendant's removal was untimely, and federal jurisdiction does not exist in this case. See Nazemi v. Wrona, Civ. No. 13-00239 SOM-BMK, 2013 WL 3936205, at *1 (D. Haw. July 30, 2013), adopted on August 19, 2013 (reasoning that awarding attorneys' fees to Plaintiffs was appropriate, even though the defendant was proceeding pro se, because the removal was clearly untimely and there were no federal questions raised in plaintiffs' complaint; thus the removal was not objectively reasonable). The Court thus recommends that the district court award Plaintiff attorneys' fees and costs incurred as a result of Defendant's improper removal.
CONCLUSION
Based on the foregoing, the Court FINDS and RECOMMENDS that the district court: (1) GRANT Plaintiff's Motion to Remand Case to State Court (ECF No. 13); (2) DENY as moot Defendant's second Application to Proceed in District Court Without Prepaying Fees or Costs (ECF No. 7); and (3) AWARD Plaintiff its attorneys' fees and costs incurred as a result of Defendant's improper removal.
If this Court's recommendations should be adopted, then this Court further RECOMMENDS that a deadline be given for Plaintiff's counsel to submit a declaration in conformance with Local Rules 54.1 and 54.2(f) to support its request for fees and/or costs.
IT IS SO FOUND AND RECOMMENDED.