The opinion of the court was delivered by: Honorable Cormac J. Carney, United States District Judge
PROCEEDINGS: (IN CHAMBERS) ORDER GRANTING PLAINTIFF'S MOTION FOR REMAND AND DENYING PLAINTIFF'S MOTION FOR SANCTIONS[filed 12/17/08]
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See FED. R. CIV. P. 78; LOCAL RULE 7-15. Accordingly, the hearing set for January 12, 2009 at 1:30 p.m. is hereby vacated and off calendar.
Plaintiff David J. Pasternak, is a receiver appointed by the Superior Court of Los Angeles in the case Khmer Buddhist Association ("KBA") v. Sar. Mr. Pasternak brought this related case against John Ramirez, Wat Khmer Vipassanaram, and the Church of the Revelation (collectively "Defendants") in Los Angeles Superior Court for an accounting, conversion, and money had and received. (Notice of Removal, Ex. A, State Court Compl. ("Compl.") ¶¶ 17, 19, 21-23.) All parties in the case are alleged to be citizens of California, in the counties of Los Angeles and Orange. (Compl. ¶¶ 2-4.) Mr. Pasternak alleges that Defendants received the KBA's total assets-approximately $450,000 in cash and six real properties-shortly before the state court appointed Mr. Pasternak as the KBA receiver. (Compl. ¶ 8.) Defendants removed the case to this Court, pursuant to 28 U.S.C. §§ 1441(b)-(c), arguing that the case gives rise to federal questions because their defenses to the state court actions involve interpretations of the First Amendment of the United States Constitution and the United States Tax Code. Mr. Pasternak now moves the Court to remand this case to the Superior Court of Los Angeles. For the reasons stated below, Plaintiff's motion for remand is GRANTED.
Under 28 U.S.C. § 1447(c), the Court must remand a case "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction . . ." The burden of establishing subject matter jurisdiction falls on Defendants, as the party seeking removal. Salveson v. W. States Bankcard Ass'n, 731 F.2d 1423, 1426 (9th Cir. 1984). Moreover, the removal statute is "strictly construed against removal jurisdiction." Id. A cause of action arises under federal law only when a plaintiff's well-pleaded complaint raises issues of federal law. Emard v. Hughes Aircraft Co., 153 F.3d 949, 953 (9th Cir. 1998). A plaintiff will not defeat removal by simply "masking or 'artfully pleading' a federal claim as a state claim." Sullivan v. First Affiliated Sec., Inc., 484 U.S. 850 (1987). A federal court can assert subject matter jurisdiction where a case either:
(1) raises a question under federal law; or (2) is between diverse parties and involves an amount in controversy of over $75,000. 28 U.S.C. § 1331; 28 U.S.C. § 1332.
Defendants have not made any argument for diversity jurisdiction. The parties are also not diverse, judging from the face of the complaint, as they are all citizens of California.
The well-pleaded complaint rule states that courts may not consider the defendant's defenses, answers, or counterclaims when analyzing whether a case may be removed from state court. Holmes Group Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002) (holding that a patent counterclaim was insufficient to provide removal jurisdiction). A court may only consider the claims made in the complaint, which, in this case, are simply state-law claims for an accounting, conversion, and money had and received. This case presents similar issues to those resolved in a related case, KBA v. Sar, SA08CV05265 (C.D. Cal. 2008.) In that case, Judge David Carter remanded to state court because federal question jurisdiction "does not exist where a suit in State Court merely raises interesting questions of Federal or Constitutional Law in the abstract." (KBA, Order of Sept. 8, 2008, remanding to state court.)
Although Defendants allege that this case presents questions of interpretation of the United States Constitution and federal statutes, they do not present a case for removal jurisdiction based upon the face of the complaint. Mr. Pasternak's complaint is a straightforward action alleging claims under state common law. Regardless of whether this case involves interpretation of federal laws or the presentation of Constitutional defenses, the Court ...