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21ST Capital Corp. v. Advanced Communications USA

January 4, 2010


The opinion of the court was delivered by: Margaret M. Morrow United States District Judge



On June 30, 2009, plaintiff 21st Capital Corporation filed an action in Los Angeles Superior Court alleging claims against Advanced Communications USA, formerly known as Nexlink Communications, and certain fictitious defendants for breach of written contract, compensation for services, goods, and/or merchandise sold and delivered, and open book account for money due on services, goods, and/or merchandise.

Commencing on or about October 20, 2008, and continuing thereafter, non-party Corban Electric & Data, Inc. and defendant entered into a series of written contracts, identified as "factored invoices." By the terms of the factored invoice agreements, Corban provided goods, wares, and services to defendant, and defendant agreed to pay the amounts specified in the agreements, which as of January 9, 2009, the date of the last agreement, totaled $42,683.86.*fn1

Prior to the execution of the contracts, Corban had entered into an "accounts receivable factoring agreement," in which Corban agreed to assign and transfer to plaintiff all right, title, and interest in and to certain of its accounts, including the right to receive payments thereon. In connection with each agreement between Corban and defendant, plaintiff communicated with defendant advising that plaintiff was a third-party beneficiary of the agreement, and requesting that defendant complete an invoice confirmation verifying that the invoice was valid and owing and would be paid to plaintiff. Defendant executed such invoice confirmation for each agreement between it and Corban, verifying plaintiff's status as third-party beneficiary and confirming that payment would be made to plaintiff. From November 5, 2008 to January 20, 2009, amounts owed pursuant to the invoices came due and were not paid.*fn2 21st Capital filed suit to collect the unpaid amounts in June 2009.

On October 2, 2009, defendant removed the action to this court. Plaintiff filed a motion to remand on October 20, 2009, asserting that defendant had not demonstrated that the amount in controversy requirement had been met and that diversity of citizenship existed.*fn3 Defendant opposed the motion.*fn4 Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court finds the matter appropriate for decision without oral argument. The hearing calendared for January 11, 2010 is therefore vacated and the motion taken off calendar.


A. Legal Standard Governing Removal Jurisdiction

Only state court actions that could originally have been filed in federal court may be removed.

28 U.S.C. § 1441(a); Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); Snow v. Ford Motor Co., 561 F.2d 787, 789 (9th Cir. 1977). The proper procedural vehicle for challenging the removal to federal court of a state court action is a motion to remand. See 28 U.S.C. § 1447(c); Ultra Tool & Plastics, Inc. v. Schulman, No. 98-CV-0473E(SC), 1998 WL 864896, * 1 (W.D.N.Y. Dec. 2, 1998).

The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988), and Takeda v. Northwestern National Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985)). When a motion to remand is filed, the party that removed the case generally bears the burden of establishing that federal jurisdiction is proper. See Gaus,980 F.2d at 566-67; Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921)); see also Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996) (removing defendants bear the burden of proving, by a preponderance of the evidence, actual facts sufficient to support jurisdiction).

"The district courts . . . have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs. . . ." 28 U.S.C. § 1332(a); see also Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) ("[J]urisdiction founded on [diversity] requires that the parties be in complete diversity and the amount in controversy exceed $75,000"). In any case where subject matter jurisdiction is premised on diversity, there must be complete diversity, i.e, all plaintiffs must have citizenship different than all defendants. See Strawbridge v. Curtis, 7 U.S. (3 Cranch) 267 (1806); see also Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 & n. 3 (1996). "Diversity jurisdiction is determined at the time the action commences, and a federal court is not divested of jurisdiction . . . if the amount in controversy subsequently drops below the minimum jurisdictional level." Hill v. Blind Industries and Services of Maryland, 179 F.3d 754, 757 (9th Cir. 1999) (emphasis added).

B. Whether the Amount in Controversy Requirement is Met

Plaintiff's state court complaint does not specify an amount in controversy exceeding $75,000; consequently, defendant bears the burden of proving, by a preponderance of the evidence, that this jurisdictional requirement is satisfied. See, e.g., Matheson, 319 F.3d at 1090 ("Where it is not facially evident from the complaint that more than $75,000 is in controversy, the removing party must prove, by a preponderance of the evidence, that the amount in controversy meets the jurisdictional threshold"); Gaus, 980 F.2d at 566-67 ("If it is unclear what amount of damages the plaintiff has sought, as is true here with regard to Gaus's claim . . . then the defendant bears the burden of actually proving the facts to support jurisdiction, including the jurisdictional amount"). In addition to the contents of the removal petition, the court considers ...

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