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Fortuin v. GE Commercial Distribution Finance Corp.

August 10, 2010

ROBERT FORTUIN, PLAINTIFF,
v.
GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION, ET. AL., DEFENDANT.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: DENYING PLAINTIFF'S MOTION TO REMAND (Doc. No. 17)

Presently before the Court is Plaintiff Robert Fortuin's Motion to Remand. (Doc. No. 17.) Defendant GE Commercial Distribution Finance Corporation filed an opposition and Plaintiff filed a reply. (Doc. Nos. 21, 23.) For the reasons set forth below, the Court DENIES Plaintiff's Motion to Remand.

BACKGROUND

Plaintiff filed a complaint for declaratory relief against Defendant in the San Diego Superior Court. (Doc. No. 1 (NOR), Ex. A (Compl.).) Plaintiff seeks a declaration that he did not enter into a guaranty agreement for a $250,000 loan made by Defendant to Worldwide Material Distribution. (Compl. ¶¶ 8, 19; NOR ¶ 1.)

Defendant was served on March 30, 2010 and on April 28, 2010 filed a notice of removal to the Southern District of California. (Id. ¶¶ 5, 6.) On May 12, 2010, Defendant answered Plaintiff's complaint and filed a counterclaim for breach of contract seeking $255,482.61 in damages against Plaintiff and Counterclaim Defendants Worldwide Material Distribution, Noel Guilianotti, and Julian Mullen. (Doc. No. 7.)

On May 28, 2010, Plaintiff moved to remand based on abstention principles. (Memo. ISO Motion ¶ 4.) Defendant filed an opposition and Plaintiff filed a reply. (Doc. Nos. 21, 23.)

LEGAL STANDARD

The Declaratory Judgment Act provides in relevant part: "In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). If an action seeking declaratory judgment presents an actual case or controversy and fulfills jurisdictional prerequisites, a district court must make a discretionary determination that entertaining the action is appropriate. Gov't Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222--23 (9th Cir. 1998).

Though discretionary, "the court must decide whether to exercise its jurisdiction by analyzing the factors set out in Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942), and its progeny." Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005). "Essentially, the district court 'must balance concerns of judicial administration, comity, and fairness to the litigants.'"

Am. States Ins. Co. v. Kearns, 15 F.3d 142, 144 (9th Cir. 1994) (citing Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1367 (9th Cir. 1991)). Brillhart sets forth a non-exclusive list of factors advising that a "district court should avoid needless determination of state law issues; it should discourage litigants from filing declaratory actions as a means of forum shopping; and it should avoid duplicative litigation." Dizol, 133 F.3d at 1225. A number of other considerations may be relevant: whether the declaratory action will settle all aspects of the controversy; whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue; whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a 'res judicata' advantage; or whether the use of a declaratory action will result in entanglement between the federal and state court systems. In addition, the district court might also consider the convenience of the parties, and the availability and relative convenience of other remedies.

Id.

The Ninth Circuit in Dizol outlined the rule that, in general, a court should not remand or decline to entertain a claim for declaratory judgment "when other claims are joined with [the] action for declaratory relief (e.g., bad faith, breach of contract, breach of fiduciary duty, rescission, or claims for other monetary relief)." Id. (internal citation omitted). "If a federal court is required to determine major issues of state law because of the existence of non-discretionary claims, the declaratory action should be retained to avoid piecemeal litigation." Id. at 1225--26 (internal citation omitted). If the district court has subject matter jurisdiction over the monetary claim alone and the monetary claim need not necessarily be joined with the declaratory action, the court should follow the general rule in Dizol. United Nat'l Ins. Co. v. R&D Latex Corp., 242 F.3d 1102, 1113 (9th Cir. 2001). A monetary counterclaim by a defendant in a declaratory action may create mandatory jurisdiction. United Nat'l Ins. Co., 242 F.3d at 1113 n.12.

DISCUSSION

Plaintiff seeks remand requesting that the Court decline to exercise discretionary jurisdiction in the instant case. (Memo. ISO Motion ΒΆΒΆ 3,5,6,8.) Having examined this question, the Court finds that retention of jurisdiction is mandatory in ...


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