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Paradigm Solutions Group, Inc. v. Shanghai Precision Technology Corporation

United States District Court, S.D. California

June 1, 2015

PARADIGM SOLUTIONS GROUP, INC., Plaintiff,
v.
SHANGHAI PRECISION TECHNOLOGY CORPORATION; LYDIA LAI, and DOES 1-50, Defendants.

ORDER (1) REMANDING TO SAN DIEGO COUNTY SUPERIOR COURT AND (2) DENYING MOTION FOR ATTORNEYS' FEES AND COSTS (ECF No. 5)

JANIS L. SAMMARTINO, District Judge.

Presently before the Court is Plaintiff Paradigm Solutions Group, Inc.'s ("Paradigm") Motion to Remand to State Court and for Attorneys' Fees and Costs. (Mot. Remand, ECF No. 5.) Also before the Court is Defendant Shanghai Precision Technology Corporation's ("SPTC") Response, (Response, ECF No. 9), and Paradigm's Reply, (Reply, ECF No. 10), to the Motion.

The motion hearing scheduled for April 30, 2015 was vacated and the matter taken under submission without oral argument pursuant to Civil Local Rule 7.1(d)(1). Having considered the Parties' arguments and the law, the Court GRANTS Plaintiff's Motion to Remand, REMANDS the case to the San Diego County Superior Court, and DENIES Plaintiff's Motion for Attorneys' Fees.

BACKGROUND

Paradigm is a California Corporation based in San Diego. (Mot. Remand 6, ECF No. 5-1.) SPTC is a Chinese Corporation engaged in the business of manufacturing golf clubs. ( Id. ) The Parties entered into a written contract, whereby Paradigm agreed to act as SPTC's Chief Operating Officer for a term of seven years. ( Id. ) Paradigm alleges that in 2013, SPTC failed to pay Paradigm as provided in the contract and maintains that it is entitled to approximately $1 Million in damages. ( Id. at 4.)

The Parties' contract contained a Binding Arbitration clause as well as a Governing Law/Choice of Venue clause. (Beal Decl. 9, ECF No. 5-2.) These provisions read as follows:

16. Binding Arbitration. It is the intent of the parties that all disputes controversies and claims between Contractor and Company concerning, relating to, stemming from or arising from this Agreement shall be fully, completely and finally resolve[d] by binding arbitration between them.
17. Governing Law; Choice of Venue. The laws of the State of California shall govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the parties hereto. The parties her[e]by irrevocably consent to the exclusive jurisdiction of, and agree that any legal action initiated under this Agreement shall be brought only in, the state court system of the State of California for all purposes in connection with any action or proceeding which arises out of or relates in any manner to this Agreement. The parties further agree that the County of San Diego shall be the proper venue for any legal action brought to enforce or interpret the terms of this Agreement.

( Id. )

In December 2013, Paradigm filed an action in the San Diego County Superior Court. (Not. of Removal, ECF No. 1-2, 1-3.) Paradigm moved the superior court to appoint a neutral arbitrator and also requested that the court issue a right to attach order and writ of attachment or, in the alternative, a temporary protective order.[1] ( Id. ) SPTC did not oppose those motions, but rather filed a Notice of Removal one day before the Superior Court hearing. (Not. Of Removal, ECF No. 1.) The Notice of Removal states that removal is appropriate under 9 U.S.C. § 205, and 28 U.S.C. §§ 1441 and 1446, and that this Court has jurisdiction based on the Federal Arbitration Act, 9 U.S.C. § 1, et seq; the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 203; and 28 U.S.C. § 1331. ( Id. )

Paradigm argues that SPTC had no basis for removing the case and now moves the Court to remand this proceeding to the San Diego County Superior Court pursuant to 28 U.S.C. § 1447(c). (Mot. Remand 5, ECF No. 5-1.) In addition, Paradigm asks the Court to award it reasonable attorneys' fees and costs incurred in bringing this motion. ( Id. )

LEGAL STANDARD

In cases "brought in a State court of which the district courts of the United States have original jurisdiction, " a defendant may remove the case to federal district court. 28 U.S.C. §1441(a). The removing party bears the burden of establishing that federal subject matter jurisdiction exists. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). Courts "strictly construe the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). Therefore, "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id. (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)).

When removal is based on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), there is a strong preference for a federal forum. 9 U.S.C. § 205; Suter v. Munich Reinsurance Co., 223 F.3d 150, 158 (3d Cir. 2000). However, a party can waive its right of removal by agreeing to a contractual clause that gives a clear and unequivocal waiver of that right. Ensco Intern., Inc. v. Certain Underwriters at Lloyd's, 579 F.3d 442, 443-44, 448 (5th Cir. 2009). One way to do so is by agreeing to a forum selection clause that designates an exclusive venue. ( Id. ) In order for the clause to be mandatory rather than permissive, it "must ...


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