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Wellisch v. Pennsylvania Higher Education Assistance Agency

United States District Court, N.D. California, San Jose Division

March 21, 2017

CHRISTIAN WELLISCH, Plaintiff,
v.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, et al., Defendants.

          ORDER DENYING PLAINTIFF'S MOTION TO REMAND [RE: ECF 16]

          BETH LABSON FREEMAN, United States District Judge

         Plaintiff Christian Wellisch[1] brings this suit, which was originally filed in state court, against Defendants Pennsylvania Higher Education Assistance Agency (“PHEAA”) and James L. Preston (collectively, “Defendants”), claiming that Defendants failed to comply with the California Military and Veterans Code (“CMVC”) and the Federal Servicemembers Civil Relief Act (“SCRA”). See generally Ex. B to Notice of Removal (“Compl.”), ECF 1-2. Captain Wellisch's claims arise out of issues related to PHEAA's servicing of his student loans while he was on active duty as a commissioned officer in the California Army National Guard (“CAARNG”). Id. ¶¶ 8-9, 11.

         Presently before the Court is Plaintiff's motion to sever his state law claims and remand them to state court or, alternatively, remand the action in its entirety. See generally Mot., ECF 16. The Court heard argument on this motion on March 16, 2017. For the reasons stated herein and on the record, the Court DENIES Plaintiff's motion.

         I. LEGAL STANDARD

         Federal courts have limited subject matter jurisdiction, and may only hear cases falling within their jurisdiction. Generally, a defendant may remove a civil action filed in state court if the action could have been filed originally in federal court. 28 U.S.C. § 1441. The removal statute provides two basic ways in which a state court action may be removed to federal court: (1) the case presents a federal question, or (2) the case is between citizens of different states and the amount in controversy exceeds $75, 000. See Id. §§ 1441(a), (b).

         The removal statutes are construed restrictively to limit removal jurisdiction. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941). The Ninth Circuit recognizes a “strong presumption against removal.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (internal quotation marks omitted). Any doubts as to removability should be resolved in favor of remand. See Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). The defendant bears the burden of showing that removal is proper. See Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004). If at any time before final judgment it appears that a district court lacks subject matter jurisdiction over a case that has been removed to federal court, the case must be remanded. 28 U.S.C. § 1447(c).

         II. DISCUSSION

         Despite the presence of a federal question-Plaintiff's claim under the SCRA-Captain Wellisch contends that this action, or at least the state law claims, should be remanded. Plaintiff asserts three grounds for remand: First, Defendants improperly removed a separate, nonremovable proceeding. Mot. 2. Second, through removal, Defendants wrongly seek to avoid the ramifications of their failure to timely file responsive pleadings. Id. Third, the removal was improper because Defendants failed to comply with statutory requirements. Id. Defendants oppose remand. Opp'n, ECF 28.

         Approximately one week after filing his multi-claim complaint in state court, including a claim under CMVC section 409.3, Captain Wellisch filed a Petition for Relief from Financial Obligation During Military Service pursuant to CMVC section 409.3. Ex. D to Notice of Removal (“MIL 010 Petition”), ECF 1-4. This document was filed and associated with Plaintiff's civil case that was pending in state court. Id.

         Plaintiff first argues that because the MIL 010 Petition is an independent proceeding with particular procedural requirements that could not have been filed in this Court originally, it is not removable. Mot. 3-4. Defendants, however, contend that the MIL 010 Petition is not a separate proceeding, and is instead a part of his civil case. Opp'n 3.

         Pursuant to CMVC section 409.3(a),

[a] service member may, at any time during his or her most current period of military service or within six months thereafter, petition a court for relief in respect of any obligation or liability incurred by the service member before the effective date of the orders for his or her most current period of military service or in respect of any tax assessment whether falling due before or during his or her most current period of military service.

         Cal. Mil. & Vet. Code § 409.3(a). This section allows a service member to file a petition for relief separate and apart from any civil action or as a part of an underlying lawsuit. See generally Id. The MIL 010 Petition is a California Judicial Council form specific to claims brought under CMVC section 409.3. The form includes instructions for the petitioner and provides notice to the defendant(s) as required under CMVC section 409.3, i.e., that a hearing is to be held within 25 days of filing the petition and that the respondent has until five days before that hearing in which to file and serve any opposition. Cal. Mil & Vet. Code § 409.3(b). Here, the state court clerk set a hearing for January 20, 2017. See MIL 010 Petition.

         As previously described, Captain Wellisch filed a complaint in state court alleging that Defendants' conduct violated the CMVC and SCRA, as well as claims for unfair business practices under California's Business and Professions Code § 17200 and fraudulent concealment. See generally Compl. Thereafter, Plaintiff filed the MIL 010 Petition in the underlying state action. See MIL 010 Petition. Although Captain Wellisch presumably could have filed the MIL 010 Petition separate from his underlying state action, he did not. Now, Plaintiff seeks to sever and remove his claim under CMVC section 409.3, arguing that it is separate from the underlying civil action. While Captain Wellisch correctly recounts the special procedures set forth in CMVC section 409.3, he provides no authority to support his assertion that it is to be construed as a proceeding separate and apart from the underlying civil action when it is filed in the underlying civil action. Indeed, the Monterey ...


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