United States District Court, N.D. California
ORDER REMANDING CASE TO SAN FRANCISCO COUNTY SUPERIOR
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE.
removed this fraud action from state court on diversity
jurisdiction grounds. Plaintiff now moves to remand to the
Superior Court of the State of California, San Francisco
County, on the basis that removal was defective. For the
reasons set forth below, the motion is Granted.
Puglia Engineering, Inc., a Washington ship repair company,
commenced this action against BAE Systems Ship Repair, Inc.
and BAE Systems, Inc. (“BAE”), BAE Systems San
Francisco (“BAE-SF”), and the City and County of
San Francisco operating through the San Francisco Port
Commission (“the Port”) in the Superior Court of
the State of California, San Francisco County. BAE is a
defense contracting company incorporated in Delaware with its
principal place of business in Virginia (Dkt. No. 1 at 2).
BAE-SF is a California corporation with its principal place
of business in California. The Port is a municipal
corporation and a citizen of California.
Puglia's claims arise from the following well-pled
allegations that BAE and BAE-SF fraudulently induced it to
acquire BAE-SF - which leases and operates a shipyard
facility owned by the Port - by misrepresenting that the
Port's dry docks were well maintained and that Puglia did
not need to perform immediate dredging in order to generate
revenue (Compl. ¶ 2).
December 1, 2016, Puglia entered a purchase agreement with
BAE for the conditional purchase of one hundred percent
BAE-SF stock (id. ¶ 27). The purchase was
conditioned on, among other things, the Port's consent to
assignment, which the Port, Puglia and BAE-SF executed in a
document effective December 30, 2016. When Puglia took over
BAE-SF in January 2017, it found the dry docks in poor
condition, with costs of repair or replacement estimated to
exceed $9 million and the immediate costs of dredging the
site estimated to be about $12 million (id.
¶¶ 2, 32). Puglia filed a notice of imminent
closure in February, claiming that it could not operate at a
profit. Without releasing any legal rights against each
other, Puglia and the Port entered an interim agreement to
continue operation of the shipyard facility until the end of
May (Dkt. No. 26 at 4). The parties did not extend this
agreement and the shipyard closed while this action was
February 15, 2017, Puglia brought claims against BAE and
BAE-SF on the basis of fraud, negligent misrepresentation,
state securities statutes and state fraudulent business
practices statutes (Compl. ¶¶ 34-62, 70-79). Puglia
seeks rescission of its purchase agreement with BAE. It also
seeks rescission of the Port's consent, alleging that it
was defective for several reasons, including that it failed
to include all language required by the lease. Moreover, it
seeks declaratory relief from all defendants and monetary
damages from all except the Port.
March 16, 2017, BAE removed this action from the Superior
Court of the State of California, San Francisco County on
diversity jurisdiction grounds and brought a motion to
transfer or dismiss in the alternative on the basis of a
forum selection clause that designated the Southern District
of New York as the proper venue for any proceeding arising
from the purchase agreement (Dkt. No. 11). Puglia contends
that this action must be remanded because removal was
procedurally defective. With the benefit of full briefing and
oral argument, this order agrees.
as here, a defendant cites diversity jurisdiction as its sole
basis for removing an action from state court, the action is
not removable “if any of the parties in interest
properly joined and served as defendants is a citizen of the
State in which such action is brought.” 28 U.S.C.
1441(b)(2). Moreover, all defendants must join in removal.
Hewitt v. City of Stanton, 798 F.2d 1230, 1232 (9th
bears the burden of establishing that an action is removable,
with all doubts resolved in favor of remand. Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
Specifically, here, BAE must show that BAE-SF and the Port
are not forum defendants and do not violate the requirement
that defendants unanimously join in removal. BAE concedes
that this action must be remanded if removal violates either
Unanimous Joinder of Defendants.
defendants must join in a removal petition with the exception
of nominal parties.” Hewitt, 798 F.2d at 1232.
The rule of unanimity does not require each defendant to
submit individual documents consenting to removal.
Proctor v. Vishay Intertechnology Inc., 584 F.3d
1208, 1225 (9th Cir. 2009). Rather, “[o]ne
defendant's timely removal notice containing ...