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L.P. v. Corporation of Presiding Bishop of Church of Jesus Christ of Latter-Day Saints

United States District Court, C.D. California

June 16, 2017





         Before the Court are Plaintiff 2151 Michelson, L.P.'s (“Plaintiff” or “Michelson”) Motion to Remand Action to the Superior Court of California, County of Orange (“MTR”) (Dkt. 16), and Defendant Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter Day Saints' (“Defendant” or “CPB”) Motion to Dismiss and Compel Arbitration (“MTD”) (Dkt. 11). The Court finds these matters appropriate for resolution without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. Having considered the parties' arguments, the Court DENIES Plaintiff's Motion and GRANTS Defendant's Motion to Dismiss and Compel Arbitration.

         I. Background

         A. Facts

         The Court adopts the facts as set out in Plaintiff's Complaint. Declaration of Christopher S. Hill (“Hill Decl.”) (Dkt. 2) Ex. A (“Compl.”).

         In 1977, Plaintiff and Defendant entered into a fifty-five-year lease. Hill Decl. Ex. A (“Lease”); Compl. ¶ 7. The property is located in Irvine, California, and Defendant is the current lessor. Compl. ¶ 6.

         The Lease provides that as lessee, Plaintiff will pay $88, 165.00 per annum in rent to Defendant. Id. ¶ 8. The Lease also states that at the end of the twenty-fifth year and the fortieth year of the Lease, the annual rental “shall be adjusted to that sum which the Lessor could derive from said property if it were made available on the open market for new leasing purposes . . . .” Id.

         According to the Lease, if the parties fail to agree upon the adjusted annual rent at the end of the twenty-fifth or fortieth years, the amount of rent will be determined by arbitration. Id. ¶ 9. In the event of such a disagreement, the lessor will appoint an arbitrator and give notice to the lessee, who will then also appoint an arbitrator and provide notice to the lessor. Id. The two arbitrators will appoint a third arbitrator. Lease at 20. If either party fails to appoint an arbitrator or give notice under the terms of the Lease, the other party “shall have the right to apply to the Superior Court of Orange County, California, to appoint an arbitrator to represent the defaulting party.” Compl. ¶ 9.

         In 2002, at the end of the twenty-fifth year of the Lease, Defendant failed to provide notice as required by the Lease. Id. ¶ 10. Accordingly, Plaintiff filed a declaratory relief action in the Orange County Superior Court. Id. Defendant filed a cross-complaint, and the court found for Plaintiff. Id. ¶¶ 11-12. Defendant appealed the judgment, id. ¶ 13, and the California Court of Appeal reversed and remanded. MTR at 4. After another bench trial in Orange County Superior Court, the court again entered judgment in favor of Plaintiff. Id.

         In 2017, at the end of the fortieth year of the Lease, Defendant again failed to provide notice by the deadline provided by the Lease. Id. at 5.

         II. Procedural History

         On March 29, 2017, Plaintiff filed the instant complaint in the Superior Court of Orange County. See Compl. at 1. Plaintiff seeks declaratory relief for the following four disputes: (1) the determination of the appropriate rental rate for the property; (2) the appropriate methodology to use in determining that rate; (3) whether the Court is precluded from reaching the merits of (1) and (2) in light of previous California state court decisions between the parties; and (4) whether Defendant waived its right to compel arbitration. Compl. ¶ 22.

         On May 2, 2017, Defendant removed this case to federal court. Notice of Removal from Superior Court of Orange County (“Notice”) (Dkt. 1).

         On May 9, 2017, Defendant filed the instant motion to dismiss. Plaintiff opposed on May 22, 2017 (“MTD Opp'n”) (Dkt. 17), and Defendant replied on May 26, 2017 (“MTD Reply”) (Dkt. 18).

         Plaintiff filed the instant motion to remand on May 19, 2017. Defendant opposed on May 26, 2017 (“MTR Opp'n”) (Dkt. 19), and Plaintiff replied on June 5, 2017 (“MTR Reply”) (Dkt. 21).

         III. Legal Standard

         A. Motion to Remand

         “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). Removal of a case from state court to federal court is governed by 28 U.S.C. § 1441, which provides in pertinent part that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed . . . to the district court of the United States for the district and division embracing the place where such action is pending.” The removing defendant must file a notice of removal in the appropriate United States District Court, together with all process, pleadings, and orders served upon the defendant. 28 U.S.C. § 1446(a). Notice of removal must be filed within thirty days of receiving a copy of the original complaint, or “within 30 days after the service of summons upon the defendant, if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.” 28 U.S.C. § 1446(b). Remand may be ordered for lack of subject matter jurisdiction or any defect in the removal procedure. 28 U.S.C. § 1447(c).

         “[P]ost-removal amendments to the pleadings cannot affect whether a case is removable, because the propriety of removal is determined solely on the basis of the pleadings filed in state court.” Williams v. Costco Wholesale Corp., 471 F.3d 975, 976 (9th Cir. 2006); see also Sparta Surgical Corp. v. Nat'l Ass'n of Sec. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998) (“[A] plaintiff may not compel remand by amending a complaint to eliminate the federal question upon which removal was based.”). Therefore, “a party that has properly removed a case need not amend its removal notice or file a new notice after an amended complaint changes the ground for federal jurisdiction.” Id. Once a defendant has properly removed a case, “the district court has jurisdiction over it on all grounds apparent from the complaint, not just those cited in the removal notice.” Id.

         To protect the jurisdiction of state courts, removal jurisdiction should be strictly construed in favor of remand. Harris v. Bankers Life and Cas. Co., 425 F.3d 689, 698 (9th Cir. 2005) (citing Shamrock Oil & Gas Corp. v. Sheet, 313 U.S. 100, 108-09 (1941)). If there is any doubt as to the right of removal in the first instance, remand must be ordered. See Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988).

         B. Motion to Dismiss and Compel Arbitration

         Although framed as a motion to dismiss, Defendant's Motion seeks an order compelling arbitration. Thus, the Court will apply the legal standard ...

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