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The Sunset Landmark Investment, LLC v. Chubb Custom Ins. Co.

United States District Court, C.D. California

September 5, 2017

The Sunset Landmark Investment, LLC
v.
Chubb Custom Ins. Co.

          CIVIL MINUTES-GENERAL

         Proceedings (In Chambers): ORDER RE MOTION TO REMAND TO STATE COURT [7]

         Before the Court are two motions, both filed by Plaintiff the Sunset Landmark Investment, LLC (“Sunset Landmark”): The first is Sunset Landmark's Motion to Remand to State Court (the “Remand Motion”), filed June 29, 2017. (Docket No. 7). On August 7, 2017, Defendant Chubb Custom Insurance Company (“Chubb”) filed its Opposition. (Docket No. 10). Sunset Landmark replied on August 14, 2017. (Docket No. 13).

         On July 31, 2017, Sunset Landmark filed a Motion for Sanctions Pursuant to Federal Rule of Civil Procedure 11 (the “Sanctions Motion”). (Docket No. 8). Chubb filed its Opposition on August 7, 2017 (Docket No. 9), and on August 14, 2017, Sunset Landmark replied (Docket No. 12). The Court has read and considered the papers filed on the Motions and held a hearing on August 28, 2017.

         For the reasons set forth below, the Remand Motion is DENIED. The Court expressed the view at the hearing that the Remand Motion should be granted, and the Court continues to believe that, factually, Chubb was well aware of the basis for removal at the time Sunset Landmark filed the Complaint. Nonetheless, under the Ninth Circuit's bright-line test, the Complaint was insufficient to start the running of the first 30-day time period, for removal.

         The Sanctions Motion is DENIED.

         I. BACKGROUND

         This action concerns a six- or seven-year old dispute between Sunset Landmark and its insurer, Chubb. (See generally Complaint (Docket No. 1-1)). In 2010, a water supply pipe burst on Sunset Landmark's property, and the parties still dispute the benefits to which Sunset Landmark is entitled. (Id. ¶¶ 6-11).

         On March 14, 2017, after several agreements to extend the tolling period, Sunset Landmark filed a claim for breach of contract against Chubb in Los Angeles Superior Court. The Complaint states that Sunset Landmark “is, and at all time relevant hereto was, a Limited Liability Company doing business in Los Angeles County, California.” (Compl. ¶ 1). The Complaint neither stated that Plaintiff was organized pursuant to the laws of California nor did it disclose the citizenship of all of its members. The Complaint does not include estimated damages. Chubb received a copy of the Complaint on March 18, 2017. (Notice of Removal ¶ 2 (Docket No. 1)).

         On May 30, 2017, about two months after it received the Complaint, Chubb filed a Notice of Removal to this Court, invoking 28 U.S.C. § 1441(b) and the Court's diversity jurisdiction, 28 U.S.C. § 1332. (Notice of Removal ¶ 3). The Notice of Removal states simply that removal is appropriate because Sunset Landmark “is a limited liability company organized and existing under the laws of the State of California” whereas Chubb “was and is a corporation incorporated under the laws of the State of Delaware with its principal place of business in the State of New Jersey” and the insurance policy at issue exceeds $75, 000. (Id. ¶¶ 3-4). The Notice of Removal adds that “Saeed Nourmand is a member of [Sunset Landmark] . . . and is a citizen of the State of California.” (Id. ¶ 5).

         Sunset Landmark now moves for remand, contending that the Notice of Removal was untimely, and further requests the Court impose sanctions for what it considers to be Chubb's frivolous decision to remove.

         II. DISCUSSION

         In general, “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court[.]” 28 U.S.C. § 1441(a). A removing defendant bears the burden of establishing that removal is proper. See Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006) (per curiam) (noting the “longstanding, near-canonical rule that the burden on removal rests with the removing defendant”). If there is any doubt regarding the existence of subject matter jurisdiction, the court must resolve those doubts in favor of remanding the action to state court. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.”). Indeed, “[i]f 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); see Kelton Arms Condo. Owners Ass'n, Inc. v. Homestead Ins. Co., 346 F.3d 1190, 1192 (9th Cir. 2003) (“Subject matter jurisdiction may not be waived, and, indeed, we have held that the district court must remand if it lacks jurisdiction.”). Here, the parties do not dispute that the underlying facts show removal was proper. The parties contest only the timing of Chubb's removal.

         Under 28 U.S.C. § 1446(b)(1), a defendant must file a notice of removal “within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based[.]” Section 1446(b)(3) additionally permits removal “within 30 days after receipt by the defendant . . . of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” Either way, a notice of removal must be filed within one year of the action's commencement. See 28 U.S.C. § 1446(c)(1). Although the time limit is procedural rather than jurisdictional, it “is mandatory and a timely objection to a late petition will defeat removal . . . .” Smith v. Mylan Inc., 761 F.3d 1042, 1045 (9th Cir. 2014) (quoting Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir. 1980)).

         Sunset Landmark contends that Chubb's Notice of Removal was untimely because it was filed more than 30 days after receiving the Complaint, and no “other paper” was filed that triggered discovery of the parties' diversity. (Remand Mot. at 5). Chubb responds that, under Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121 (9th Cir. 2013), a defendant may notice removal ÔÇťoutside the two thirty-day periods on the basis of its own ...


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