United States District Court, C.D. California
MAHAFFEY LAW GROUP, P.C.
STEVEN E. PAGANETTI ET AL.
Present: The Honorable ANDREW J. GUILFORD
CIVIL MINUTES - GENERAL
[IN CHAMBERS] ORDER REGARDING MOTION TO REMAND AND MOTION TO
matter is appropriate for resolution without oral argument.
Fed.R.Civ.P. 78(b). The hearing set for September 9, 2019 is
Mahaffey Law Group, P.C. (“MLG”) sued Defendants
Steven E. Paganetti (“Paganetti”) and Wild,
Carter & Tipton (“WCT”) asserting the
following claims: (1) recovery of foreclosure on attorney
lien on escrowed settlement proceeds; (2) fraud; (3) fraud by
ratification; (4) breach of contract; and (5) conversion. MLG
now moves to remand this case back to Orange County Superior
Court. (Mot. to Remand, Dkt. No. 24.) At the same time,
Paganetti moves to dismiss MLG's claims under Federal
Rule of Civil Procedure 12(b)(6). (Mot. to Dismiss, Dkt. No.
Court GRANTS Plaintiff's motion to remand. The Court
REMANDS this case to Orange County Superior Court. All other
pending matters, including Defendant's motion to dismiss,
following facts come from Plaintiff's First Amended
Complaint (“FAC”) and, at this stage, the Court
assumes they're true. (See generally FAC, Dkt.
MLG is a law firm based in Newport Beach, California.
(Id. at ¶ 1.) Defendant WCT is a law firm based
in Fresno, California. (Id. at ¶ 3.) Paganetti
is an attorney who first worked for WCT and then for MLG.
(Id. at ¶ 2.)
claims stem from two fee disputes. Only the second dispute is
relevant here. That dispute concerns a client of
Paganetti's at WCT named John Sanford. (Id. at
¶ 31.) (It's unclear how to spell
“Sanford” since it's spelled differently
throughout both parties' briefs.) Once Paganetti started
at MLG, he wanted to continue representing Sanford at MLG.
(See Id. at ¶¶ 32-34.) MLG okayed this
request based on Paganetti's representation that he'd
be representing Sanford under a standard contingency fee
agreement. (Id.) Paganetti then sent Sanford a
letter memorializing the fee agreement, which Sanford signed
and returned. (Id. at ¶ 43.)
time later, Paganetti told MLG that the Sanford matter had
settled, yielding a contingency fee award of $73, 326.
(Id. at ¶ 47.) Of this amount, Paganetti took
home $65, 993.36, while MLG pocketed only $7, 332.60.
later resigned from MLG. (Id. at ¶ 52e.) And
after Paganetti resigned, MLG discovered the Sanford matter
hadn't fully settled. (Id. at ¶ 52.) MLG
also found out that the fee agreement in place with Sanford
wasn't the standard contingency agreement Paganetti
described. Rather, the fee agreement also included an
open-ended defense obligation that eventually cost MLG to
incur more than $118, 000 in defense costs. (Id. at
¶¶ 51, 63.)
claims that the $65, 993.36 in funds Paganetti received for
“settling” the Sanford matter was supposed to be
used to prepay these defense costs. (Other possible factors
such as punitive damages raises the amount involved in this
case to over $75, 000.) Consequently, MLG believes Paganetti
defrauded MLG of fees rightfully owed to MLG. And because MLG
claims Paganetti had partner-status at WCT when he originally
had Sanford sign the fee agreement at issue here, MLG alleges
WCT is jointly liable for Paganetti's fraud.
Constitution provides, in Article III, § 2, that
“[t]he judicial Power [of the United States] shall
extend . . . to all Cases . . . between Citizens of different
States.” And Congress, in 28 U.S.C. Section 1132(a),
has authorized district courts to exercise jurisdiction over
“all civil actions where the matter in controversy
exceeds the sum or value of $75, 000, exclusive of interests
and costs, and is between . . . citizens of different
States.” Principles of federalism and judicial economy
require courts to “scrupulously confine their [removal]
jurisdiction to the precise limits which [Congress] has
defined.” See Shamrock Oil & Gas Corp. v.
Sheets, 313 U.S. 100, 109 (1941). “Nothing is to
be more jealously guarded by a court than its
jurisdiction.” United States v. Ceja-Prado,
333 F.3d 1046, 1051 (9th Cir. ...