Velu v. Aristotle Air Conditioning and Heating LLC

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Gopal Velu, No. CV-21-01188-PHX-MTL 10 Plaintiff, ORDER 11 v. 12 Aristotle Air Conditioning and Heating LLC, et al., [13] Defendants. [14] 15 Before the Court is Plaintiff Gopal Velu’s Motion to Remand (Doc. 16). For the 16 reasons stated below, the Court grants the Motion.1 17 I. BACKGROUND 18 Velu commenced this action against Aristotle Air Conditioning and Heating, LLC 19 (“Aristotle”) in Arizona Superior Court on May 27, 2021. (Doc. 1 at 8.) The Complaint 20 alleges that Velu is a resident of Cleveland, Ohio and Aristotle is an Arizona limited 21 liability company. (Id.) Velu claimed damages in an amount required to qualify as a Tier 2 22 case pursuant to Rule 26.2(c)(3) of the Arizona Rules of Civil Procedure (“more than 23 $50,000 [but] less than $300,000”). (Id.) 24 Aristotle removed the case to this Court on July 8, 2021. (Id. at 1‒2.) Aristotle then 25 failed to timely file an Answer. (Docs. 16 at 3; 17 at 3.) On July 16, 2021, this Court issued 26 an Order requesting Velu to file a status report as to his timeline to seek entry of default [27] 1 Both parties have submitted legal memoranda and oral argument would not have aided 28 the Court’s decisional process. See Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998); see also LRCiv 7.2(f); Fed. R. Civ. P. 78(b). 1 and whether he intended to file a motion to remand. (Doc. 10.) Also on July 16, 2021, 2 Aristotle filed an untimely Answer to Velu’s Complaint. (Doc. 11.) The same day, Velu 3 filed a status report and a request for entry of default against Aristotle. (Docs. 12; 13.) The 4 status report clarified that Velu had not determined whether he intended to file a motion to 5 remand and reserved the right to do so. (Doc. 12.) Because Aristotle filed an Answer, the 6 Court denied Velu’s request for entry of default. (Doc. 14.) 7 Velu filed this Motion to Remand on August 3, 2021. (Doc. 16.) Velu argues 8 removal was improper because Aristotle is a citizen of Arizona, the forum state. (Id. at 4‒ 9 5.) Velu also seeks attorneys’ fees incurred as a result of the removal. (Id. at 5.) Aristotle 10 admits that it is a citizen of Arizona. (Doc. 17 at 1.) It argues, however, that Velu waived 11 his right to remand by first filing a request for entry of default. (Id.) 12 II. LEGAL STANDARD 13 A defendant may remove a case filed in state court to district court if the action 14 could have originally been filed in the district court. 28 U.S.C. § 1441 (a). District courts 15 have original jurisdiction of all civil actions arising under federal law or where the matter 16 in controversy exceeds $75,000 and is between citizens of different states. 28 U.S.C. 17 §§ 1331, 1332(a). “A motion to remand is the proper procedure for challenging removal.” 18 Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). Because the 19 removal statute is strictly construed, “any doubt about the right of removal requires 20 resolution in favor of remand.” Id. “An order remanding the case may require payment of 21 just costs and any actual expenses, including attorney fees, incurred as a result of the 22 removal.” 28 U.S.C. § 1447 (c). 23 III. DISCUSSION 24 A. Motion to Remand 25 Velu argues remand is required because Aristotle is a citizen of Arizona. (Doc. 16 26 at 5.) Under the so-called “forum defendant rule,” a defendant may not remove a case based 27 solely on diversity of citizenship jurisdiction if it is a citizen of the state in which the action 28 was originally brought. 28 U.S.C. § 1441 (b)(2). “This rule embodies the notion that a 1 defendant cannot complain of being haled before the courts of his or her own state.” Regal 2 Stone Ltd. v. Longs Drug Stores California, L.L.C., 881 F. Supp. 2d 1123, 1126 (N.D. Cal. 3 2012). Aristotle removed this case based solely on diversity of citizenship jurisdiction. 4 (Doc. 1 at 2.) Aristotle further admitted that it is a citizen of Arizona. (Doc. 17 at 1.) The 5 Court, therefore, finds that removal violated the forum defendant rule. 6 Aristotle argues that Velu waived his right to remand by first filing a request for 7 entry of default. (Id.) The forum defendant rule is a waivable procedural requirement. 8 Lively v. Wild Oats Markets, Inc., 456 F.3d 933, 942 (9th Cir. 2006). A plaintiff can waive 9 the right to remand based on procedural defects by engaging in affirmative conduct or 10 evidencing unequivocal assent that would render remand offensive to fundamental 11 principles of fairness. Owens v. Gen. Dynamics Corp., 686 F. Supp. 827, 830 (S.D. Cal. 12 1988). 13 The Ninth Circuit has not decided whether requesting entry of default constitutes 14 affirmative conduct that waives a plaintiff’s right to remand. Alarcon v. Shim, Inc., No. C 15 07-02894 SI, 2007 WL 4287336 , at *3 (N.D. Cal. Dec. 5, 2007). Furthermore, there is 16 conflicting authority among the district courts that have addressed this issue. See, e.g., id. 17 (holding request for entry of default was a ministerial act that did not waive right to 18 remand). But see Giraudo v. Henkels & McCoy, No. CIV. 93-548-FR, 1993 WL 302354 , 19 at *2 (D. Or. July 28, 1993) (holding plaintiffs waived their right to remand based on 20 procedural irregularities by seeking an order of default). This Court agrees with those 21 courts that have held that filing a request for entry of default does not waive the right to 22 remand based on procedural defects. This conclusion is supported by the requirement of 23 resolving any doubt about the right of removal in favor of remand. See Moore-Thomas, [24] 553 F.3d at 1244 (9th Cir. 2009). Accordingly, the Court holds that the removal violated 25 the forum defendant rule and that Velu did not waive his right to remand by filing a request 26 to enter default against Aristotle. 27 B. Attorneys’ Fees 28 “An order remanding the case may require payment of just costs and any actual 1 expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447 (c). 2 District courts have wide discretion to award attorneys’ fees in a remand order. Moore v. 3 Permanente Med. Grp., Inc., 981 F.2d 443 , 448 (9th Cir. 1992). “Absent unusual 4 circumstances, courts may award attorney’s fees under § 1447(c) only where the removing 5 party lacked an objectively reasonable basis for seeking removal.” Martin v. Franklin Cap. 6 Corp., 546 U.S. 132, 141 (2005). It is not objectively reasonable to remove an action when 7 doing so will violate the forum defendant rule. See Ekeya v. Shriners Hosp. for Child., 8 Portland, 258 F. Supp. 3d 1192, 1206 (D. Or. 2017); see also Everest Sys. Co. v. Platinum 9 Roofing, Inc., No. 19-CV-03133-BLF, 2019 WL 3387951 , at *2 (N.D. Cal. July 26, 2019) 10 (“Even though this rule is merely procedural and thus waivable, it would flout the forum 11 defendant rule if the [c]ourt were to condone in-state defendants baselessly removing to 12 federal court in the hopes that a plaintiff will waive its right to remand.”). As explained 13 above, removal of this case violated the forum defendant rule because Aristotle is citizen 14 of Arizona. Aristotle’s attempt to justify this violation by claiming its counsel did not 15 confirm its citizenship until after removal, and only in anticipation of its Answer (Doc. 17 16 at 8), further supports a finding that removal was unreasonable. Thus, the Court finds that 17 Aristotle lacked an objectively reasonable basis for seeking removal. The Court will, 18 therefore, award Velu his reasonable attorneys’ fees incurred in seeking remand. 19 IV. CONCLUSION 20 Accordingly, 21 IT IS ORDERED that Plaintiff’s Motion to Remand (Doc. 16), including the 22 request for attorneys’ fees incurred in seeking remand, is granted. 23 IT IS FURTHER ORDERED that no later than August 24, 2021, Plaintiff shall 24 file an affidavit supporting his application for attorneys’ fees. Defendant may file an 25 opposition no later than September 7, 2021. Plaintiff shall not file a reply unless one is 26 ordered. The Court will retain jurisdiction following remand to resolve the award of 27 attorneys’ fees. 28 /// 1 IT IS FURTHER ORDERED that the September 16, 2021 scheduling conference is vacated. 3 IT IS FINALLY ORDERED directing the Clerk to remand this action to the Arizona Superior Court in Maricopa County. 5 Dated this 10th day of August, 2021. [6] ’ Wichal T. Hburde 8 Michael T. Liburdi 9 United States District Judge [28] -5-