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Moe G. Enterprises, LLC v. Lenihan

January 12, 2011

MOE G. ENTERPRISES, LLC., PLAINTIFF,
v.
LENIHAN GABRIEL FONTANA, MATTHEW L. ECF NOS. 2 & 9 KURZWEG, D/B/A KURZWEG LAW OFFICES AND BAR 1713, LLC, DEFENDANTS.



The opinion of the court was delivered by: Chief Magistrate Judge Lisa Pupo

OPINION LENIHAN, Chief Magistrate Judge

Currently pending before the Court is Plaintiff‟s Motion for Remand and Assessment of Costs (ECF No. 2), and a Motion to Consolidate Two Civil Actions (ECF No. 9) filed by Defendants Gabriel Fontana and Bar 1713, LLC ("Bar 1713 Defendants"). For the reasons set forth below, the Court will Grant Plaintiff‟s Motion for Remand and Assessment of Costs, and deny the Bar 1713 Defendants‟ Motion to Consolidate as moot.

I. PROCEDURAL HISTORY

Plaintiff, Moe G. Enterprises, LLC ("Moe") instituted this civil action against Defendants by filing a Complaint in the Court of Common Pleas of Allegheny County, Pennsylvania, on May 26, 2010. The Complaint asserts only state law claims against the Defendants, contained in 5 counts-Count I (Equitable Relief for the production of corporate records) against Kurzweg; Count II (Equitable Relief for the production of corporate records) against Kurzweg and Fontana; Count III (Conversion) against Fontana; Count IV (Conversion) against Bar 1713; and Count V (Equitable Relief enjoining interference with Moe‟s contractual relationships) against Fontana. (Compl., ECF No. 1-2). These state law claims arise out of and/or relate to the business and operation of a bar/nightclub located in the City of Pittsburgh. The Complaint further alleges that at all relevant times, the parties either resided in, or were organized under the laws of and conducted business in Pennsylvania.*fn1 (Compl., ¶¶1-5.)

After a delay in responding to the Complaint, the Bar 1713 Defendants filed several preliminary objections to the Complaint which, with one exception,*fn2 were overruled on September 15, 2010.*fn3 The Bar 1713 Defendants eventually filed an Answer, New Matter and Counterclaim on October 18, 2010.*fn4 (Ex. 4 to Notice of Removal, ECF No. 1-5.) The Counterclaim asserted a state law claim for defamation, as well as a federal claim for the alleged violation of the Computer Fraud and Abuse Act, 18 U.S.C. §1030 et seq. ("CFAA").

On November 18, 2010, the Bar 1713 Defendants filed a Notice of Removal and the case was removed to this federal court and randomly assigned to the undersigned. In the Notice of Removal, the Bar 1713 Defendants expressly state that a lack of diversity exists among the parties to this action and the Complaint fails to set forth any claims arising under the laws of the United States. (Notice of Removal, ¶2.) Nonetheless, the Bar 1713 Defendants assert that with the addition of the CFAA claim in their Counterclaim, this action became removable from the court of common pleas to this United States District Court pursuant to 28 U.S.C. §§ 1331 and 1441(a). (Notice of Removal, ¶4.) Finally, the Bar 1713 Defendants submit that their Notice of Removal is timely because it is being filed within thirty days of the filing of their Answer, New Matter, and Counterclaim. (Notice of Removal, ¶6.)

Subsequently, on November 23, 2010, Plaintiff filed a motion for remand on two grounds: (1) this Court lacked original subject matter jurisdiction, and therefore, the removal of this case to federal court by the Bar 1713 Defendants was clearly improper; and (2) the filing of the Notice of Removal was untimely, and therefore, defective. Plaintiff also contends that an award of costs, expenses and fees is warranted here for the reason that the Bar 1713 Defendants could not have held an objectively reasonable basis for removal. On December 14, 2010, the Bar 1713 Defendants‟ response was two-fold: (1) a brief in opposition arguing that pursuant to 28 U.S.C. §1367(a), this Court has supplemental jurisdiction over this case as it arises from the same nucleus of facts as another federal action currently pending before this court, Gabriel Fontana and Bar 1713, LLC v. William P. Corry, docketed at Civil Action number 10-1685, which asserts a claim under the CFAA (the "CFAA action"); and (2) a motion to consolidate this case with the newly filed CFAA action.*fn5 Thereafter, on December 20, 2010, Plaintiff filed a reply in support of its motion for remand and assessment of costs, and a memorandum in opposition to the Bar 1713 Defendants‟ motion to consolidate.

As both motions have been fully briefed, they are now ripe for disposition.

II. LEGAL STANDARD -- REMOVAL & MOTION TO REMAND Section 1441 of Title 28, United States Code, governs the removal of a case to federal court. Generally, "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 . . . , to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. §1441(a). "The removal statutes "are to be strictly construed against removal and all doubts should be resolved in favor of remand.‟" Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (quoting Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987) (other citations omitted)); Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 219 (3d Cir. 2005). Where a motion for remand is filed, the defendant has the burden of proving that removal was proper. Sikirica, 416 F.3d at 219 (citing Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004)).

The time for removal is governed by Section 1446(b), which provides, in essence, that the notice of removal shall be filed within thirty days after receipt by the defendant of a copy of the initial pleading,*fn6 unless the case stated by the initial pleading is not removable. 28 U.S.C. § 1446(b). In the latter situation, "a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, 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[.]" Id.

III. DISCUSSION

A. Motion for Remand and Motion to Consolidate

In removal cases, the existence of federal court jurisdiction is usually determined under the well-pleaded complaint rule, which provides that federal question jurisdiction is established when the face of a properly pleaded complaint asserts a federal question. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing Gully v. First Nat'l Bank, 299 U.S. 109, 112-13 (1936)). The well-pleaded complaint rule "makes the plaintiff the "master of the claim,‟ meaning that he or she may avoid federal jurisdiction by forgoing federal causes of action and basing the claim on only state law." Scott v. Sysco Food Serv. of Metro N.Y., L.L.C., Civ. A. No. 07-3656 (SRC), 2007 WL 3170121, *2 (D.N.J. Oct. 26, 2007)(citing Caterpillar, 482 U.S. at 392 (other citation omitted)). "Under the well-pleaded complaint rule, there can be no removal on the basis of a federal question unless the federal law under which the claim arises is a direct and essential element of the plaintiff‟s case." In re Community Bank of N. Va., 418 F.3d 277, 293 (3d Cir. 2005) (citing Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10-12 (1983); Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908)). Moreover, the United States Supreme Court has made clear that for purposes of determining removal jurisdiction under the "well-pleaded complaint rule," federal jurisdiction is determined without any reference to federal claims raised in counterclaims.*fn7 Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002) (citations omitted). In so holding, the Supreme Court explained:

Admittedly, our prior cases have only required us to address whether a federal defense, rather than a federal counterclaim, can establish "arising under" jurisdiction. Nevertheless, those cases were decided on the principle that federal jurisdiction generally exists "only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (emphasis added). As we said in The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 57 L.Ed. 716 (1913), whether a case arises under federal patent law "cannot depend upon the answer." Moreover, we have declined to adopt proposals that "the answer as well as the complaint ... be consulted before a determination [is] made whether the case "ar[ises] under‟ federal law ... ." Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 10-11, n. 9, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (citing American Law Institute, Study of the Division of Jurisdiction Between State and Federal Courts § 1312, pp. 188-194 (1969)). It follows that a counterclaim-which appears as part of the defendant's answer, not as part of the plaintiff's complaint-cannot serve as the basis for "arising under" jurisdiction. See, e.g., In re Adams, 809 F.2d 1187, 1188, n. 1 (C.A.5 1987); FDIC v. Elefant, 790 F.2d 661, 667 (C.A.7 1986); Takeda v. Northwestern National Life Ins. Co., 765 F.2d 815, 822 (C.A.9 1985); 14B C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure ยง 3722, pp. 402-414 (3d ed.1998). Allowing a counterclaim to establish "arising under" jurisdiction would also contravene the longstanding policies underlying our precedents. First, since the plaintiff is "the master of the complaint," the well-pleaded-complaint rule enables him, "by eschewing claims based on federal law, ... to have the cause heard in state court." Caterpillar Inc., supra, at 398-399, 107 S.Ct. 2425. The rule proposed by respondent, in contrast, would leave acceptance or rejection of a state forum to the master of the ...


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