Magnoliadrhomes LLC v. Kahn

• Court: District Court, N.D. California
• Decided: August 2, 2021
• Docket: 4:21-cv-03682
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA

7 MAGNOLIADRHOMES LLC, et al., Case No. 21-cv-03682-PJH 8 Plaintiffs,

9 v. ORDER GRANTING MOTION FOR REMAND AND DENYING MOTION 10 RICHARD KAHN, et al., FOR SANCTIONS 11 Defendants. Re: Dkt. Nos. 11, 13 12

13 Before the court are plaintiffs Magnoliadrhomes, LLC’s and Youlin Wang’s 14 (collectively, “plaintiffs”) motion for remand (Dkt. 11) and motion for sanctions (Dkt. 13). 15 Defendants Richard Kahn (“Kahn”) and Forensic Professional Group, USA, Inc. (“FPG”) 16 (collectively, “defendants”) failed to file any opposition to either motion. The court finds 17 that both motions are suitable for decision without oral argument and VACATES the 18 August 5, 2021 and August 26, 2021 hearings. Having read plaintiffs’ papers and 19 carefully considered their arguments and the relevant legal authority, the court GRANTS 20 the motion for remand and DENIES the motion for sanctions. 21 BACKGROUND 22 On December 11, 2020, plaintiffs filed their operative first amended complaint 23 (“FAC”) in Santa Clara County Superior Court against defendants, as well as four other 24 persons. Dkt. 11-1 ¶ 3.1 On February 8, 2021, plaintiffs served defendants with the FAC 25

26 1 Despite their service of process prior to this action’s removal, Dkt. 11-1 ¶¶ 5-8, those four persons did not join defendants’ removal, Dkt. 1 (Notice of Removal) at 2 (stating 27 that only defendant “removes [sic] to this federal court, the state court action described 1 and summons. Id. ¶ 4; Dkt. 11-1 at 9-10 ¶ 3 (proof of service on Kahn in both his 2 individual capacity and capacity as registered agent for FPG). In their FAC, plaintiffs 3 allege claims under both state and federal law. Dkt. 1-2 (FAC) ¶¶ 81-209. The court 4 need not detail the allegations underlying this action to decide the instant motions. 5 On May 17, 2021, defendants filed a six-page notice of removal. Dkt. 1. They did 6 not file the certification regarding removed cases required by this court’s standing order.2 7 On June 16, 2021, plaintiffs filed the instant motion to remand. Dkt. 11. In it, they 8 request that the court remand this action to the Santa Clara County Superior Court. Id. at 9 4. They also request that the court reimburse plaintiffs their attorneys’ fees and costs for 10 obtaining remand “in an amount and manner to be determined by this Court.” Id. 11 Defendants failed to file any opposition to plaintiffs’ motion for remand. 12 On July 14, 2021, plaintiffs then filed the instant motion for sanctions. Dkt. 13. In 13 it, they request that the court impose monetary and non-monetary sanctions on 14 defendants as well as their counsel, Douglas Everett Klein (“Counsel Klein”), for violation 15 of Rule 11. Id. Again, defendants failed to file any opposition. On August 2, 2021, three 16 days before the scheduled hearing on this matter, defendants filed a statement of non- 17 opposition to the motion for remand. Dkt. 14. 18 DISCUSSION 19 I. Remand Is Proper 20 “A motion to remand is the proper procedure for challenging removal.” Moore- 21 Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). A federal court 22 properly remands an action to state court when it either lacks subject matter jurisdiction 23 over such action or there is a defect in removal procedure. Allen v. UtiliQuest, LLC, 2014 24 WL 94337, at *2 (N.D. Cal. Jan. 9, 2014) (“A remand may be ordered either for lack of 25 subject matter jurisdiction or for any defect in the removal procedure.”). 26 Title 28 U.S.C. § 1446 generally permits a defendant to remove an action within 27 1 only 30 days of such defendant’s receipt of the complaint or summons. 28 U.S.C. § 2 1446(b)(1). “The burden of establishing federal jurisdiction falls on the party invoking the 3 removal statute.” Williams v. Caterpillar Tractor Co., 786 F.2d 928, 930 (9th Cir. 1986), 4 aff'd but disapproved on other grounds Caterpillar Inc. v. Williams, 482 U.S. 386, 391 n.4 5 (1987). 6 Defendants had until March 10, 2021 to remove this action. They filed their notice 7 of removal on May 17, 2021. Thus, defendants’ removal was untimely. 8 The authorities cited by defendants in their notice of removal to support their 9 allegation that they complied with the applicable deadline do not alter that conclusion. 10 First, two of those authorities, Tedford v. Warner-Lambert, 327 F.3d 423 (5th Cir. 2003) 11 and Leslie v. Banctec Serv. Corp., 928 F. Supp. 341 (S.D.N.Y. 1996), do not bind this 12 court. On that basis, the court need not and will not consider them. 13 That leaves Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990). The 14 portion of that case cited by defendants discusses equitable tolling. 498 U.S. at 95 15 (“Time requirements in lawsuits between private litigants are customarily subject to 16 ‘equitable tolling.”). Defendants neglect any explanation for why the application of that 17 principle is appropriate (or permissible) in this case. The court itself does not see one. 18 In light of the above, the court grants plaintiffs’ motion to remand on grounds that 19 defendants failed to comply with § 1446(b)(1)’s removal deadline. Given that, the court 20 need not consider plaintiffs’ alternative arguments in support of remand. Dkt. 11 at 9-11.3 21 II. The Court Awards Attorney’s Fees and Costs for Obtaining Remand 22 When issuing an order remanding a removed case to federal court, a district court 23 may “require payment of just costs and any actual expenses, including attorney fees, 24

25 3 For the record, the court notes certain shortcomings in those arguments. First, in their FAC, plaintiff alleges federal law claims. Thus, the applicability of Title 28 U.S.C. § 26 1441(b)(2)’s “forum defendant rule,” Dkt. 11 at 11, is beside the point. Second, plaintiffs criticize defendant for failing to obtain the consent of the non-removing defendants prior 27 to removing this action. Id. at 9-10. Plaintiffs, however, fail to explain how or why 1 incurred as a result of the removal.” 28 U.S.C. § 1447(c). When construing this statute, 2 the Supreme Court has held that “absent unusual circumstances, attorney’s fees should 3 not be awarded when the removing party has an objectively reasonable basis for 4 removal.” Martin v. Franklin Cap. Corp., 546 U.S. 132, 136 (2005). 5 The court finds that defendants lack an objectively reasonable basis for removal. 6 Critically, Title 28 U.S.C. § 1446(b)(1)’s 30-day removal deadline is clear and was 7 obviously applicable to defendants’ removal decision. In their notice of removal, 8 defendants failed to offer any authority or argument explaining their failure to comply with 9 that deadline. 10 Moreover, the court infers that defendants subjectively understood their non- 11 compliance with that deadline. Two procedural facts support that inference. First, 12 defendant failed to file any opposition to the motion for remand. Second, defendants 13 failed to comply with this court’s standing order requiring a removing party to make 14 certain certifications concerning an action’s removal. That latter failure is particularly 15 telling because a key piece of information called for in that certification is “[w]hether the 16 notice of removal was dated more than thirty (30) days after the first defendant was 17 served.” https://cand.uscourts.gov/wp-content/uploads/judges/hamilton- 18 pjh/PJH_Standing-Order-Removed-Cases.pdf, ¶ 2. 19 Defendants’ belated statement of non-opposition does not alter that inference. 20 Defendants say that “recent case law no longer supports the assertion of diversity 21 jurisdiction.” Dkt. 14 at 2. However, they fail to cite any specific new authority 22 substantiating that position. Further, defendants do not offer any justification for their 23 decision to untimely remove this action. In their statement of non-opposition, defendants 24 contend that they had “to quickly act to avoid any new prejudice . . . by a tardy removal.” 25 Id. That contention lacks merit. As explained above, the deadline for removal had 26 occurred over two months before defendants removed this action—thus, any tardiness 27 resulting in prejudice had already occurred at the time of removal. 1 incurred to obtain remand. In their reply, plaintiffs request $24,825 in such fees. Dkt. 12 2 at 8. To support that request, plaintiffs filed the declaration of their counsel Dhaivat H. 3 Shah (“Counsel Shah”). Dkt. 12-1. In it, Counsel Shah explains that he charges $750 4 per hour and spent over 30 hours working on plaintiffs’ motion for remand, including over 5 26 hours researching the remand statutes, reviewing the notice of removal, and drafting 6 plaintiffs’ motion. Id. ¶ 18. Counsel Shah has 23 years of experience. Id. ¶ 8. 7 The court finds plaintiffs’ request for $24,825 in attorney’s fees unreasonable. 8 Even assuming the reasonableness of Counsel Shah’s $750 per hour rate, the court 9 struggles to see how an attorney with 23 years of experience requires 26 hours to 10 prepare a motion for remand addressing a six-page notice of removal with such an 11 obvious timing defect. The court also does not see any good reason for Counsel Shah’s 12 decision to spend four hours on a reply in support of a then-unopposed motion. Id. ¶ 13 18(c). 14 Instead, the court finds that 12 hours represents a reasonable amount of time to 15 prepare a motion for remand involving the complexity of the issues at hand. Accordingly, 16 the court awards plaintiffs $9,000 in attorney’s fees. 17 III. The Court Denies the Motion for Sanctions 18 The court understands that plaintiffs’ motion for sanctions is distinct from the 19 request for attorney’s fees in their motion to remand. Unlike the attorney’s fees request, 20 this motion asks for both monetary and non-monetary sanctions and seeks to hold 21 Counsel Klein liable with plaintiffs on a joint and severable basis. Dkt. 13 at 9. 22 The court denies plaintiffs’ motion for sanctions. As plaintiff themselves recognize, 23 this court has “wide discretion in determining the appropriate sanctions for Rule 11 24 violations.” Id. at 17. Thus, regardless of whether or not defendants and Counsel Klein 25 violated Rule 11, the court finds that its award under the removal statutes will suffice to 26 deter future abuse of the judicial process.4 27 1 CONCLUSION 2 For the above reasons, the court GRANTS plaintiff’s motion for remand and 3 DENIES their motion for sanctions. The court directs the clerk to remand this action to 4 the Santa Clara County Superior Court. 5 IT IS SO ORDERED. 6 Dated: August 2, 2021 7 /s/ Phyllis J. Hamilton PHYLLIS J. HAMILTON 8 United States District Judge

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 They add that “[a]n objectively reasonable and competent attorney would have reviewed 27 the statute, the FAC and the state court docket and quickly determined that there could