Sherman & Howard LLC v. Bruno

          ORDER

          HONORABLE JOHN J. TUCHI UNITED STATES DISTRICT JUDGE.

         At issue is Plaintiff Sherman & Howard LLC's Motion to Remand to State Court and Motion for Sanctions Pursuant to 28 U.S.C. § 1927 (Doc. 10, Mot. to Remand), to which Defendant Paul Leonard Bruno filed a Response (Doc. 36, Resp.), and to which Plaintiff filed a Reply (Doc. 38, Reply). Also at issue is Defendant's Cross-Motion for Sanctions Pursuant to 28 U.S.C. § 1927 (Doc. 37, Def's Mot. for Sanctions), which, the Court resolves without the benefit of Plaintiff's Response. The Court will grant Plaintiff's Motion to Remand; however, the Court denies both Motions for Sanctions.

         I. BACKGROUND

         Plaintiff filed this action in Maricopa County Superior Court to recover attorney's fees incurred by Bruno and PB Co., Inc., of which Bruno is the sole shareholder and President. (Doc. 1-1, Compl. ¶¶ 1-32.) The fees at issue in the Complaint include those charged to Bruno during his Chapter 13 and Chapter 11 bankruptcy proceedings, which the Bankruptcy Court dismissed on September 7, 2017. See Order, Doc. 334, In re Bruno, No. 16-bk-11826-PS (Bankr. D. Ariz. Sept. 7, 2017). On November 8, 2017, Bruno timely removed the case to federal court. See Notice of Removal, Doc. 1, Sherman & Howard LLC v. Bruno, 17-cv-04128-DJH, (D. Ariz. Nov. 8, 2017). Plaintiff subsequently filed a Motion to Remand, which United States District Court Judge Diane J. Humetewa granted after Bruno failed to file a responsive pleading. In the Order granting the Motion, Judge Humetewa agreed with Plaintiff's contention that the District Court was “without subject matter jurisdiction.” Order at 1, Doc. 20, No. 17-cv-04128-DJH (D. Ariz. Dec. 19, 2017). After Judge Humetewa remanded the case, however, Bruno filed a Motion to Vacate the Order due to excusable neglect, which Judge Humetewa denied.

         On March 12, 2018, Judge Christopher Whitten of the Maricopa County Superior Court entered Final Judgment against Bruno and PB Co., Inc. (Doc. 1-2 at 72-73.) Two weeks later, on March 28, 2018, Bruno removed the action to this Court for a second time. Once again, Plaintiff moves to remand the case to the Superior Court.

         II. LEGAL STANDARD

         Federal courts may exercise removal jurisdiction over a case only if subject matter jurisdiction exists. 28 U.S.C. § 1441(a); Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir. 2004). The removing party is required to provide a signed notice of removal that contains “a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). “By design, § 1446(a) tracks the general pleading requirement stated in Rule 8(a) of the Federal Rules of Civil Procedure.” Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 553 (2014). “The notice of removal of a civil action or proceeding shall be filed 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.” 28 U.S.C. § 1446(b). A plaintiff may seek to have a case remanded to the state court from which it was removed if the district court lacks jurisdiction or if there is a defect in the removal procedure. 28 U.S.C. § 1447(c). Generally, removal statutes are strictly construed against removal jurisdiction. See Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988).

         When a Defendant attempts to remove a case after a previous remand, “removal . . . is permitted only upon a ‘relevant change of circumstances'-that is, ‘when subsequent pleadings or events reveal a new and different ground for removal.'” Reyes v. Dollar Tree Stores, Inc., 781 F.3d 1185, 1188 (9th Cir. 2015) (quoting Kirkbride v. Cont'l Cas. Co., 933 F.2d 729, 732 (9th Cir. 1991)). As such, a successive attempt to remove may be proper when “an intervening change of law gives rise to a new basis for subject-matter jurisdiction” or “when the pleadings are amended to create federal subject-matter jurisdiction for the first time.” Id.

         III. ANALYSIS

         The Court first addresses Plaintiff's Motion to Remand before turning to the cross-Motions for Sanctions.

         A. Plaintiff's Motion to Remand

         Bruno asserts in the Notice of Removal that this Court has jurisdiction because Plaintiff “has made a claim for services connected to Defendant Bruno's Chapter 11 bankruptcy proceedings.” (Notice of Removal at 2.) Bruno reiterates this basis for removal in his Response, arguing that this Court not only has jurisdiction, but that it has exclusive jurisdiction over the matter. (Resp. at 6-9.) This argument conflicts with Ninth Circuit precedent on the point. “A post-dismissal motion to enforce a fee agreement between a debtor and [his] attorney is ancillary to the bankruptcy court's core function of adjudicating the estate.” In re Elias, 188 F.3d 1160, 1162 (9th Cir. 1999) (per curiam). Thus, in a case such as the one currently before this Court, a “state court is fully capable of resolving the fee dispute.” See id.

         Given the Maricopa County Superior Court's ability to exercise jurisdiction over this matter, this Court need not reach the question of whether jurisdiction would have ever been proper in federal court because removal at this point is both untimely and improper. As recounted above, Plaintiff filed this matter in Maricopa County Superior Court on October 23, 2017, and served Defendant on November 2, 2017. (Doc. 1-1 at 85.) Bruno's removal would have been timely on or before December 2, 2017. See 28 U.S.C. § 1446(b). Because Bruno removed this matter on March 28, 2018, his attempt is untimely on its face. However, Bruno offers several reasons why this attempt should be considered timely, each of which lacks legal merit.

         First, Bruno asserts that his attempt to remove is timely because “[o]n March 12, 201[8] Sherman & Howard added defendants, GP Meetings & Events, Inc. and PB Co Property Management, LLC.” (Notice of Removal at 1-2.) Despite this assertion, the record demonstrates that those parties were not in fact added as Defendants to the action. Instead, on March 12, 2018, Sherman & Howard filed a post-judgment Application for Writ of Garnishment against GP Meetings & Events, Inc., among others.^[1] (Doc. 1-2 at 104.) Thus, Plaintiff did not join any additional party on March 12. Moreover, even if Bruno was correct, that fact would not make his removal timely. Certainly, removal by a party that had been joined on March 12 might have been timely. However, the mere ...