WILLIAM Q. HAYES, District Judge.
The matter before the Court is Plaintiff's Motion to Remand. (ECF No. 9).
On July 30, 2012, Plaintiff filed a complaint against RBC Capital Markets Corporation, an Illinois Corporation and RBC Dain Rauscher, Inc., an Illinois Corporation, in the San Diego Superior Court, Case No. 37-2012-00101475-CU-BC-CTL. The initial action alleged: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) intentional interference with contractual advantage, and (4) intentional interference with economic advantage. (ECF No. 1 at ¶4-5). On September 17, 2012, the Defendants removed the initial action to the Southern District Court of California claiming original jurisdiction under 28 U.S.C. §1332(a)(1) because the amount in controversy exceeded $75,000 and involved citizens of different states. Id. at ¶6. On March 27, 2013, Plaintiff dismissed the initial action. Id. at ¶9.
On April 10, 2013, Plaintiff filed this action against RBC Capital Markets Corporation, an Illinois Corporation and RBC Dain Rauscher, Inc., an Illinois Corporation (collectively "RBC") and WNC & Associates, Inc., WNC Holding, LLC, and WNC Housing, L.P. (collectively "WNC") in the San Diego Superior Court, Case No. 37-2013-00043450-CU-BC-CTL. (ECF No. 1, Ex. 1). Plaintiff alleged the following causes of action against both RBC and WNC: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) intentional interference with contractual advantage, (4) intentional interference with economic advantage, and (5) fraud in the inducement. Id.
On June 18, 2014, Plaintiff filed a Request for Dismissal with Prejudice as to the WNC Defendants and WNC was dismissed from the action. (ECF No. 1 ¶ 20).
On August 6, 2014, Defendant removed this action to this Court, asserting diversity of citizenship between the parties and that the amount in controversy exceeded $75,000. Id. at ¶ 25-35; see 28 U.S.C. § 1332.
On September 5, 2014, Plaintiff filed the Motion to Remand on the grounds that (1) Defendant's removal notice was untimely, (2) inclusion of WNC and subsequent dismissal of WNC from the case is not evidence of bad faith, and (3) Defendant independently waived any right to remove the case.
Title 28 U.S.C. § 1446(b) provides that "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." 28 U.S.C. § 1446(b)(3) (emphasis added). However, "[a] case may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by section 1332 more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action." 28 U.S.C. § 1446(c)(1).
A defendant bears the burden of establishing federal jurisdiction. Abrego Abrego v. The Dow Chemical Co., 443 F.3d. 676, 682 (9th Cir. 2006). "Removal statutes are strictly construed against removal." Luther v. Countrywide Home Loan Servicing LP, 533 F.3d 1031, 1034 (9th Cir. 2008). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
Defendant contends that, "Notice of Removal is timely pursuant to 28 U.S.C. § 1446(c)(1) because Hamilton acted in bad faith to prevent RBC from removing the action." (ECF No. 1). Defendant contends that WNC, a non-diverse defendant, was named in the complaint "solely to prevent RBC from exercising its right to remove this action to federal court." (ECF No. 13 at 6). Defendant contends that a finding of bad faith is supported by the following facts:
Id. at 11. Defendant contends that "[t]his case was not removable on the face of the 2013 Complaint, even after WNC was dismissed. . . . Thus, RBC had 30 days from the receipt of an `other paper' that rendered this case removable to file Notice of Removal." Id. Defendant contends that "other paper" indicating removal was not received until July 10, 2014, when Plaintiff's counsel confirmed that "there was no monetary or other compensation paid. . . . as part of the settlement" with WNC. Defendant asserts that the notice of removal, filed August 6, 2014 was within the 30 day filing period. Id.
Plaintiff contends that WNC was joined in good faith based on discovery in a prior action which revealed WNC's tortious misconduct in "extricat[ing] itself from the project in a rapidly failing market. . . ." (ECF No. 9 at 4). Plaintiff explains that WNC was voluntarily dismissed from this action, "[a]s the result of a settlement of an unrelated business dispute between Plaintiff and WNC Defendants involving their other common project, Plaintiff was required to dismiss the WNC defendants from this case in exchange for no separate monetary or other consideration from WNC." Id. at 4-5. Plaintiff contends that the 30 day clock to timely file for removal began on June 18, 2014 when WNC was dismissed, and that the August 6, 2014 removal was not timely. Id. at 5.
The parties agree that removal in this case is presumptively untimely because the action was removed on August 6, 2014, which is more than one year after it commenced on April 10, 2013. (ECF No. 1; ECF No. 9). "A case may not be removed . . . more than one year after the commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action." 28 U.S.C. § 1446(c)(1). "The bad faith requirement sets a high threshold . . ." Primus Automotive Financial Services, Inc. v Batarse, 115 F.3d 644, 649 (9th Cir. 1997). The Court of Appeals for the Ninth Circuit has explained in a different context that "[a] finding of bad faith is warranted where an attorney `knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent." Id. (citing In re Keegan Management Co., Sec. Litig., 78 F.3d 431, 436 (9th Cir. 1996)). The Ninth Circuit has further stated that "[a] party demonstrates bad faith by `delaying or disrupting the litigation or hampering enforcement of a court order.'" Id. (citing Hutto v. Finney, 437 U.S. 678, 689 n. 14 (1978)).
In this case, Plaintiff's Counsel submitted a sworn declaration which states in part:
(ECF No. 9-2 ¶ 2-3). The Court finds that Plaintiff states a plausible explanation for the joinder of WNC in the instant action, but failing to join WNC in the initial action.
The Declaration submitted by Plaintiff's counsel further states that:
(ECF No. 9-2 ¶ 5-6).
The Court finds that Plaintiff did not consistently fail to take steps to prosecute the claims against the RBC or WNC. Defendant contends only that Plaintiff did not seek discovery from RBC or WNC or make an investigation into its claims against WNC. The sworn Declaration states a consistent and plausible explanation for requesting no discovery from WNC or RBC and making no investigation into its claims against WNC. See Lawson v. Parker Hannifin Corp., No. 13-cv-923-O, 2014 WL 1158880 (N.D. Tex. Mar. 20, 2014) (finding bad faith where plaintiff "consistently failed to take steps to prosecute her claims against Hanlon, including failing to serve him with discovery requests or noticing his deposition, and failing to seek a default judgment when Hanlon failed to timely answer the petition.").
The Declaration submitted by Plaintiff's Counsel further states that:
(ECF No. 9-2 ¶ 4-5).
Plaintiff has provided consistent plausible reasoning for the timing of the non-diverse Defendant's dismissal. Moreover, WNC was dismissed on June 18, 2014, more than two months after the expiration of the one-year limitations period on April 10, 2014. The Court finds that WNC's dismissal more than two months after the one-year limitation for removal expired is not indicative of bad faith. Compare Lawson, 2014 WL 1158880 at *1 (finding that "nonsuiting Hanlon shortly after the one-year period for removal coupled with the belated filing of the notice of nonsuit, and execution of the Release by Lawson nine days prior to the date she allegedly settled with Hanlon, . . . support the Court's finding of bad faith forum manipulation."), and Forth v. Diversey Corporation, No. 13-cv-808-A, 2013 WL 6096528, *1 (W.D.N.Y. Nov. 20, 2013) (finding that Plaintiff's explanations and actions were both "inconsistent and implausible" leading the court to determine that Defendants had demonstrated by clear and convincing evidence that Plaintiffs acted in bad faith to prevent Defendants from removing the action.), with NKD Diversified Enterprises, Inc. v. First Mercury Ins. Co., No. 14-cv-00183-AWI-SAB, 2014 WL 1671659, *1 (E.D. Cal. Apr. 28, 2014) (finding no evidence of bad faith when the non-diverse party was dismissed less than three months after the expiration of the one-year removal period).
The Court finds that Defendant has not met the high threshold required to establish bad faith on the part of the Plaintiff. See Primus, 115 F.3d at 649. The facts alleged by Defendant do not show that Plaintiff or Plaintiff's attorney knowingly or recklessly raised a frivolous argument, or delayed or disrupted the litigation in order to prevent removal. See Id. at 689. Because Defendant has failed to demonstrate bad faith, the exception to the one-year removal period does not apply and Defendant's removal is untimely.
Plaintiff contends that, "given the untimely and improper nature of the Defendants' efforts to remove this case, Plaintiff should be awarded its attorney's fees and costs incurred related to the same" pursuant to 28 U.S.C. § 1447(c). (ECF 14 at 10). The relevant part of 28 U.S.C. § 1447(c) states: "An order remanding the case may require the payment of just costs and any actual expenses, including attorney fees, incurred as a result of removal." 28 U.S.C. § 1447(c). "Whether to award attorney fees is left to the discretion of the district court." NKD, 2014 WL 1671659 at *8 (citing Martin v. Franklin Capital Corp., 546 U.S. 132, 139 (2005)). "Determining whether attorney fees should be awarded turns on the reasonableness of he removal." Id. (citing Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1165 (9th Cir. 2008)). "[A]bsent unusual circumstances, attorney's fees should not be awarded when the removing party has an objectively reasonable basis for removal." Martin v. Franklin Capital Corp., 546 U.S. at 136.
Although Defendant has not met its burden of establishing bad faith, the Court finds thatRBC had an objectively reasonable basis for seeking removal. Plaintiff's request for attorney fees is denied.
IT IS HEREBY ORDERED that the Motion to Remand is
