E-Alert Case Updates

Court’s Sua Sponte Review of Removal Results in Remand

Striegel, et al. v. Gibson’s G LLC, et al.
United States District Court for the District of Maryland, Civ. No.: JKB-12-1919 (D. Md. October 10, 2012)
by Kevin M. Cox, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Brian and Connie Striegel (“Plaintiffs”) filed an action against Gibson’s G LLC (“Gibson”) and Craftstar Homes, Inc. (collectively, “Defendants”) on May 17, 2012, in the Circuit Court for Queen Anne’s County, Maryland. Plaintiffs alleged state claims for breach of contract, breach of implied warranties, breach of express warranties, breach of warranty of completion of construction, negligent misrepresentation, intentional misrepresentation, and unfair or deceptive trade practices. A notice of removal was filed by Defendants on June 27, 2012.

Nearly three (3) months later—well beyond Plaintiffs’ thirty (30) day deadline to file a motion to remand on any basis other than lack of subject matter jurisdiction, and after Plaintiffs filed a lengthy brief opposing Defendants’ motion to dismiss—the court raised the issue of its jurisdiction sua sponte. On September 20, 2012, the court directed the parties to provide information sufficient to determine whether complete diversity of citizenship existed between them. On September 26, 2012, Defendants filed a response to the court’s order, identifying the members of Gibson and their citizenships, and arguing against remand. On October 1, 2012, Plaintiffs filed a response to the court’s order, requesting that the court remand the action to state court. On October 3, 2012, Defendants filed a supplemental response to the court’s order, arguing against remand.

Generally, an action brought in state court may be removed only if the district court would have original jurisdiction over the action. The burden of establishing federal jurisdiction is based upon the party seeking removal and federal courts strictly construe removal jurisdiction because it raises significant federalism concerns. If at any time before final judgment, it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.

Complete diversity among the parties did not exist; therefore, the court did not have diversity jurisdiction over the action. The only other means for federal jurisdiction to exist would be there to have existed a federal question in the case. Generally, federal courts have federal question jurisdiction over causes of action created by federal law. Where the relevant cause of action is created by state law, federal question jurisdiction depends on whether the Plaintiffs’ demand depends on resolution of a substantial question of federal law. It is axiomatic that the court’s evaluate federal question jurisdiction on the basis of a well-pleaded complaint, meaning a complaint that states a claim and does nothing more. A defense that raises a federal question is inadequate to confer federal jurisdiction.

The court stated that Plaintiffs’ claim for breach of the warranty of completion of construction did not seek a remedy for the violation of the federal law. Plaintiffs simply alleged that Defendants issued a warranty and subsequently breached it. Despite Defendants’ attempts to re-characterize the claim, the requirements of 38 U.S.C. § 3705—specifically, whether § 3705 required Defendants to issue the warranty of completion—were not relevant to Plaintiffs’ claim for a breach of that warranty. Plaintiffs did not allege that Defendants violated any rights created by the federal statute, but rather that Defendants breached the agreement between the two (2) parties.

The court held that it did not have subject matter jurisdiction over the case. Accordingly, the United States District Court for the District of Maryland remanded the case to the Circuit Court for Queen Anne’s County, Maryland, and closed its case.