Craig v. Universum Communications, Inc. et.al.
- Haywood Gilliam
- 4:20-cv-01284
- U.S. District Court · Northern District of California
- 10
In Craig v. Universum Communications, Judge Gilliam sent the case back to state court as untimely but denied attorneys’ fees.
Roger Craig and Universum Communications, Inc.; the case was returned to state court, and Craig was denied attorneys’ fees.
What happened
Roger Craig sued Universum Communications, Inc. in California state court over an investment-related dispute. Universum later moved the case to federal court, arguing that federal diversity jurisdiction applied. Craig asked the federal court to return the case to state court.
The court ruled that the removal was too late. Craig’s original complaint did not make it clear that more than $75,000 was at stake, and Universum did not show that the case was removable from the original complaint. The court also found that Craig had not acted in bad faith to prevent removal.
Judge Gilliam granted Craig’s motion to remand and denied his request for attorneys’ fees. The court concluded that Universum’s arguments were not frivolous, even though the court rejected them.
The detailed version
- Craig v. Universum Communications, Inc. et.al. · No. 4:20-cv-01284
- Haywood Gilliam
- Aug. 11, 2020
Background
Roger Craig initially filed the action in San Mateo Superior Court in September 2018. His original complaint alleged breach of contract, breach of fiduciary duty, and a common count for money owed. It alleged that he invested $30,000 in exchange for shares and sought damages to be determined at trial, along with interest and attorneys’ fees.
Craig later filed an amended complaint that added a fraud claim and stated more specific damages, including $291,598.65 in damages and $1,166,394.60 in punitive damages. He also added Universum Communications, Inc. as a defendant in January 2020. Universum Communications, Inc. removed the case to federal court on February 20, 2020, relying on diversity jurisdiction. Craig moved to remand, arguing that removal was barred because it occurred more than one year after the state-court case began.
Removal deadline
Federal law generally bars removal based on diversity jurisdiction more than one year after a state-court action begins. An exception can apply if the case was removable based on the original complaint, or if the plaintiff acted in bad faith to prevent removal.
The court found that the original complaint did not specify the damages Craig sought. Its reference to a $30,000 investment and damages “TBD at trial” did not plausibly establish that the amount in controversy exceeded $75,000. Universum relied on the larger damages amounts in the amended complaint but did not explain how the original complaint itself showed that the federal jurisdictional threshold was met. The court therefore concluded that the one-year removal bar applied and that Universum’s removal was untimely.
Bad faith
The court rejected Universum’s argument that Craig acted in bad faith by delaying the more detailed damages allegations and by adding Universum Communications, Inc. after the one-year period. The court noted that Craig explained that he needed time and research to determine the correct name of the defendant, and the state-court record showed attempts to serve several different Universum entities. The court also found that Universum offered only speculation about why the original complaint did not include more detailed information about the amount in controversy.
Attorneys’ fees and disposition
Craig requested attorneys’ fees under 28 U.S.C. § 1447(c), which allows fees in some cases when removal lacked an objectively reasonable basis. The court denied that request because, although it disagreed with Universum’s timeliness argument, it did not find the removal arguments frivolous.
The court GRANTED Craig’s motion to remand and DENIED Craig’s request for attorneys’ fees.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.