Malgesini v. Malley

Background

Thomas Malgesini filed a state-court complaint against Gregory Malley in Santa Clara County Superior Court on August 13, 2020. Malgesini alleged that Malley breached a written agreement and sought $250,000. Malley removed the case to the U.S. District Court for the Northern District of California, asserting that the case was a de facto compulsory counterclaim to an earlier federal action.

Malley did not dispute that the case lacked federal-question jurisdiction and diversity jurisdiction. Instead, he argued that the federal court had supplemental jurisdiction under 28 U.S.C. § 1367(a). After removal, the federal court related the case to the earlier federal action. Malley also filed motions to dismiss and to strike.

Analysis

Under 28 U.S.C. § 1441(a), a defendant may remove a state-court case only if the federal district court could have exercised original jurisdiction over it. Section 1367(a) provides supplemental jurisdiction over related claims in a case that already falls within the court’s original jurisdiction, but it does not itself create original jurisdiction or provide an independent basis for removal.

The court relied on Ninth Circuit precedent holding that § 1367 is not a basis for removal. The court also observed that, in the related federal action, it had declined to exercise supplemental jurisdiction over the state-law claims after Malley failed to adequately amend his federal Racketeer Influenced and Corrupt Organizations Act claims. The court dismissed those remaining state-law claims without prejudice and closed that action. For this additional reason, the court concluded that it lacked subject-matter jurisdiction over Malgesini’s case.

Costs and attorney’s fees

Under 28 U.S.C. § 1447(c), a remand order may require payment of costs and actual expenses, including attorney’s fees, incurred because of removal. The court found that Malley had no objectively reasonable basis for removing the case and that, at minimum, an objectively reasonable attorney would have recognized that removal was doubtful. The court therefore found reimbursement warranted, but directed Malgesini to file a request under Civil Local Rule 54 within 14 days rather than awarding a specific amount in this order.

Disposition

Judge Edward J. Davila granted Malgesini’s motion to remand, remanded the case to Santa Clara County Superior Court, and denied Malley’s motions to dismiss and to strike as moot. The Clerk was directed to close the federal-court file.