Hollis v. Truist Bank

Background

Daniel Hollis filed a form complaint against Truist Bank in California small-claims court. The complaint asserted one claim, for breach of contract. Hollis alleged that the breach occurred in June 2019 and identified emotional distress, legal fees, and consequential damage to his financial life as damages. He filed the complaint without a lawyer.

After Truist was served, the bank determined that Hollis did not have a Truist account in 2019. Truist found that Hollis had had an account in 2012 that was closed because of suspected fraudulent activity. Truist also reported the closure to ChexSystems, a credit-reporting agency.

Removal and Jurisdiction

Truist removed the case to federal court under the federal-question jurisdiction statute, 28 U.S.C. § 1331. The bank hypothesized that Hollis’s actual dispute concerned the 2012 report to ChexSystems and that he intended to assert a claim under the Fair Credit Reporting Act, a federal credit-reporting statute. Truist relied on its investigation and on a subpoena that sought account-related documents and notices of adverse action.

The court emphasized that neither Hollis’s complaint nor his subpoena mentioned the Fair Credit Reporting Act, ChexSystems, or credit reporting. The court said Truist was guessing about what Hollis intended to sue over. A defendant may remove a case only when the case is actually removable; the defendant cannot remove based on a prediction about claims the plaintiff might later assert. The court distinguished the authority cited by Truist because that authority still required the case to be removable.

Order

The court stated that subject-matter jurisdiction—the court’s legal power to hear the case—was lacking because there was currently no federal claim. It said Hollis might later provide more detail, and the case might then become removable, but until that happened it should be litigated in state court.

The court issued an order to show cause, giving Truist until April 7, 2022, to explain why the case should not be remanded to state court. The order did not itself state that the case had been remanded; instead, it said the court intended to refer the matter to a district judge with a recommendation for remand. The court denied Truist’s pending motion for a more definite statement under Federal Rule of Civil Procedure 12(e), without prejudice to refiling if federal subject-matter jurisdiction was later established.

Effect

The case was treated as lacking current federal jurisdiction, and Truist was required to respond before the anticipated recommendation concerning remand. Truist’s motion for a more definite statement was denied without prejudice, rather than finally barred from being filed again if federal jurisdiction later existed.