US Bank National Association v. Foley

Background

US Bank National Association brought an unlawful-detainer action against David R. Foley and Lisa Foley. US Bank alleged that the defendants had failed to surrender possession of property in Los Gatos, California. The action was filed in Santa Clara Superior Court on August 18, 2022. The defendants removed it to federal court on February 27, 2023.

The court issued an order to show cause, meaning it required the defendants to explain why the case should not be sent back to state court. The court stated that the defendants bear the burden of showing that removal is proper and that doubts about federal jurisdiction are resolved in favor of remand.

Federal-question jurisdiction

The defendants argued that federal-question jurisdiction existed because US Bank’s claim responded to alleged violations of the Fair Debt Collection Practices Act. The court applied the well-pleaded-complaint rule, which generally asks whether a federal question appears on the face of the plaintiff’s properly pleaded complaint rather than in a defense or counterclaim.

The court observed that US Bank’s complaint contains a single California unlawful-detainer claim and does not identify a federal claim. It stated that a California unlawful-detainer claim does not arise under federal law. The defendants also appeared to rely on supplemental jurisdiction based on a related federal case, David R. Foley v. US Bank National Association, et al., No. 23-cv-00877-NC. The court said that the existence of a related federal case does not authorize federal jurisdiction over a separate state-court action. The defendants were ordered to address specifically how US Bank’s complaint presents a federal question.

Diversity jurisdiction

The defendants also asserted diversity jurisdiction. That form of jurisdiction generally requires more than $75,000 in controversy and citizenship in different states. The court noted that US Bank’s complaint expressly seeks less than $25,000, based on damages calculated at $100 per day starting August 10, 2022. The court said this amount was far below the $75,000 threshold at the time of filing.

The defendants argued that the amount in controversy should be combined with the related federal case. The court rejected that approach for the reasons it gave regarding the related case. The court also noted that the defendants conceded they were both residents of Santa Clara County, California. It ordered them to explain how the amount in controversy exceeds $75,000 without relying on the related matter and how the case can proceed in light of the forum-defendant rule, which generally limits removal based on diversity when a defendant is sued in the state where that defendant resides.

Disposition

The court did not issue a final ruling remanding the case. It ordered the defendants to respond in writing by March 24, 2023. The court cautioned that if the case had to be remanded, the defendants could be required to pay just costs and actual expenses, including attorney fees, caused by the removal.