Portfolio Recovery Associates LLC v. Delos Reyes

Background

Portfolio Recovery Associates LLC sued Angelica-Flores Delos Reyes in the Superior Court of California for San Mateo County to collect $7,093.85. Delos Reyes was served by substituted service on March 12, 2020. She answered in December 2021 and filed cross-claims alleging abuse of process, harassment, intentional infliction of emotional distress, and false light. She later amended those claims, added other causes of action, and sought $360,000 in combined general damages. Portfolio filed an anti-SLAPP motion against the cross-complaint.

Delos Reyes filed a notice of removal on January 30, 2023, bringing the case to federal court. Portfolio filed an unopposed motion to remand on February 23, 2023.

Legal Standard

A defendant may remove a state-court case only if the case could originally have been filed in federal court. The removing defendant must provide facts showing a basis for federal jurisdiction. A federal court may remand a removed case at any time before final judgment if it lacks subject-matter jurisdiction.

Federal jurisdiction can be based on a federal question or diversity of citizenship. Federal-question jurisdiction generally must appear on the face of the plaintiff’s complaint. Diversity jurisdiction requires more than $75,000 in controversy and complete diversity, meaning every plaintiff must be a citizen of a different state from every defendant.

Discussion

The court first found that the notice of removal did not adequately allege facts supporting federal jurisdiction. It merely asserted that federal-question and diversity jurisdiction existed. It did not address the absence of a federal claim on the face of Portfolio’s complaint or provide facts supporting diversity jurisdiction.

Timeliness

Under federal law, a defendant generally must remove a case within 30 days after receiving the initial pleading or being served with the summons. Delos Reyes was served on March 12, 2020, but did not remove the case until January 30, 2023. The court held that the removal was untimely and that remand was required because Portfolio timely challenged the removal.

Diversity Jurisdiction

The court also held that Delos Reyes could not remove the case based on diversity jurisdiction because she was a citizen of California and the case was brought in a California state court. In addition, she did not allege facts showing that the amount in controversy exceeded $75,000 based on Portfolio’s $7,093.85 debt claim, or identifying the citizenship of the 35 cross-defendants listed in the notice of removal.

Federal-Question Jurisdiction

The court held that Delos Reyes’s anticipated federal defenses and counterclaims could not establish federal-question jurisdiction. Portfolio’s complaint asserted a California state-law debt-collection claim, and a federal defense or counterclaim does not ordinarily create federal jurisdiction for removal. The court therefore concluded that it had no federal-question jurisdiction.

Disposition

The court found that it lacked subject-matter jurisdiction and granted Portfolio’s motion to remand. The Clerk was ordered to transmit the file to the San Mateo County Superior Court and close the federal case.