Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_19-cv-06350/USCOURTS-cand-4_19-cv-06350-0/pdf.json

Nature of Suit Code: 245
Nature of Suit: Real Property Product Liability
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN RAFAEL YACHT CLUB,

Plaintiff,

v.

PAUL DAVIS RESTORATION-NORTH 

BAY,

Defendant.

Case No. 19-cv-06350-DMR 

ORDER REASSIGNING CASE TO 

DISTRICT JUDGE; REPORT AND 

RECOMMENDATION TO GRANT 

MOTION TO REMAND CASE TO 

MARIN COUNTY SUPERIOR COURT

Defendant Paul Davis Restoration, Inc. removed this case pursuant to 28 U.S.C. § 1441 

from Superior Court of California, County of Marin, where it was pending as a complaint brought 

by Plaintiff San Rafael Yacht Club against Paul Davis Restoration, Inc. and North Bay Area 

Corporation, dba Paul Davis Restoration of the North Bay (erroneously sued as Paul Davis

Restoration—North Bay) for breach of contract and related state law claims. [Docket No. 1 

(Notice of Removal).] The Notice of Removal states one ground for removal: that diversity exists 

between the parties. Id. at ¶ 3. 

Plaintiff dismissed Paul Davis Restoration, Inc. from the action on February 26, 2020. 

[Docket No. 18.] According to Plaintiff, despite being served with the summons and complaint, 

North Bay Area Corporation has failed to timely answer or respond to the complaint or otherwise 

appear in this action. Plaintiff now moves to remand the action on the ground that the parties are 

no longer diverse and the court lacks subject matter jurisdiction. [Docket No. 19.] It also seeks to 

have the motion heard on shortened time. [Docket No. 20.] No opposition has been filed. This 

matter is suitable for resolution without a hearing. Civ. L.R. 7-1(b). 

All parties have not yet filed a declination or consent to the jurisdiction of a magistrate 

judge pursuant to 28 U.S.C. § 636(c). Therefore, the court issues this Report and 

Recommendation and reassigns this case to a District Judge for final disposition, with the 

Case 4:19-cv-06350-YGR Document 29 Filed 03/18/20 Page 1 of 4
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United States District Court

Northern District of California

recommendation that the motion to remand be granted.

I. DISCUSSION

Pursuant to 28 U.S.C. § 1441, “any civil action brought in a State court of which the 

district courts of the United States have original jurisdiction, may be removed by the defendant or 

other defendants, to the district court of the United States for the district and division embracing 

the place where such action is pending.” 28 U.S.C. § 1441(a). “If the district court at any time 

determines that it lacks jurisdiction over the removed action, it must remedy the improvident grant 

of removal by remanding the action to state court.” Cal. ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 

831, 838 (9th Cir.), opinion amended on denial of reh’g, 387 F.3d 966 (9th Cir. 2004) (citing 28 

U.S.C. § 1447). “The removal statute is strictly construed against removal jurisdiction, and the 

burden of establishing federal jurisdiction falls to the party invoking the statute.” Id. 

A district court has diversity jurisdiction where the parties are diverse and “the matter in 

controversy exceeds the sum or value of $75,000, exclusive of interests and costs.” 28 U.S.C. 

§ 1332. “Although an action may be removed to federal court only where there is complete 

diversity of citizenship, ‘one exception to the requirement for complete diversity is where a nondiverse defendant has been fraudulently joined.’” Hunter v. Philip Morris USA, 582 F.3d 1039, 

1043 (9th Cir. 2009) (internal citations omitted) (quoting Morris v. Princess Cruises, Inc., 236 

F.3d 1061, 1067 (9th Cir. 2001)). Under Ninth Circuit law, the joinder of a non-diverse defendant 

is deemed fraudulent when a plaintiff’s failure to state a claim against the resident defendant is 

“obvious according to the settled rules of the state.” Hunter, 582 F.3d at 1043. In such cases, the 

court may ignore the presence of the non-diverse defendant for purposes of determining diversity. 

Id. (citing Morris, 236 F.3d at 1067). There is a strong presumption against removal jurisdiction 

and a general presumption against fraudulent joinder, which means that the removing defendants 

bear a “heavy burden” to prove fraudulent joinder, with all ambiguity resolved in favor of remand 

to state court. Hunter, 582 F.3d at 1046. 

In its Notice of Removal, Paul Davis Restoration, Inc. avers that this case fulfills the 

diversity jurisdiction requirements. It states that it is a Florida corporation with its principal place 

of business in Florida, and that Plaintiff is a citizen of California. Paul Davis Restoration, Inc. 

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United States District Court

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does not allege the citizenship of North Bay Area Corporation; instead, it contends that North Bay 

Area Corporation’s citizenship should be disregarded because it was fraudulently joined. Notice 

of Removal ¶¶ 3-4. Specifically, it contends that North Bay Area Corporation filed for bankruptcy 

on January 31, 2019 and “an automatic stay was therefore imposed against most collection 

activities, including this action.” Id. at ¶ 4, Ex. B.

Plaintiff dismissed Paul Davis Restoration, Inc. from this action on February 26, 2020. 

[Docket No. 18.] Therefore, North Bay Area Corporation is the sole remaining defendant. 

Plaintiff disputes that North Bay Area Corporation was fraudulently joined, asserting that “[o]n 

November 26, 2019, the Bankruptcy Court for the Northern District of California ordered relief 

from the automatic stay in this matter for the limited purpose of pursuing insurance proceeds that 

may cover Yacht Club’s damages claims.” [Docket No. 19 at ECF p. 7 (Pfeilschiefter Decl., Feb. 

27, 2020) ¶ 5.] It also contends that North Bay Area Corporation executed a waiver of service of 

the summons and complaint on December 12, 2019; therefore, its answer or response to the 

complaint was due by February 10, 2020. Id. at ¶ 6.1 North Bay Area Corporation has not 

appeared in this action or responded to the complaint, and Plaintiff states it intends to seek its 

default. Mot. 4. No party has filed an opposition to the present motion. Given the general 

presumption against fraudulent joinder and a removing defendant’s “heavy burden” to prove 

fraudulent joinder, Hunter, 582 F.3d at 1046, the court concludes that North Bay Area Corporation 

was not fraudulently joined, and its citizenship may not be disregarded for the purposes of 

determining diversity. The court also concludes that the removing party, Paul Davis Restoration, 

Inc., has not met its burden of establishing federal jurisdiction. Therefore, the court has no basis 

for exercising diversity jurisdiction over this action.

II. CONCLUSION

For the reasons above, the court recommends that Plaintiff’s motion to remand be granted 

and that this action be remanded to the Marin County Superior Court. The Clerk is directed to 

reassign this case to a District Judge.

1 Plaintiff filed a waiver of the service of summons which was executed on December 12, 2019 by 

a “David L. Osborn.” [Docket No. 15.]

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United States District Court

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Any party may file objections to this report and recommendation with the district judge 

within 14 days after being served with a copy. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(a); 

N.D. Cal. Civ. L.R. 72-2. 

IT IS SO ORDERED.

Dated: March 18, 2020

______________________________________

Donna M. Ryu

U

United States Magistrate Judge

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORN

I

A

IT IS SO ORDERED

Judge Donna M. Ryu

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