Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-04853/USCOURTS-cand-5_05-cv-04853-0/pdf.json

Nature of Suit Code: 350
Nature of Suit: Motor Vehicle Personal Injury
Cause of Action: 28:1441 Petition for Removal- Auto Negligence

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

Maria Gonzalez De Rojas, et. al,

Plaintiffs,

 v.

Smart Transportation, et. al,

Defendants.

 /

NO. C 05-04853 JW 

ORDER GRANTING PLAINTIFFS'

MOTION TO REMAND

I. INTRODUCTION

On April 21, 2004, Maria Gonzalez De Rojas's husband was killed when a fully loaded large truck

trailer rolled over and crushed the automobile in which he was riding. (See Docket Item No. 8, Plaintiffs'

Motion to Remand, hereafter, "Motion" at 2.) The other passengers in the automobile, Eduardo Gortari

and Francis Sesto, were seriously injured in the accident. On July 2, 2004, Ms. De Rojas, her two minor

children, and Mr. Gortari and Mr. Sesto (collectively "Plaintiffs") filed a wrongful death and personal injury

action in the Monterey County Superior Court against Iceberg Enterprises ("Iceberg"), Smart

Transportation ("Smart"), and Mahad Haji Yusuf ("Yusuf") who was the driver of the truck (Id.) 

At the time of the filing of the State action, Plaintiffs' Complaint alleged that Smart is a foreign

corporation or other business entity of a type unknown to Plaintiffs but whose principal place of business is

the State of Ohio; Yusuf is an individual who is a resident of the State of Ohio; and Iceberg is a corporation
United States District Court

For the Northern District of California

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with its principal place of business in National City, California and is the owner of a 1996 utility trailer

involved in the accident. (Defendants' Notice of Removal, Ex. A ¶ 2.)

In the course of discovery, it was revealed that Iceberg is a Colorado corporation with its principal

place of business in Colorado. (Motion at 2.) It was also revealed that Smart is a California corporation. 

However, at the time of the State action, Smart was a "suspended" corporation.

On October 31, 2005, after the close of discovery in the State court proceedings, Iceberg moved

and was granted summary judgment. On November 28, 2005, Smart and Yusuf removed the case to the

District Court of Northern District of California on the basis of diversity of citizenship. 28 U.S.C. § 1332. 

Plaintiffs filed a Motion to Remand and requested that time be shortened for an immediate hearing. 

Plaintiffs' Motion for Shorten Time was granted.

On December 12, 2005, the parties appeared for a hearing on Plaintiffs' Motion to Remand. 

Based on the papers filed to date and the arguments presented, the Court GRANTS Plaintiffs' Motion to

Remand.

II. DISCUSSION

A defendant may remove to federal court any civil action brought in a state court that originally

could have been filed in federal court. 28 U.S.C. § 1441(c). Pursuant to 28 U.S.C. § 1332(a), federal

district courts have original jurisdiction over any civil action where the dispute is between citizens of

different states and the amount in controversy exceeds $75,000. 

Title 28 U.S.C. § 1447(c) provides: “If at any time before final judgment it appears that the district

court lacks subject matter jurisdiction, the case shall be remanded.” The defendant seeking removal of an

action to federal court bears the burden of establishing grounds for federal jurisdiction. Id. § 2:609. 

Removal statutes are construed restrictively, so as to limit removal jurisdiction. Ethridge v. Harbor House

Restaurant, 861 F.2d 1389, 1393 (9th Cir. 1988). Doubts as to removability are resolved in favor of

remanding the case to state court. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941);

Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
United States District Court

For the Northern District of California

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Removal jurisdiction is not coequal to original jurisdiction. Even if there is complete diversity of

citizenship such that the action could be filed in a federal district court, a case nevertheless cannot be

removed if one of the defendants is a citizen of the forum state. 28 U.S.C. § 1441(b). 

Rule 17(b) of the Federal Rule of Civil Procedure provides that the capacity of a corporation to sue

and be sued is determined by the law of the state under which it was organized. There is no question that

Smart was organized under the laws of the State of California. (Declaration of Rebecca Connolly in

Support of Plaintiffs' Motion to Remand, Ex. D; Declaration of Charles O. Thompson in Support of

Opposition to Plaintiffs' Motion to Remand, Ex. C.) Smart argues that since it has been "suspended" as a

corporation, it should not be considered a California corporation. There is no authority to support this

position. Under California Corporation Code 2205, a corporation is suspended until it complies with

certain requirements. According to the California Secretary of State's Official Website, a corporation is

suspended for "failure to meet statutory filing requirements of either the Secretary of State's office or the

Franchise Tax Board." (Thompson Decl. Ex. C.) During oral argument, counsel for Smart represented

that they do not know the reasons for Smart's suspended status as a California corporation. It appears

though that Smart would be able to lift this status by complying with the necessary filing requirements. 

It is settled that during the suspension, a California corporation is disabled from resort to the courts

for any purpose. See Community Elec. Service v. National Elec. Contr., 869 F.2d 1235, 1239 (9th Cir.

1989). However, it does not cease to exist as a California corporation. It is still empowered to take

actions to relieve the suspension and it can amend its articles of incorporation. See Cal. Corp. Code 2205. 

Thus, for the purpose of determining citizenship of a corporation, the Court only looks to Smart's place of

incorporation, not its status, whether inactive or suspended. Therefore, at the time this action was

removed, one of the Defendants, Smart, was a California citizen and the action was not removeable. 

The other statutory provision which prevents removal is the prohibition against removal on the basis

of diversity of an action which has been pending for more than one-year in State court. See 28 U.S.C. §

1446. Smart and Yusuf argue that they should be relieved from this requirement because they removed
United States District Court

For the Northern District of California

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within 30 days of the dismissal of Iceberg, which was fraudulently joined. First, the dismissal of Iceberg did

not make removeable a case which was otherwise not removeable. The dismissal of Iceberg left Smart, a

California citizen and Yusuf, an Ohio citizen. With Smart still in the case, 28 U.S.C. § 1441(b) still

prohibits removal. Secondly, the Court does not find any basis for Defendants' position that the addition of

Iceberg was fraudulent. 

III. CONCLUSION

The Court GRANTS Plaintiff's Motion to Remand. The case is remanded to the California

Superior Court for Monterey County. The Court retains jurisdiction subsequent to the remand for the

purpose of considering a motion by the Plaintiffs for attorney's fees and costs incurred as result of the

removal under 28 U.S.C. § 1447(c). The Clerk of this Court shall close the file.

Dated: December 12, 2005 

JAMES WARE

United States District Judge
United States District Court

For the Northern District of California

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Charles Oliver Thompson thompsonc@lbbslaw.com

Charles Oliver Thompson thompsonc@lbbslaw.com

David Bernard Lynch Dlynch@lowball.com

Melynnie Anne Rizvi rizvi@lbbslaw.com

Rebecca Connolly Rebecca.Connolly@grunskylaw.com

Dated: December 12, 2005 Richard W. Wieking, Clerk

By: /s/ JW Chambers 

Ronald L. Davis

Courtroom Deputy