Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00218/USCOURTS-caed-2_06-cv-00218-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

REDEVELOPMENT AGENCY OF THE

CITY OF ROSEVILLE,

2:06-CV-0218-MCE-PAN

Plaintiff,

v. MEMORANDUM AND ORDER

MAIDU VILLAGE PHASE III, LP, a

California limited

partnership; PROJECT GO, INC.,

a California Nonprofit, public

benefit corporation; LYNDA

TIMBERS, an individual; MARK

SHEPPARD, an individual; and

DOES 1-100.

Defendants.

______________________________

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MAIDU VILLAGE PHASE III, LP, a

California limited

partnership; PROJECT GO, INC.,

a California Nonprofit, public

benefit corporation; LYNDA

TIMBERS, an individual; MARK

SHEPPARD, an individual; and

DOES 1-100.

Counter Claimants,

v.

REDEVELOPMENT AGENCY OF THE

CITY OF ROSEVILLE; HOUSING

AUTHORITY OF THE CITY OF

ROSEVILLE, CALIFORNIA; AND

DOES 1 - 10.

Counter Defendants.

----oo0oo----

Through the present action, Plaintiff and Counter Defendant

Redevelopment Agency of the City of Roseville (“Agency”) alleges

that Defendant Maidu Village Phase III, LP (“Maidu”); Project Go,

Inc. (“PGI”); Lynda Timbers; and Mark Sheppard (collectively

“Defendants”) violated the terms of a regulatory agreement to

which the Agency and Defendants are parties. In seeking redress

for that alleged breach, the Agency filed suit in the superior

court of Placer County asking for declaratory and injunctive

relief as well as damages.

Defendants removed the suit to this Court alleging federal

question jurisdiction. The Agency now seeks to have this action

remanded to the state court.

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Because oral argument will not be of material assistance, 1

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

The Agency and the Roseville Housing Authority (the 2

“Authority”) are separate legal entities. However, for purposes

of the present Motion, they will be treated interchangeably.

3

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For the reasons set forth more fully below, the Agency’s Motion

to Remand is granted.1

BACKGROUND

The Agency, in tandem with the Roseville Housing Authority2

(“Authority”), entered into a series of agreements including loan

agreements and a regulatory agreement with PGI, a nonprofit

public benefit housing corporation which is the general partner

of Maidu Village Phase III, a California limited partnership,

which is in turn the owner of a low income apartment complex

located in Roseville, California. The individual Defendants,

Lynda Timbers and Mark Sheppard are PGI’s Executive Director and

the Housing Program Manager, respectively.

The regulatory agreement provides that the Authority will

use the federal Department of Housing and Urban Development’s

(“HUD”) procedures for setting the applicable rent. It further

provides that “the gross rent cannot exceed the applicable

payment standard by bedroom size as established by the [Housing]

Authority pursuant to the then current Roseville Housing

Authority Administrative Plan, in accordance with applicable

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[HUD] regulations.” Def.’s Notice of Removal, Ex. A-3:

Regulatory Agreement, Recital B.

In early 2005, Maidu completed construction on a low-income

housing project in Roseville, California (the “Project”). The

Project is a 76-unit rental housing development restricted to low

and very low income senior citizens who are qualified to avail

themselves of HUD’s Section 8, Housing Choice Voucher Program. 

In September 2005, the Agency conducted an initial monitoring of

the Project and discovered that eleven tenants were being charged

rent in excess of the maximum permissible under the regulatory

agreement. Plaintiffs advised PGI that it was in breach of the

regulatory agreement by charging excessive rent. PGI then

amended the incorrect leases but did not provide for any

reimbursement of the overcharged rent prompting the Agency to

file the present action.

STANDARD

A defendant may remove any civil action from state court to

federal district court if the district court has original

jurisdiction over the matter. 28 U.S.C. § 1441(a). Generally,

district courts have original jurisdiction over civil actions in

two instances: (1) where there is complete diversity between the

parties, or (2) where a federal question is presented in an

action arising under the Constitution, federal law, or treaty. 

28 U.S.C. §§ 1331 and 1332.

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The removing party bears the burden of establishing federal

jurisdiction. Ethridge v. Harbor House Rest., 861 F.2d 1389,

1393 (9th Cir. 1988). Furthermore, courts construe the removal

statute strictly against removal. Gaus v. Miles, Inc., 980 F.2d

564, 566 (9th Cir. 1992) (citations omitted). If there is any

doubt as to the right of removal in the first instance, remand

must be granted. See Gaus, 980 F.2d at 566. Therefore, if it

appears before final judgment that a district court lacks subject

matter jurisdiction, the case shall be remanded to state court. 

28 U.S.C. § 1447(c).

The district court determines whether removal is proper by

first determining whether a federal question exists on the face

of the plaintiff's well-pleaded complaint. Caterpillar, Inc. v.

Williams, 482 U.S. 386, 392 (1987). If a complaint alleges only

state-law claims and lacks a federal question on its face, then

the federal court must grant the motion to remand. See 28 U.S.C.

§ 1447(c); Caterpillar, 482 U.S. at 392. Nonetheless, there are

rare exceptions when a well–pleaded state-law cause of action

will be deemed to arise under federal law and support removal. 

They are " . . . (1) where federal law completely preempts state

law, (2) where the claim is necessarily federal in character, or

(3) where the right to relief depends on the resolution of a

substantial, disputed federal question." ARCO Envtl. Remediation

L.L.C. v. Dep't of Health & Envtl. Quality of Mont., 213 F.3d

1108, 1114 (9th Cir. 2000)(internal citations omitted).

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If the district court determines that removal was improper,

then the court may also award the plaintiff costs and attorney

fees accrued in response to the defendant's removal. 28 U.S.C. §

1447(c). The court has broad discretion to award costs and fees. 

Balcorta v. Twentieth-Century Fox Film Corp., 208 F.3d 1102, 1106

n.6 (9th Cir. 2000). The Supreme Court has clarified that the

standard for awarding fees pursuant to Section 1447(c) should

turn on the reasonableness of the removal. Martin v. Franklin

Capital Corp., 126 S. Ct. 704, 711 (U.S. 2005). Absent unusual

circumstances, courts may award attorney’s fees under § 1447(c)

only where the removing party lacked an objectively reasonable

basis for seeking removal. Id. Conversely, when an objectively

reasonable basis exists, fees should be denied. Id.

ANALYSIS

1. Federal Question Jurisdiction

A. Well Pleaded Complaint

The Agency first contends that this Court lacks federal

jurisdiction to hear the present matter because no federal

question exists on the face of its well pleaded complaint. 

Specifically, the Agency clarifies that its Complaint contains

only three state law claims seeking declaratory and injunctive

relief as well as damages related to the alleged contractual

breach by Defendants. Agency Motion to Remand, p. 5:16-19.

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The Agency further avers that the central issue upon which the

resolution of this matter will turn is whether PGI breached

Section 52 of the regulatory agreement by charging rates that

exceeded the maximum rents authorized by the Authority. Id. at

p. 5:21-23.

Defendants rebut that the Agency has essentially clothed

federal claims as state claims but that the Court should “push

aside” those labels and recognize that the claims are controlled

exclusively by federal law. Def.s’ Opp., p. 9:1-3. In

particular, Defendants contend that the controlling issue here is

whether the Authority has the power to set the rent levels for

HUD’s Section 8 housing program pursuant to federal law. Def.s’

Opp., p. 2:7-10.

For nearly a century, the well-pleaded complaint rule has

governed removal actions. See Aetna Health, Inc. v. Davila, 542

U.S. 200, 124 S.Ct. 2488, 2494 (2004); Franchise Tax Board of

Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1,

9-10 (1983); Louisville & Nashville R.R. Co. v. Mottley, 211 U.S.

149, 152 (1908). The rule states that if a federal question is

not presented on the face of the plaintiff’s complaint, then the

action cannot be removed to federal court. Franchise Tax Board,

463 U.S. at 10-11. Unlike state courts, federal courts are

courts of limited jurisdiction. Kokkonen v. Guardian Life Ins.

Co. of Am., 511 U.S. 375, 377 (1994). Thus, the well-pleaded

complaint rule operates to avoid upending federalism and creating

serious jurisdictional conflicts between federal and state

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courts. Franchise Tax Board, 463 U.S. at 9-10.

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The well-pleaded complaint rule “makes the plaintiff the

master of the claim.” Caterpillar, Inc. v. Williams, 482 U.S.

386, 392 (1987). Certainly, in the present action the Agency

could have elected to frame its claims pursuant to the HUD

regulations that dictate the maximum rents permissible.

Nonetheless, the Agency chose not to avail itself of a federal

forum. Instead, it chose to seek redress in a state forum as it

is legally permitted to do. Further, the Agency’s Complaint

contains no federal question on its face. Rather, the Agency is

seeking declaratory relief as to Defendants’ compliance with

Section 52 of the regulatory agreement, injunctive relief

enjoining Defendants from violating the regulatory agreement and

damages for any injury suffered. These claims do not invoke a

federal question. Consequently, unless Defendants can show that

the Agency’s right to declaratory or injunctive relief depends on

the resolution of a substantial, disputed federal question, this

action must be remanded. ARCO, 213 F.3d at 1114. 

Defendants attempt to raise a federal question by alleging

that an examination of the HUD regulations is necessary to the

disposition of the present action. While Defendants may be quite

correct on that score, their argument nonetheless fails. Even

assuming that the HUD regulations must be examined to determine

the merits of Plaintiff’s claims, those regulations are only

being raised as a defense. It is well settled that a defense

which raises a federal question is insufficient to confer federal

jurisdiction. Merrell Dow Pharm., Inc. v. Thompson, 478 U.S.

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804, 808 (1986)(citations and quotations omitted.

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As noted above, the Court must construe the removal statute

strictly against removal. Gaus, 980 F.2d at 566. The Agency’s

well plead Complaint clearly does not state a federal question. 

To the extent federal law is relevant to the disposition of the

controversy, it is raised as a defense which is insufficient to

confer federal jurisdiction. Accordingly, the Court finds that

remand of the present action is warranted. 

2. Attorneys Fees

The Agency is seeking to recover the attorney’s fees it

accrued in moving for remand. The appropriate test for awarding

fees under Section 1447(c) should recognize the desire to deter

removals sought for the purpose of prolonging litigation and

imposing costs on the opposing party, while not undermining

Congress’ basic decision to afford defendants a right to remove

as a general matter, when the statutory criteria are satisfied. 

Martin v. Franklin Capital Corp., 126 S. Ct. 704, 711 (U.S. 2005)

The Agency avers that it is entitled to an award of

attorney’s fees because Defendants sought removal despite the

fact that the Agency’s claim rests solely on state law grounds

with only an insubstantial federal ingredient. Agency Motion to

Remand, P. 10:3-4. The Supreme Court has recently instructed,

however, that the standard for awarding fees should turn on the

reasonableness of the removal. Id. Absent unusual

circumstances, courts may award attorney’s fees under § 1447(c)

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only where the removing party lacked an objectively reasonable

basis for seeking removal. Id.

Conversely, when an objectively reasonable basis exists, fees

should be denied. Id.

The Court finds that this is not an unusual circumstance

where the Defendants lacked any objectively reasonable basis for

seeking to have this matter heard in a federal court. Rather,

Defendants raised the reasonable argument that the merits of this

controversy could only be resolved by examination of the HUD

regulations. Although the Court rejected that argument, 

Defendants’ removal was not objectively unreasonable rendering an

award of attorney’s fees improper.

CONCLUSION

The Court finds that this matter should be remanded because

there is no federal question. Accordingly, the Agency’s Motion

for Remand is GRANTED. The Court further DENIES the Agency’s

request for attorney’s fees and costs.

IT IS SO ORDERED.

DATED: April 20, 2006

_____________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

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