Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01238/USCOURTS-azd-2_06-cv-01238-0/pdf.json

Nature of Suit Code: 240
Nature of Suit: Torts to Land
Cause of Action: 28:1441 Petition for Removal- Declaratory Judgement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Marian B. Farris, )

)

Plaintiff, ) No. CV 06-1238-PHX-PGR 

) 

v. )

) ORDER

)

Advantage Capital Corporation, )

)

Defendant. )

____________________________)

Pending before the Court is the Plaintiff's Motion to Remand (Doc. 7). The Court

held oral argument on the motion on August 8, 2006, and now issues its ruling.

I. INTRODUCTION

On April 20, 2006, the Plaintiff, Marian B. Farris, filed a Petition for Special Action

in the Superior Court of the State of Arizona, County of Maricopa, captioned Marian B.

Farris, an unmarried woman v. Advantage Capital Corporation, a New York corporation,

Case No. LC2006-000271. On April 28, 2006, the Defendant Advantage Capital

Corporation ("Advantage") was served a copy of the Summons, the Petition for Special

Action, and the Arizona Superior Court Civil Cover Sheet. On May 3, 2006, Defendant

Advantage filed a Notice of Removal pursuant to 28 U.S.C. § 1446(a) and Rule 3.7, Rules

of Practice of the United States District Court for the District of Arizona. The Defendant

maintains that removal is proper under 28 U.S.C. § 1441, which authorizes removal of any

action over which the federal courts have original jurisdiction, provided that, in cases where

Case 2:06-cv-01238-PGR Document 18 Filed 11/06/06 Page 1 of 6
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original jurisdiction is predicated on diversity, no defendant is a citizen of the state in which

the action was commenced. Original jurisdiction exists here under 28 U.S.C. 1332(a)(1),

which confers original diversity jurisdiction over claims in excess of $75,000 between

citizens of different states. The Petition for Special Action names Marian B. Farris as the

sole Plaintiff and alleges that she is a resident of Maricopa County, Arizona. Advantage is

the sole Defendant and was at the time of filing, and still is, a corporation incorporated under

the laws of the State of New York, with its principal place of business in the State of

Georgia. As such, complete diversity of citizenship exists between the Plaintiff and the

Defendant in this action. Furthermore, the amount of controversy exceeds $75,000 as the

Plaintiff alleges in her Petition for Special Action that her damages "are no less than

$1,150,000." 

II. FACTUAL BACKGROUND

On March 31, 2006, Advantage filed a Verified Complaint in the Maricopa County

Superior Court alleging seven claims for relief, including a claim for fraudulent conveyance

against the Plaintiff in the present action, Marian B. Farris, and two other Defendants,

Charles L. Bolton, III and Brenda L. Bolton, who are Ms. Farris' son and former daughter-inlaw respectively. Mr. Bolton is a former registered representative of Advantage, and two of

Advantage's customers whose investment accounts Mr. Bolton serviced complained that

$649,000 was missing from their accounts.

With respect to Ms. Farris, the Verified Complaint seeks a judgment voiding Mr. and

Mrs. Bolton's allegedly fraudulent transfer to her of their multi-million dollar home in

Scottsdale, Arizona ("the Windrose Drive Property"). Also, on March 31, 2006, pursuant to

A.R.S. § 12-1191, Advantage recorded a Notice of Lis Pendens concerning the purported

transfer of the Windrose Drive Property. 

In response, on April 20, 2006, pursuant to A.R.S. § 33-420, the Plaintiff, Marian B.

Farris, filed a Petition for Special Action in the Maricopa Superior Court seeking to quash

Advantage's Notice of Lis Pendens against the Windrose Drive Property and to recover

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alleged damages $1,150,000, which she seeks to have trebled. On May 3, 2006, Advantage

filed a timely notice of removal based on diversity jurisdiction, and the Plaintiff concedes

that the parties are properly in this Court. However, on May 26, 2006, the Plaintiff filed a

Motion to Remand to state court which she argues is proper due to the Burford abstention

doctrine. The Defendant disagrees.

III. DISCUSSION

The Plaintiff maintains that, despite the presence of diversity jurisdiction, this Court

should abstain from hearing this case and remand it to the Maricopa County Superior Court

under the Burford abstention doctrine. However, the Defendant opposes the remand arguing

that the Plaintiff's action to quash a lis pendens does not meet any of the requirements to

invoke Burford abstention.

In Burford v. Sun Oil Company, et al., the United States Supreme Court determined

that a federal court could decline to exercise its jurisdiction to hear a case that involved

essentially a local issue arising out of a complicated regulatory scheme. 319 U.S. 315, 317-

18 (1943). Specifically, the Court held that it was proper for a federal court to abstain from

deciding a challenge to the validity of an order of the Texas Railroad Commission granting

the petitioner Burford a permit to drill oil wells in the East Texas oil field. Id. Federal

jurisdiction was present on the basis of both diversity of citizenship and federal question –

a contention by the oil companies that the order denied them due process of law. Id.

Under Burford, abstention may be appropriate to avoid federal intrusion into matters

which are largely of local concern and which are within the special competence of local

courts. The United States Supreme Court has stated that the Burford abstention doctrine "is

concerned with protecting complex state administrative processes from undue federal

interference;" however, "it does not require abstention whenever there exists such a process,

or even in all cases where there is a 'potential for conflict' with state regulatory law or

policy." New Orleans Public Service, Inc. v. Council of the City of New Orleans, et al., 491

U.S. 350, 361(1989).

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 In an effort to limit the application of abstention under the Burford principles, the

Ninth Circuit Court of Appeals generally requires certain factors to be present for abstention

to apply: (1) that the state has concentrated suits involving the local issue in a particular

court; (2) the federal issues are not easily separable from complicated state law issues with

which the state courts may have special competence; and (3) that federal review might

disrupt state court efforts to establish a coherent policy. Tucker v. First Maryland Savings

& Loan, Inc., 942 F.2d 1401, 1405 (9th Cir. 1991).

The Plaintiff maintains that the factors requiring abstention under Burford are clearly

present in this case. The Plaintiff brought her claim under A.R.S. § 33-420, a specific

statutory scheme created by the Arizona legislature for the benefit of owners of real property

located within the state of Arizona. The statute at issue provides as follows:

 . . .The owner or beneficial title holder of the real property may

bring an action pursuant to this section in the superior court in

the county in which the real property is located for such relief as

is required to immediately clear title to the real property as

provided for in the rules of procedure for special actions. 

A.R.S. § 33-420(B). According to the Plaintiff, this statute reflects an obvious effort by the

Arizona legislature to establish a coherent policy on the subject of clearing title to real

property and protecting that real property from unlawful liens. Furthermore, the Plaintiff

points out that the Arizona legislature dictated the process by which real property owners can

obtain relief, requiring use of the unique Arizona procedure known as a special action. In

addition, the Plaintiff states that the statute actually provides the specific court where the

remedy can be pursued – the superior court of Arizona.

The Defendant responds that the special action process enacted by the Arizona

legislature is one filed in the general state court system and not one earmarked for a specific

court with specialized jurisdiction, i.e. the Superior Court of a particular county. In addition,

the Defendant contends that merely because there are state statutes in existence that provide

for notices of lis pendens and the procedure for quashing them, that does not mean that this

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Court's construction of those statutes would "disrupt state efforts to establish a coherent

policy." Tucker, 942 F.2d at 1405. 

The Court agrees with the Defendant. This Court, sitting in diversity, would sit in the

same posture as the Arizona state court and there would be no different result in the federal

proceedings than would be achieved in the state court proceeding. Id. at 1406. Furthermore,

Arizona does not require that suits brought to quash notices of lis pendens be filed in a

specific court. The statute merely names the superior court, i.e. the general Arizona state

court system. Hence, the first factor generally required by the Ninth Circuit for Burford

abstention is absent. 

The second factor, that federal issues are not easily separable from complicated state

law issues with which the state courts may have special competence, is clearly not applicable

here. There are no federal implications to the claims or the process by which the Plaintiff

seeks to clear title to her Arizona real estate; therefore, this is a fact that will not weigh in

favor of abstention. Id. The state law issues in this case are two fold: (1) whether the

Defendant's fraudulent conveyance action in the Maricopa County Superior Court, which

seeks avoidance of transfers of the Windrose Drive Property, is one affecting title to real

property within the meaning of A.R.S. §12-1191; and (2) if not, whether Defendant's Notice

of Lis Pendens renders it liable to Plaintiff under A.R.S. § 33 -420. These issues involve two

well established Arizona statutes. The claims to be resolved are not complicated nor do they

involve a complex web of administration. 

Finally, the third consideration for Burford abstention is also absent in this case as

federal adjudication of this matter will not disrupt the state of Arizona's efforts to establish

a coherent policy. Burford abstention is designed to limit federal interference with the

development of state policy, and it is justified where the issues sought to be adjudicated in

federal court are primarily questions regarding the interpretation of state laws. Tucker, 942

F.2d at 1407. Essentially, Burford allows federal "courts to decline to rule on an essentially

local issue arising out of a complicated state regulatory scheme." U.S. v. Morros, 268 F.3d

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695, 705 (9th Cir. 2001). This is clearly not the situation before the Court. As such, the

Court concludes that abstention under the principles set forth in Burford is not appropriate,

and the motion is denied. Therefore,

IT IS ORDERED that the Plaintiff's Motion to Remand (Doc. 7) is DENIED.

DATED this 6th day of November, 2006.

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