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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

CHRISTIAN WELLISCH,

Plaintiff,

v.

PENNSYLVANIA HIGHER EDUCATION 

ASSISTANCE AGENCY, et al.,

Defendants.

Case No. 17-cv-00213-BLF 

ORDER DENYING PLAINTIFF'S 

MOTION TO REMAND

[Re: ECF 16]

Plaintiff Christian Wellisch1brings this suit, which was originally filed in state court,

against Defendants Pennsylvania Higher Education Assistance Agency (“PHEAA”) and James L. 

Preston (collectively, “Defendants”), claiming that Defendants failed to comply with the 

California Military and Veterans Code (“CMVC”) and the Federal Servicemembers Civil Relief 

Act (“SCRA”). See generally Ex. B to Notice of Removal (“Compl.”), ECF 1-2. Captain 

Wellisch’s claims arise out of issues related to PHEAA’s servicing of his student loans while he 

was on active duty as a commissioned officer in the California Army National Guard 

(“CAARNG”). Id. ¶¶ 8–9, 11. 

Presently before the Court is Plaintiff’s motion to sever his state law claims and remand 

them to state court or, alternatively, remand the action in its entirety. See generally Mot., ECF 16. 

The Court heard argument on this motion on March 16, 2017. For the reasons stated herein and 

on the record, the Court DENIES Plaintiff’s motion.

I. LEGAL STANDARD

Federal courts have limited subject matter jurisdiction, and may only hear cases falling

within their jurisdiction. Generally, a defendant may remove a civil action filed in state court if 

the action could have been filed originally in federal court. 28 U.S.C. § 1441. The removal 

 

1

Plaintiff is a Captain in the California Army National Guard. Compl. ¶ 9. Accordingly, the 

Court refers to him as Captain Wellisch or Plaintiff throughout this order.

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statute provides two basic ways in which a state court action may be removed to federal court: (1) 

the case presents a federal question, or (2) the case is between citizens of different states and the 

amount in controversy exceeds $75,000. See id. §§ 1441(a), (b).

The removal statutes are construed restrictively to limit removal jurisdiction. See 

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09 (1941). The Ninth Circuit recognizes 

a “strong presumption against removal.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)

(internal quotation marks omitted). Any doubts as to removability should be resolved in favor of 

remand. See Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). 

The defendant bears the burden of showing that removal is proper. See Valdez v. Allstate Ins. Co., 

372 F.3d 1115, 1117 (9th Cir. 2004). If at any time before final judgment it appears that a district 

court lacks subject matter jurisdiction over a case that has been removed to federal court, the case 

must be remanded. 28 U.S.C. § 1447(c). 

II. DISCUSSION

Despite the presence of a federal question—Plaintiff’s claim under the SCRA—Captain 

Wellisch contends that this action, or at least the state law claims, should be remanded. Plaintiff 

asserts three grounds for remand: First, Defendants improperly removed a separate, nonremovable proceeding. Mot. 2. Second, through removal, Defendants wrongly seek to avoid the 

ramifications of their failure to timely file responsive pleadings. Id. Third, the removal was 

improper because Defendants failed to comply with statutory requirements. Id. Defendants 

oppose remand. Opp’n, ECF 28.

Approximately one week after filing his multi-claim complaint in state court, including a 

claim under CMVC section 409.3, Captain Wellisch filed a Petition for Relief from Financial 

Obligation During Military Service pursuant to CMVC section 409.3. Ex. D to Notice of 

Removal (“MIL 010 Petition”), ECF 1-4. This document was filed and associated with Plaintiff’s 

civil case that was pending in state court. Id. 

Plaintiff first argues that because the MIL 010 Petition is an independent proceeding with 

particular procedural requirements that could not have been filed in this Court originally, it is not 

removable. Mot. 3–4. Defendants, however, contend that the MIL 010 Petition is not a separate 

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United States District Court

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proceeding, and is instead a part of his civil case. Opp’n 3. 

Pursuant to CMVC section 409.3(a),

[a] service member may, at any time during his or her most current 

period of military service or within six months thereafter, petition a 

court for relief in respect of any obligation or liability incurred by 

the service member before the effective date of the orders for his or 

her most current period of military service or in respect of any tax 

assessment whether falling due before or during his or her most 

current period of military service.

Cal. Mil. & Vet. Code § 409.3(a). This section allows a service member to file a petition for relief 

separate and apart from any civil action or as a part of an underlying lawsuit. See generally id. 

The MIL 010 Petition is a California Judicial Council form specific to claims brought under

CMVC section 409.3. The form includes instructions for the petitioner and provides notice to the 

defendant(s) as required under CMVC section 409.3, i.e., that a hearing is to be held within 25 

days of filing the petition and that the respondent has until five days before that hearing in which 

to file and serve any opposition. Cal. Mil & Vet. Code § 409.3(b). Here, the state court clerk set a 

hearing for January 20, 2017. See MIL 010 Petition. 

As previously described, Captain Wellisch filed a complaint in state court alleging that 

Defendants’ conduct violated the CMVC and SCRA, as well as claims for unfair business 

practices under California’s Business and Professions Code § 17200 and fraudulent concealment. 

See generally Compl. Thereafter, Plaintiff filed the MIL 010 Petition in the underlying state 

action. See MIL 010 Petition. Although Captain Wellisch presumably could have filed the MIL 

010 Petition separate from his underlying state action, he did not. Now, Plaintiff seeks to sever 

and remove his claim under CMVC section 409.3, arguing that it is separate from the underlying 

civil action. While Captain Wellisch correctly recounts the special procedures set forth in CMVC 

section 409.3, he provides no authority to support his assertion that it is to be construed as a 

proceeding separate and apart from the underlying civil action when it is filed in the underlying 

civil action. Indeed, the Monterey County Superior Court filed the MIL 010 Petition as part of his 

civil case. Opp’n 3. Accordingly, the Court does not agree that the procedure set forth in CMVC 

section 409.3 creates an independent proceeding that should be severed from the underlying

action.

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Perhaps recognizing this, Plaintiff argues that because removal of the MIL 010 Petition

would “nullify” the specific procedures set forth in the CMVC, “removal strikes at the heart of the 

sovereign dignity of the State.” Mot. 5. Captain Wellisch’s reliance on People v. Cordova, 248 

Cal. App. 4th 543 (2016), however, is misplaced. There, the court considered whether it could 

add to or ignore particular language in a statute, ultimately determining that it could not. See 

generally id. The excerpt on which Plaintiff relies relates specifically to that substantive issue. 

Here, by contrast, the issue is purely procedural, and thus, Plaintiff’s argument is unpersuasive. 

Although the Court recognizes that proceeding in this Court may “unduly burden” Captain 

Wellisch because he can longer reap the procedural benefits of CMVC section 409.3, the Court 

cannot provide relief on that ground alone. See Mot. 6–7. Although the Court has the discretion 

to decline supplemental jurisdiction in certain circumstances, burden to the Plaintiff is not a reason 

to do so. See 28 U.S.C. § 1367(c)(1)–(4). 

Second, Captain Wellisch contends that removal was improper because it was untimely. 

Mot. 6. However, as Defendants correctly state, they timely removed the action within the 30-day 

time period required by 28 U.S.C. § 1446(b). Notice of Removal ¶ 8, ECF 1 (filed Jan. 17, 2017; 

Compl. (filed Dec. 28, 2016). Plaintiff cites no authority to support the claim that removal was 

untimely because it was allegedly filed after the deadline for Defendants to file and serve a 

response to the CMVC section 409.3 petition. See Mot. 6. Indeed, pursuant to statute, the time 

for removal is within 30 days after receipt of the first pleading in the state action that sets forth a 

removable claim. 28 U.S.C. § 1446(b)(1). Here, the first pleading that set forth a removable 

claim was the complaint, and thus, removal was timely so long as it was filed on or before January 

27, 2017.

Finally, Plaintiff argues that PHEAA is barred from taking any litigation action, thus it 

cannot properly remove nor join in the removal of this action. Mot. 7. Specifically, Captain 

Wellisch claims that because PHEAA’s corporate registration in California is suspended, it cannot 

file a notice of removal in this Court. Id.; see also Cal. Corp. Code § 2203(c) (barring a 

corporation that conducts intrastate business without registering with the Secretary of State from 

maintaining “any action or proceeding upon any intrastate business so transacted” in any court in 

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California). Defendants contend, however, that even if PHEAA were considered a foreign 

corporation, it need not register with the California Secretary of State because its business consists 

exclusively of interstate commerce. Opp’n 6–7. PHEAA also argues that because it is a 

government agency of the Commonwealth of Pennsylvania, the filing requirement under the 

California Corporations Code is inapplicable.2 Id. at 7. The Court agrees with Defendants. 

To succeed on his claim under Cal. Corp. Code § 2203, Plaintiff bears the burden of 

proving that “the action arises out of the transaction of intrastate business by a foreign 

corporation.” United Sys. of Ark. v. Stamison, 63 Cal. App. 4th 1001, 1007 (1998). Plaintiff has 

not satisfied his burden—PHEAA claims that it conducts its student loan business out of 

Pennsylvania, and thus, any contact with California borrowers falls exclusively in interstate 

commerce. Opp’n 6–7. Captain Wellisch does not contest this assertion, but does emphasize that 

PHEAA was previously registered in this state, and thus it is barred from taking any litigation 

action. Mot. 7. At the hearing, however, PHEAA explained that it used to conduct business from 

California and have employees in California, and thus registered with the Secretary of State. 

Because it no longer conducts business from California and no longer has any employees in the 

state, PHEAA allowed its registration to lapse. The Court finds this argument compelling. Thus, 

for the aforementioned reasons, the Court concludes that PHEAA is not barred from litigating this 

case.

For the foregoing reasons, the Court concludes that it has subject matter jurisdiction over 

this action based on the federal claim asserted under the SCRA and DENIES Plaintiff’s motion to 

remand this action or any portion thereof.

IT IS SO ORDERED.

Dated: March 21, 2017

______________________________________

BETH LABSON FREEMAN

United States District Judge

 

2 Because the Court agrees that PHEAA’s business consists entirely of interstate commerce, and 

thus need not register with the California Secretary of State, it decline to address PHEAA’s second 

argument that PHEAA is not a “person” or a “corporation” to which the statute would apply. See 

Opp’n 7. 

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