United States District Court, W.D. North Carolina, Charlotte Division
D. Whitney Chief United States District Judge.
MATTER is before the Court on Plaintiff's Motion to
Remand to State Court and Motion for Attorney Fees. (Doc. No.
13). Defendant filed a Memorandum in Opposition, (Doc. No.
20), and Plaintiff filed a Memorandum in Support of its
Motion to Remand. (Doc. No. 23). For the reasons set forth
below, Plaintiff's Motion to Remand to State Court is
GRANTED and the accompanying Motion for Attorney Fees is
claims arise out of a contractual relationship between the
parties for information technology and staff augmentation
services in support of Defendant's work on construction
projects in the U.S. Virgin Islands. On February 2, 2018,
Defendant entered into a contract (the “Prime
Contract”) with the Virgin Islands Housing Finance
Authority to undertake residential construction projects to
repair the destruction caused by Hurricanes Irma and Maria.
Defendant then entered into a subcontract with Plaintiff (the
“Subcontract”) for services related to
Defendant's performance of the Prime Contract.
originally sued Defendant in January 2019 in California state
court to recover allegedly unpaid invoices under the
Subcontract. (Doc. No. 1-1, p. 13). The California court,
evaluating the forum selection and choice of law provisions
in the Subcontract, found “that North Carolina is the
proper forum, but that the North Carolina court is required
to apply California law.” (Id., p. 257).
Accordingly, the California action was stayed pending a
filing “in the appropriate North Carolina court, which
shall apply California law in adjudicating the underlying
dispute.” (Id., p. 258).
the California state court's ruling, Plaintiff filed a
Complaint (Doc. No. 1-1) on August 14, 2019 in Mecklenburg
County Superior Court. On September 11, 2019, Defendant
removed the action to the United States District Court for
the Western District of North Carolina alleging federal
question jurisdiction under 28 U.S.C. § 1331. (Doc. No.
1, p. 2). On October 7, 2019, Defendant filed a Motion to
Dismiss and memorandum in support (Doc. Nos. 8-9) as well as
a Motion for Judicial Notice (Doc. No. 10). Defendant
additionally requested a hearing regarding the Motion to
Dismiss. (Doc. No. 11). Plaintiff then filed a Motion to
Remand to State Court and Motion for Attorney Fees and
memorandum in support. (Doc. Nos. 13-14).
primary issue before the Court today is whether this Court
may exercise subject matter jurisdiction over this case.
Defendant raises no diversity of citizenship allegation and
bases the propriety of removal squarely on its argument that
Plaintiff's claims arise under the laws of the United
States and therefore grants the Court federal question
jurisdiction pursuant to 28 U.S.C. § 1331. (Doc. No. 1,
proper jurisdiction, the case must be remanded to state
court. Wisconsin Dep't of Corr. v. Schacht, 524
U.S. 381, 389 (1998) (“No party can waive the
[jurisdictional] defect or consent to jurisdiction. No. court
can ignore the defect; rather a court, noticing the defect,
must raise the matter on its own.”) (internal citation
omitted). “‘Federal courts are courts of limited
jurisdiction,' possessing ‘only that power
authorized by Constitution and statute.'” Gunn
v. Minton, 568 U.S. 251, 256 (2013) (quoting
Kokkonen v. Guardian Life Ins. Co. of America, 511
U.S. 375, 377 (1994)).
is proper in cases “arising under” federal law
when a plaintiff's complaint establishes “that the
plaintiff's right to relief necessarily depends on
resolution of a substantial question of federal law.”
Empire Healthchoice Assur. Inc. v. McVeigh, 547 U.S.
677, 699 (2006) (quoting Franchise Tax Bd. of Cal. v.
Constr. Laborers Vacation Tr. for Southern Cal., 463
U.S. 1, 27-28 (1983)). Federal courts may exercise
jurisdiction over a narrow category of cases that arise under
state law, but implicate significant issues of federal law,
if the claims “necessarily raise a stated federal
issue, actually disputed and substantial, which a federal
forum may entertain without disturbing any congressionally
approved balance of federal and state judicial
responsibilities.” Grable & Sons Metal Prods.,
Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314
types of state law claims that arise under federal law and
trigger federal question jurisdiction ultimately amount to
“a special and small category.” Empire
Healthchoice Assur. Inc., 547 U.S. at 699; see also
Gunn, 568 U.S. at 258 (describing courts' difficulty
in defining the slim arising under category not as painting
on a blank canvas but rather a “canvas look[ing] like
one that Jackson Pollock got to first”). In
Gunn, the Supreme Court articulated a four-part test
to determine whether claims fall within this limited category
of federal questions. Federal jurisdiction lies over a state
law claim that is:
(1) necessarily raised, (2) actually disputed, (3)
substantial, and (4) capable of resolution in federal court
without disrupting the federal-state balance approved by
Congress. Where all four of these requirements are met . . .
jurisdiction is proper because there is a ‘serious
federal interest in claiming the advantages thought to be
inherent in a federal forum,' which can be vindicated
without disrupting Congress's intended division of labor
between state and federal courts.
Id. (citing Grable, 545 U.S. at 313-14)
(internal citations omitted).
a federal defense “is not grounds for § 1331
jurisdiction.” Burrell v. Bayer Corp., 918
F.3d 372, 381 (4th Cir. 2019). “[A] case may not be
removed to federal court [under § 1331] on the basis of
a federal defense, including the defense of preemption, even
if the defense is anticipated in the plaintiff's
complaint, and even if both parties admit that the defense is
the only question truly at ...