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Gafcon, Inc. v. Aecom Caribe, LLP

United States District Court, W.D. North Carolina, Charlotte Division

January 7, 2020

GAFCON, INC., Plaintiff,


          Frank D. Whitney Chief United States District Judge.

         THIS 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 DENIED.

         I. Background

         Plaintiff's 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.

         Plaintiff 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).

         Following 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).

         II. Discussion

         The 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, p. 2).

         Absent 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)).

         Jurisdiction 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 (2005).

         The 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).

         However, 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 ...

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