Anderson Plant LLC v. Batzer Constr., Inc.

Decision Date29 July 2015
Docket NumberNo. 3:15-cv-01966-CRB,3:15-cv-01966-CRB
CourtU.S. District Court — Northern District of California

Petitioner Anderson Plant, LLC moves to remand this action to the Superior Court for the County of San Francisco. Amend. Remand Mot. (dkt. 21) at 1. Anderson Plant originally filed its Petition to Vacate Arbitration Award (the "Petition") in that Court before Respondent Batzer Construction, Inc. removed to this Court. See Notice of Removal (dkt. 1) ¶¶ 1-2; see generally Petition (dkt. 1-2). Batzer Construction requests that the Court deny the motion to remand and instead transfer the action to the United States District Court for the Eastern District of California, since the Eastern District previously considered a related dispute between the parties. See Transfer Mot. (dkt. 17) at 1-2. For the reasons discussed below, the Court GRANTS the motion to remand, and DENIES AS MOOT the motion to transfer.


Anderson Plant and Batzer Construction entered into a contract (the "Contract") in May 2011 for Batzer Construction to perform construction work on property owned by Anderson Plant. See generally Doherty Decl. (dkt. 12), Ex. A (dkt. 12-1) at Ex. A; Loiselle Decl. (dkt. 7-1)1 ¶ 2. After Batzer Construction failed to complete the work pursuant to the Contract, Anderson Plant withheld payment from, and then sued, Batzer Construction on several contract and tort claims (the "Contract Action"). Remand Memo. (dkt. 19) at 4; Loiselle Decl. ¶ 3. Batzer Construction asserted counterclaims against Anderson Plant. Loiselle Decl. ¶ 3. The parties subsequently agreed to resolve all the claims in the Contract Action through arbitration. See id. ¶ 4.

While that arbitration was pending, in August 2013, Anderson Plant initiated a separate action in the Superior Court for Shasta County (the "Licensure Action") when Anderson Plant discovered that Batzer Construction might not have been properly licensed to perform the work it did under the Contract. See generally Doherty Decl., Ex. A. Anderson Plant sought as relief, inter alia, the disgorgement of nearly $4.5 million it had paid to Batzer Construction, as permitted by Cal. Bus. & Prof. Code § 7031 ("Section 7031"). See id., Ex. A ¶ 18. Batzer Construction and its co-defendant Fidelity and Deposit Company of Maryland removed the Licensure Action to the Eastern District. See Doherty Decl., Ex. B (dkt. 12-3) at 1. Batzer Construction then moved to stay the Licensure Action and compel arbitration as to the central issue of the case: whether Batzer Construction was a properly licensed contractor under Cal. Bus. & Prof. Code § 7000, et seq. See Anderson Plant, LLC v. Batzer Constr., Inc., No. 2:13-cv-02109-KJM-CMK, 2014 WL 800293, at *1 (E.D. Cal. Feb. 27, 2014). The Eastern District held that the Federal Arbitration Act ("FAA") governed the Contract as to the arbitrability of that issue, and, accordingly, compelled the Licensure Action to arbitration. Id. at *3-4.

Following a three-day hearing on the licensure issue, a panel of arbitrators determined that Batzer Construction was not properly licensed, but had substantially complied with California's licensure requirements. See Resp.'s Suppl. Ex. A to Notice of Removal (dkt. 28) (the "Arbitration Decision") at 9; see also Cal. Bus. & Prof. Code § 7031(e). Because the arbitration took place in San Francisco, Anderson Plant filed the Petition pursuant to Cal. Civ. Proc. Code § 1292.2 in the Superior Court for San Francisco County, rather than Shasta County—the venue for both the Contract and Licensure Actions. See Petition at 1. Batzer Construction2 removed the Petition on May 1, 2015, asserting that this Court has diversity jurisdiction under 28 U.S.C. § 1332. Notice of Removal at 1; see also 28 U.S.C. § 1441(b). Anderson Plant timely moved to remand the Petition on June 1, 2015. See Remand Mot. (dkt. 11);3 28 U.S.C. § 1447(c).

A. Motion to Remand

"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant . . . to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "[T]he proponent of federal jurisdiction . . . has the burden to prove, by a preponderance of the evidence, that removal is proper." Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106-07 (9th Cir. 2010).The same party also bears "the burden of showing that it has complied with the procedural requirements for removal." Ligutom v. SunTrust Mortg., No. C10-05431 HRL, 2011 WL 445655, at *1 (N.D. Cal. Feb. 4, 2011).

The removal statute is "strictly construe[d] . . . against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam). "Where doubt regarding the right to removal exists, a case should be remanded to state court." Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).

B. Motion to Transfer

"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought . . . ." 28 U.S.C. § 1404(a). "The party moving to transfer venue under Section 1404(a) bears the burden of establishing the factors in favor of transfer." Earth Island Institute v. Quinn, 56 F. Supp. 3d 1110, 1115 (N.D. Cal. 2014) (citing Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th Cir. 2000)).

District courts have discretion "to adjudicate motions for transfer according to an 'individualized, case-by-case consideration of convenience and fairness.'" Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). Courts must weigh multiple factors in determining whether transfer is appropriate. See Jones, 211 F.3d at 498-99 (citing Stewart Org., 487 U.S. at 29). Such factors include:

(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.

Id. (internal citations omitted). "No single factor is dispositive . . . ." Earth Island Institute, 56 F. Supp. 3d at 1117 (internal quotations omitted). However, "[t]he defendant must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum." Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).

A. Motion to Remand

Anderson Plant asserts three bases for remanding the action: (1) Batzer Construction did not remove the Petition in the time required by 28 U.S.C. § 1446; (2) the $75,000 amount in controversy requirement of 28 U.S.C. § 1332(a) is not met here, given the nature of the underlying arbitration award and the relief sought in the Petition; and (3) the Court should decline to exercise jurisdiction under the abstention doctrine set forth in Burford v. Sun Oil Co., 319 U.S. 315 (1943), since federal adjudication of the Petition would interfere with state efforts to regulate contractor licensure requirements. Remand Memo. at 6-13. The Court agrees with the first two of these arguments and accordingly GRANTS the motion to remand.

1. Timeliness of Removal

Anderson Plant argues that Batzer Construction did not timely file the Notice of Removal, since the Petition was not removed until well after the removal period expired. Remand Memo. at 6-7. Generally, "[t]he notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based . . . ." 28 U.S.C. § 1446(b)(1). The parties do not dispute that removal was timely if the date on which the Petition was served is considered the commencement date for the thirty-day removal period. See Remand Memo. at 7; Remand Opp'n (dkt. 20) at 6. Nor could they—Anderson Plant filed the Petition on April 2, 2015, see Petition at 36, and Batzer Construction removed the Petition on May 1, 2015, see Notice of Removal at 4. Thus, even assuming the Petition was served on Batzer Construction the same day the Petition was filed,4 the removal date would be within the thirty-day period.

But the parties disagree as to whether the Petition itself is an "initial pleading" under Section 1446. Batzer Construction contends that it is. See Remand Opp'n at 6-7. Anderson Plant, however, argues that the Petition is merely a "continuation of" the Licensure Action, such that "the filing of the Petition did not initiate an independent proceeding for removalpurposes . . . ." Remand Memo. at 6. Anderson Plant therefore contends that the thirty-day removal period commenced shortly after August 28, 2013, when Anderson Plant filed the complaint in the Licensure Action. See id. at 6-7; see also Doherty Decl., Ex. A at 1.

The Court finds the Notice of Removal to be untimely, since it was filed more than thirty days after August 28, 2013. Multiple courts have held that a petition filed subsequent to an arbitration award is not a separate proceeding for purposes of removal. See Lesser Towers, Inc. v. Roscoe-Ajax Constr. Co., 258 F. Supp. 1005, 1006-07, 1009-10 (S.D. Cal. 1966) (considering untimely the removal to federal court of a petition to confirm an arbitration award in state court, as...

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