Free & Sovereign State of Chihuahua v. Cesar Horacio Duarte Jaquez
| Decision Date | 14 July 2020 |
| Docket Number | EP-20-CV-00086-DCG |
| Parties | FREE AND SOVEREIGN STATE OF CHIHUAHUA, Plaintiff, v. CESAR HORACIO DUARTE JAQUEZ, BERTHA OLGA GOMEZ FONG, OLGA SOFIA DUARTE GOMEZ, OLGA DUARTE JAQUEZ CESAR ADRIAN DUARTE GOMEZ, CAD CONSTRUCTION, INC., GABRIELA ARMENDARIZ CHAPARRO, MANUEL ALBERTO GARZA, 44 FOUNTAIN RD., LLC, AND 110 S. FESTIVAL, LLC., Defendants. |
| Court | U.S. District Court — Western District of Texas |
Presently before the Court is Plaintiff Free and Sovereign State of Chihuahua's ("State of Chihuahua") "Motion to Remand" (ECF No. 7) ("Motion"), filed on April 29, 2020. Therein, the State of Chihuahua requests the Court to remand the instant case to the state court pursuant to 28 U.S.C. § 1447(c). For the reasons that follow, the Court GRANTS the State of Chihuahua's Motion.
The State of Chihuahua, a foreign sovereign state and political subdivision of Mexico, initially brought this civil lawsuit in a Texas state court against its former governor, Cesar Duarte Jaquez ("Duarte"), his wife, two children, his sister, and other entities and associates (collectively, "Defendants"). Notice of Removal at 15, ECF No. 1. According to the complaint, Duarte fled to the United States after Mexico indicted him with more than 21 counts of corruption and fraud for plundering hundreds of millions of dollars in government funds during his tenure as governor of the State of Chihuahua. Id. at 16. Specifically, the complaint alleges that Duarte conspired with his family and associates to abscond with these stolen government funds, which were then used to make investments and purchase luxury homes and cars in the United States. Id. Thus, the State of Chihuahua filed this lawsuit seeking to recoup these funds from Duarte and those who acted in concert with him, and to recover any assets purchased with these funds. Id.
Defendants subsequently removed to federal court on the basis of federal jurisdiction. Id. at 1. Defendants contend that this Court has subject matter jurisdiction over this suit because, although all of the State of Chihuahua's claims against them are rooted in state law, these claims raise substantial questions of federal law by implicating foreign policy concerns. Id. at 4-5. The State of Chihuahua now moves to remand on the ground that no federal question jurisdiction exists. Mot. at 2-3, ECF No. 7.1
"Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). "Absent diversity jurisdiction [under 28 U.S.C. § 1332], federal-question jurisdiction is required." Id. "A federal question exists 'only in those cases in which a well-pleaded complaint establishes that either federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.'" Singh v. DuaneMorris LLP, 538 F.3d 334, 337 (5th Cir. 2008) (quoting Franchise Tax Bd. v. Constr. Laborers Vacation Tr., 463 U.S. 1, 27-28 (1983)); Torres v. S. Peru Copper Corp., 113 F.3d 540, 542 (5th Cir. 1997).
As such, cases premised on state-law claims "may still arise under the laws of the United States if a well-pleaded complaint establishe[s] that [the] right to relief under state law requires resolution of a substantial question of federal law in dispute between the parties." Franchise Tax Bd., 463 U.S. at 13. In other words, "federal jurisdiction is unavailable unless it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims." Id. Nevertheless, "[f]ederal jurisdiction cannot be predicated on an actual or anticipated defense[.]" Vaden v. Discover Bank, 556 U.S. 49, 60 (2009). For that reason, "[t]he [well-pleaded complaint] rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Williams, 482 U.S. at 392.
Under 28 U.S.C. § 1447(c), if a federal district court determines "at any time before final judgment . . . that [it] lacks subject matter jurisdiction, the case shall be remanded." The removing parties "bear[] the burden of establishing that federal jurisdiction [exists]." De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995); see also In re Tobacco/Govtl. Health Care Costs Litig., 100 F. Supp. 2d 31, 35 (D.D.C. 2000) (). Federal courts strictly construe the removal statutes, "and any doubt about the propriety of removal must be resolved in favor of remand." Gasch v. Hartford Acc. & Indent. Co., 491 F.3d 278, 281-82 (5th Cir. 2007).
The claims that the State of Chihuahua asserts here are unquestionably rooted in state law. Notice of Removal at 19-21 (). None of the claims has an element premised on a right created by Congress or the Constitution. But Defendants contend that the Court has federal jurisdiction over these state-law claims because they turn on substantial questions of federal law. According to Defendants, these state-law claims implicate important concerns for United States foreign relations, including: (1) the act of state doctrine; (2) foreign official immunity; and (3) the federal common law of foreign relations. Id. The Court now addresses these arguments in that order.
Defendants argue that the State of Chihuahua's claims "necessarily raise issues under the doctrine because they require consideration of the State of Chihuahua's 'official' actions during . . . Duarte's tenure [as governor of the state]." Resp. in Opp'n at 9, ECF No. 10. Further, Defendants argue that these state-law claims implicate the act of state doctrine because they "arise from conduct that occurred in a foreign state pursuant to the exercise of foreign authority." Notice of Removal at 6. Upon scrutinizing the record, the Court concludes that no act of state issue is present as a necessary element to resolve any of the State of Chihuahua's state-law claims.
The act of state doctrine "limits, for prudential rather than jurisdictional reasons, the adjudication in American courts of the validity of a foreign sovereign's public acts." Walter Fuller Aircraft Sales, Inc. v. Republic of Phil., 965 F.2d 1375, 1387 (5th Cir. 1992). "The doctrine applies to bar an action when 'the relief sought or the defense interposed would haverequired a court in the United States to declare invalid the official act of a foreign sovereign performed within its own territory.'" Id. (quoting W.S. Kirkpatrick & Co., Inc. v. Envt'l Tectonics Corp., Int'l, 493 U.S. 400, 405 (1990)). Thus, W. S. Kirkpatrick, 493 U.S. at 406.
Here, the act of state doctrine has no bearing in this case. First, the act of state doctrine typically applies upon a contested intrusion by a court in the United States into the sovereignty of a foreign government within its own territory. See, e.g., Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 439 (1964) (); Underhill v. Hernandez, 168 U.S. 250, 252 (1897) (). Yet here, it is the foreign sovereign itself which willingly subjects itself to the judicial process and laws of a state in the United States by seeking a remedy through adjudication in a court of the same. Further, this foreign sovereign alleges that Defendants committed torts in violation of the laws of the State of Texas, which is also the situs of the property involved in this case. Additionally, the act of state doctrine is not applicable merely because a foreign sovereign is a party to a lawsuit. See Torres, 113 F.3d at 542-43 ().
Second, the state-law claims in the complaint do not appear to precipitate a determination of the validity of any foreign sovereign act. Put differently, nowhere in its complaint does the State of Chihuahua interject a federal issue in this case by seeking to employ the Texas state court to enforce one of its sovereign acts taken within its own territory. In the parallel case of Republic of Phil. v. Marcos, 806 F.2d 344 (2d Cir. 1986) [hereinafter, Marcos I], the foreign government brought an action in a New York state court against its former head of state to recoup property that he allegedly looted during his tenure as head of state. Before removal to the federal court, the President of the Republic of the Philippines issued an executive order authorizing the Commission on Good Government to appeal to foreign countries to freeze the defendants' assets abroad. This order, the Second Circuit noted, "contributed heavily to interjecting a federal issue into the case sufficient to confer federal question subject matter jurisdiction." Id. at 347. The Second Circuit reasoned that "federal jurisdiction [was] present in any event because the claim raise[d], as a necessary element, the question...
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