Kiely v. Canty
| Decision Date | 30 April 2015 |
| Docket Number | Civil Action No. 15–CV–10204–DLC. |
| Citation | 102 F.Supp.3d 359 |
| Parties | Kevin J. KIELY, Esq., Plaintiff, v. John CANTY, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Damian R. Laplaca, Richard L. Levine, Nelson Kinder & Mosseau P.C., Boston, MA, for Plaintiff.
John Canty, Webster, MA, pro se.
ORDER ON PLAINTIFF'S MOTION FOR REMAND (# 11)
This matter arises in the context of a larger, broader dispute involving principally the Defendant, John Canty, and American Express Bank FSB (“American Express”). American Express sued the Defendant in the state district court to collect an alleged outstanding debt. The Plaintiff, Kevin Kiely, was American Express' attorney in the district court lawsuit, but he was not a named party to the lawsuit itself. American Express and the Defendant subsequently agreed to dismiss the lawsuit and arbitrate their dispute. In initiating the arbitration proceeding, however, the Defendant reframed the dispute to cast himself as the claimant and American Express as the respondent, and he added the Plaintiff as a respondent. The Plaintiff brought suit in the state superior court for declaratory relief and a stay under Massachusetts' arbitration statute. The Defendant in turn removed the complaint to federal court. The Plaintiff argues this Court has no jurisdiction to adjudicate his complaint and he seeks remand to the state court. Having considered the record, the memoranda and arguments of counsel, and the law, I find that the Court does have jurisdiction over this complaint. However, I decline in my discretion to hear this matter and will accordingly grant the motion to remand the case to the state superior court. The Plaintiff's request for an award of attorneys' fees and costs is denied. The reasons for these rulings are explained below.
On December 21, 2012, American Express filed a complaint against the Defendant in the district court in Dudley, Massachusetts (the “district court lawsuit”). The complaint did not articulate a specific statutory or common law cause of action, but it alleged that the “Defendant owes the Plaintiff the sum of $20,482.07 for monies owed pursuant to the use by the Defendant of a credit card issued by the Plaintiff....” The Plaintiff was not a party to the district court lawsuit. He was, however, American Express' attorney of record and thus filed the complaint on American Express' behalf.
American Express and the Defendant agreed over time to arbitrate their dispute and the district court ultimately allowed a motion to compel arbitration and to dismiss the district court lawsuit without prejudice. On January 15, 2014, to initiate the arbitration process, the Defendant served on American Express a demand to arbitrate their dispute through JAMS.1However, the arbitration demand significantly re-framed the nature of their dispute in three significant ways. First, the Defendant reversed the posture of the parties and he listed himself as the claimant and American Express as the respondent. Second, the Defendant broadened the nature of the dispute well beyond the simple debt collection claim by stating his intent to file a claim alleging “state and federal consumer protection violations, credit reporting violations and the violation of other federal and state statutes....” Third, the Defendant added two new entities as respondents, including an entity named American Recovery Services, Inc. (ARSI), and, notably, the Plaintiff himself.
On May 13, 2014, the Defendant formally filed his notice of claims with JAMS. As foretold by his initial demand for arbitration, the Defendant's notice of claims alleged that American Express, ARSI and the Plaintiff had each violated several state and federal laws in their dealings with the Defendant, including, in particular: (1) the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 (RICO); (2) the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681; and (3) the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692.
On August 7, 2014, the Defendant moved in the arbitration proceeding to formally add ARSI, the Plaintiff and two other individuals as respondent parties. On September 22, 2014, the arbitrator allowed the motion to join ARSI and the Plaintiff, but otherwise denied it.
On December 15, 2014, the Defendant filed an amended notice of claims which sought among other things to enlarge the scope of the underlying dispute to include two other of the Defendant's American Express accounts. At least one of these accounts had already been the subject of a state superior court lawsuit in which American Express had obtained a favorable verdict, which, at the time, was the subject of a pending appeal. The arbitrator would subsequently deny the Defendant's request to amend his claims to include these accounts.
Thus, as of the end of 2014, the Plaintiff was a party to an arbitration proceeding that contained at least three federal claims.
On January 6, 2015, the Plaintiff filed a complaint in the Essex County Superior Court in an effort to extricate himself from the arbitration. The complaint sought a declaratory judgment under M.G.L. c. 251, § 2(b), a provision of the Massachusetts Uniform Arbitration Act (MUAA), that the Plaintiff was not bound by the arbitration agreement between American Express and the Defendant. The complaint also asked the court to enjoin the arbitration pending a ruling. The superior court scheduled an expedited hearing for January 27, 2015, and subsequently rescheduled it to February 5, 2015. The arbitrator, aware of the imminent hearing, stayed the arbitration pending the outcome.
On January 26, 2015, the Defendant removed the superior court action to federal court before the hearing could take place.
On February 13, 2015, the Plaintiff moved to remand the matter to the superior court on the ground that the Court has no jurisdiction to adjudicate a claim for declaratory relief pursuant to Massachusetts law.
On February 23, 2015, the Defendant filed a multifaceted “Amended Answer and Counterclaims and Petition to Compel Arbitration of Counterclaims.” Among other things, the Defendant averred that the Court does have jurisdiction over the complaint because the parties' underlying dispute involves several federal claims. The Defendant also asserted several counterclaims that essentially mirrored his arbitration claims, but which additionally encompassed the two other American Express accounts the arbitrator had refused to add to that proceeding. The Defendant also asked the Court to compel the Plaintiff to participate in the arbitration, and lastly asked the Court to stay litigation of the Defendant's counterclaim action pending the outcome of the arbitration proceeding.
A case may be removed to federal district court if the court would have had original jurisdiction over the matter. 28 U.S.C. § 1441(a). A party may seek to remand a civil action back to state court based on an alleged defect in the removal procedure, or lack of subject matter jurisdiction. 28 U.S.C. § 1447(c). As the party seeking to remove, the Defendant has “the burden of demonstrating the existence of federal jurisdiction.” In re Pharmaceutical Indus. Average Wholesale Price Litigation,431 F.Supp.2d 109, 116 (D.Mass.2006)(citing BIW Deceived v. Local S6,132 F.3d 824, 831 (1st Cir.1997)).
“[T]he removal statute should be strictly construed, and any doubts about the propriety of removal should be resolved against the removal of an action.” Id.(citing Danca v. Private Health Care Sys., Inc.,185 F.3d 1, 4 (1st Cir.1999)).
The Defendant avers that the Court has federal jurisdiction under 28 U.S.C. § 1331, which gives federal courts “original jurisdiction over all civil actions arising under the Constitution, laws, or treaties of the United States,” because the complaint seeks to adjudicate whether the Plaintiff may be compelled to participate in an arbitration that involves several federal claims. The governing standard for determining if a case “arises under” federal law is the well-pleaded complaint rule. Phillips Petroleum Co. v. Texaco Inc.,415 U.S. 125, 127–128, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974). Typically, this means that jurisdiction is ascertained from looking at the face of the state court complaint that triggered the removal. Franchise Tax Bd. v. Construction Laborers Vacation Trust,463 U.S. 1, 9–10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)(superseded on other grounds as stated in Morda v. Klein,865 F.2d 782, 783 (1989)). Here, the state court complaint does not allege any federal claims and, on the contrary, refers only to Massachusetts' arbitration statute. On its face, then, the complaint presents no federal question. Were the analysis to end there, as the Plaintiff argues it should, we would conclude that there is no federal question jurisdiction.
The analysis does not end there, however. There are exceptions to the practice of looking solely at the complaint to determine whether an action arises under federal law. See e.g., Danca,185 F.3d at 4( that a state law claim that implicates an area of federal law may in some circumstances be deemed federal no matter how pleaded). In actions such as this one where the complaint seeks a declaratory judgment, the proper inquiry is to look at the action the declaratory judgment defendant could have brought to obtain the same result the Plaintiff seeks to avoid, and to ask whether federal question jurisdiction would have been present had he done so. Great Clips, Inc. v. Hair Cuttery of Greater Boston, LLC,591 F.3d 32, 35 (1st Cir.2010)(“In a declaratory action, the familiar well-pleaded complaint rule asks whether there would ‘necessarily’ be federal jurisdiction ‘if the declaratory judgment defendant brought a coercive action [corresponding to the declaration sought] to enforce its rights.’ ”)(citing Franchise Tax Bd.,463 U.S. at 19, 103 S.Ct. 2841 (1983)); see also Garanti Finansal Kiralama A.S....
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...to submit to arbitration. See id. The complaint, therefore, on its face does not present a federal question. See Kiely v. Canty, 102 F. Supp. 3d 359, 364-65 (D. Mass. 2015) (concluding that complaint on its face did not present a federal question where the complaint sought declaratory judgm......