Lake v. Ohana Military Cmtys., LLC, 19-17340
| Decision Date | 27 September 2021 |
| Docket Number | 19-17340 |
| Citation | 14 F.4th 993 |
| Parties | Kenneth LAKE; Crystal Lake; Kyle Pahona; Ryan Wilson; Heather Wilson; Ashley Moseley; Timothy Moseley, Plaintiffs-Appellants, v. OHANA MILITARY COMMUNITIES, LLC; Forest City Residential Management, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
P. Kyle Smith (argued), Law Office of Kyle Smith, Kailua, Hawaii; Terry Revere, Revere & Associates, Kailua, Hawaii; for Plaintiffs-Appellants.
Randall C. Whattoff (argued), Kamala S. Haake, and Christine A. Terada, Cox Fricke LLP, Honolulu, Hawaii, for Defendants-Appellees.
Before: Richard R. Clifton, Ryan D. Nelson, and Daniel P. Collins, Circuit Judges.
We are asked to decide whether federal subject matter jurisdiction exists and whether the district court properly denied Plaintiffs’ motion to remand to state court. The district court held federal jurisdiction exists because Plaintiffs’ state law claims implicated a federal interest in military housing. We reject the asserted grounds for federal jurisdiction and reverse, vacate, and order remand to state court.
Defendants-Appellees Ohana Military Communities, LLC ("Ohana") and Forest City Residential Management, Inc. (collectively, "Defendants") began a major housing construction project on Marine Corps Base Hawaii ("MCBH") in 2006. Because MCBH was allegedly widely contaminated with pesticides potentially impacting human health, Defendants developed and implemented a Pesticide Soil Management Plan ("Plan"). Defendants allegedly never informed residential tenants of the Plan, the decade-long remediation efforts, or known pesticide contamination at MCBH. Plaintiffs-Appellants Kenneth Lake, Crystal Lake, and other military servicemember families (collectively, "Plaintiffs") filed an action in Hawaii state court alleging 11 different claims under state law. Defendants removed to federal court. The district court denied Plaintiffs’ motion to remand, which we review on this appeal from the subsequent judgment on the merits.
We begin in 1959 when Hawaii was admitted as the 50th state. Act to Provide for the Admission of the State of Hawaii into the Union, Pub. L. No. 86-3, 73 Stat. 4 (1959) ("Admission Act"). The United States reserved "the power of exclusive legislation, as provided by" the Enclave Clause of the U.S. Constitution,1 over "tracts or parcels of land as, immediately prior to the admission of said State, are controlled or owned by the United States and held for Defense or Coast Guard purposes." Id. § 16(b); see also id . § 7(b) (); Proclamation 3309, 24 Fed. Reg. 6868 (Aug. 25, 1959) (). Before Hawaii's admission, MCBH was both owned by the United States and used for military purposes. See, e.g. , John Gunther, Our Pacific Frontier , 18 Foreign Affairs 583, 595 (1940).
However, the Admission Act also granted Hawaii concurrent jurisdiction over these lands. Section 16(b) provided that the federal reservation of authority "shall not operate to prevent such lands from being a part of the State of Hawaii, or to prevent [Hawaii] from exercising over or upon such lands, concurrently with the United States, any jurisdiction whatsoever which it would have in the absence of such reservation of authority and which is consistent with the laws hereafter enacted by the Congress pursuant to such reservation of authority." Admission Act, § 16(b). Congress then added a second proviso "[t]hat the United States shall continue to have sole and exclusive jurisdiction over such military installations as have been heretofore or hereafter determined to be critical areas as delineated by the President of the United States and/or the Secretary of Defense." Id. § 16(b).
In 1996, Congress undertook the Military Housing Privatization Initiative ("MHPI") to privatize military housing, allowing private companies to own and manage housing on military installations. See generally National Defense Authorization Act for Fiscal Year 1996, Pub. L. No. 104-106, § 2801(a)(1), 110 Stat. 186, 544–51 (codified at 10 U.S.C. §§ 2871 – 85 ). Servicemembers such as Lake receive a Basic Allowance for Housing ("BAH") with which "they can choose to live in private sector housing" off base "or privatized housing" on base. See, e.g. , Military Housing Privatization , Off. of the Assist. Sec'y of Def. for Sustainment, https://bit-ly.ezproxy.lib.ntust.edu.tw/3iFbvv3.
In 2004, Hawai‘i2 Military Communities, LLC ("HMC") and the Navy formed Ohana Military Communities, LLC as a Public Private Venture ("PPV"). Ohana was assigned the rights and obligations to a 50-year Initial Ground Lease subject to an operating agreement and a property management agreement. The Navy retained fee title ownership of the land and conveyed ownership of the residential units and future improvements for the lease term to Ohana through HMC. The Operating Agreement between HMC and the Navy gives "sole and exclusive management and control" of Ohana to HMC as the "Managing Member."
Before its new construction, Ohana developed its Pesticide Soil Management Plan in 2006. The Plan mandated that "[w]ritten notifications will be provided where residents and contractors may contact soils impacted with pesticides." The Navy reviewed and commented on later versions of the Plan, beginning in 2008. Ohana engaged in systematic cleanup efforts while demolishing old homes and building new ones over the next decade.
Ohana allegedly never informed existing or potential tenants of the Plan, its remediation efforts, or known pesticide contamination at MCBH. Ohana's Community Handbook given to new residents stated "[f]amilies can safely work and play in their yards." After lawsuits were filed, Ohana warned that children and pets should not be allowed to play and families should not grow fruits or vegetables in the yards near old house foundations.
In 2016, Plaintiffs filed an action in Hawaii state court alleging 11 different claims under state law, including contract, Hawaii Landlord Tenant Code, Hawaii Deceptive Acts or Practices ("UDAP"), negligence, intentional infliction of emotional distress, fraud and misrepresentation, unfair method of competition ("UMOC"), trespass, and nuisance claims. Defendants removed the action to the District of Hawaii based on federal question jurisdiction under 28 U.S.C. §§ 1331 and 1442(a)(1). Plaintiffs moved to remand to state court.
The district court denied Plaintiffs’ motion to remand. The district court then granted Defendants’ motion to dismiss the UDAP, UMOC, and trespass claims with prejudice. Plaintiffs amended their complaint for the remaining claims. After discovery, the district court granted Defendants’ motion for summary judgment on all remaining claims except for some of Plaintiffs’ nuisance claims regarding construction dust.3 The parties stipulated to dismiss those latter claims and Plaintiffs appealed. We have appellate jurisdiction under 28 U.S.C. § 1291.
"We review questions of statutory construction and subject-matter jurisdiction de novo." City of Oakland v. BP PLC , 969 F.3d 895, 903 (9th Cir. 2020). Removal is proper when the district court has original jurisdiction. 28 U.S.C. § 1441. The parties agree there is no diversity jurisdiction under 28 U.S.C. § 1332. Thus, to fit within § 1441, the removed claims here must "aris[e] under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331 ; see Gunn v. Minton , 568 U.S. 251, 257, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013). To support removal under § 1442, the removing party "must show that (1) it is a ‘person’ within the meaning of the statute, (2) a causal nexus exists between plaintiffs’ claims and the actions [it] took pursuant to a federal officer's direction, and (3) it has a ‘colorable’ federal defense to plaintiffs’ claims." Leite v. Crane Co. , 749 F.3d 1117, 1120 (9th Cir. 2014) (citation omitted).
"A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears." Stock W., Inc. v. Confederated Tribes of the Colville Rsrv. , 873 F.2d 1221, 1225 (9th Cir. 1989). "Removal and subject matter jurisdiction statutes are ‘strictly construed ....’ " Hawaii ex rel. Louie v. HSBC Bank Nev., N.A. , 761 F.3d 1027, 1034 (9th Cir. 2014) (quoting Luther v. Countrywide Home Loans Servicing LP , 533 F.3d 1031, 1034 (9th Cir. 2008) ).
Generally, a "defendant seeking removal has the burden to establish that removal is proper and any doubt is resolved against removability." Id. (quoting Luther , 533 F.3d at 1034 ). Though the federal officer and agency removal statute, 28 U.S.C. § 1442, is read "broadly in favor of removal," Durham v. Lockheed Martin Corp. , 445 F.3d 1247, 1252 (9th Cir. 2006), Defendants still "bear[ ] the burden of proving by a preponderance of the evidence that the colorable federal defense and causal nexus requirements for removal jurisdiction" are factually supported. Leite , 749 F.3d at 1122. Defendants have not met their burden to show federal jurisdiction over Plaintiffs’ state law claims based on their asserted grounds.
First, state law has not been assimilated into federal law, because Hawaii has concurrent legislative jurisdiction over MCBH. See Pratt v. Kelly , 585 F.2d 692, 695 (4th Cir. 1978). Second, the district court's novel ground for subject matter jurisdiction is unsupported. Third, there is no federal officer or agency jurisdiction because there is no causal nexus under 28 U.S.C. § 1442, see Durham , 445 F.3d at 1251, and Ohana is not a federal agency, see In re Hoag Ranches , 846 F.2d 1225, 1227–28 (9th Cir. 1988). Fourth, no federal issue was "necessarily raised." Gunn , 568 U.S. at 258, 133 S.Ct. 1059. Thus, this case must be remanded to state court.
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