Unreported / Non-Citable
Background
Joshua Christopher Parker, a Texas resident proceeding without counsel, filed a complaint in San Diego Superior Court against three real-estate finance entities — Unison Agreement Corp., Odin New Horizon Real Estate Fund LP, and Odin New Horizon General Partner LLC. The case involves a dispute over an option-purchase agreement on real property in San Diego County, including claims for quiet title and declaratory relief.
The defendants are all incorporated or organized in Delaware but have their principal places of business in California. They removed the case to federal court based on diversity jurisdiction under 28 U.S.C. § 1332 (Texas plaintiff vs. Delaware/California defendants, with more than $75,000 at issue). Parker promptly moved to remand, raising several defects with the removal — most importantly that the defendants are California citizens and that the “forum-defendant rule” bars them from removing a state-court suit filed in California to federal court based on diversity.
The Court’s Holding
The court remanded the case to state court but denied Parker’s request for costs and fees.
The forum-defendant rule appears in 28 U.S.C. § 1441(b)(2), which provides that a case otherwise removable on diversity grounds “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” The defendants did not dispute that they were properly served California citizens; they argued only that Parker had identified no “prejudice” from a federal forum. The court rejected that argument as inconsistent with the strict-construction rule that places the burden of showing the propriety of removal on the defendants and not on the plaintiff.
The defendants’ second argument was that Parker had waived his right to remand through post-removal conduct: proposing pleading amendments, serving discovery requests, and serving (but not filing) a default request, all of which they claimed showed engagement with the federal court on the merits. Citing Owens v. General Dynamics, the court explained that waiver requires “affirmative conduct or unequivocal assent” so significant that remand would offend principles of fairness. Parker had moved to remand less than two weeks after removal, vigorously pursued that motion, and any apparent engagement with the merits appeared to be inadvertent “protective participation” by a pro se litigant. The court credited his explanation and declined to find waiver, distinguishing Ninth Circuit and Fifth Circuit cases involving plaintiffs who had repeatedly engaged the federal court before moving to remand.
On costs and fees under 28 U.S.C. § 1447(c), the court declined to award any. Parker was representing himself and had not incurred attorney’s fees, and the court chose not to award costs.
Key Takeaways
- The forum-defendant rule in 28 U.S.C. § 1441(b)(2) bars California-based defendants from removing California state-court diversity cases to federal court — even when complete diversity otherwise exists.
- The plaintiff does not need to show “prejudice” from removal. The defendants always bear the burden of establishing that removal is proper.
- Waiver of the right to remand requires substantial affirmative conduct in federal court before the remand motion is filed. A pro se plaintiff who moves to remand promptly and engages with the federal court only “protectively” is unlikely to be deemed to have waived.
- Costs and fees under 28 U.S.C. § 1447(c) are within the court’s discretion and may be denied where the plaintiff is self-represented and has incurred no attorney’s fees.
Why It Matters
The forum-defendant rule is one of the simplest but most often-misunderstood limits on removal. California real-estate finance and lending entities are frequently named as defendants in California state-court actions concerning California real property. Counsel for those defendants should think carefully before removing on diversity grounds when the company itself is a California citizen — the rule will almost always require remand.
For California pro se litigants, the case is also reassuring. Courts will not lightly find waiver of the right to remand based on tentative procedural moves taken to protect the plaintiff’s interests while the remand motion is pending. Self-represented plaintiffs who file remand motions promptly and pursue them diligently will generally be allowed back to state court even if they had to make some procedural moves in the interim.