American Express National Bank v. Alili

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

AMERICAN EXPRESS NATIONAL BANK, Case No. 1:24-cv-104

Plaintiff, Dlott, J.

Litkovitz, M.J.

vs.

MAHMOUD ALILI, et al., REPORT AND

Defendants. RECOMMENDATION

This matter is before the Court on plaintiff American Express National Bank’s motion to

remand this matter to state court under 28 U.S.C. § 1447(c) (Doc. 15), defendant Mahmoud

Alili’s memorandum in opposition (Doc. 16), and plaintiff’s reply memorandum (Doc. 20). For

the reasons that follow, the Court should grant the motion to remand.

I. Background

Plaintiff American Express National Bank initiated a breach of contract action in the

Court of Common Pleas in Butler County, Ohio, naming as defendants Mahmoud Alili and Stars

Wireless and Smoke LLC. (Doc. 2). Plaintiff alleges that defendants failed to comply with the

terms of its credit card account and to pay the $30,886.20 balance owing on the account. (Id.).

Attached to the complaint are the closing statement and card member agreement for the account.

(Doc. 2, Exs. A, B).

Defendant Alili filed an answer denying the allegations of the complaint. He also filed a

counterclaim alleging plaintiff violated Ohio law, the Truth in Lending Act, 15 U.S.C. § 1601 et

seq., and the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (Doc. 3). As relief on the

counterclaim, defendant Alili seeks $250,000.00 for “financial losses” and $1 million in punitive

damages. (Id.).

Thereafter, defendant Alili filed a pro se notice of removal of the state court action in this

federal court alleging federal jurisdiction over this matter based on federal law and diversity of

citizenship. (Doc. 1). Plaintiff now seeks a remand of this case to state court, alleging the

federal court lacks subjection matter jurisdiction over the action. (Doc. 15).

I. Law and Analysis

If a defendant removes an action filed in state court to federal court under 28 U.S.C. §

1441(a), “the federal court has jurisdiction only if it would have had original jurisdiction over the

action.” Total Quality Logistics, LLC v. Summit Logistics Group, LLC, 606 F. Supp. 3d 743,

747 (S.D. Ohio 2022). Thus, “[o]nly 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). The defendant bears the burden of showing that removal is proper

and the federal court has original jurisdiction to hear the case. See Village of Oakwood v. State

Bank and Trust Co., 539 F.3d 373, 377 (6th Cir. 2008); Ahearn v. Charter Township of

Bloomfield, 100 F.3d 451, 453-54 (6th Cir. 1996); Total Quality Logistics, LLC v. James, 630 F.

Supp. 3d 902, 904-05 (S.D. Ohio 2022). Because removal raises significant federalism

concerns, courts strictly construe the removal statute and “resolve doubts in favor of remand.”

James, 630 F. Supp. 3d at 904. See also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,

108-09 (1941); Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534 (6th Cir. 1999);

Summit Logistics, 606 F. Supp. 3d at 747.

II. Federal Question Jurisdiction

Defendant Alili first bases his removal of the state court action on the Court’s federal

question jurisdiction. (Doc. 1 at PAGEID 2). He alleges the counterclaim he filed raises

claims under federal law and supports removal to this federal court. (Id.).

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The Court cannot discern a basis for federal question jurisdiction in this matter. Federal

district courts “have original jurisdiction of all civil actions arising under the Constitution, laws,

or treaties of the United States.” 28 U.S.C. § 1331. To determine if an action “arises under”

federal law for purposes of removal, the “well-pleaded complaint rule” dictates that “federal

jurisdiction exists only when a federal question is presented on the face of the plaintiff’s properly

pleaded complaint.” Loftis v. United Parcel Service, Inc., 342 F.3d 509, 514 (6th Cir. 2003)

(quoting Caterpillar, 482 U.S. at 392). See also Metropolitan Life Ins. Co. v. Taylor, 481 U.S.

58, 63 (1987). Under the well-pleaded complaint rule, district courts have federal question

removal jurisdiction over “only those cases in which a well-pleaded complaint establishes either

that 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.” Franchise Tax Bd. v. Constr.

Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983). As master of its own complaint, “the fact

that the wrong asserted could be addressed under either state or federal law does not ordinarily

diminish the plaintiff’s right to choose a state law cause of action,” Loftis, 342 F.3d at 515

(quoting Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 943 (6th Cir. 1994)), and the plaintiff

may avoid federal jurisdiction by exclusive reliance on state law. See Caterpillar, 482 U.S. at

392.

In addition, “it is now settled law that a case may not be removed to federal court on the

basis of a federal defense . . . even if the defense is anticipated in the plaintiff’s complaint, and

even if both parties concede that the federal defense is the only question truly at issue.”

Caterpillar, 482 U.S. at 393 (emphasis in the original) (citing Franchise Tax Board, 463 U.S. at

12). See also Beneficial National Bank v. Anderson, 539 U.S. 1, 6 (2003); Metropolitan Life,

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481 U.S. at 63; Chase Manhattan Mortgage Corp. v. Smith, 507 F.3d 910, 915 (6th Cir. 2007).

Likewise, “it is well settled that federal counterclaims . . . are ‘inadequate to confer federal

jurisdiction.’” Chase Manhattan Mortg. Corp., 507 F.3d at 914-15 (citing Holmes Group, Inc.

v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002) (“[A] counter-claim—which

appears as part of the defendant’s answer, not as part of the plaintiff’s complaint—cannot serve

as the basis for ‘arising under’ jurisdiction.”).

Defendant Alili has failed to establish this Court has original federal question jurisdiction

over this case. The state court complaint does not show this case arises under the Constitution

or laws of the United States. Rather, the complaint raises solely a state law claim of breach of

contract. Defendant Alili contends his counterclaim arises under federal law, but the existence

of a counterclaim or defense based upon federal law is insufficient to support removal

jurisdiction. Franchise Tax Board, 463 U.S. at 8-12; Chase Manhattan Mortgage Corp., 507

F.3d at 914-15. Therefore, defendant Alili has failed to meet his burden of showing federal

question jurisdiction to support removal of this matter.

IV. Diversity Jurisdiction

Defendant Alili also alleges removal is proper based on the Court’s diversity jurisdiction

under 28 U.S.C. § 1332. Removal based on diversity of citizenship is proper only where the

defendants are not citizens of the forum state. The removal statute provides that a civil action

“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.” 28 U.S.C. § 1441(b)(2). Even if there is

complete diversity among the parties, the presence of a properly joined and served resident

defendant bars removal. Chase Manhattan Mortgage Corp., 507 F.3d at 914; Federal National

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Mortgage Association v. LeCrone, 868 F.2d 190, 194 (6th Cir. 1989). Because defendant Alili

is an Ohio citizen, removal on the basis of diversity jurisdiction is barred under § 1441(b)(2).

Accordingly, the Court lacks federal subject matter jurisdiction over this case for

purposes of removal.

IT IS THEREFORE RECOMMENDED THAT:

Plaintiff American Express National Bank’s motion to remand this matter to state court

under 28 U.S.C. § 1447(c) (Doc. 15) be GRANTED, and this matter be remanded to the Court

of Common Pleas in Butler County, Ohio.

Karen L. Litkovitz

United States Magistrate Judge

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

AMERICAN EXPRESS NATIONAL BANK, Case No. 1:24-cv-104

Plaintiff, Dlott, J.

Litkovitz, M.J.

vs.

MAHMOUD ALILI, et al.,

Defendants.

NOTICE

Pursuant to Fed. R. Civ. P. 72(b), WITHIN 14 DAYS after being served with a copy of

the recommended disposition, a party may serve and file specific written objections to the

proposed findings and recommendations. This period may be extended further by the Court on

timely motion for an extension. Such objections shall specify the portions of the Report

objected to and shall be accompanied by a memorandum of law in support of the objections. If

the Report and Recommendation is based in whole or in part upon matters occurring on the

record at an oral hearing, the objecting party shall promptly arrange for the transcription of the

record, or such portions of it as all parties may agree upon, or the Magistrate Judge deems

sufficient, unless the assigned District Judge otherwise directs. A party may respond to another

party’s objections WITHIN 14 DAYS after being served with a copy thereof. Failure to make

objections in accordance with this procedure may forfeit rights on appeal. See Thomas v. Arn,

474 U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981).

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