“[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.”
How later courts described this case
- “[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.”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
AMERICAN EXPRESS NATIONAL BANK Case No. 1:24-cv-107
Plaintiff,
Dlott, J.
v. Bowman, M.J.
MAHMOUD ALILI and
STARS WIRELESS AND SMOKE LLC,
Defendants.
REPORT AND 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. 13), to which
defendant Mahmoud Alili has not responded.
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 Hamilton County, Ohio, alleging that defendant Mahmoud
Alili and Stars Wireless and Smoke Shop LLC failed to comply with the terms of a credit
card account and pay the $2,902.31 balance owing on the account. (Doc. 2). Defendant
Alili filed an answer denying the allegations of the complaint. (Doc. 3). He also filed a
counterclaim seeking $1.25 million in damages alleging claims under 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. (Id.).
Thereafter, defendant Alili filed a pro se notice of removal of the state court action
in this federal court alleging federal jurisdiction over the matter based on federal law and
diversity of citizenship. (Doc. 1). Plaintiff now seeks to remand this action back to state
court, alleging that this court lacks subjection matter jurisdiction over the action. (Doc.
13). The undersigned agrees.
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). He alleges the counterclaim he filed raises claims
under federal law and supports removal to this federal court. (Id.). 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, 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 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.
V. Conclusion
For these reasons, it is herein RECOMMENDED that Plaintiff’s motion to remand
this matter to state court under 28 U.S.C. § 1447(c) (Doc. 13) be GRANTED, and this
matter be remanded back to the Hamilton County Municipal Court.
s/Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
AMERICAN EXPRESS NATIONAL BANK Case No. 1:24-cv-107
Plaintiff,
Dlott, J.
vs Bowman, M.J.
MAHMOUD ALILI and
STARS WIRELESS AND SMOKE LLC,
Defendants.
NOTICE
Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written
objections to this Report & Recommendation (“R&R”) within FOURTEEN (14) DAYS after
being served with a copy thereof. That period may be extended further by the Court on
timely motion by either side for an extension of time. All objections shall specify the
portion(s) of the R&R objected to, and shall be accompanied by a memorandum of law in
support of the objections. A party shall respond to an opponent’s objections within
FOURTEEN DAYS after being served with a copy of those objections. 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).