Bigfoot Ventures, LTD v. Mark S. Knighton

JS-6

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No.: 2:25-cv-01378-AB-MAA Date: June 18, 2025

Title: Bigfoot Ventures, LTD v. Mark S. Knighton et al

Present: The Honorable ANDRÉ BIROTTE JR., United States District Judge

Evelyn Chun N/A

Deputy Clerk Court Reporter

Attorney(s) Present for Plaintiff(s): Attorney(s) Present for Defendant(s):

None Appearing None Appearing

Proceedings: [In Chambers] ORDER GRANTING MOTION FOR REMAND

[15]

Before the Court is a Motion for Remand (“Motion,” Dkt. No. 15) filed by

Plaintiff Bigfoot Ventures, Ltd. (“Plaintiff”). Defendants Mark Knighton, Rory

Hargaden as an individual and Trustee of the Shamrock Alpha Trust

(“Defendants”) filed an opposition, and Plaintiff filed a reply. The Motion is

GRANTED.

I. BACKGROUND

This action is one of several between Bigfoot Ventures, LTD, on one hand,

and Mark Knighton and associated entities on the other, concerning a 5.5 million

euro promissory note entered into between Bigfoot and nonparty NextEngine, Inc.,

in June 2008. See First Amended Complaint (“FAC,” Dkt. No. 17-1, page ID

#1506-1517) ¶ 13. Bigfoot’s FAC alleges that NextEngine defaulted on the 2008

Promissory Note. FAC ¶ 15. In 2015, Bigfoot sued NextEngine in state court to

recover the money due on the Note, and secured an $8 million judgment against

NextEngine. Id. ¶¶ 15, 16. Bigfoot alleges that when it served a Notice of Levy on

NextEngine’s bank, Bigfoot received a notice of third party claim from defendant

Knighton, who claimed a priority interest in NextEngine’s assets. Id. ¶ 18. This

caused Bigfoot to suspect that “Knighton had improperly encumbered

NextEnginge to thwart Bigfoot’s enforcement of the Judgment.” Id. ¶ 18.

Accordingly, Bigfoot sought and conducted a judgment debtor examination of

Knighton. Id. Thereafter, in August 2018, Bigfoot moved the state court judge to

amend the judgment to add Knighton and ShapeTools to the judgment. In February

2020, the state court found that Knighton was an alter ego of NextEngine and that

ShapeTools was a mere continuation of NextEngine, and thus granted Bigfoot’s

motion and added Knighton and ShapeTools to the judgment. Id. ¶ 20.

In June 2021, Bigfoot sought to enforce its judgment and took a second

judgment debtor exam of Knighton in his personal capacity as judgment debtor,

and as the corporate representative for both NextEngine and ShapeTools. FAC ¶

23. Bigfoot learned that NextEngine and ShapeTools were essentially worthless,

but Knighton still owned a property in Santa Monica worth several million dollars.

Id. ¶¶ 23, 24. Bigfoot thought that the only way to recover on its judgment would

be to levy and sell Knighton’s Santa Monica property. Id. ¶ 26. But, Bigfoot

alleges, Knighton and Hargaden fraudulently encumbered the Santa Monica

property by using it as collateral for a loan between Knighton and Hargaden and/or

Shamrock, Hargaden’s investment vehicle. Id. ¶¶ 27, 28. The transaction was

reflected in the Shamrock Loan, Security Agreement, and two Liens. Id. ¶ 27.

Bigfoot alleges that in light of a number of allegations that the Court will not

recount here, “the encumbrance of Knighton’s Santa Monica property via the

Shamrock Loan, Security Agreement, and Liens is a voidable transaction, marked

by numerous badges of fraud.” Id. ¶ 31.

On April 6, 2023, in order to recover its judgment, Bigfoot filed this action

in state court, asserting three claims under the California’s Uniform Voidable

Transfers Act (“UVTA) and a claim for declaratory relief, seeking the avoidance of

Knighton’s fraudulent loans and security interests relating to the Santa Monica

property. Defendants Knighton and Hargaden filed their Answer on July 10, 2023.

On October 31, 2023, Bigfoot added WayTools, LLC as a defendant but made no

changes to the substantive allegations or causes of action.

On February 18, 2025, nearly two years after the action was commenced,

Defendants removed the action to this Court.1 Defendants’ rather convoluted

1 When Defendants removed the action, they separately filed two batches of

“exhibits.” See Dkt. Nos. 6, 7. Presumably, these filings comprise the state court

Notice of Removal alleges that this Court has subject matter jurisdiction as

follows: based on a related case (“Related Cases Provides Basis For Federal Court

Jurisdiction”) Mark Knighton, et al. v. Bigfoot Ventures, Ltd., et al., Case No. 2:24-

CV-7461; based on federal question jurisdiction arising out of patent law; based on

supplemental/pendant jurisdiction in that the claims herein are supplemental to the

claims in the related case and perhaps because of diversity jurisdiction; and based

on “Protection of Prior Rulings: Ancillary Enforcement of Jurisdiction.”

Bigfoot moves for remand, arguing that this Court lacks subject matter

jurisdiction. In their opposition, Defendants clarify their claimed bases for federal

jurisdiction as follows: “subject matter jurisdiction exists in this Removed Action

because: (1) resolution of a substantial question of federal law has arisen; and/or

(2) due to an existing related federal case overseen by the Honorable Andre

Birotte, Jr., supplemental jurisdiction is proper; and/or (3) due to the existence of a

prior related federal case overseen by the Honorable Andre Birotte, Jr.,

ancillary/pendant jurisdiction to protect rulings made by Judge Birotte is proper.”

Opp’n 15:15-22.

II. LEGAL STANDARD

Under 28 U.S.C. § 1441(a), a civil action may be removed to the district

court where the action is pending if the district court has original jurisdiction over

the action. “The burden of establishing federal jurisdiction is on the party seeking

removal, and the removal statute is strictly construed against removal jurisdiction.”

Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1265 (9th Cir.1999),

superseded by statute on other grounds as stated in Abrego Abrego v. The Dow

Chem. Co., 443 F.3d 676, 681 (9th Cir. 2006); Martinez v. Los Angeles World

Airports, 2014 WL 6851440, at *2 (C.D. Cal. Dec. 2, 2014). Thus, “[f]ederal

record, but there appears to be no declaration attesting to this. Together, the filings

comprise more than 1,200 pages of material, but Defendants did not supply the

Court with an index. Nor it is clear that either batch of exhibits includes

filed/conformed copies of the operative pleadings. In addition, the filings lack the

title page required by Local Rule 11-3.8. Ordinarily, the Court would strike these

filings because they violate Local Rule 11-3.8. However, Defendants did file with

their opposition to the motion for remand the key documents the Court needs to

resolve the motion–Plaintiff’s First Amended Complaint and the state court judge’s

vexatious litigation order–and because the court is remanding the action, it will not

require Defendants to cure the deficiencies in these two filings.

jurisdiction must be rejected if there is any doubt as to the right of removal in the

first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “If at any

time before final judgment it appears that the district court lacks subject matter

jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c).

III. DISCUSSION

Bigfoot argues that none of the grounds for federal jurisdiction that

Defendants allege exists in this case.2 The Court agrees.

A. Defendants Could Not Remove Based on Diversity Jurisdiction.

Insofar as Defendants invoke diversity jurisdiction, they could not remove

the case on that basis. Under 28 U.S.C. § 1332, a district court has original

jurisdiction over a civil action where the matter in controversy exceeds the sum or

value of $75,000, exclusive of interest and costs, and the dispute is between

citizens of different states. Section 1332 requires complete diversity, i.e., that “the

citizenship of each plaintiff is diverse from the citizenship of each defendant.”

Caterpillar Inc. v. Lewis, 519 U.S. 61, 67–68 (1996). However, 28 U.S.C.

§ 1441(a)(b)(2), the forum defendant rule, limits removal to cases where no

defendant “properly joined and served . . . is a citizen of the State in which such

action is brought.”

Defendants appear to assert that they are citizens of California. Therefore,

under the forum defendant rule, they cannot remove the action on the ground of

diversity jurisdiction. Defendants argue that they are not removing based “soley”

on diversity jurisdiction, so the forum defendant rule does not apply. But

Defendants do not meaningfully elaborate on this point and instead rely on3 district

court cases from Alabama and West Virginia that do not address this issue. In

addition, insofar as Defendants attempt to invoke jurisdictional bases other than

diversity, that attempt fails so there are no alternative bases for federal jurisdiction.

The forum defendant rule therefore bars Defendants from removing based

on diversity jurisdiction.

2 Bigfoot also argues that removal was untimely. The Court will not address this

argument because it finds that neither the original complaint nor the FAC nor the

state court vexatious litigant order reveal any basis for federal jurisdiction.

3 Defendants’ citations to these cases omit the jurisdictions and lack parentheticals,

thus obfuscating rather than disclosing useful information proper citations require.

B. Supplemental Jurisdiction Provides No Independent Basis for Removal.

Defendants also argue that federal question jurisdiction exists because “[i]f

the Current Federal Action is determined to be related to the Removed Action then

the Court can acquire Supplemental Jurisdiction over the Removed Action.” Opp’n

26:11-14.

Defendants are mistaken. The supplemental jurisdiction statute provides

that, “in any civil action of which the district courts have original jurisdiction, the

district courts shall have supplemental jurisdiction over all other claims that are so

related to claims in the action within such original jurisdiction that they form part

of the same case or controversy.” 28 U.S.C. § 1367(a). Clearly, the Court must

have original federal jurisdiction over an action before it may exercise

supplemental jurisdiction over state law claims. See Syngenta Crop Prot., Inc. v.

Henson, 537 U.S. 28, 34 (2002) (a “court must have jurisdiction over a case or

controversy before it may assert jurisdiction over ancillary claims. [] Ancillary

jurisdiction, therefore, cannot provide the original jurisdiction that petitioners must

show in order to qualify for removal under § 1441.”) (citation omitted).

Defendants cite three district court cases to support their contrary position.

In each of these cases, however, the court had original federal question jurisdiction

because the plaintiff asserted claims under patent law, and the issue was only

whether the court had supplemental jurisdiction over state law claims and

counterclaims. These cases simply do not support Defendants’ position that the

Court has original jurisdiction based on supplemental jurisdiction.

Defendants also argue that Bigfoot’s claims are “artful pleading” to avoid

rulings this Court made in a prior case between the parties and that therefore this

Court should exercise ancillary jurisdiction. This argument conflates different

jurisdiction-related concepts and is undeveloped. The Court therefore rejects it

without further discussion.

C. The Action Does Not Trigger Federal Question Jurisdiction.

Defendants also argue that the Court has federal question jurisdiction under

the patent law notwithstanding the FAC’s assertion of only state-law claims. This

position appears to be based on a defense that Defendants expect to raise against

Bigfoot’s fraudulent transfer claims: that Bigfoot’s fraudulent transfer claim

directed at Knighton’s Santa Monica property must fail because the 2008 Note is

sufficiently secured by certain patents, and therefore, presumably, Bigfoot can

recover its judgment through the patent security without touching the Santa

Monica property, so Bigfoot does not need to avoid the transfers that

encumbered/alienated that property. Defendants argue that this defense gives rise

to a federal question because it puts in issue the “validity, enforceability,

infringement and/or infringement value of the patents,” which is relevant “to show

that the creditor is sufficiently secured and not harmed.” Opp’n 17:1-6.

Insofar as this is an argument that the action “arises under” patent law,

Defendants are mistaken. Federal question jurisdiction exists over “all civil actions

arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. §

1331. Under no interpretation does this action “arise under” the laws of the United

States.

Under the well-pleaded complaint rule, an action “arises under” the laws of

the United States only where “a federal question is presented on the face of

plaintiff’s properly pleaded complaint.” Caterpillar, 482 U.S. at 392. Here, no

federal question is presented on the face of Bigfoot’s Complaint or FAC, which

assert only claims under state law.

Defendants also invoke the artful pleading doctrine, arguing that Bigfoot’s

state law claims are actually federal claims. The artful pleading doctrine “allows

removal where federal law completely preempts a plaintiff’s state-law claim.”

Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998). This occurs when “the pre-

emptive force of the statute is so extraordinary that it converts an ordinary state

common-law complaint into one stating a federal claim for purposes of the well-

pleaded complaint rule.” Caterpillar, 482 U.S. at 393. “To have this effect, a

federal statute must ‘provide[] the exclusive cause of action for the claim asserted

and also set forth procedures and remedies governing that cause of action.’ ” City

of Oakland v. BP PLC, 969 F.3d 895, 905 (9th Cir. 2020) (citing Beneficial Nat’l

Bank v. Anderson, 539 U.S. 1, 8 (2003)). The only federal law that Defendants

refer to is the patent law, but they don’t explain how patent law provides “the

exclusive cause of action” and “sets forth procedures and remedies” governing

Bigfoot’s state law claims for fraudulent transfer relating to the Santa Monica real

property.

Defendants also argue that there is federal question jurisdiction under the

Gunn test. This refers to a “ ‘special and small category’ of state-law claims that

arise under federal law. …Under the [Supreme] Court’s [Gunn] test, we must

determine whether, by virtue of this claim, a federal issue is ‘(1) necessarily raised,

(2) actually disputed, (3) substantial, and (4) capable of resolution in federal court

without disrupting the federal-state balance approved by Congress.’ ” City of

Oakland, 969 F.3d at 906 (citing Gunn v. Minton, 568 U.S. 251, 258 (2013)).

Defendants have not satisfied any of these elements. First, no patent issue is

“necessarily raised” by Bigfoot’s claims. Defendants’ argument that Bigfoot’s

interest in its judgment is adequately secured by the patent collateral is at most a

defense to the fraudulent transfer claims, and is not an issue raised by the

fraudulent transfer claims themselves. Second, none of the patent issues

Defendants’ vaguely refer to—patent validity, enforceability, infringement and/or

infringement value of the patents—is actually disputed, or at least Defendants do

not demonstrate that they are actually disputed. Third, Defendants do not point to a

substantial issue of federal law, nor, fourth, do they explain how it would not

disrupt the federal-state balance for this Court to exercise jurisdiction over

fraudulent transfer claims governed by California law that were pending in state

court for nearly two years before they were removed. Thus, Defendants do not

establish federal question jurisdiction under the Gunn test.

Defendants appear to rely on the state court’s January 2025 order denying

their motion to declare Bigfoot a vexatious litigant to establish some of these

elements. See State Court Order (Dkt. No. 17-1). As relevant, that order states,

“Defendants argue plaintiff cannot show a reasonable probability of succeeding at

trial. Defendants assert plaintiff is secured via patent IP collateral, so is precluded

from asserting fraudulent conveyance. [] This is unavailing; the question is

whether the alleged transfers were fraudulent. Whether plaintiff is secured is

irrelevant to its right to protect its judgment from fraudulent transfers.” State Court

Order, page ID#1535. This analysis from the state court does nothing at all to

substantiate Defendants’ argument that Bigfoot’s claims raise any patent issue

sufficiently to trigger federal jurisdiction under the Gunn test. In fact, the analysis

suggests the contrary—that patent issues are not necessarily raised, or actually

disputed, or substantial such that they trigger federal question jurisdiction.

IV. CONCLUSION

Defendants have not met their burden of establishing subject matter

jurisdiction. Bigfoot’s Motion for Remand (Dkt. No. 15) is therefore GRANTED.

This action is REMANDED to the state court from which it was removed.

Defendants’ Motion to Consolidate (Dkt. No. 25) is DENIED AS MOOT.

SO ORDERED.