United States District Court, E.D. Virginia, Alexandria Division
D. Davis United States Magistrate Judge
matter is before the Court on Plaintiff SoFi Lending
Corp.'s ("Plaintiff) Motion to Remand (Dkt. No. 3)
pursuant to 28 U.S.C. § 1447(c). Plaintiff seeks an
order remanding this matter to the General District Court for
Loudoun County, which is where Plaintiff initiated this
matter against Defendant Ghazee Miakhel
('"Defendant"). Upon consideration of the
pleadings, Plaintiffs Motion, and Defendant's Memorandum
in Opposition to Motion to Remand (Dkt. No. 21), the Court
finds that it lacks subject matter jurisdiction in this
matter. For the reasons stated below, Plaintiffs Motion to
Remand is GRANTED.
to section 16.1-79 of the Code of Virginia, Plaintiff filed a
Wan-ant in Debt in the General District Court for Loudoun
County to collect $19, 831.29 from Defendant. (Dkt. No. 1-1
at 2.) Plaintiff subsequently filed a Bill of Particulars
alleging that Defendant breached the loan agreement between
the parties by not paying the amount due. (Id. at
21-22.) Defendant filed a motion to compel arbitration, which
was denied. (Id. at 16.) However, Defendant had
already initiated arbitration proceedings; thus. Plaintiff
moved the state court to stay the arbitration. (Id.
at 10.) On November 14, 2017, Defendant filed a Notice of
Removal in this Court. (Dkt. No. 1.)
STANDARD OF REVIEW
federal removal statute allows a defendant to remove an
action initiated in state court to "the district court
of the United States for the district and division embracing
the place where such action is pending." 28 U.S.C.
§ 1441(a). However, the district court must have subject
matter jurisdiction over the action; otherwise, "the
case shall be remanded." 28 U.S.C. §
1447(c) (emphasis added). The burden of establishing subject
matter jurisdiction is on the party seeking removal.
Mulcahey v. Columbia Organic Chems., Co., 29 F.3d
148, 151 (4th Cir. 1994) (citing Wilson v. Republic Iron
& Steel Co., 257 U.S. 92 (1921)). Additionally, the
Fourth Circuit strictly construes removal jurisdiction
because of significant federalism concerns. Id.
cites "28 U.S.C. § 1331, 1441 and 1446, and 9
U.S.C. § 1-16" as grounds for removal. (Dkt. No.
1.) Sections 1441 and 1446 provide the procedure but not a
basis for removal. See 28 U.S.C. §§ 1441,
1446. Therefore, the Court will only address Defendant's
other two bases for removal, 28 U.S.C. § 1331 and 9
U.S.C. § 1 et seq. The Federal Arbitration Act,
which is found at 9 U.S.C. § 1 et seq., is not
a source of federal jurisdiction. See Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 26 n.32 (1983) (noting that an order compelling
arbitration can issue in federal court "only when the
federal district court would have jurisdiction over a suit on
the underlying dispute"); Whiteside v. Teltech
Corp., 940 F.2d 99, 102 (4th Cir. 1991) ("[T]he FAA
does not provide a basis for federal question jurisdiction
for bringing a suit under the Act in federal court.").
Section 1331 is the federal question statute, which provides
"original jurisdiction of all civil actions under the
Constitution, laws, or treaties of the United States" to
the district courts. 28 U.S.C. § 1331.
state law creates the cause of action, as it does here,
federal jurisdiction turns on whether the plaintiffs demand
"necessarily depends on resolution of a substantial
question of federal law." Franchise Tax Bd. v.
Construction Laborers Vacation Trust, 463 U.S. 1, 28
(1983). Notably, the question of federal law must be
"presented on the face of the plaintiffs properly
pleaded complaint" and not predicated on a defense or a
counterclaim. Rivet v. Regions Bank of La., 522 U.S.
470, 475 (1998); see also Vaden v. Discover Bank,
556 U.S. 49, 62 (2009).
Motion to Remand, Plaintiff argues that federal jurisdiction
cannot be based on the Federal Arbitration Act or
Defendant's counterclaims, if any. (Dkt. No. 4.)
Plaintiff also asserts that Defendant filed his Notice of
Removal untimely. (Id.) Defendant contends that this
Court has federal question jurisdiction under the Federal
Arbitration Act and that he filed his Notice of Removal
timely. (Dkt. No. 21.) Because the Court lacks subject matter
jurisdiction, the issue of timeliness is not reached.
party seeking removal, Defendant bears the burden of
establishing subject matter jurisdiction. See
Mulcahey, 29 F.3d at 151. Defendant's federal
question argument rests on Plaintiffs Motion to Stay
Arbitration, which was filed in state court. Specifically,
Defendant states that "Plaintiff amended its claim by
requesting the court to Stay the arbitration proceeding"
that was pending at the time Plaintiff filed its motion.
(Dkt. No. 21 at 2.) Defendant's argument is misplaced
because Plaintiff did not amend its claim by asking the state
court to stay arbitration.
Plaintiff did amend its complaint to include a stay of
arbitration as relief, Defendant's argument would fail
because the Federal Arbitration Act does not confer subject
matter jurisdiction. See Vaden, 556 U.S. at 62-63.
Defendant relies on the language in section 4, which provides
that a party "may petition any United States district
court which, save for such agreement, would have jurisdiction
under title 28 ...." 9 U.S.C. § 4. "The phrase
'save for [the arbitration] agreement' indicates that
the district court should assume the absence of the
arbitration agreement and determine whether it 'would
have jurisdiction under title 28' without it."
Vaden, 556 U.S. at 62 (quoting 9 U.S.C. § 4.)
Simply put, Plaintiff would not be able to bring its suit in
this Court because Plaintiff asserts breach of contract, a
state law claim. See Vaden, 556 U.S. at 63-64
(explaining that the "save for" phrase in section 4
means that courts must "look through" the issue of
arbitration altogether to determine subject matter
the Court lacks jurisdiction over Defendant's
counterclaims of "FDCPA, TCPA and FCRA." (Dkt. No.
1.) Presumably, Defendant is referring to the Federal Debt
Collection Practices Act, 15 U.S.C. § 1692 et
seq., the Telephone Consumer Protection Act, 47 U.S.C.
§ 227, et seq., and the Fair Credit Reporting
Act, 15 U.S.C. § 1681, et seq., because
Defendant filed a Warrant in Debt with his Notice of Removal
that references these statutes. (Dkt. No. 1-1 at 4.) However,
Plaintiff argues that Defendant failed to serve the Warrant
in Debt upon Plaintiff. (Dkt. No. 4 at 8 n.4.) Nonetheless,
Defendant's counterclaims do not supply the necessary
subject matter jurisdiction in this case. See Vaden v.
Discover Bank, 556 U.S. 49, 62 (2009)
("[Counterclaims, even if they rely exclusively on
federal substantive law, do not qualify a case for
federal-court cognizance."). Therefore, the Court finds
that Defendant failed to meet his burden of establishing
subject matter jurisdiction. Accordingly, this matter must be
remanded pursuant to 28 U.S.C. § 1447(c).