United States District Court, W.D. Virginia, Roanoke Division
Elizabeth K. Dillon United States District Judge.
and third-party plaintiff Crystal Rivers, proceeding pro
se, removed this case from the Circuit Court for the
City of Roanoke and has filed a motion to proceed in
forma pauperis. (Dkt. No. 1.) Based on her financial
affidavit, the court finds that Rivers is financially
eligible to proceed in forma pauperis, and so will
grant that motion. Because the court concludes removal was
not proper and that it lacks subject-matter jurisdiction over
this action, the court will remand the case to state court.
courts are not courts of general jurisdiction; they have only
the power that is authorized by Article III of the
Constitution and the statutes enacted by Congress pursuant
thereto.” Brickwood Contractors., Inc. v. Datanet
Eng'g, Inc., 369 F.3d 385, 390 (4th Cir. 2004)
(quoting Bender v. Williamsport Area Sch. Dist., 475
U.S. 534, 541 (1986)). Hence, “questions of
subject-matter jurisdiction may be raised at any point during
the proceedings and may (or, more precisely, must) be raised
sua sponte by the court.” Id.;
Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006)
(explaining that “a court on its own initiative, at any
stage in the litigation, ” may consider whether it
lacks subject-matter jurisdiction) (citing Fed.R.Civ.P.
12(h)(3)). If a district court determines that jurisdiction
is lacking over a removed case, it must remand to state
court. 28 U.S.C. § 1447(c).
to Rivers's notice of removal,  the state action was filed
on August 29, 2014. In the complaint, plaintiff Northwood
Management Group, Inc. (Northwood) asserted two state law
claims against CVLR Performance Horses, Inc., and Rivers,
CVLR's president. (Dkt. No. 2-2; see Dkt. No.
2-13 at 4 (prior court opinion describing Rivers as
CVLR's president).) Both claims alleged that the
defendants breached a partnership agreement and legal fees
agreement. In Count I, Northwood sought specific performance
and imposition of a constructive trust. In Count II,
Northwood requested that the court order an accounting.
Rivers, who was represented by counsel at the time, filed a
counterclaim and also sought-and apparently received-leave to
file a third-party complaint against her former attorney,
Gary Bowman. (Dkt. Nos. 2-3, 2-4.) Bowman filed a plea in bar
and a demurrer, which were sustained, and he was dismissed
from the case. (Dkt. No. 2-6.) Rivers appealed that ruling
and, according to her notice of removal, the appeal remains
pending. (Dkt. No. 2, ¶¶ 18-20.)
to the appeal, the state court also granted Rivers permission
to add three other parties as third-party defendants within
21 days, which she did. (Dkt. Nos. 2-5, 2-6, 2-7.) Although
it is not clear from her lengthy third-party complaint which
counts are based on state law and which ones are federal-law
claims,  her notice of removal states that her
third-party complaint contains five counts, four of which
“alleg[e] facts relating to Civil Racketeering and
Corrupt Organizations Act 18 U.S.C., and predicate
acts.” (Dkt. No. 2, ¶ 1.)
who bears “[t]he burden of establishing federal
jurisdiction [as] the party seeking removal, ”
Mulcahey v. Columbia Organic Chems. Co., 29 F.3d
148, 151 (4th Cir. 1994), asserts that removal is proper
under 28 U.S.C. § 1441, presumably under § 1441(a).
In pertinent part, that provision states:
[A]ny civil action brought in a State court of which the
district courts of the United States have original
jurisdiction, may be removed by the defendant or the
defendants, 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).
on its language, then, 28 U.S.C. § 1441(a) permits
removal of only those actions which could have originally
been filed in federal district court. Id. Rivers
asserts that her amended third-party complaint contains
federal claims and that she filed the notice of removal
within thirty days after filing her complaint. She thus
contends that this court can assert jurisdiction under 28
U.S.C. § 1331, which gives the district courts
subject-matter jurisdiction over “all civil actions
arising under the Constitution, laws, or treaties of the
general rule, however, is that removal based on
federal-question jurisdiction is improper unless a federal
claim appears on the face of the plaintiff's complaint.
Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir. 2005).
As explained by the Supreme Court in Holmes Group, Inc.
v. Vornado Air Circulation Systems, Inc., 535 U.S. 826
(2002), neither a federal defense nor a federal counterclaim
can create federal jurisdiction where it does not appear on
the face of the well-pleaded complaint. Id. at 831.
Based on Holmes, this court and others have held
that removal was improper where the only federal claim in the
suit was a counterclaim. See, e.g., Williamsburg
Plantation, Inc. v. Bluegreen Corp., 478 F.Supp.2d 861,
864 (E.D. Va. 2006); Great E. Resort Corp. v. Bluegreen
Corp., No. 5:06-cv-84, 2006 WL 3391504, at *1 (W.D. Va.
Nov. 22, 2006) (“Only a defendant, which does not
include a plaintiff/counterclaim-defendant, may remove an
action to federal court.”). See also Wallace v.
Wiedenbeck, 985 F.Supp. 288, 290 (N.D.N.Y. 1998)
(“It is well established that a defendant cannot remove
based on grounds raised in its answer. This principle applies
with equal force to defenses, as well as
counterclaims.”) (internal citations omitted).
these cases do not explicitly reference the precise situation
here, where the federal claim is raised only in a third-party
complaint, the same reasoning that they employed would
plainly bar removal. That is so because Northwood's
complaint in this matter does not assert a federal claim and
could not have been filed in federal court. Indeed, the
Fourth Circuit has recently held that “an additional
counter-defendant [who was listed as a third-party defendant
in the case] is not entitled to remove under [28 U.S.C.]
§ 1441(a).” Jackson v. Home Depot U.S.A.,
Inc., 880 F.3d 165, 170 (4th Cir. 2018). Thus, even if
the third-party defendants here had removed the case, rather
than Rivers as the defendant/third-party plaintiff, removal
would not be proper and remand would be required. See
Id. Based on the above authority, the court concludes
that it lacks jurisdiction over the claims, and so it will
remand the entire action to state court.
foregoing reasons, the court will grant Rivers in forma
pauperis status, but will remand this case to state