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The Bradley A. Malkin Family Limited Partnership v. Sanchez

United States District Court, D. Nevada

October 17, 2019

J. MARIO SANCHEZ, et al., Defendant(s).


         Presently before the court is receiver Diana Mullen's (the “receiver”) motion to remand case to state court. (ECF No. 11). The Bradley A. Malkin Family Limited Partnership and Bradley A. Malkin (“plaintiffs”) filed a response (ECF No. 15), to which the receiver replied (ECF No. 20).

         I. Background

         Jose M. Sanchez (“Sanchez”) allegedly initiated, executed, and maintained a complex Ponzi scheme that involved several corporate entities, including I-8 & Thornton, LLC; Laughlin River Parcel A, LLC; AZ 10, LLC; AZ 11, LLC; and AZ 21, LLC. (ECF No. 15 at 2-3). Sanchez would solicit investors-including plaintiffs-for money to purportedly form and fund the corporate entities that would, in turn, purchase, develop, and sell real property. Id. at 3. Plaintiffs aver that, rather than putting these funds to their proper purpose, “[t]hese funds were effectively stolen and put to work in [Sanchez's] fraudulent scheme.” Id.

         Plaintiffs, who invested over one million dollars with Sanchez, filed suit in the Eighth Judicial District Court of Clark County, Nevada, alleging securities fraud in violation of Nevada Revised Statute (“NRS”) § 90.570, fraudulent misrepresentation, breach of fiduciary duty, gross negligence, conversion, accounting, constructive trust, and tortious breach of the implied covenant of good faith and fair dealing. (ECF No. 3-1). The complaint included a request for the appointment of a receiver, who was appointed on August 7, 2018. (ECF No. 11 at 2-3).

         On July 2, 2019, Sanchez filed for chapter 11 bankruptcy. Id. at 3. Plaintiffs then removed the case to this court and requested that the case be referred to the bankruptcy court. (ECF Nos. 1, 4). The receiver then filed the instant motion to remand. (ECF No. 11).

         II. Legal Standard

         Pursuant to 28 U.S.C. § 1441(a), “any 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). “A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock West, Inc. v. Confederated Tribes of Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989).

         Upon notice of removability, a defendant has thirty days to remove a case to federal court once he knows or should have known that the case was removable. Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1250 (9th Cir. 2006) (citing 28 U.S.C. § 1446(b)(2)). Defendants are not charged with notice of removability “until they've received a paper that gives them enough information to remove.” Id. at 1251.

         Specifically, “the ‘thirty day time period [for removal] . . . starts to run from defendant's receipt of the initial pleading only when that pleading affirmatively reveals on its face' the facts necessary for federal court jurisdiction.” Id. at 1250 (quoting Harris v. Bankers Life & Casualty Co., 425 F.3d 689, 690-91 (9th Cir. 2005) (alterations in original)). “Otherwise, the thirty-day clock doesn't begin ticking until a defendant receives ‘a copy of an amended pleading, motion, order or other paper' from which it can determine that the case is removable. Id. (quoting 28 U.S.C. § 1446(b)(3)).

         A plaintiff may challenge removal by timely filing a motion to remand. 28 U.S.C. § 1447(c). On a motion to remand, the removing defendant faces a strong presumption against removal, and bears the burden of establishing that removal is proper. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996); Gaus v. Miles, Inc., 980 F.2d 564, 566-67 (9th Cir. 1992).

         III. Discussion

         Plaintiffs did not remove the instant action on the basis of 28 U.S.C. § 1441, and for good reason. The underlying claims are all state law claims. Plaintiffs do not allege diversity of citizenship, nor can they.[1]

         Instead, plaintiff removed this case pursuant to 28 U.S.C. § 1452. With a few exceptions not applicable here, 28 U.S.C. § 1452(a) provides that “[a] party may remove any claim or cause of action in a civil action . . . to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.” 28 U.S.C. § 1452(a). However, § 1334 states as follows:

Upon timely motion of a party in a proceeding based upon a [s]tate law claim or [s]tate law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a [s]tate forum of appropriate jurisdiction.

28 U.S.C. § 1334(c)(2). Further, the language of § 1452 itself provides that “[t]he court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground.” 28 U.S.C. § 1452(b).

         1. Plaintiffs' claims are related to Sanchez's ...

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