United States District Court, D. Hawaii
CHARLES VITALE and NINA VITALE, Individually and in their Representative Capacities and on Behalf of a Class of All Persons Similarly Situated, Plaintiffs,
D.R. HORTON, INC.; D.R. HORTON-SCHULER HOMES, LLC; et al., Defendants.
ORDER REMANDING CASE
Derrick K. Watson United States District Judge.
removed this action, brought by a putative class of
Hawai‘i home-buyers, pursuant to the Class Action
Fairness Act (“CAFA”), 28 U.S.C. § 1332(d).
The parties do not dispute that CAFA’s minimal
diversity requirements have been met. This action, however,
consists solely of state-law claims that a Hawai‘i
homebuilder and its mainland parent corporation developed and
sold homes in Hawai‘i with a defective condition to a
putative class predominantly composed of Hawai‘i
citizens. Consequently, CAFA’s mandatory “local
controversy” exception requires the Court to decline to
exercise jurisdiction over this matter. 28 U.S.C. §
1332(d)(4)(A). Accordingly, this case is remanded to state
Horton, Inc. (“Horton Inc.”) and D.R.
Horton-Schuler Homes, LLC (“Horton LLC”)
developed, constructed, and sold thousands of single-family
homes and condominiums in the State of Hawai'i that
Plaintiffs allege contain defective, embedded hurricane
straps. Complaint ¶¶ 5-6 (attached to Notice of
Removal, Dkt. No. 1-2). The named Plaintiffs filed this
action on July 13, 2015 in Hawai'i state court on behalf
of themselves and a class of similarly situated
home-purchasers. The class is defined as: “All
individuals and entities that own Horton Homes constructed
with hurricane straps embedded in the foundations
substantially completed on or after July 13, 2005 in the
State of Hawai'i, and all homeowners associations whose
members consist of such individual and entity
homeowners.” Complaint ¶ 24. Plaintiffs have
identified 3, 300 putative class members, over 2, 900 of whom
they claim are citizens of the State of Hawai‘i.
Declaration of Graham B. LippSmith (“LippSmith
Decl.”) ¶ 4.
removed this action on August 10, 2015 (Dkt. No. 1). They
based removal on the Court’s original subject matter
jurisdiction under CAFA, asserting that CAFA’s minimal
diversity requirement had been met because “Plaintiffs
are domiciled in and citizens of Hawaii” and
“Defendant Horton Inc. is a Delaware corporation”
with a principal place of business in Texas. Dkt. No. 1,
¶ 4.a. The case was stayed by stipulation of the parties
on August 20, 2015 (Dkt. No. 8), and the stay was officially
lifted as of March 30, 2016. Dkt. No. 10. On April 10, 2016,
Defendants filed a Motion to Dismiss Plaintiffs’
Complaint for Lack of Standing. Dkt. No. 11. On June 14,
2016, the Court alerted the parties to its concerns regarding
the Court’s subject matter jurisdiction under CAFA
Sections 1332(d)(3) and (d)(4) and ordered briefing on the
The Court’s Obligation to Ensure Its Own
preliminary matter, the Court briefly addresses its perpetual
obligation to ensure its own subject matter jurisdiction, in
light of Defendants’ erroneous assertion that the Court
may not consider CAFA’s jurisdictional exceptions
sua sponte. Defendants’ assertion is
plainly without merit. See, e.g., Bey v. SolarWorld
Indus. Am., Inc., 904 F.Supp.2d 1103, 1108 (D. Or. 2012)
(Rejecting defendant’s argument that “the Court
may not raise the § 1332(d)(4) exceptions sua
sponte, ” while likening CAFA exceptions to
abstention cases where “federal courts have
consistently held that they may raise abstention concerns
sua sponte, ” and that similar
“reasoning applies all the more strongly in the context
of the § 1332(d)(4) exceptions[.]”); id.
at 1109 (“Congress has specifically directed the courts
to decline jurisdiction if a purported class action
is overwhelmingly a state controversy. There is no precedent
prohibiting the Court from raising the applicability of the
§ 1332(d)(4) exceptions on its own, relatively early in
the case, as courts often do with abstention
concerns.”); Reddick v. Glob. Contact Sols.,
LLC, 2015 WL 5056186, at *3-*4 (D. Or. Aug. 26, 2015)
(“The question of who bears the burden of persuasion
under CAFA in connection with a motion to remand is
immaterial to this court’s sua sponte
determination of whether it may properly exercise federal
subject-matter jurisdiction.”). Even the very cases
cited by Defendants offer no support for the assertion. At
best, those cases hold that district courts need not raise
CAFA jurisdictional concerns sua sponte, not that
they cannot. See Barfield v. Sho-Me Power Electric
Co-op, 2015 WL 5022836 at *5 (W.D. Mo. Aug. 21, 2015);
Kuxhausen v. BMS Financial Services, NA LLC, 707
F.3d 1136, 1140 n.1 (9th Cir. 2013).
the Court is generally obligated to ensure its own subject
matter jurisdiction at each stage of the proceeding. See,
e.g., Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S.
567, 593 (2004) (“[B]y whatever route a case arrives in
federal court, it is the obligation of both district court
and counsel to be alert to jurisdictional
requirements.”); United States v. Southern
California Edison Co., 300 F.Supp.2d 964, 972 (E.D. Cal.
2004) (district courts have an “independent obligation
to address [subject-matter jurisdiction] sua
sponte”) (internal quotation marks omitted).
Moreover, remand is required if the Court lacks subject
matter jurisdiction at any time. See, e.g., 28
U.S.C. § 1447(c) (“If at any time before final
judgment it appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.”);
Ins. Corp. of Ireland v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 702 (1982) (holding that a party
does not waive subject-matter jurisdiction “by failing
to challenge [it] early in the proceedings”);
Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d
373, 376 (9th Cir. 1997) (“This is not to say that a
defect in jurisdiction can be avoided by waiver or
stipulation to submit to federal jurisdiction. It
cannot.”); Berg v. United Air Lines, Inc.,
2012 WL 3138022, at *2 (N.D. Cal. Aug. 1, 2012) (“[T]he
Court is duty-bound to police its own removal jurisdiction
sua sponte, despite neither party having raised the
issue.”) (citing United Investors Life Ins. Co. v.
Waddell & Reed Inc., 360 F.3d 960, 967 (9th Cir.
2004)); cf. Kelton Arms Condo. Owners
Ass’n, Inc. v. Homestead Ins. Co., 346 F.3d 1190,
1192-93 (9th Cir. 2003) (holding that a court may not sua
sponte remand for procedural defects in removal but
noting a distinction between procedural and jurisdictional
defects and that a “district court must remand if it
this continuing obligation in mind, the Court turns to the
mandatory exceptions to CAFA jurisdiction.
CAFA Mandates This Court’s Declination of
vests federal district courts with original jurisdiction of
any class action in which minimal diversity of citizenship
exists between at least one member of the putative class and
at least one defendant, the class consists of at least 100
members, and the matter in controversy exceeds $5, 000, 000.
The parties do not dispute that these three conditions have
been met here.
however, also includes both mandatory and permissive
jurisdictional exceptions. Because the Court finds the
mandatory “local controversy” exception
applicable here, CAFA’s compulsory declination
provision requires remand to state court. See 28
U.S.C. § 1332(d)(4)(A).
Citizenship of Two-Thirds or More of Members of the
Court first addresses the citizenship requirement of
CAFA’s mandatory declination provisions, which require
proof, by a preponderance of the evidence, that two-thirds or
more of the members of the proposed class are citizens of
Hawai‘i. See 28 U.S.C. §§
1332(d)(4)(A)(i)(I) and (d)(4)(B); see also Mondragon v.
Capital One Auto Fin., 736 F.3d 880, 884 (9th Cir. 2013)