United States District Court, M.D. Florida, Tampa Division
Charlene Edwards Honeywell, United States District Judge.
matter comes before the Court upon the Plaintiffs'
Emergency Motion to Remand, Motion for Attorneys' Fees
under 28 U.S.C. § 1447(c) and Motion for Expedited
Briefing Schedule (Doc. 6), and Defendants' response in
opposition (Doc. 12). In the motion, Plaintiffs state that
this Court lacks subject matter jurisdiction over the case
because the claims in the Complaint do not arise under
federal law. The Court, having considered the motion and
being fully advised in the premises, will grant-in-part
Plaintiffs' Emergency Motion to Remand, Motion for
Attorneys' Fees under 28 U.S.C. § 1447(c) and Motion
for Expedited Briefing Schedule.
Complaint, one of many between the parties, involves a
dispute between Stephen Bracciale and Saint Anton Capitol,
LLC (“SAC”) and Pedro Valdez and National
Sourcing, Inc. (“NSI”). NSI is a Service-Disabled
Veteran Owned Small Business (“SDVOSB”) which
provides a variety of services to government agencies. Doc. 2
at ¶ 9. The relationship between the parties and the
underlying documents sued upon as described in the Complaint
(and the related actions) are as follows.
employed Bracciale under a Consulting Agreement through July
18, 2017, to assist in marketing, business development,
client relations, training, operations, and contract support.
Id. at ¶ 12. Valdez terminated Bracciale as a
consultant and employee, locked him out of the NSI offices,
and removed him as a signer on the NSI bank account.
Id. at ¶ 13. Bracciale contends that he is
chiefly responsible for the business and infrastructure that
has led to NSI's success. Id. at ¶ 11.
2011, NSI hired Valdez to assist in recruiting and hiring of
employees. Id. at ¶ 16. In April 2013, to
maintain its status as a SDVOSB, Valdez became a director and
officer of NSI, and purchased 51% of NSI's shares from
the former interim owner. Id. at ¶ 16. To
finance this transaction, Valdez entered into the following
agreements: a Promissory Note for $5.1 million dollars from
Valdez to SAC (a company owned by Bracciale) agreeing to pay
ten interest-only payments of $153, 000 every six months to
SAC with a final balloon payment of $5.1 million due April 1,
2018; a Security Agreement for $5.1 million (which Valdez and
NSI granted to SAC to secure the Promissory Note) which
includes as security Valdez's pledge of his shares and
NSI's grant of its collateral; and a Stock Pledge
Agreement between Valdez and SAC in connection with the
Promissory Note and Security Agreement. Id. at
¶ 18. Bracciale also entered into financing agreements
with NSI including a $1 million Note and Security Agreement
and a $575, 000 Note and Security Agreement. The Complaint
alleges that Valdez and NSI have defaulted on their
obligations and that Valdez is causing irreparable harm to
NSI. See id. at § D. The Complaint includes
claims for default on the Valdez Promissory Note and breach
of fiduciary duty against NSI and Valdez. Id. at
¶¶ 35-40, 42-47.
The Valdez State Action
18, 2017, Valdez filed a state court complaint styled
Pedro Valdez, et al. v. Stephen Bracciale, et al.,
case No. 17-CA-6700 in the Thirteenth Judicial Circuit Court
in and for Hillsborough County, Florida (the “Valdez
State Action”) requesting declaratory relief regarding
the ambiguities in the Valdez Promissory Note, seeking
equitable accounting on the Valdez Promissory Note, and
alleging claims for conversion, fraud, and conspiracy against
Bracciale and other parties. See Doc. 6-1. That same
day Valdez changed the locks to NSI's offices and fired
Bracciale as a consultant to NSI. Doc. 6 at 3. Bracciale
served Valdez with default notices and filed an Emergency
Motion for Appointment of Receiver. See Doc. 6-2. On
August 4, 2017, the state court held a hearing on the
Emergency Motion for Appointment of Receiver and ordered the
appointment of a consultant to oversee the work of NSI's
forensic accountant. See Doc. 6-4. It also continued
the evidentiary hearing to August 28, 2017. Doc. 6 at 3. On
August 16, 2017, Valdez voluntarily dismissed the case
without prejudice. See Doc. 6-5.
The Valdez Federal Action
August 16, 2017, NSI and Valdez filed a federal court
complaint, styled National Sourcing, Inc., et al., v.
Stephen Bracciale, et al., case no. 8:17-cv-1950-36JSS
in the Middle District of Florida, Tampa Division, against
Bracciale, SAC, and others (the “Valdez Federal
Action”) (referred to in the motion as
the “NSI Action” and in the response as the
“First Filed Action”). See Doc. 6- 5.
The Valdez Federal Action alleges claims for a breach of
fiduciary duty, aiding and abetting breach of fiduciary duty,
and fraudulent inducement pursuant to Florida Statutes and
requests declaratory relief pursuant to 28 U.S.C.
§§ 2201-2202. See Doc. 6-5. It alleges
that after Valdez missed some payments on the Valdez
Promissory Note, Bracciale threatened to default him, so NSI
terminated the Administrative Services Agreement, Consulting
Agreement, and Bracciale's employment with NSI on July
18, 2017. Doc. 6-5 at ¶¶ 47-48. The Valdez Federal
Action alleges federal question jurisdiction by asserting
that there is a present and actual controversy regarding the
Administrative Services Agreement, Security Agreement and the
Valdez Promissory Note, id. at ¶¶ 69-71;
because they are void as illegal and unenforceable by
purportedly violating 13 C.F.R. § 124.106, 38 C.F.R.
§ 74.4, and by virtue of overpaying and vesting control
of NSI to Bracciale as a non-veteran. Id. at ¶
The State Court Action
August 18, 2017, Bracciale and SAC filed the Verified
Complaint and Demand for Injunctive Relief (the
“Complaint”) against Valdez and NSI alleging
breach of a promissory note and breach of fiduciary
duty. See Doc. 6-6. On August 21, 2017,
Bracciale and SAC filed a Verified Emergency Ex Parte Motion
for Temporary Injunction (the “Emergency Motion”)
to enjoin Valdez and NSI from conducting business operations
and to request that the court temporarily appoint an
additional signatory to the NSI bank account. See
Emergency Motion, the Plaintiffs alleged that Valdez locked
Bracciale out of NSI's offices and was incurring
liabilities on behalf of NSI by secretly relocating its
offices, hiring three additional employees, neglecting NSI
accounts payable, withdrawing funds from NSI accounts, giving
himself a 64% raise, and making misrepresentations about
NSI's financial accounts, among other things.
Id. at 2.
August 23, 2017, the state court entered an ex parte
Temporary Restraining Order (the “TRO”) without
notice and without bond which took effect immediately.
See Doc. 6-11. It restrained and enjoined Valdez,
NSI, and all individuals or entities working with them from
withdrawing or moving funds, charging credit accounts,
entering into agreements, and incurring liabilities, among
other things. Doc. 6-11 at 2. Ultimately, it ordered Valdez
and NSI not to “[c]omitt any acts that would
jeopardize the ongoing operations of NSI.” Id.
The state court set a hearing date for the TRO on August 28,
2017, at 3:30 p.m. and ordered that it would remain in full
force and effect up to and including August 29, 2017, unless
modified or extended by order of the state court.
The Notice of Removal
August 25, 2017, Valdez and NSI filed a Notice of Removal,
which removed the State Court Action to this Court. Doc. 1.
In their Notice of Removal, Defendants state that this Court
has subject matter jurisdiction over the action because it
involves a federal question. Specifically, they assert that
because the regulations regarding NSI's certification as
a SDVOSB under the Small Business Act (“SBA”) are
at issue in the Valdez Federal Action, which is the
first-filed case, it implicates a federal question in this
case. Defendants allude to the eligibility requirements for
the Veteran's Administration (“VA”) SDVOSB
contracting program as set forth in 13 C.F.R. §§
121, 125 and 38 C.F.R. § 74. Id. at
assert that the SBA and SDVOSB regulations both require that
a corporation qualified as a SDVOSB have at least 50% of the
aggregate of all stock outstanding and at least fifty-one
percent of each class of voting stock outstanding
unconditionally owned by one or more service-disabled
veterans. Id. at ¶ 9. They also assert that the
regulations require that the management and daily business
operations for the corporation be controlled by one or more
service-disabled veterans. See id. at ¶ 10-12.
Defendants argue that because the Complaint's allegations
regarding NSI's SDVOSB status include that NSI must be
operated by an officially designated service-disabled
veteran, and that Valdez fulfills that role for NSI, the
documents upon which the Plaintiffs sue are “directly
controlled by the limitations and dictates of the SBA and the
VA SDVOSB regulations.” Doc. 1 at ¶ 15.
of cases to federal court is governed by 28 U.S.C. §
1441, which provides in part that “[e]xcept as
otherwise expressly provided by Act of Congress, 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.”
Id. at § 1441(a). Federal district courts are
courts of limited jurisdiction. See Morrison v. Allstate
Indem. Co., 228 F.3d 1255, 1260- 61 (11th Cir. 2000).
Parties seeking to invoke subject matter jurisdiction must
show that the underlying claim is based upon either diversity
jurisdiction (cases in which the parties are of diverse
citizenship and “the matter in controversy exceeds the
sum or value of $75, 000, exclusive of interest and
costs”), or the existence of a federal question (i.e.,
“a civil action arising under the Constitution, laws,
or treaties of the United States”). See 28
U.S.C. §§ 1331-1332.
jurisdiction is construed narrowly with all doubts resolved
in favor of remand. See Univ. of S. Ala. v. Am. Tobacco
Co., 168 F.3d 405, 411 (11th Cir. 1999); Pacheco de
Perez v. AT & T Co., 139 F.3d 1368, 1373 (11th Cir.
1998). “A removing defendant bears the burden of
proving proper federal jurisdiction.” Leonard v.
Enter. Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002)
(citing Williams v. Best Buy Co., 269 F.3d 1316,
1319-20 (11th Cir. 2001)). In assessing whether removal is
proper, the district court considers “only the limited
universe of evidence available when the motion to remand is
filed-i.e., the notice of removal and accompanying documents.
If that evidence is insufficient to establish that removal
was proper or that jurisdiction was present, neither the
defendants nor the court may speculate in an attempt to make
up for the notice's failings.” Lowery v. Ala.
Power Co., 483 F.3d 1184, 1213-15 (11th Cir. 2007),
cert. denied, 553 U.S. 1080, 128 S.Ct. 2877, 171
L.Ed.2d 812 (2008).
the alleged basis for federal jurisdiction is a federal
question under 42 U.S.C. § 1331, as it is in this case,
the removing defendant has the burden of demonstrating the
action “aris[es] under the Constitution, laws, or
treaties of the United States.” 28 U.S.C. § 1331.
The federal question at issue “must appear on the face
of the plaintiff's well-pleaded complaint.”
Cmty. State Bank v. Strong, 651 F.3d 1241, 1251
(11th Cir. 2011). “The presence or absence of
federal-question jurisdiction is governed by the
‘well-pleaded complaint rule, ' which provides that
federal jurisdiction exists only when a federal question is
presented on the face of the plaintiff's properly pleaded
complaint.” Caterpillar Inc. v. Williams, 482
U.S. 386, 392 (1987). “The rule makes the plaintiff the
master of the claim; he or she may avoid federal jurisdiction
by exclusive reliance on state law.” Id.
are exceptions to the well-pleaded complaint rule. In general
terms, removal is improper if based solely upon a
plaintiff's allegation of an anticipated defense or if
based upon a defendant's responsive pleading.”
Lazuka v. FDIC, 931 F.2d 1530, 1534 (11th Cir. 1991)
(citing Merrell Dow Pharmaceuticals Inc. v.
Thompson, 478 U.S. 804, 808, 809 n. 6 (1986)). Also
“when a federal statute wholly displaces the state-law
cause of action through complete pre-emption, ” the
state claim can be removed. Beneficial Nat. Bank v.
Anderson, 539 U.S. 1, 8 (2003); Franchise Tax Bd. of
Cal. v. Construction Laborers Vacation Trust for Southern
Cal., 463 U.S. 1, 9-10 (1983). This is so because
“[w]hen the federal statute completely pre-empts the
state-law cause of action, a claim which comes within the
scope of that cause of action, even if pleaded in terms of
state law, is in reality based on federal law.”
Id. And the “artful-pleading” doctrine
provides exceptions to the well-pleaded complaint rule. Under
one of these exceptions, even if it appears from the
complaint that only state-law causes of action are actually
pleaded, a federal question will be inferred where “the
vindication of a right under state law necessarily turn[s] on
some construction of federal law.” Merrel Dow,
478 U.S. at 808. Under this analysis, “in limited
circumstances, federal-question jurisdiction ...