Speth v. City of Reno ( 2024 )

2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 * * * 6 CAI RENO HOTEL PARTNERS LLC, Case No. 3:23-cv-00396-MMD-CSD 7 Counter Claimant, ORDER v. 8 MARY SPETH, ON BEHALF OF THE 9 THERESA FRISCH TRUST, 10 Counter Defendant. 11 12 I. SUMMARY 13 Original Plaintiff and Counter Defendant Mary Speth, the trustee of the Theresa 14 Frisch Trust, sued the City of Reno regarding a plan to decommission a portion of sewer 15 main and allegedly force her to hook a sewer lateral from a property the trust owns and 16 Speth manages to a different portion of the sewer main. (ECF No. 1.) The Court permitted 17 Counter Claimant CAI Reno Hotel Partners LLC to intervene (ECF No. 26), and CAI filed 18 several state-law counterclaims against Speth (ECF No. 28 at 10-16). Speth settled her 19 claims against Reno and the Court granted their stipulation to dismiss them (ECF No. 44), 20 leaving CAI’s state-law counterclaims against Speth as the only claims in this case. 21 Before the Court is Speth’s motion to alternatively asking the Court to decline to exercise 22 supplemental jurisdiction over CAI’s counterclaims or dismiss them for failure to state a 23 claim. (ECF No. 45 (“Motion”).)1 Because no federal claims remain in its case, which 24 remains in its early stages, and as further explained below, the Court declines to exercise 25 supplemental jurisdiction over CAI’s counterclaims and will grant the Motion. 26 /// 27 /// 28 2 Speth argues in pertinent part that the Court should decline to exercise jurisdiction 3 over CAI’s counterclaims under 28 U.S.C. § 1367(c)(3) because no federal claims remain 4 in this case, the case is still in its early stages, and considerations of judicial economy, 5 convenience, and fairness to litigants counsel in favor of the Court declining supplemental 6 jurisdiction over them, or alternatively under 28 U.S.C. § 1367(c)(1) because CAI’s 7 counterclaims raise novel questions of state law. (ECF No. 45 at 7-9.) CAI acknowledges 8 in response that this decision is left to the Court’s discretion but argues the Court can and 9 should retain jurisdiction over its counterclaims because it would be burdensome to refile 10 its counterclaims in state court, the Court is knowledgeable about the parties’ claims, and 11 the parties have already started discovery. (ECF No. 49 at 8-9.) The Court agrees with 12 Speth. 13 The Court “may decline to exercise supplemental jurisdiction over” CAI’s 14 counterclaims if they raise “a novel or complex issue of State law[,]” “the claim 15 substantially predominates over the claim or claims over which the district court has 16 original jurisdiction[,]” or “the district court has dismissed all claims over which it has 17 original jurisdiction[.]” 28 U.S.C. § 1367(c)(1)-(3). All three of these subsections arguably 18 apply here, and (c)(3) indisputably applies. 19 To start, the only federal claim in this case (ECF No. 1 at 9, 11-12) was dismissed 20 before Speth filed her Motion. (ECF Nos. 44, 45.) CAI only asserts state-law 21 counterclaims against Speth. (ECF No. 28 at 10-16.) And while it is true that the parties 22 have started discovery, this case remains in its early stages. It was filed less than a year 23 ago (ECF No. 1), discovery does not close until the end of the year (ECF No. 59), and a 24 trial date has not even been set yet.2 “As a general matter, a court will decline 25 2The Court accordingly rejects CAI’s unpersuasive contention that the Court 26 should retain jurisdiction over its counterclaims because it will be expensive or otherwise burdensome to refile its counterclaims in state court (ECF No. 48 at 9) because the 27 pertinent inquiry considers how close this case is to trial and whether the Court has already resolved the merits of the state law issues. Cf. Arroyo v. Rosas, 19 F.4th 1202, 28 1214 (9th Cir. 2021) (“Given the very late stage at which the district court declined 2 Practice and Procedure (Wright & Miller), § 3567.3 Supplemental Jurisdiction— 3 Discretionary Exercise of Supplemental Jurisdiction Under 28 U.S.C. § 1367(c), 13D Fed. 4 Prac. & Proc. Juris. § 3567.3 (3d ed.) (Jun. 2024 Update). This general presumption 5 applies. The Court accordingly declines to exercise supplemental jurisdiction over CAI’s 6 counterclaims under 28 U.S.C. § 1367(c)(3). See Parra v. PacifiCare of Arizona, Inc., 715 7 F.3d 1146, 1156 (9th Cir. 2013) (“once the district court, at an early stage of the litigation, 8 dismissed the only claim over which it had original jurisdiction, it did not abuse its 9 discretion in also dismissing the remaining state claims.”). 10 Speth also persuasively points out in reply that CAI does not even address their 11 argument that the Court should decline to exercise supplemental jurisdiction over CAI’s 12 counterclaims under 28 U.S.C. § 1367(c)(1) because the counterclaims raise a novel 13 issue of state law. (ECF No. 52 at 6.) The fact that CAI does not respond to this argument 14 suggests that CAI does not have a very good response to it. And Speth’s unrebutted 15 argument based on § 1367(c)(1) thus “bolster[s] the case for denying supplemental 16 jurisdiction” because “if [as here] the underlying claims are dismissed and the 17 supplemental claims raise difficult or important issues of state law, the interest of comity 18 may counsel the federal court to decline supplemental jurisdiction.” 13D Fed. Prac. & 19 Proc. Juris. § 3567.3. 20 The Court further agrees with Speth that the primary case CAI relies upon to 21 support its argument that the Court should retain jurisdiction over CAI’s counterclaims 22 does not really support it. (ECF No. 52 at 4-5.) In Acri v. Varian Assocs., Inc., 114 F.3d 23 999, 1000 (9th Cir.), supplemented, 121 F.3d 714 (9th Cir. 1997), as amended (Oct. 1, 24 1997), the United States Court of Appeals for the Ninth Circuit held that “[t]he district court 25 may exercise supplemental jurisdiction over state law claims without sua sponte 26 27 supplemental jurisdiction in this case, these values overwhelmingly favored retaining jurisdiction over” the plaintiff’s state law claim that the district court had effectively already 28 decided). And here, the Court has made no rulings on the merits of CAI’s counterclaims. 2 uncontroversial proposition does not apply because Speth asked the Court to conduct a 3 § 1367(c) analysis. (ECF No. 45 at 7-9.) And the Acri court also mentioned in passing 4 that the Court must conduct a § 1367(c) analysis when a party asks it to—as the Court is 5 doing here. See 114 F.3d at 1000. Moreover, the Acri court repeatedly mentioned the 6 general presumption (while clarifying it is not mandatory) that federal district courts should 7 decline to exercise supplemental jurisdiction over state law claims where, as here, the 8 federal claims have been dismissed before trial. See id. at 1000-01. As noted, the Court 9 sees no valid reason to depart from that presumption here. 10 In addition, and while Speth did not raise it, § 1367(c)(2) appears to apply here as 11 well. State law claims necessarily predominate over the claim over which the Court had 12 original jurisdiction because the Court already dismissed that claim. See id. To reiterate 13 a now-obvious point, there are no federal claims left in this case. The Court would only 14 be adjudicating state-law claims if it chose to retain jurisdiction over CAI’s counterclaims. 15 And the Court never even really adjudicated a federal claim here, as it denied Speth’s 16 motion for a preliminary injunction primarily because she could not show irreparable injury 17 and could be made whole by damages (ECF No. 35 at 37-42 (giving ruling denying motion 18 for preliminary injunction)) and later granted the parties’ stipulation to dismiss all Speth’s 19 claims, which included the only federal claim (ECF No. 44). 20 In sum, the Court declines to exercise jurisdiction over CAI’s counterclaims under 21 28 U.S.C. § 1367(c)(1)-(3), but primarily (3). See Sanford v. MemberWorks, Inc., 625 F.3d 22 550, 561 (9th Cir. 2010) (‘“[I]n the usual case in which all federal-law claims are eliminated 23 before trial, the balance of factors to be considered under the pendent jurisdiction 24 doctrine—judicial economy, convenience, fairness, and comity—will point toward 25 declining to exercise jurisdiction over the remaining state-law claims.”’) (quoting 26 Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7 (1988), superseded on other 27 grounds by statute as recognized in Fent v. Okla. Water Res. Bd., 235 F.3d 553, 557 28 1 || (10th Cir. 2000)); see also id. (affirming the district court’s decision to dismiss the state- 2 || law claims without prejudice). 3 ]} Ill. CONCLUSION 4 The Court notes that the parties made several arguments and cited several cases 5 || not discussed above. The Court has reviewed these arguments and cases and 6 || determines that they do not warrant discussion as they do not affect the outcome of the 7 || Motion before the Court. 8 It is therefore ordered that Speth’s motion to dismiss (ECF No. 45) is granted. 9 It is further ordered that the Court declines to exercise supplemental jurisdiction 10 || over CAI’s counterclaims (ECF No. 28 at 10-16) and accordingly dismisses them without 11 || prejudice to refiling in state court. 12 It is further ordered that, as this order resolves the outstanding issues in this case, 13 || the Clerk of Court is directed to close it. 14 DATED THIS 28" Day of June 2024. 16 we MIRANDA M. DU 17 CHIEF UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28