Summary
The United States District Court for the Southern District of California granted PromiseOne Bank’s motion to remand a Texas forcible detainer action removed by Nehal, LLC. The court held that the state-law forcible detainer claim did not present a federal question and that removal to the Southern District of California was improper. The court awarded $4,049 in attorneys’ fees and costs jointly and severally against Nehal and its counsel, while denying without prejudice sanctions related to Nehal’s separate bankruptcy proceeding.
Topics
Practice areas
Questions Presented
- Whether the removed Texas forcible-detainer action arose under federal law or otherwise presented a substantial federal question sufficient to establish federal-question jurisdiction.
- Whether removal to the Southern District of California was proper when the underlying action was pending in Bexar County, Texas.
- Whether PromiseOne was entitled to attorney fees and costs under 28 U.S.C. § 1447(c), Federal Rule of Civil Procedure 11, and 28 U.S.C. § 1927 for the removal.
- Whether sanctions could be awarded in this action for fees and costs incurred in Nehal's separate bankruptcy proceeding.
- What amount of sanctions was properly attributable to the removal and filings in the federal action.
Holdings
- The action did not arise under federal law and did not present a substantial federal question. The state-law forcible-detainer claim could not be removed based on an anticipated defense or an asserted federal issue concerning the Small Business Administration loan.
- Removal to the Southern District of California was improper because Bexar County, Texas, is served by the Western District of Texas, not the Southern District of California.
- PromiseOne was entitled to attorney fees and just costs incurred as a result of Nehal's objectively unreasonable and frivolous removal under 28 U.S.C. § 1447(c), Rule 11, and § 1927.
- The court declined to award sanctions for fees and costs incurred in Nehal's separate bankruptcy proceeding and denied that portion of the request without prejudice.
- The proper sanction was $4,049 in attorney fees and costs, awarded jointly and severally against Nehal and Attorney Marc Steven Applbaum.
Key quotations
“federal question jurisdiction is not established by an anticipated defense which is invalidated by some federal law; a suit only arises under the laws of the United States when the plaintiff’s “well pleaded” statement of his own cause of action shows that it is based upon those laws.” (Discussion III.A)
“The only thing Nehal has effectively demonstrated is that its removal of this case is frivolous and objectively unreasonable.” (Discussion III.B.1)
“Sanctions are awarded to PromiseOne Bank in the amount of $4,049.00 against Attorney Mare Steven Applbaum and Defendant Nehal, LLC, jointly and severally.” (Conclusion)
Factual background
PromiseOne Bank loaned Nehal, LLC $2,079,000 to purchase San Antonio real property, secured by a deed of trust. After Nehal defaulted, PromiseOne foreclosed, acquired the property, and filed a Texas forcible-detainer action after Nehal failed to vacate following notice. Nehal filed for bankruptcy shortly before the first hearing, obtained relief from the automatic stay, and then removed the forcible-detainer action to the Southern District of California minutes before a scheduled state-court hearing, asserting federal-question jurisdiction based on the federal Small Business Administration loan.
Procedural history
PromiseOne Bank filed a forcible-detainer action in the Justice Court, Precinct 2, Place 1, Bexar County, Texas. After Nehal, LLC filed for bankruptcy and obtained dismissal of the bankruptcy case following relief from the automatic stay, Nehal removed the forcible-detainer action to the Southern District of California on October 31, 2025. PromiseOne moved to remand and requested sanctions. The court remanded the case, awarded $4,049 in sanctions jointly and severally against Nehal and its counsel, and denied without prejudice sanctions attributable to the bankruptcy proceeding.
Remand instructions
Remand the case to the Justice Court, Precinct 2, Place 1, Bexar County, Texas. Award $4,049.00 in sanctions jointly and severally against Attorney Marc Steven Applbaum and Nehal, LLC. Deny without prejudice sanctions for fees and costs related to the bankruptcy proceeding.