2.11Federal Court Subject-Matter Jurisdiction

A.Removal

The most common grounds for federal court jurisdiction are federal question (28 USC 1331) and diversity of citizenship (28 USC 1332). An action originally filed in a state court may be removed to federal court if: (1) the case could have originally been filed in a federal court; and (2) for cases removed on the basis of diversity, no defendant is a citizen of the state where the action is filed. 28 USC 1441. Removal of a state case to federal court is governed by 28 USC 1441–28 USC 1455. Federal law controls the criteria for removal. Grubbs v Gen Elec Credit Corp, 405 US 699, 705 (1972). If the federal court concludes that it does not have jurisdiction, it must remand the case. 28 USC 1447(c); 28 USC 1455(b)(4).

Only a defendant may exercise the right of removal; the trial court does not have authority to remove a case to federal court. See 28 USC 1441(a); 28 USC 1455(a).

“Promptly after the filing of [a] notice of removal of a civil action the defendant or defendants shall give written notice thereof to all adverse parties and shall file a copy of the notice with the clerk of such State court, which shall effect the removal and the State court shall proceed no further unless and until the case is remanded.” 28 USC 1446(d).

The federal court in which the notice of removal is filed must examine it promptly, and “[i]f it clearly appears on the face of the notice and any exhibits annexed thereto that removal should not be permitted, the court shall make an order for summary remand.” 28 USC 1455(b)(4).

If the federal court does not summarily remand the prosecution, an evidentiary hearing must be held promptly, and the federal court, after the hearing, “shall make such disposition of the prosecution as justice shall require. If the [federal court] determines that removal shall be permitted, it shall so notify the State court in which prosecution is pending, which shall proceed no further.” 28 USC 1455(b)(5).

Where there are multiple claims or multiple parties, a defendant may remove a whole case if it contains a separate and independent claim or cause of action within federal question jurisdiction. 28 USC 1441.

B.Bankruptcy

“[F]or those matters that merely arise under, arise in, or are otherwise related to a bankruptcy case, the [federal] district court has original jurisdiction, but such jurisdiction is not exclusive”; “[r]ather, the federal and state courts have concurrent jurisdiction, and the matters can be heard by either one.” Southfield v Shefa, LLC, 340 Mich App 391, 410 (2022). “[I]n a dispute involving a hotel whose owner entered and exited federal bankruptcy proceedings, and now the city where the hotel is located seeks [declaratory relief, appointment of receiver, and judicial foreclosure] from that owner for alleged violations of state law,” “the circuit court erred in concluding that . . . [it] did not have subject-matter jurisdiction over any of the city’s claims.” Id. at 394, 416.¹