Appleby v. Mohela et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Carrie Lynn Appleby,
Plaintiff,
v.
Mohela, et al.,
Defendants.
No. CV-26-08203-PCT-KML
ORDER
Plaintiff Carrie Lynn Appleby filed this suit against defendants MOHELA, the U.S.
Department of Education, and U.S. Federal Student Aid in Coconino County Superior
Court on June 5, 2026, alleging they mishandled her student loans. (Doc. 1-3.) MOHELA
filed a notice of removal (Doc. 1) and Appleby moved to have the case remanded to state
court (Doc. 15). Although Appleby filed suit in state court and asserts state-law claims, she
also asserts a related federal claim which permits removal to this court. (Doc. 1-4.)
Appleby’s request to remand this case to state court is denied.
On June 17, 2026, MOHELA received a summons and incomplete copy of
Appleby’s complaint (the “June 17th copy”) by certified mail. (Docs. 1-3; 16-1 at 3.) This
copy contained only one sentence alleging deceptive practices, negligent
misrepresentation, and unlawful withholding of funds “related to the administration of
[Appleby’s] Public Service Loan Forgiveness (‘PSLF’) application” and requested
monetary relief in the amount of $48,407.34, plus interest. (Doc. 1-3 at 4, 5.) MOHELA’s
local counsel obtained a complete copy of the complaint from the Coconino County
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Superior Court on July 24th, 2026 and provided it to MOHELA’s national counsel on July
27th, who then provided it to MOHELA on July 28th (the “July 28th copy”). (Docs. 1-4;
16 at 8 n.4; 16-2 at 3.) This copy included five new pages of information not contained in
the June 17th copy, including a claim that MOHELA violated the federal Expedited Funds
Availability Act (“EFAA”), 12 U.S.C. § 4001, et seq. (Doc. 1-4 at 5.) On August 24, 2026,
MOHELA removed the case from state court pursuant to 28 U.S.C. §§ 1331, 1367(a),
1441, and 1446, asserting federal-question jurisdiction over the EFAA claim and
supplemental jurisdiction over the state-law claims. (Doc. 1 at 3–4.)
On September 18, 2026, Appleby filed a motion to remand. (Doc. 15.) That motion
argues the court lacks diversity jurisdiction because less than $75,000 is in controversy.
(Doc. 15 at 2–3.) The motion also argues the removal was untimely because MOHELA
was served with the summons and complaint on June 10, 2026, but did not remove the case
until August 24. (Doc. 15 at 3.) Neither argument is correct.
A federal court has jurisdiction over a civil case initiated in state court and removed
by a defendant only if the case could have been brought in federal court in the first instance.
28 U.S.C. § 1441(a). “A federal court can decide cases only when it has subject matter
jurisdiction.” Shamrock Development Co. v. City of Concord, 656 F.2d 1380, 1384 (9th
Cir. 1981). Federal-question jurisdiction generally exists if a federal question appears on
the face of a plaintiff’s well-pleaded complaint, Caterpillar Inc. v. Williams, 482 U.S. 386,
392 (1987), or where a federal issue is “a necessary element” of a state-law claim. Empire
Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006); accord Gunn v.
Minton, 568 U.S. 251, 258 (2013). In rare circumstances, removal is also proper where
federal law completely preempts a plaintiff’s state-law claim. Saldana v. Glenhaven
Healthcare LLC, 27 F.4th 679, 686 (9th Cir. 2022). Appleby’s complaint raises a federal
question because it pleads a claim under the EFAA, a federal statute. See Virgin v. Cnty.
of San Luis Obispo, 201 F.3d 1141, 1142–43 (9th Cir. 2000) (“A claim arises under federal
law within § 1331 if . . . a federal law creates the plaintiff’s cause of action . . . .”).
Turning to the timeliness of removal: Under § 1446(b)(1), if a “defendant is served
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with the summons but the complaint is furnished to the defendant sometime after, the
period for removal runs from the defendant’s receipt of the complaint.” Murphy Bros. v.
Michetti Pipe Stringing, Inc., 526 U.S. 344, 354 (1999). “[I]f a case stated by the initial
pleading” is not initially removable due to apparent lack of subject matter jurisdiction, a
defendant has 30 days to file a notice of removal after receiving an amended pleading,
motion, order, or other paper “from which it may first be ascertained that the case is one
which is or has become removable.” § 1446(b)(3); see Blumberger v. Tilley, 115 F.4th
1113, 1122 (9th Cir. 2024), cert. denied, 145 S. Ct. 2818 (2025).
Here, though MOHELA received a summons and copy of Appleby’s complaint on
June 17th, that copy was missing the five pages detailing all of Appleby’s allegations and
claims. The June 17th copy contained vague assertions of fraud and misrepresentation, but
such claims do not establish federal-question jurisdiction merely because they concern a
federal loan-forgiveness program such as PSLF. Fraud and misrepresentation are
traditionally state-law claims, and the Higher Education Act (“HEA”)—which governs
PSLF—has not been found to completely preempt all state-law claims and confer exclusive
federal question jurisdiction. See Saldana, 27 F.4th at 686 (explaining only three federal
statutes have been found to establish complete preemption); cf. Ammedie v. Sallie Mae,
Inc., 485 F. App’x 399, 400 (11th Cir. 2012) (remanding to state court after rejecting loan
servicer’s argument that HEA preempted all state-law claims in the area of student-loan-
debt collection).
With nothing more than these vague claims and a brief reference to PSLF in the
June 17th copy of the complaint, it was impossible for MOHELA to know the precise
grounds for Appleby’s claims and whether they necessarily raised a substantial federal
question. MOHELA therefore could not have reasonably ascertained a basis for removal
until July 28th, 2026, when it received the complete copy of the complaint containing
Appleby’s federal EFAA claim and other allegations.
/
/
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Accordingly, the 30-day notice-of-removal period began no earlier than July 28th,
2026. Because MOHELA filed its notice within that 30-day period, its notice was timely
and Appleby’s motion to remand is denied.
IT IS ORDERED the Motion to Remand (Doc. 15) is DENIED.
Dated this 7th day of October, 2026.
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