Baldain et al v. American Home Mortgage Servicing, Inc. et al

Filing 65

ORDER signed by Senior Judge Lawrence K. Karlton on 3/25/2010 ORDERING that Pltfs' claims are DISMISSED with prejudice solely insofar as those claims turn exclusively on duties imposed by federal law. Pltfs' remaining claims are DISMISSED for lack of subject matter jurisdiction. CASE CLOSED. (Engbretson, K.)

1 2 3 4 5 6 7 8 9 10 11 Plaintiffs, 12 v. 13 14 15 16 17 18 Defendants. 19 20 21 22 23 24 25 26 / Plaintiffs in this suit bring various claims arising out of foreclosure on a mortgage. Plaintiffs' second amended complaint ("SAC") names six defendants. Pending before the court are two The AMERICAN HOME MORTGAGE SERVICING, INC., OPTION ONE MORTGAGE CORPORATION, QUALITY LOAN SERVICE CORP., OLYMPIC MORTGAGE & INVESTMENT COMPANY, INC., PHILLIP RUBLE and TIMOTHY ALAN SMITH and DOES 1-20, inclusive, ORDER WALTER BALDAIN, JR., MICHAEL BALDAIN, NO. CIV. S-09-0931 LKK/GGH UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

motions to dismiss, filed by separate groups of defendants.

first motion is filed by the American Home Mortgage Servicing, Inc. ("AHMSI") and Sandy Canyon Corporation F/K/A Option One Mortgage Corporation ("Option"). The second group of defendants are Olympic 1

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Mortgage & Investment Company, Inc. ("Olympic"), Philip Lynn Ruble ("Ruble"), and Timothy Allan Smith ("Smith"). This suit was initially filed in federal court on the basis of federal question jurisdiction. Prior complaints alleged claims under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., ("TILA") and the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 26012617, ("RESPA"), as well as various state law. Plaintiffs' SAC

omits these federal causes of action, notwithstanding the fact that the court previously denied the motion to dismiss plaintiffs' TILA claim for rescission as alleged in the prior complaint. January 5, 2010. In light of these omissions, the SAC alleges only state law causes of action, to wit, negligence, violation of the California Rosenthal Act, breach of fiduciary duty, fraud, violation of California Business and Professions Code §§ 17200 et seq., breach of contract, breach of the implied covenant of good faith and fair dealing, and wrongful foreclosure. In the usual case where all Order of

federal claims are dismissed at the pleading stage, the proper course is to decline to continue to exercise supplemental

jurisdiction over remaining state law claims. 28 U.S.C. § 1367(c); see Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988); Gini v. Las Vegas Metropolitan Police Dept., 40 F.3d 1041, 1046 (9th Cir. 1994) ("[I]n the usual case in which federal-law claims are eliminated before trial, the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state law claims.")(quoting Schneider v. TRW Inc., 938 F.2d 986, 993 (9th 2

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Cir. 1991)). If the complaint continues to present an independent basis for subject matter jurisdiction, then this rule does not apply. Here,

the SAC asserts that federal question jurisdiction remains proper. A state law claim presents a federal question, for purposes of "arising under" jurisdiction, where it "necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Grable & Sons Metal Prods. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005). In the SAC, at least one theory of liability seems to turn exclusively on federal law. See SAC ¶ 122 (defendants were

negligent in failing to "respond to Plaintiffs' Qualified Written Request pursuant to 12 U.S.C. § 2605(e), and to give Plaintiffs notice of the transfer of the servicing rights to their loan pursuant to 12 U.S.C. § 2605(c).") (emphasis added). Various other claims implicitly invoke obligations imposed by TILA. At oral argument in this matter, plaintiffs' counsel indicated his preference to proceed in state court, and his willingness to dismiss his allegations and theories of liability that implicated federal law. voluntary Counsel for defendants agreed that in light of such the court should decline to exercise

dismissal,

supplemental jurisdiction over the remaining claims. Accordingly, the court ORDERS as follows: 1. Plaintiffs' claims are DISMISSED WITH PREJUDICE solely insofar as those claims turn exclusively on duties 3

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imposed by federal law.

Rains v. Criterion Sys., Inc.,

80 F.3d 339, 346 (9th Cir. 1996) (no federal question where federal law provides merely an alternative theory as an element of a state law claim). 41(a)(2). Plaintiffs' remaining claims are DISMISSED FOR LACK OF SUBJECT MATTER JURISDICTION. IT IS SO ORDERED. DATED: March 25, 2010. Fed. R. Civ. P.

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