Neal et al v. E-Trade Bank et al
Filing
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MEMORANDUM and ORDER signed by Judge Frank C. Damrell, Jr. on 8/25/2011. Plaintiffs' state law claims are REMANDED to Superior Court of the State of California for County of Yuba. This action is TERMINATED. (cc: Yuba County Superior Court) (Marciel, M)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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----oo0oo----
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DENNIS ALAN NEAL AND
JACQUELINE DIANNE NEAL
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Civ. No. S-11-0954 FCD/GGH
Plaintiffs,
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v.
MEMORANDUM AND ORDER
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E-TRADE BANK, E-TRADE
FINANCIAL CORPORATION,GMAC
MORTGAGE, LLC, MORTGAGE
ELECTRONIC REGISTRATION
SYSTEM., INC. ETS SERVICES,
LLC and DOES 1 through 100,
inclusive
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Defendants.
____________________________
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----oo0oo---This matter is before the court on the motions of defendants
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E-Trade Bank, E-Trade Financial Services, GMAC Mortgage, LLC
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(“GMAC”), Mortgage Electronic Registration System, Inc.,
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(“MERS”), and ETS Services, LLC (“ETS”) (collectively,
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“defendants”), to dismiss plaintiffs Dennis Alan Neal and
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Jacqueline Dianne Neal’s (“plaintiffs”) complaint pursuant to
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Federal Rule of Civil Procedure (“FRCP”) 12(b)(6).1
BACKGROUND
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Plaintiff originally brought this action against defendants
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in California State Superior Court for the County of Yuba,
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alleging violations of procedural due process under the Fifth
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Amendment of the United States Constitution, the Federal Fair
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Debt Collection Practices Act (“FDCPA”), and a number of
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corollary state law claims.
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Feb. 24, 2011, [Docket #11, Ex. A].)
(See Pls.’ Compl. [“Compl.”], filed
Defendants timely removed
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the case to this court pursuant to 28 U.S.C. § 1441(c) based on
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plaintiffs’ federal claims under the FDCPA and the Fifth
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Amendment of the United States Constitution.
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Removal, filed Apr. 11, 2011, [Docket #1].)
(Defs.’ Not. of
Plaintiffs’ claims are based upon a residential home loan
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transaction and the subsequent foreclosure of plaintiffs’ home.
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(Compl. ¶¶ 11, 28-30.)
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claims on the federal Home Affordable Modification Program
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(“HAMP”).
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misrepresentations regarding a potential remodification of their
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home loan.
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defendants improperly went forward with foreclosure without any
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good faith attempt to negotiate with plaintiffs.
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All defendants have moved to dismiss the action for failing to
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state any claims upon which relief can be granted.
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///
Plaintiffs base the majority of their
Plaintiffs allege that defendants made material
(Id. ¶¶ 11-32.)
Additionally, plaintiffs claim that
(Id. ¶ 29.)
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Because oral argument will not be of material
assistance, the court orders these matters submitted on the
briefs. E.D. Cal. L.R. 230(g).
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STANDARD
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Under Federal Rule of Civil Procedure 8(a), a pleading must
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contain “a short and plain statement of the claim showing that
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the pleader is entitled to relief.”
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S. Ct. 1937, 1949 (2009).
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court, the complaint must “give the defendant fair notice of what
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the claim is and the grounds upon which it rests.”
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v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations
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omitted).
See Ashcroft v. Iqbal, 129
Under notice pleading in federal
Bell Atlantic
“This simplified notice pleading standard relies on
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liberal discovery rules and summary judgment motions to define
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disputed facts and issues and to dispose of unmeritorious
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claims.”
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Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).
On a motion to dismiss, the factual allegations of the
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complaint must be accepted as true.
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322 (1972).
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every reasonable inference to be drawn from the “well-pleaded”
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allegations of the complaint.
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Schermerhorn, 373 U.S. 746, 753 n.6 (1963).
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allege “‘specific facts’ beyond those necessary to state his
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claim and the grounds showing entitlement to relief.”
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550 U.S. at 570.
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plaintiff pleads factual content that allows the court to draw
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the reasonable inference that the defendant is liable for the
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misconduct alleged.”
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Cruz v. Beto, 405 U.S. 319,
The court is bound to give plaintiff the benefit of
Retail Clerks Int’l Ass’n v.
A plaintiff need not
Twombly,
“A claim has facial plausibility when the
Iqbal, 129 S. Ct. at 1949.
Nevertheless, the court “need not assume the truth of legal
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conclusions cast in the form of factual allegations.”
United
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States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th
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Cir. 1986).
While Rule 8(a) does not require detailed factual
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allegations, “it demands more than an unadorned, the defendant-
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unlawfully-harmed-me accusation.”
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pleading is insufficient if it offers mere “labels and
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conclusions” or “a formulaic recitation of the elements of a
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cause of action.”
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1950 (“Threadbare recitals of the elements of a cause of action,
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supported by mere conclusory statements, do not suffice.”).
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Moreover, it is inappropriate to assume that the plaintiff “can
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prove facts which it has not alleged or that the defendants have
Iqbal, 129 S. Ct. at 1949.
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Twombly, 550 U.S. at 555; Iqbal, 129 S. Ct. at
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violated the . . . laws in ways that have not been alleged.”
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Associated Gen. Contractors of Cal., Inc. v. Cal. State Council
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of Carpenters, 459 U.S. 519, 526 (1983).
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Ultimately, the court may not dismiss a complaint in which
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the plaintiff has alleged “enough facts to state a claim to
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relief that is plausible on its face.”
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(citing Twombly, 550 U.S. at 570).
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failed to “nudge [his or her] claims across the line from
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conceivable to plausible,” is the complaint properly dismissed.
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Id. at 1952.
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probability requirement, it demands more than “a sheer
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possibility that a defendant has acted unlawfully.”
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This plausibility inquiry is “a context-specific task that
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requires the reviewing court to draw on its judicial experience
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and common sense.”
Iqbal, 129 S. Ct. at 1949
Only where a plaintiff has
While the plausibility requirement is not akin to a
Id. at 1949.
Id. at 1950.
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In ruling upon a motion to dismiss, the court may consider
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only the complaint, any exhibits thereto, and matters which may
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be judicially noticed pursuant to Federal Rule of Evidence 201.
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See Mir v. Little Co. Of Mary Hospital, 844 F.2d 646, 649 (9th
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Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United
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States, Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal. 1998).
ANALYSIS
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A.
Federal Fair Debt Collection Practices Act
Plaintiffs’ fourth claim for relief alleges violation of the
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Federal Fair Debt Collection Practices Act (“FDCPA”).
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(Compl. ¶¶ 58-65.)
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under the FDCPA, asserting they have failed to allege any facts
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which could constitute a violation of the FDCPA.
Defendants move to dismiss plaintiffs’ claim
More
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specifically, defendants contend that plaintiff cannot state a
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claim because foreclosure does not constitute debt collection
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under the FDCPA.
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(MTD at 10:5-15.)
Plaintiffs have failed to allege any facts which could
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constitute unfair debt collection.
In plaintiffs’ opposition to
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the motion to dismiss, they contend that defendants violated
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California and federal debt collection laws by “using
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unconscionable means in an attempt to collect a debt.” (Pls.’
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Opp’n., at 6:17-18.)
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defendants violated the statute when they “proceeded to collect a
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debt from plaintiff by means of an ‘end-run’ or ‘sneak’
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foreclosure.”
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conclusions of law which need not be accepted as true by this
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court.
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638, 643 n.2 (9th Cir. 1986).
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plaintiffs make which could be construed as a debt collection
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practice is defendants’ threatened foreclosure of plaintiff’s
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home. (Compl. ¶ 62.)
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pursuant to a deed of trust is not the collection of a debt
More specifically, plaintiffs argue that
(Compl. ¶ 62.)
These allegations are simply
See United States ex. rel. Chunie v. Ringrose, 788 F.2d
The only allegation which
However, “foreclosing on [a] property
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within the meaning of the FDCPA.”
Izenberg v. ETS Services, LLC,
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589 F. Supp. 1193, 1199 (C.D. Cal. 2008) (quoting Ines v.
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Countrywide Home Loans, 2008 WL 4791863, at *2 (S.D. Cal. Nov. 3,
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2008)).
As such, defendants’ motion to dismiss plaintiffs’ claim for
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unfair debt collection under the FDCPA is GRANTED without leave
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to amend.
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B.
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Procedural Due Process
Plaintiffs contend that defendants violated their federal
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due process rights because “[t]hey engaged in a process for a
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HAMP loan modification with the expectation that defendants would
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follow and comply with the federal guidelines in place for HAMP.”
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(Compl. ¶ 49.)
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are liable as state actors because their particular actions are
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‘inextricably intertwined’ with those of the government in the
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administration of HAMP.”
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Moreover, Plaintiffs maintain that “[d]efendants
(Id. ¶ 48.)
Here, plaintiffs’ attempt to bootstrap HAMP to a procedural
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due process claim asserted against exclusively private entities
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is ineffectual. Indeed, plaintiffs, in their opposition, fail to
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address defendants’ contention that plaintiff cannot state a
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viable due process claim.
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grant the motion in defendants’ favor; the court nonetheless
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discusses its findings.
On that basis alone, the court could
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In order to state a claim under the Due Process Clause, a
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claimant must show that some government action deprived him or
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her of life, liberty or property.
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Co., Inc., 457 U.S. 922, 937 (requiring that the allegedly
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offending person is a state actor, either “because he is a state
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See Lugar v. Edmondson Oil
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official, because he has acted together with or has obtained
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significant aid from state officials, or because his conduct is
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otherwise chargeable to the state.”) “In order to apply the
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proscriptions of the Fifth Amendment to private actors there must
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exist a sufficiently close nexus between the government and the
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challenged action of the private entity so that the action of the
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latter may be fairly treated as that of the government itself.”
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Rank v. Nimmo, 677 F.2d 692, 701 (9th Cir. 1982) (internal
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quotations omitted).
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Plaintiffs’ procedural due process claim falls short of
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permitting the court to infer a plausible connection among the
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private defendants and a government agency or official such that
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the private actions would constitute state action.
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existence of a regulatory scheme which these private defendants
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must comply with cannot convert them into state actors.
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analysis is inimical to the Due Process Clause.
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U.S. at 936 (“As a matter of substantive constitutional law the
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state-action requirement reflects judicial recognition of the
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fact that most rights secured by the Constitution are protected
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only against infringement by governments.”)
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omitted)
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“[t]he mere fact that a business is subject to state regulation
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does not by itself convert its action into that of the State for
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purpose of the Fourteenth Amendment.”
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Co., 419 U.S. 345, 350 (1974); see also Rank, 677 F.2d at 702
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(“foreclosure by a private lender of a mortgage in a federal
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mortgage guaranty program does not involve federal action
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sufficient to invoke the due process clause of the Fifth
The mere
Such an
See Lugar, 457
(internal quotations
Indeed, the Supreme Court has explicitly held that
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Jackson v. Metro. Edison
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Amendment.”)
Since plaintiffs cannot establish the requisite state action
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element, their second claim for relief under the Due Process
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Clause of the Fifth Amendment is dismissed without leave to
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amend.
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C.
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Subject Matter Jurisdiction
Jurisdiction is a threshold inquiry before the adjudication
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of any case before the court.
See Morongo Band of Mission
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Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380
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(9th Cir. 1988).
Without jurisdiction, this court cannot
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adjudicate the merits of this case or order any relief.
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(“If the district court had no jurisdiction over the subject
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matter, the action should have been dismissed, regardless of the
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parties’ preference of an adjudication in federal court.”).
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On April 11, 2011, defendants removed this case to the
See id.
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United States District Court for the Eastern District of
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California under 28 U.S.C. §§ 1441(c) based on federal question
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jurisdiction.
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[Docket # 1].)
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(1) violation of the Due Process Clause of the Fifth Amendment
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and (2) violation of the FDCPA.
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However, as set forth above, these claims are properly dismissed
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without leave to amend.
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complaint devoid of any federal claims.
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state law claims for violation of California Business and
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Professions Code § 17200 et seq., the California Fair Debt
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Collection Practice Act, wrongful foreclosure, cancellation of
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deed, breach of contract, breach of the implied covenant of good
(Defs.’ Not. of Removal, filed Apr. 1, 2011,
Plaintiffs’ complaint alleges two federal claims:
(Compl. ¶¶ 47-52, 58-65.)
Dismissal of these claims leaves the
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The remaining claims are
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faith and fair dealing, negligence, fraud, and quiet title.
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(Compl. ¶¶ 35-46, 53-103.)
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Subject to the conditions set forth in 28 U.S.C. § 1367(c),
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district courts may decline to exercise supplemental jurisdiction
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over state law claims.
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F.3d 999, 1000 (9th Cir. 1997) (en banc).
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whether to exercise supplemental jurisdiction should be informed
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by values of “economy, convenience, fairness, and comity.”
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at 1001 (citations omitted).
See Acri v. Varian Assoc., Inc.,, 114
The court’s decision
Id.
Further, primary responsibility for
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developing and applying state law rests with the state courts.
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Therefore, when federal claims are eliminated before trial,
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district courts should usually decline to exercise supplemental
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jurisdiction.
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350 (1988); Gini v. Las Vegas Metro. Police Dept., 40 F.3d 1041,
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1046 (9th Cir. 1994) (“In the usual case in which federal-law
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claims are eliminated before trial, the balance of factors . . .
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will point toward declining to exercise jurisdiction over the
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remaining state law claims.”) (internal quotations and citations
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omitted).
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jurisdiction over plaintiffs’ remaining state law claims.
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See Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343,
As such, the court declines to exercise supplemental
Accordingly, plaintiffs’ complaint is REMANDED to the
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Superior Court of the State of California for the County of Yuba.
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CONCLUSION
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Plaintiffs’ second and fourth claims for violation the Due
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Process Clause of the Fifth Amendment and the FDCPA are DISMISSED
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without leave to amend.
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REMANDED to the Superior Court of the State of California for the
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County of Yuba.
Plaintiffs’ state law claims are
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IT IS SO ORDERED.
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DATED: August 25, 2011
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FRANK C. DAMRELL, JR.
UNITED STATES DISTRICT JUDGE
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