Kvam v. Chase Home Finance, LLC et al

Filing 31

ORDER REMANDING CASE.. Signed by Judge Maria-Elena James on 6/4/2012. (cdnS, COURT STAFF) (Filed on 6/4/2012)

Download PDF
1 2 3 4 UNITED STATES DISTRICT COURT 5 Northern District of California 6 7 PATRICIA C. KVAM, No. C 11-4004 MEJ Plaintiff, 8 v. 9 ORDER REMANDING CASE TO MARIN COUNTY SUPERIOR COURT CHASE HOME FINANCE LLC, et al., 10 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 Defendants. _____________________________________/ This is a mortgage foreclosure action. It arises from a home loan obtained in March 2007 by 13 Plaintiff Patricia Kvam for her residence in Novato, California. Plaintiff defaulted on her 14 $525,000.00 loan in April 2009. More than two years later, in July 2011, Plaintiff filed a complaint 15 in Marin County Superior Court against Defendants Chase Home Finance, LLC and California 16 Reconveyance Company. The crux of Plaintiff’s complaint is that Defendants violated the law in the 17 course of lending her the money to purchase her residence. Her complaint alleges the following state 18 law causes of action: (1) temporary restraining order, preliminary injunction, and permanent 19 injunction; (2) declaratory relief; (3) promissory estoppel; (4) breach of the implied covenant of good 20 faith and fair dealing; (5) negligence; (6) deceit: intentional misrepresentation; (7) deceit: negligent 21 misrepresentation; (8) fraud and deceit: suppression of material facts; (9) deceit: promise made 22 without intent to perform; (10) quiet title to real property; and (11) violation of the California 23 Business and Professions Code § 17200.1 24 In August 2011, Defendants removed Plaintiff’s complaint to this Court. Dkt. No. 1. They 25 based their removal primarily on Plaintiff’s Section 17200 cause of action, arguing that the claim was 26 27 28 1 The Court provides these facts for background purposes only and does not discuss the entirety of Plaintiff’s factual allegations because they are not material to the disposition of this matter. For the same reason, the Court does not consider Defendants’ request for judicial notice. 1 predicated on the violation of multiple federal statutes, rules, and regulations. Id. at 4. Defendants 2 then filed a motion to dismiss Plaintiff’s entire complaint, which is currently pending before the 3 Court. Dkt. No. 5. In considering this motion, the Court has reviewed the papers submitted by both 4 parties and analyzed Plaintiff’s claims. This review and analysis has revealed jurisdictional issues 5 with Plaintiff’s action being removed to this Court, which, as discussed below, leads the Court to 6 remand her lawsuit to Marin County Superior Court. 7 A district court’s first task is to determine whether it has subject matter jurisdiction (i.e., the 8 power to adjudicate the case). Pursuant to 28 U.S.C. § 1441(a), “any civil action brought in a State 9 court of which the district courts of the United States have original jurisdiction, may be removed by 10 the defendant or the defendants, to the district court of the United States for the district and division 12 court has original jurisdiction over civil actions that arise under federal law or are between citizens of For the Northern District of California UNITED STATES DISTRICT COURT 11 embracing the place where such action is pending.” Under 28 U.S.C. §§ 1331 and 1332, a district 13 different states where the amount in controversy, exclusive of interest and costs, exceeds $75,000.00. 14 See Schwarzer, Tashima & Wagstaffe, Cal. Prac. Guide: Fed. Civ. Pro. Before Trial, ¶ 2.2 (The 15 Rutter Group 2011) (federal courts are courts of limited jurisdiction that can only adjudicate certain 16 matters: mainly those based on diversity of citizenship or a federal question) (citing Kokkonen v. 17 Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994)). The burden of establishing that 18 federal jurisdiction exists is on the party seeking removal, and courts strictly construe the removal 19 statute against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566-67 (9th Cir. 1992) 20 (internal citations omitted). Accordingly, “federal jurisdiction must be rejected if there is any doubt 21 as to the right of removal in the first instance.” Id. at 566. Further, a district court must remand the 22 case to state court if it appears at any time before final judgment that it lacks subject matter 23 jurisdiction. 28 U.S.C. § 1447(c). See also Gilder v. PGA Tour, Inc., 936 F.2d 417, 421 (9th Cir. 24 1991) (“Although neither party contests subject matter jurisdiction, we are bound to address it sua 25 sponte if it is questionable”); In re Disciplinary Action Against Mooney, 841 F.2d 1003, 1006 (9th 26 Cir. 1988) (overruled on other grounds in Partington v. Gedan, 923 F.2d 686 (9th Cir. 1991)) 27 (“Nothing is to be more jealously guarded by a court than its jurisdiction. Jurisdiction is what its 28 2 1 power rests upon. Without jurisdiction it is nothing.”). 2 Here, Defendants removed Plaintiff’s state law complaint on the grounds that the allegations, 3 particularly the Section 17200 cause of action, contain some references to violations of federal law. 4 “In determining whether federal jurisdiction attaches to a state law claim that is predicated on 5 violations of federal law, a court must examine whether the ‘state-law claim necessarily raise[s] a 6 stated federal issue, actually disputed and substantial, which a federal forum may entertain without 7 disturbing any congressionally approved balance of federal and state judicial responsibilities.’” 8 Cortes v. Bank of America, 2009 WL 4048861, at *2 (C.D. Cal. Nov. 20, 2009) (quoting Grable & 9 Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005)). “When a claim can be 10 supported by alternative and independent theories — one of which is a state law theory and one of 12 not a necessary element of the claim.” Id. (quoting Rains v. Criterion Sys. Inc., 80 F.3d 339, 346 (9th For the Northern District of California UNITED STATES DISTRICT COURT 11 which is a federal law theory — federal question jurisdiction does not attach because federal law is 13 Cir. 1996)); see also Pope v. Wells Fargo Bank, 2010 WL 8388301, at *3 (E.D. Cal. Nov. 29, 2010) 14 (“Courts have consistently found that federal question jurisdiction does not exist where a plaintiff has 15 alleged a UCL claim based on violations of both state and federal law.”); Carbonel v. ARA Loans and 16 Realty, Inc., 2010 WL 3219296, at *2 (N.D. Cal. Aug. 12, 2010) (granting motion to remand because 17 the plaintiff’s Section 17200 claim was predicated on violations of state law and three federal 18 statutes, which were consequently not a “necessary part of the claim” and would just “shape the 19 court’s interpretation” of the claim) (citations and quotations omitted)). 20 The Court finds the above cases instructive with respect to Plaintiff’s Section 17200 cause of 21 action. While her claim is predicated on the violation of some federal laws, it is also based on her 22 allegations that Defendants are liable under state law for defrauding her. See, e.g., Compl. ¶ 69 23 (“Defendants’ actions in implementing and perpetrating their fraudulent scheme of inducing Plaintiff 24 to accept mortgages based on inflated property valuations and undisclosed disregard of their own 25 underwriting standards and the sale of overpriced collateralized mortgage pools, all the while 26 knowing that the plan would fail, taking the Plaintiff down and costing her the equity in her home and 27 other damages, violates numerous federal and state statutes and common law protections enacted for 28 3 1 consumer protection, privacy, trade disclosure, fair trade and commerce, violation of the foreclosures 2 statutes, and securitization regulations and laws.”) (emphasis added). As explained earlier, because 3 Plaintiff’s Section 17200 state law claim can be supported by alternate and independent state law 4 theories, it does not necessarily depend on the resolution of an actual and disputed federal issue.2 5 Based on this analysis, the Court finds that federal jurisdiction is improper and the matter is 6 consequently REMANDED to Marin County Superior Court. Defendants’ motion to dismiss is 7 DENIED as moot. 8 9 Dated: June 4, 2012 _______________________________ Maria-Elena James Chief United States Magistrate Judge 10 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 The same is true for Plaintiff’s other state law causes of action which Defendants claim provide justification for removal since they include some references to federal laws and regulations. But these references to federal laws and regulations are even more attenuated than in Plaintiff’s Section 17200 cause of action. For instance, Plaintiff alleges in her fifth cause of action for negligence that Defendants owed her a duty to adequately disclose information regarding the loan and failed to “act in accordance with banking industry practice, statute, and regulations.” Compl. ¶ 37. This does not automatically confer federal jurisdiction since federal law is not a necessary element of her negligence cause of action and the claim can be resolved on alternative and independent state law theories. Moreover, even if this claim did raise a federal issue, and then the Court determined that this issue was substantial and disputed — which it is not — the Court would still decline to take this action away from state court. See State of Cal. v. H & R Block, Inc., 2006 WL 2669045, at *3 (N.D. Cal. Sept. 18, 2006) (explaining that Grable requires three elements to justify removal: (1) state law claim raises federal issues; (2) these issues are acutally disputed and substantial; and (3) assuming these two conditions are met, it must still be appropriate “from a state-federal balance of responsibility perspective, for this Court to take this case from a state court and hear it.”) (emphasis added). 4

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?