Zapata et al v. Wells Fargo Bank, N.A. et al

Filing 49

ORDER TO SHOW CAUSE RE JURISDICTIONAL DEFECT. Show Cause Response due by 1/28/2014. Signed by Judge Alsup on 1/24/2014. (whalc3, COURT STAFF) (Filed on 1/24/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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CHRISTOPHER ZAPATA and ELAINE
A. ZAPATA,
No. C 13-04288 WHA
Plaintiffs,

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v.

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ORDER TO SHOW CAUSE RE
FEDERAL SUBJECT-MATTER
JURISDICTION

WELLS FARGO BANK, N.A.;
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; U.S.
BANK, N.A., as trustee for the CSMC
Armt 2006-3 Trust,
Defendants.

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/

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On August 16, 2013, this foreclosure action was removed on the basis of federal-question

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jurisdiction because the complaint asserted a RICO claim, among other claims (Dkt. No. 1).

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Afterwards, an order granted defendants’ motion to dismiss on December 10, 2013 (Dkt. No.

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42). In that order, plaintiffs were allowed to seek leave to amend their state-law claims arising

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out of California Civil Code Sections 2923.5 and 2923.55 that did not rely on a challenge to the

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securitization process (id. at 9). All other claims, including the RICO claim, were dismissed

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with prejudice. On December 20, 2013, plaintiffs moved for leave to file an amended complaint

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that asserts claims under Sections 2923.5 and 2923.55. The proposed amended complaint does

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not assert any federal claims.

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When the RICO claim was dismissed, federal-question jurisdiction was stripped from this

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action. Moreover, it is unlikely that diversity jurisdiction exists because the papers suggest a

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lack of complete diversity and it is unclear whether the amount in controversy exceeds $75,000.

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“[D]ismissal of federal claims does not automatically deprive district courts of subject

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matter jurisdiction over any supplemental claims . . . . Rather, the district court retains discretion

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over whether to exercise supplemental jurisdiction over state law claims even after all federal

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claims are dismissed.” Lacey v. Maricopa Cnty., 693 F.3d 896, 940 (9th Cir. 2012).

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Supplemental jurisdiction, however, is “subject to the factors set forth in [the supplemental-

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jurisdiction statute].” Herman Family Revocable Trust v. Teddy Bear, 254 F.3d 802, 806 (9th
Cir. 2001). The undersigned judge is unlikely to exercise supplemental jurisdiction over the

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For the Northern District of California

United States District Court

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proposed amended complaint’s state-law claims because the federal RICO claim was dismissed,

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the state-law claims predominate over any lingering federal issues, and the state-law claims are

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novel. 28 U.S.C. 1367(c). Therefore, it seems appropriate to deny plaintiffs’ motion to file an

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amended complaint without prejudice so that they can file their state-law claims in state court.

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Lande v. Lockheed Martin Corp., 2009 U.S. Dist. LEXIS 36880, at *13 (N.D. Cal. 2009) (Judge

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Ronald Whyte).

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All parties are ORDERED TO SHOW CAUSE BY NOON ON JANUARY 28, 2014, as to why

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plaintiffs’ motion for leave to file an amended complaint should not be denied without prejudice

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for lack of federal subject-matter jurisdiction with the expectation that the state-law claims will

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be pursued in state court.

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IT IS SO ORDERED.

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Dated: January 24, 2014.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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