Yturralde v. Aztec Foreclosure Corporation et al

Filing 26

ORDER DISCHARGING ORDER TO SHOW CAUSE REGARDING SUBJECT MATTER JURISDICTION RE: Dkt. No. 14. Signed by Judge Nathanael M. Cousins on 3/12/2015. (nclc3S, COURT STAFF) (Filed on 3/12/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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9 JAMES YTURRALDE, an individual,
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Plaintiff,
v.

12 AZTEC FORECLOSURE
CORPORATION, a corporation;

13 SABADELL UNITED BANK, N.A., a

Case No. 15-cv-00210 NC
ORDER DISCHARGING ORDER
TO SHOW CAUSE REGARDING
SUBJECT MATTER
JURISDICTION
Re: Dkt. No. 14

national association; LYDIAN

14 MORTGAGE, a corporation; and DOES 1
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through 50, inclusive,
Defendants.

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This case was removed by Sabadell United Bank on the basis of federal question

19 jurisdiction. See Dkt. No. 1 at 3-6. Because the assertion regarding federal question
20 jurisdiction appeared to lack merit, the Court previously ordered Sabadell United Bank to
21 show cause why this case should not be remanded to state court for lack of subject matter
22 jurisdiction. Dkt. No. 14. The Court also ordered Sabadell United Bank to explain
23 whether defendant Lydian Mortgage consents to the removal or explain why such consent
24 is not necessary. Id. Sabadell United Bank filed a timely response to the order to show
25 cause. Dkt. No. 22.
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After the Court issued the order to show cause, the Federal Deposit Insurance

27 Corporation, as receiver for Lydian Private Bank, N.A. (“FDIC - Receiver”), erroneously
28 sued as Lydian Mortgage, filed a notice that FDIC - Receiver consents to the removal of
Case No. 15-cv-00210 NC
ORDER DISCHARGING
ORDER TO SHOW CAUSE

1 the action. Dkt. Nos. 11, 17. The notice also asserts that the Court has subject matter
2 jurisdiction over this action because when the FDIC is a party, the entire action is deemed
3 to arise under the laws of the United States. 12 U.S.C. § 1819(b)(2)(A) (providing that,
4 with one exception, “all suits of a civil nature at common law or in equity to which the
5 Corporation, in any capacity, is a party shall be deemed to arise under the laws of the
6 United States”); see also Bullion Servs., Inc. v. Valley State Bank, 50 F.3d 705, 707 (9th
7 Cir. 1995).
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Under an exception explicitly provided by the statute, this rule does not apply to any

9 action “(i) to which the Corporation, in the Corporation’s capacity as receiver of a State
10 insured depository institution by the exclusive appointment by State authorities, is a party
11 other than as a plaintiff; (ii) which involves only the preclosing rights against the State
12 insured depository institution, or obligations owing to, depositors, creditors, or
13 stockholders by the State insured depository institution; and (iii) in which only the
14 interpretation of the law of such State is necessary.” 12 U.S.C. § 1819(b)(2)(D). The
15 FDIC - Receiver has not addressed the applicability of this exception. However, it appears
16 that the exception does not apply here because, according to the FDIC - Receiver,
17 defendant Lydian Mortgage was a subsidiary of Lydian Private Bank, a financial institution
18 regulated by the Office of the Comptroller of the Currency. Thus, the FDIC - Receiver is
19 not a “receiver of a State insured depository institution by the exclusive appointment by
20 State authorities” as required by § 1819(b)(2)(D)(i). Given that this element of the
21 exception is not met, the Court does not need to address the remaining two elements.
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The Court finds that it has jurisdiction over this action under 12 U.S.C.

23 § 1819(b)(2)(A) if the FDIC - Receiver is a party to this action. However, the Court notes
24 that the FDIC - Receiver has not formally moved to be substituted as a party. If the FDIC 25 Receiver wishes to do so, it must file its motion by March 20, 2015.
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In light of the Court’s finding of an independent basis of subject matter jurisdiction,

27 the Court does not resolve now Sabadell United Bank’s assertion in its notice of removal
28 that plaintiff’s state law claims should be deemed to arise out of or be predicated on alleged
Case No. 15-cv-00210 NC
ORDER DISCHARGING
ORDER TO SHOW CAUSE

2

ns
al
1 violation of federa law.

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Th order to show cause to Sabadel United Bank regardi subject matter
he
e
ll
ing

tion, Dkt. No. 14, is DI
N
ISCHARGE
ED.
3 jurisdict

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IT IS SO OR
T
RDERED.

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Date: March 12, 2015

__________
__________
____
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Nath
hanael M. C
Cousins
Unit States M
ted
Magistrate J
Judge

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Case No. 15-cv-00210 NC
ORDER DISCHARG
R
GING
ORDER TO SHOW CAUSE
R

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