Porter v. PennyMac Loan Services, LLC

Filing 16

MEMORANDUM AND ORDER, The Court GRANTS Porters motion to remand (Doc. 12 ) and REMANDS this case to the Circuit Court for the First Judicial Circuit, Jackson County, Illinois,for lack of federal subject matter jurisdiction. The Court DENIES as moot all pending motions. Signed by Judge J. Phil Gilbert on 7/16/2014. (jdh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
TRAVIS PORTER,
Plaintiff,
vs.

Case No. 14-cv-379-JPG-DGW

PENNYMAC LOAN SERVICES, LLC,
Defendant.

MEMORANDUM AND ORDER
This matter comes before the Court on plaintiff Travis Porter’s motion to remand (Doc.
12) to which defendant PennyMac Loan Services, LLC (“PennyMac”) has responded. For the
following reasons, the Court grants the motion to remand.
Porter filed his complaint in the Circuit Court of the First Judicial Circuit, Jackson
County, Illinois, alleging a claim arising under Illinois’ Consumer Fraud and Deceptive Business
Practices Act. Specifically, Porter alleged PennyMac’s manner of demanding payment on his
mortgage loan and making negative reports to the credit bureaus constituted unfair acts and
practices. Porter did not plead a cause of action arising under a federal law.
PennyMac removed the action to this Court alleging this Court has federal-question
jurisdiction pursuant to 28 U.S.C. § 1331 because Porter’s state law claim implicates significant
federal issues. Specifically, PennyMac argues that PennyMac’s servicing of Porter’s monthly
escrow obligations are governed by the Real Estate Settlement Procedures Act (“RESPA”), 12
U.S.C. § 2601 et seq. and its implementing regulations, 24 C.F.R. Part 3500. PennyMac reasons
that its liability under Illinois’ Consumer Fraud and Deceptive Business Practices Act turns on
whether PennyMac complied with RESPA.

Porter filed a motion to remand arguing this Court lacks jurisdiction because Porter’s
complaint is premised solely on Illinois state law and not on RESPA. PennyMac responded
arguing “the complaint raises a substantial federal issue sufficient to establish federal
jurisdiction” because “[t]he management of mortgage escrow accounts is governed by RESPA,
and Porter’s mortgage specifically provides that his escrow account will be handled in
accordance with RESPA” (Doc. 15, p. 1). The Court will now consider whether it must remand
this case to state court for lack of subject matter jurisdiction.
Federal courts are courts of limited jurisdiction and may only hear cases authorized by
the Constitution or Congress. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994). The party invoking federal jurisdiction bears the burden of establishing the existence of
the district court’s original jurisdiction. Hart v. FedEx Ground Package Sys., Inc., 457 F.3d 675,
679 (7th Cir. 2006). Any uncertainty as to federal jurisdiction must be resolved in favor of
remand. Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993).
District courts have “original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. A federal question is
present only if (1) pursuant to the well-pleaded complaint rule, the plaintiff pleads a federal
cause of action on the face of the complaint, Phillips Petroleum Co. v. Texaco, Inc., 415 U.S.
125, 127-28 (1974); or (2) “some substantial, disputed question of federal law is a necessary
element of one of the well-pleaded state claims” Franchise Tax Bd. of State of Cal. v. Constr.
Laborers Vacation Trust for S. Cal., 463 U.S. 1, 13 (1983). “[T]he mere presence of a federal
issue in a state cause of action does not automatically confer federal-question jurisdiction.”
Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 813 (1986).

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Here, Porter’s complaint alleges only state law causes of actions. Porter chose to avoid
federal jurisdiction by basing his causes of action on state law. See Pan Am. Petro. Corp. v.
Superior Court, 366 U.S. 656, 662-63 (1961) (“the party who brings a suit is master to decide
what law he will rely upon”). Pennymac merely alleges that the terms of the mortgage implicate
RESPA and the state court may have to decide whether PennyMac complied with RESPA. The
prospect that the state court may have to apply portions of RESPA to the claim does not turn this
into a substantial federal question. PennyMac has failed to bear its burden in showing that this
Court has subject matter jurisdiction. As such, the Court must remand this case to state court
pursuant to 28 U.S.C. § 1447(c).
For the foregoing reasons, the Court GRANTS Porter’s motion to remand (Doc. 12) and
REMANDS this case to the Circuit Court for the First Judicial Circuit, Jackson County, Illinois,
for lack of federal subject matter jurisdiction. The Court DENIES as moot all pending motions.

IT IS SO ORDERED.
DATED: July 16, 2014
s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE

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