Mitchell et al v. Swartley et al
ORDER granting 3 MOTION to Remand filed by Joyce L. Mitchell, G. Daniel Mitchell. Case is REMANDED to the Eleventh Judicial District for the State of Montana. The pending motions, 8 MOTION for Preliminary Injunction filed by Joyce L. Mitchell, G. Daniel Mitchell, and 16 MOTION to Intervene filed by SunTrust Bank are DENIED as moot. Signed by Judge Dana L. Christensen on 1/23/2014. (NOS, )
IN THE lJNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
G. DANIEL MITCHELL and JOYCE
CHRISTOPHER B. SWARTLEY, as
successor Trustee to Sterling Title
Services, and DOES 1-20
INCLUSIVE, jointly and severally,
Clark. u.s District Court
District Of Montana
Plaintiffs G. Daniel and Joyce Mitchell ("Mitchells") seek remand of this
case to state court based on lack of subject matter jurisdiction, alleging specifically
that there is no federal question for this Court to resolve. Defendant Christopher
B. Swartley, as successor Trustee to Sterling Title Services, responds that the
Mitchells' motion to remand should be denied because: (1) this Court has
jurisdiction due to the fact that the Mitchells' complaint implicates a substantial
issue of federal law; and (2) the interests ofjudicial economy, fairness, and
avoidance of conflicting rulings support denial of the motion.
The Mitchells also seek reasonable attorneys' fees and costs associated with
the motion to remand this action.
The Mitchells' motion will be granted because the Defendant has not met
his burden to establish that removal to federal court is proper. However, the Court
declines to award attorneys' fees and associated costs.
In July, 2012, the Mitchells filed suit in this Court against multiple
defendants, including SunTrust Bank ("STB") and SunTrust Mortgage ("STM"),
alleging, essentially, that a deed of trust they entered into in 2005 was void and
unenforceable ("Federal case"). The Court found that all of Mitchells' claims
failed as a matter of law, granted the Defendants' motion to dismiss the Mitchells'
Amended Complaint, and dismissed the case on May 7, 2013. (CV 12-127-M
DLC, Doc. 93.) The Court denied the Mitchells' request for reconsideration on
July 8, 2013. The Mitchells then filed their notice of appeal with the Ninth Circuit
on July 29, 2013. The parties' appellate mediation is scheduled for February 17,
2014, and the Mitchells' appellate brief is due in March of2014.
After the Federal Case was dismissed, STB, as beneficiary under the deed of
trust l appointed Christopher Swartley - Defendant in the instant case - as the
lAs discussed below, the identity of the proper beneficiary under the deed of trust is
disputed in the instant case.
successor trustee by filing a substitution of trustee in the office of the clerk and
recorder for Flathead County. Pursuant to STB's instructions, Swartley filed the
Notice of Sale Under Deed of Trust on August 20,2013, setting the sale for
January 7, 2014.
Meanwhile, the Mitchells filed the instant action on or about November 15,
2013 in the Montana Eleventh Judicial District. The complaint was filed to enjoin
the Trustee-Defendant from conducting the scheduled foreclosure sale on two
grounds: (I) void notice of sale under Montana's Small Tract Financing Act
("SFTA"); and (II) because the deed of trust on which Trustee is proceeding is the
subject of the Mitchells' pending appeal of the Federal case. Defendant removed
the instant case to this Court on November 26,2013, and the Mitchells filed their
motion to remand on December 3, 2013. The sale is currently scheduled for
February 6, 2014, pursuant to this Court's order of December 16,2013. (Doc. 10.)
A. Removal & Remand
"[R]emoval statutes are strictly construed against removal." Luther v.
Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th Cir. 2008).
"The presumption against removal means that the defendant always has the burden
of establishing that removal is proper." Moore-Thomas v. Alaska Airlines, Inc.,
553 F.3d 1241, 1244 (9th Cir. 2009). "Federal jurisdiction must be rejected if there
is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc.,
980 F.2d 564, 566 (9th Cir. 1992) (citing Libhart v. Santa Monica Dairy Co., 592
F.2d 1062, 1064 (9th Cir.1979)).
Defendant based his removal of this action on the premise that this Court
has subject matter jurisdiction pursuant to 29 U.S.C. § 1331 ("The district courts
shall have original jurisdiction of all civil actions arising under the Constitution,
laws, or treaties of the United States") - most commonly referred to as "federal
question jurisdiction," or "arising under" jurisdiction.
Under the well-pleaded complaint rule, a federal question must be present
on the face of the complaint. Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d
1033,1040 (9th Cir. 2003). This rule "severely limits the number of cases in
which state law 'creates the cause of action' that may be initiated in or removed to
federal district court." Id. (quoting Franchise Tax Bd. o/Cal. v. Construction
Laborers Vacation Trust/or California, 463 U.S. 1,9-10 (1983)).
Additionally, a plaintiff "may not avoid federal jurisdiction by omitting
from the complaint allegations of federal law that are essential to the establishment
of the claim." Id. (quoting Hansen v. Blue Cross o/Cal., 891 F.2d 1384, 1389
(9th Cir. 1989). Under this artful-pleading doctrine, removal is proper where a
claim is "necessarily federal in character ... or where the right to relief depends
on the resolution of a substantial, disputed federal question." Id. (citations
omitted). Courts should "invoke the doctrine only in limited circumstances as it
raises difficult issues of state and federal relationships and often yields
unsatisfactory results." Id. (internal quotation marks and citations omitted).
Defendant concedes that Plaintiffs do not plead any federal causes of action
(Doc. 11 at 8), but claims that the instant action is "unavoidably federal in
character," and argues that the disputed federal question in this case appears on the
face of the Mitchells' complaint, "namely the propriety of the Dismissal Order
issued in the Federal Case, as the Mitchells' state law claims effectively amount to
a challenge of the Dismissal Order brought in a state forum." (Doc. 11 at 7.)
Defendant goes on to argue that "the applicability of the Dismissal Order and
actions taken by the Trustee in conformity with the Dismissal Order - actions that
form the basis of the New Action - are inextricably embedded with state-law
claims contained in the New Action." (Doc. 11 at 7-8.) While the Court agrees
that the Federal case and the instant case are related, there is simply not sufficient
overlap to justify the Court's exercise of subject matter jurisdiction.
Count I of the Plaintiff s complaint relates not to the validity of the deed
which was the subject of the Federal case - but to whether the notice of sale issued
as the result of this Court's dismissal of the Federal case was proper. At the heart
of Claim I is a dispute Plaintiffs raise over the identity of the deed of trust's proper
beneficiary, and the resulting implications for the foreclosure sale under Montana
law - the Small Tract Financing Act ("STFA"). Specifically, Plaintiffs claim that
Sun Trust is not the proper beneficiary, and that since the notice of sale names it as
such, the notice is void pursuant to STFA. It is true that resolution of this Claim
will require the adjudicating court to review the deed of trust on the narrow
question of the proper beneficiary's identity, just as this Court was required to do
when it resolved the distinct issues presented in the Federal case. However, the
fact that the two actions hinge on the same document does not create sufficient
overlap to create federal jurisdiction. This Claim simply does not implicate the
issues litigated in the Federal case, nor does it implicate this Court's decision in
that case. In addition to the divergent subject matter between the two actions,
Claim I of the instant action also has a different temporal element in that it relates
to the notice of sale, which occurred after this Court's dismissal of the Federal
Finally, this state law claim does not amount to a challenge to this Court's
order dismissing the Federal Claim, either on its face, or in effect. A state court
ruling in the Plaintiff's favor on Claim I - holding that the notice of sale was
invalid because Sun Trust was not the proper beneficiary - would not contradict or
affect in any way this Court's dismissal of the Federal case. Defendant has failed
to meet its burden to establish that Claim I is sufficiently federal in character, or
that it is based on state law claims that tum on substantial questions of federal law.
Claim II, although captioned "Void Deed of Trust," does not "specifically
seek a declaration that the deed of trust is void" (Doc. 11 at 8). The Court
interprets Claim II, as clarified by Plaintiffs' briefing, as the basis for Plaintiffs'
requested relief that the adjudicating court enjoin Defendant from selling or
otherwise depriving Plaintiffs of the property until the appeal of the Federal case is
resolved. While the Plaintiffs maintain their position that the deed of trust is void
despite this Court's 'opinion to the contrary, they do not request the court
adjudicating the instant action to weigh in on that subject, but merely to delay the
sale until the Ninth Circuit has the opportunity to do so.
In his notice of removal, Defendant states that, "Whether the Mitchells
prevail on their appeal is a question of federal law." (Doc. 1 at ~ 5.) Defendants do
not directly address or provide support for this argument in their response brief.
The Court is highly.dubious of the implication that, in the context of removal,
federal jurisdiction can be premised on the fact that a Federal district court's
decision is on appeal, or on a Plaintiff's request to enjoin a Defendant until that
appeal is resolved. On this point, there is considerable doubt as to the Court's
jurisdiction - certainly enough to meet the low bar required for the Court to
remand this case.
As with Claim I, in Claim II, the Plaintiffs are not asking the adjudicating
court to rule on the issues and claims addressed by this Court that are now before
the Ninth Circuit. A ruling in favor of the Plaintiff on Claim II would merely result
in an injunction preventing Defendants from proceeding with the sale until the
appeal is resolved. Claim II does not raise a federal claim, nor is it unavoidably
federal in character.
Defendants next argue that removal was proper in that it serves the interests
ofjudicial economy, fairness, and avoidance of conflicting rulings. As an initial
matter, as established above, the claims and remedies sought in the new action are
distinct from those raised in the Federal case, and as such, they do not create the
possibility of conflicting rulings. While this Court has expended significant
resources resolving the Federal case, the new action, while based on similar
subject matter, is not sufficiently similar that it will create duplicative efforts or a
multiplicity of litigation. Remanding this case will not harm judicial economy, at
least not to the degree this Court believes is required to overcome the strong
presumption in favor of remand.
Defendants have not met their burden to establish that this Court has subject
matter jurisdiction over this matter and that removal was proper. Accordingly, the
Court will remand this case to state court.
B. Attorneys' Fees
Plaintiffs move for attorneys fees and costs, arguing that there was no
reasonable basis to remove this case. An order remanding a case to state court may
require payment ofjust costs and any actual expenses, including attorneys' fees,
incurred as a result of the removal. 28 U.S.C. § 1447(c). Granting of fees and costs
upon remand is left to the court's discretion, as there is neither a presumption for
nor against it statutorily. Martin v. Franklin Capital Corp., 546 U.S. 132, 140-141
(2005). "Absent unusual circumstances, courts may award attorney's fees under §
1447(c) only where the removing party lacked any objectively reasonable basis for
seeking removal. Conversely, when a objectively reasonable basis exists, fees
should be denied." Id. at 141.
There was an objectively reasonable basis for removal here. Although
Defendant has not ~et his burden to establish that removal was proper and that
this Court has subject matter jurisdiction, the instant case is sufficiently related to
the Federal case, and Defendants argument as to judicial economy are reasonable
in light of the underlying facts. The Court will not award fees or costs.
III. Conclusion & Order
IT IS ORDERED that Plaintiffs' motion for remand (Doc. 3) is GRANTED,
and that this case is REMANDED to the Eleventh Judicial District for the State of
IT IS FURTBER ORDERED that because this Court does not have
jurisdiction over this matter, the pending motions in this case (Docs. 8 and 16) are
DENIED as moot.
k-3..Jday of January, 2014.
Dana L. Christensen, Chief Judge
United States District Court
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