AUDLEY v. PNC MORTGAGE, A DIVISION OF PNC BANK, NATIONAL ASSOCIATION
Filing
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MEMORANDUM OPINION AND RECOMMENDATION - MAGISTRATE JUDGE signed by MAG/JUDGE JOI ELIZABETH PEAKE on 05/11/2012. For the reasons set out herein, this Court concludes that federal jurisdiction exists and abstention is not appropriate in this case. The Court therefore recommends that Plaintiff's motion be denied. IT IS THEREFORE RECOMMENDED that Plaintiff's Motion to Remand [Doc. # 11 ]be DENIED.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
DANIEL AUDLEY,
Plaintiff,
v.
PNC MORTGAGE, A DIVISION OF
PNC BANK, NATIONAL ASSOCIATION,
Defendant.
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1:11CV347
MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This matter is before the Court on a Motion to Remand [Doc. #11] filed by Plaintiff
Daniel Audley (“Plaintiff”), seeking to remand to state court this case involving claims related
to efforts by Defendant PNC Mortgage, a Division of PNC Bank, National Association
(“Defendant” or “PNC Bank”) to collect on a loan and promissory note from Plaintiff. The
Motion to Remand has been fully briefed. For the reasons that follow, the Court recommends
that Plaintiff’s motion be denied.
I.
FACTS, CLAIMS, AND PROCEDURAL HISTORY
Plaintiff alleges that he is a resident of Cabarrus County, North Carolina. (Pl.’s Verified
Compl. [Doc. #3].) He purchased certain real property as his residence in Concord, North
Carolina, in 2003, and financed his purchase with a loan through National City Mortgage by
signing a deed of trust and promissory note. Plaintiff’s deed of trust secures a loan in the
amount of $157,426. (Id. Ex. B.) Plaintiff eventually defaulted on the loan, and in December
2009, he began receiving debt collection letters from an attorney for Defendant PNC Bank.
Plaintiff claims that at that time, Defendant did not have any rights to his loan. In January 2010,
Plaintiff received notice of the transfer of his loan to PNC Bank as of January 6, 2010. (Id. Ex.
D.)
Plaintiff filed this action in state court raising five causes of action. Plaintiff alleges in his
First Cause of Action that Defendant PNC Bank violated the federal Fair Debt Collection
Practices Act (“FDCPA”) (15 U.S.C. § 1692-1692p (2006)), and the North Carolina Debt
Collection Practices Act (N.C. Gen. Stat. § 75-50 to -56 (2009)). Plaintiff’s Second Cause of
Action alleges fraud by failing to deliver “notification of transfer” in compliance with 24 C.F.R.
§ 203.502(b)(2)(I) (2012). In his Third Cause of Action, Plaintiff alleges that Defendant
breached a contract by charging undue inspection fees and by not registering the transfer of his
mortgage. Plaintiff’s Fourth Cause of Action alleges a “Defective Mortgage” for alleged failure
to disclose restrictive covenants. Finally, Plaintiff’s Fifth Cause of Action is for “Failure to
Establish Conditions Precedent,” contending that Defendant allegedly failed to mail a
delinquency notice to Plaintiff as required by 24 C.F.R. § 203.602 (2012). Plaintiff seeks
damages, injunctive relief, and declaratory relief.
Defendant removed the action to this Court on May 5, 2011. (Pet. for Removal [Doc.
#1].) Plaintiff thereafter filed the present Motion to Remand. Plaintiff argues in his Motion to
Remand that this Court should abstain from exercising jurisdiction in this action, that no federal
question is presented in this action, and that diversity jurisdiction does not exist because the
amount in controversy does not exceed $75,000. (Pl.’s Memo. in Supp. of Mot. to Remand
[Doc. #12].) Defendant opposes Plaintiff’s motion.
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II.
DISCUSSION
A.
Federal Question Jurisdiction
This Court has subject matter jurisdiction over cases removed from state court to the
extent that this Court would have had original jurisdiction over the action. 28 U.S.C.A. § 1441(a)
(West 2012). In this case, Defendant contends that this Court has federal subject matter
jurisdiction based on both federal question jurisdiction pursuant to 28 U.S.C. § 1331 (2006) and
diversity jurisdiction pursuant to 28 U.S.C.A. § 1332 (West 2012).
With respect to federal question jurisdiction under 28 U.S.C. § 1331, “Congress has given
the lower federal courts jurisdiction to hear, originally or by removal from a state court, only
those cases in which a well-pleaded complaint establishes either that federal law creates the cause
of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial
question of federal law.” Franchise Tax Board v. Construction Laborers, 463 U.S. 1, 27-28
(1983). Thus, “federal-question jurisdiction is invoked by and large by plaintiffs pleading a cause
of action created by federal law,” but there is also a “longstanding, if less frequently encountered,
variety of federal ‘arising under’ jurisdiction . . . [recognizing that] in certain cases
federal-question jurisdiction will lie over state-law claims that implicate significant federal
issues.” Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005).
In the present case, Plaintiff pleads in his First Cause of Action a violation of the federal
FDCPA, as set out above. In the same cause of action, he also pleads a violation of the North
Carolina Debt Collections Practices Act. Although Plaintiff has specifically asserted a claim
under the federal FDCPA, Plaintiff nevertheless contends that federal question jurisdiction is
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lacking because there is no “substantial question of federal law.” In making this argument,
Plaintiff is apparently relying on cases interpreting the “variety of federal ‘arising under’
jurisdiction” that may exist when state-law claims “implicate significant federal issues.” Grable,
545 U.S. at 312. Plaintiff’s argument fails to acknowledge, however, that he has pled a cause of
action created by federal law under the FDCPA. See 15 U.S.C.A. § 1692k (West 2012) (creating
civil liability for debt collectors). This is not a case where state law alone creates the cause of
action. Thus, there is no need to consider whether Plaintiff’s state law claims implicate
significant federal issues; federal question jurisdiction exists because Plaintiff has specifically pled
a cause of action created by federal law. Thus, Plaintiff’s contention that there is not a
“substantial federal question” is misplaced, since Plaintiff’s First Cause of Action provides a
basis for traditional “arising under” jurisdiction pursuant to 28 U.S.C. § 1331.
In addition, the fact that Plaintiff’s other claims are pendent state-law claims does not
necessitate remanding this action to state court. See 28 U.S.C. § 1367 (2006) (authorizing federal
courts to exercise supplemental jurisdiction over related state law claims in cases in which federal
courts have original jurisdiction). Although Plaintiff argues that his state law claims predominate
over his federal claims, the predominance of state claims would not divest this court of
jurisdiction, where federal question jurisdiction exists and the remaining state law claims are
related to the federal claim and are within the Court’s supplemental jurisdiction. This Court
therefore has federal question jurisdiction in this action pursuant to 28 U.S.C. § 1331 and § 1367.
The Court notes that under 28 U.S.C. § 1367(c), this Court has discretion to decline to
exercise supplemental jurisdiction over a state law claim if the state law claim substantially
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predominates over the federal law claim. However, this would require the Court to decline to
exercise supplemental jurisdiction over only the state law claims, while the federal FDCPA
claims remained in this Court.1 Plaintiff does not seek such relief, and given the relationship
between the claims, the Court will not sever and remand portions of the case.2
B.
Burford Abstention
Plaintiff nevertheless argues that this Court should abstain from exercising jurisdiction
under the Burford doctrine. See Burford v. Sun Oil Co., 319 U.S. 315 (1943). The Burford
doctrine applies in a “narrow range” of cases. Martin v. Stewart, 499 F.3d 360, 364 (4th Cir.
2007). Burford allows abstention:
when federal adjudication would “unduly intrude” upon “complex
state administrative processes” because either: (1) “there are
difficult questions of state law . . . whose importance transcends
the result in the case then at bar”; or (2) federal review would
disrupt “state efforts to establish a coherent policy with respect to
a matter of substantial public concern.”
1
The Court also notes that there are no claims to be severed and remanded under 28 U.S.C. § 1441(c)
because there are no claims that are not within the original or supplemental jurisdiction of the Court, nor are there
claims that have been made nonremovable by statute. See 28 U.S.C. § 1441(c) (West 2012) (providing that a court
may sever and remand matters that are not within the original or supplemental jurisdiction of the court or that
have been made nonremovable by statute); see also Hinson v. Norwest Financial South Carolina, Inc., 239 F.3d
611, 616 (4th Cir. 2001) (noting that § 1441(c) does not apply “when pendent claims, as distinct from ‘separate
and independent claims,’ are involved”).
2
Plaintiff also contends that diversity jurisdiction is lacking because there is no evidence as to the amount
in controversy. (Memo. in Supp. of Mot. to Remand at 6-7.) Because this Court has found that federal question
jurisdiction exists, the Court need not address Plaintiff’s argument on diversity jurisdiction. However, the Court
notes that there is no question that the parties are diverse, and the amount owed on the promissory note at issue
is alleged to be over $75,000, so diversity jurisdiction would appear to exist even if federal question jurisdiction
did not exist.
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Martin, 499 F.3d at 364 (quoting New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491
U.S. 350, 361-63 (1989)).
Plaintiff contends that the North Carolina foreclosure law is “undergoing sweeping
changes in the state appellate courts.” In support of this contention, Plaintiff relies upon the
recent state case of In re David A. Simpson, P.C., 711 S.E.2d 165 (N.C. Ct. App. 2011). In
Simpson, the North Carolina Court of Appeals followed case law and North Carolina statutory
law (which adopts certain provisions of the Uniform Commercial Code) in concluding that there
was not sufficient evidence to show that the petitioner in a loan foreclosure action was the
“owner and holder” of the promissory note and deed of trust. However, regardless of whether
Simpson represents “sweeping change” in North Carolina foreclosure law as Plaintiff contends,
this Court concludes that Plaintiff has failed to show that an administrative process is at issue
in this action or that difficult or complex questions of state law are present whose importance
transcends the result in the action. In addition, there is no basis to conclude that federal review
will disrupt any state effort to develop a coherent policy with regard to the subject matter of the
case. Under such circumstances, Burford abstention is not appropriate. See Nat’l City Mortgage
Co. v. Stephen, 647 F.3d 78, 82-83 (3d Cir. 2011) (rejecting the argument that Burford
abstention applies when a district court was asked to apply state law to set aside a foreclosure
sale); see also Gilbert v. Residential Funding LLC, – F.3d –, 2012 WL 1548580 (4th Cir. May 3,
2012) (proceeding with consideration of issues of federal and state law in a lawsuit directly
related to Simpson that had been removed to federal court).
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Plaintiff also argues that this Court should abstain so that he can seek relief in state court
under Rule 60 of the North Carolina Rules of Civil Procedure, because Rule 60 motions are “a
new theory being discussed by debtor-creditor attorneys across North Carolina.” (Memo. in
Supp. of Mot. to Remand [Doc. #12] at 4.) Plaintiff contends that such a Rule 60 motion
would have to be filed with the North Carolina Clerk of Court, rather than in federal court. (Id.)
It is not apparent, however, why this possible new litigation strategy presents a difficult question
of state law in this action, as Plaintiff concludes. Therefore, upon consideration of Plaintiff’s
arguments for Burford abstention, the Court finds no basis to abstain under the relevant criteria.
III.
CONCLUSION
For the reasons set out above, this Court concludes that federal jurisdiction exists and
abstention is not appropriate in this case. The Court therefore recommends that Plaintiff’s
motion be denied.3
IT IS THEREFORE RECOMMENDED that Plaintiff’s Motion to Remand [Doc. #11]
be DENIED.
This, the 11th day of May, 2012.
/s/ Joi Elizabeth Peake
United States Magistrate Judge
3
The Fourth Circuit has not directly addressed the question of whether a Motion to Remand is a
nondispositive pretrial matter within the scope of a magistrate judge’s authority under 28 U.S.C. § 636(b)(1)(A).
See Jonas v. Unisun Ins. Co., 230 F.3d 1352, 2000 WL 1350648 (unpublished) (4th Cir. Sept. 20, 2000) (noting
that the Fourth Circuit “has not addressed whether a magistrate judge may issue an order of remand (as opposed
to issuing a report and recommendation for the district court's review)”). However, the circuit courts to consider
the issue have concluded that magistrate judges lack authority to issue orders, rather than recommendations, on
motions to remand. See, e.g., Williams v. Beemiller, Inc., 527 F.3d 259 (2d Cir. 2008) (following Tenth, Sixth and
Third circuit in so concluding). Therefore, as a matter of caution, the undersigned proceeds by way of
Recommendation.
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