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Tina v. Home Capital Funding


July 2, 2008


The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge


Plaintiffs initiated this action on July 1, 2008. They concurrently filed a verified complaint and an ex parte application for a temporary restraining order ("TRO") and preliminary injunction. Defendants are several mortgage lenders and financial institutions, and two individuals who previously owned Plaintiffs' home. Defendants have yet to appear in this action. In the complaint, Plaintiffs allege two state-law causes of action: (1) fraud, and (2) deceptive and unfair trade practices, in violation of California Business and Professions Code § 17200.

Plaintiffs' claims for injunctive relief essentially seek to enjoin Defendants, one of whom may hold Plaintiffs' two mortgages, from foreclosing on Plaintiffs' home. The remainder of the claims relate generally to Defendants' alleged involvement in falsely representing to Plaintiffs that a bedroom in Plaintiffs' house had been constructed without proper building permits, preventing Plaintiffs from renting or lease the unlawful additions to Plaintiffs' property, causing Plaintiffs' mortgage payments to go into arrears, stating an incorrect amount due and owing, engaging in a willfully oppressive sale, collecting improper closing and other fees, making incorrect tax and escrow impounds, misapplying Plaintiffs' payments, and other violations occurring at the closing of the sale on September 16, 2005.

Federal courts are courts of limited jurisdiction. "Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause." Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264 (1868)). Accordingly, federal courts are under a continuing duty to confirm their jurisdictional power and are even "obliged to inquire sua sponte whenever a doubt arises as to [its] existence. . . ." Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977) (citations omitted).

"The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Longstanding Supreme Court precedent provides that "the question whether a claim 'arises under' federal law must be determined by reference to the 'well-pleaded complaint.'" Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808 (1986) (quoting Franchise Tax. Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 9-10 (1983)). Under this rule, the existence of a federal question must appear on the face of a plaintiff's well-pleaded complaint. See Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152 (1908). A case "arises under" federal law within the meaning of 28 U.S.C. § 1331 when federal law either (1) creates the cause of action or (2) the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law. See Franchise Tax Bd. v, 463 U.S. at 27-28.

Applying the well-pleaded complaint rule in this case, Plaintiffs' claims neither arise under federal law nor require the resolution of substantial federal issues. On the civil cover sheet, Plaintiffs state that this court has jurisdiction due to the existence of a federal question. Specifically, they describe their cause of action as "Fraud TILA" and state that they are filing under 15 U.S.C. § 1601, et seq. -- the Truth in Lending Act. Nevertheless, the complaint explicitly contains only state-law causes of action. Neither the complaint nor the application for injunctive relief refers to the Truth in Lending Act or to any other federal statute.*fn1 Although violations of federal statutes such as the Truth in Lending Act can form the predicate for a § 17200 claim, see Jones v. E*Trade Mortgage Corp., 397 F.3d 810, 813 (9th Cir. 2005), the state law claims here do "not depend necessarily upon a question of federal law," Merrell Dow Pharmaceuticals, Inc., 478 U.S. at 807, because a jury could find Defendants liable for fraud or violation of § 17200 based upon the misrepresentations and fraudulent conduct alleged in the complaint.

Accordingly, the court sua sponte dismisses this action for lack of federal subject matter jurisdiction. The Clerk of Court is instructed to close the file.


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