UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
January 7, 2009
LOUISE KAHLER, PLAINTIFF,
VANTEX MORTGAGE GROUP, INC., DEFENDANTS.
The opinion of the court was delivered by: M. James Lorenz, United States District Court Judge
ORDER REMANDING ACTION TO STATE COURT
Defendants filed a notice of removal, removing this negligence, fraud, breach of contract and unfair business practice action from state court. The notice of removal is based on 28 U.S.C. §§ 1441 and 1331. Because the court lacks subject matter jurisdiction, the action is remanded to state court.
The federal court is one of limited jurisdiction. See Gould v. Mutual Life Ins. Co. of N.Y., 790 F.2d 769, 774 (9th Cir. 1986). It possesses only that power authorized by the Constitution or a statute. See Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986). It is constitutionally required to raise issues related to federal subject matter jurisdiction, and may do sua sponte. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93-94 (1998); see Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990).
"Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties." 28 U.S.C. § 1441(b).
The Court has consistently interpreted jurisdictional statutes with an "arising under" qualification . . . as "giv[ing] 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."
Williston Basin Interstate Pipeline Co. v. An Exclusive Gas Storage Leasehold and Easement, 524 F.3d 1090, 1100 (9th Cir. 2008) quoting Franchise Tax Bd. v. Constr. Laborers Vacation , 463 U.S. 1, 27-28 (1983); see also Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 690 (2006).
"The burden of establishing federal jurisdiction is on the party seeking removal, and the removal statute is strictly construed against removal jurisdiction." Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d 709, 712 n.3 (9th Cir. 1990). "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).
Although Defendants cite to the complaint, review of the complaint does not bear out the claim of federal question jurisdiction. Defendants claim the court has original jurisdiction over this action under 28 U.S.C. § 1331 because "Plaintiff has specifically pled claims for relief arising under federal disclosure laws, the Fair Debt Collection Practices Act, FDIC §§ 226.18(d) and 226.23(h), 24 CFR 3500.8(4), and 18 U.S.C. § 1001(a)(2)." (Notice of Removal at 2.)
Plaintiff alleges claims under California common and statutory law for declaratory relief, injunctive relief, accounting, fraud, rescission, breach of fiduciary duty, interference with contractual relations, breach of the covenant of good faith and fair dealing, reformation of unconscionable contract, and unfair and unlawful business practice. (Notice of Removal Ex. A.) The only reference to federal law is in the tenth cause of action for unfair and unlawful business practice, which alleges violations of California Business and Professions Code Section 172000. (Id. at 14.) As some of the alleged unlawful, unfair and/or fraudulent business practices, Plaintiff alleges violations of certain federal regulations: "[f]ailure to comply with FDIC sections 226.18(d) & 226.23(h)," "[v]iolation of 24 CFR 3500.8(4)," "[v]iolation of 18 USC Section 1001(a)(2)," and "[f]ailing to comply with FDIC requirements." (Id.) Such allegations are not sufficient for a claim or right to arise under the laws of the United States as required by 28 U.S.C. § 1441(b).
"[F]or a state law claim to provide a basis for federal jurisdiction, the state law claim must 'turn on substantial questions of federal law,' and 'really and substantially involv[e] a dispute or controversy respecting the validity, construction or effect of [federal] law.'" Williston Basin Interstate Pipeline, 524 F.3d at 1102 quoting Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005). Plaintiff alleged more than eleven different acts on which she based the unfair business practice claim. (Compl. at 14.) As to four of them, Plaintiff alleged that Defendants failed to comply with certain federal laws and regulations. (Id.) However, neither the complaint nor Defendants' notice of removal provide any indication that the unfair business practice claim involves a dispute or controversy regarding the validity, construction or effect of federal law.
Based on the foregoing, Defendants failed to meet their burden of establishing federal jurisdiction. This action is therefore REMANDED to the San Diego County Superior Court.
IT IS SO ORDERED.
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