UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
September 29, 2009
ANA MONTES, AN INDIVIDUAL, PLAINTIFF,
HOMEQ SERVICING, A CORPORATION; GE MONEY MORTGAGE COMPANY, SUCCESSOR IN INTEREST TO WMC MORTGAGE CORP, A CORPORATION; WELLS FARGO, A NATIONAL ASSOCIATION; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., A CORPORATION; AND DOES 1 THROUGH 200, INCLUSIVE, DEFENDANTS.
The opinion of the court was delivered by: Florence-marie Cooper, Judge United States District Court
ORDER REMANDING CASE TO SUPERIOR COURT
This matter is before the Court on the Court's September 1, 2009, Order to Show Cause (docket no. 7). The Court has read and considered Defendants' "Opposition/Response to the Court's Order to Show Cause Re: Remand." Plaintiff has filed nothing. For the reasons and in the manner set forth below, IT IS HEREBY ORDERED that this action be REMANDED to state court.
This matter arises out of a home mortgage loan transaction. Plaintiff alleges causes of action for: (1) "Set[ting] Aside [the] Trustee's Sale," alleging violations of CAL. CODE CIV. PROC. §§ 2924b(c) & 2923.5; (2) "To Cancel [the] Trustee's Sale," brought without reference to any statute, other than by reincorporating all preceding paragraphs; (3) "Quiet Title," brought under CAL. CODE CIV. PROC. §§ 762.10 & 762.20; (4) "Declaratory Relief," brought with reference to CAL. CODE CIV. PROC. § 2923.5; (5) and "Inducement of Breach of Fiduciary Duty," brought without reference to any statutory provisions.
I. Legal Standard
Absent diversity jurisdiction, a defendant may only remove a complaint filed in state court when "a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); see Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 933-34 (9th Cir.1994) (quoting Caterpillar). When a case is removed to federal court there is a strong presumption against federal jurisdiction, and the burden is on the defendant to prove that removal is proper. Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992) (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir. 1990)).
The removal statute is strictly construed, and any doubt about the right of removal is resolved in favor of remand. Gaus, 980 F.2dat 566 (citations omitted); see also Price Frieze, Inc. v. Matrix, Inc., 167 F.3d 1261, 1265 (9th Cir. 1999) (superseded by statute on other grounds, as recognized in Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 681-82 (9th Cir. 2006)); Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir.2009) (citations omitted). If the removal is challenged by the court, the removing party must provide competent proof that removal jurisdiction is proper. Gaus, 980 F.2d at 567. The Court may "demand that the party alleging jurisdiction justify his allegations by a preponderance of evidence." Id. "Subject matter jurisdiction may not be waived, and, indeed, ... the district court must remand if it lacks jurisdiction." Kelton Arms Condominium Owners Association, Inc. V. Homestead Insurance Co., 346 F.3d 1190, 1192 (9th Cir. 2003) (citing Sparta Surgical Corp. v. Nat'l Ass'n Securities Dealers, Inc.,159 F.3d 1209, 1211 (9th Cir. 1998) (emphasis added).
A defendant may remove a civil action from State court to federal court if the claim could have initially been brought in the district court. 28 U.S.C. § 1441(a). In general, the notice of removal must be filed with "a copy of all process, pleadings, and orders" served on the removing defendant in the action. Id.
The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in the court and is not required to be served on the defendant, whichever period is shorter.
28 U.S.C. § 1446(b); see also U.S. ex rel. Walker v. Gunn, 511 F.2d 1024, 1025 (9th Cir. 1975) (finding removal was untimely; therefore, state court proceedings were valid).
When a case involves multiple defendants "the 30-day period for removal commences to run from the date the first defendant receives a copy of the complaint." Teitelbaum v. Soloski, 843 F. Supp. 614, 615 (C.D. Cal. 1994) (citing Brown v. Demco, Inc., 792 F.2d 478, 481-82 (5th Cir. 1986)). Furthermore, pursuant to 28 U.S.C. § 1446(a), "all defendants in a state action must join in the petition for removal, except for nominal, unknown or fraudulently joined parties." Emrich v. Touche Ross & Co., 846 F.2d 1190, 1193 n.1 (9th Cir. 1988) (citing Hewitt v. City of Stanton, 798 F.2d 1230, 1233 (9th Cir. 1986); Tri-Cities Newspapers, Inc. v. Tri-Cities P.P. & A Local, 349, 427 F.2d 325, 326-27 (5th Cir. 1970)). Accordingly, "failure to join all proper defendants in a removal petition may otherwise render the removal petition procedurally defective." Emrich, 846 F.2d at 1193 n.1. The court may allow a moving party to amend a notice of removal after the 30-day period as long as the amendment corresponds to defective allegations of jurisdiction. 28 U.S.C. § 1653. The purpose for allowing a moving party to amend a notice of removal after the 30-day period "is to permit correction of incorrect statements about extant jurisdiction." Snell v. Cleveland, Inc., 316 F.3d 822, 828 (9th Cir. 2002) (citing Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 831, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989)).
On September 1, 2009, this Court issued an Order to Show Cause ("OSC") because: 1) removal was based on federal question jurisdiction pursuant to 28 U.S.C. § 1331, but it appeared that the claims did not arise under federal law; 2) not all served defendants joined in the notice of removal; and 3) the notice of removal was filed more than thirty days after the date of service of the initial pleading or the date on which defendant first had notice of removability. The Court noted in the OSC that "Plaintiff(s) must submit a response within 30 days of the date of removal if the defects are procedural and plaintiff(s) object(s) and request(s) remand. See 28 U.S.C. § 1447(c)."
A. Procedural Defects in Defendants' Removal
The Court first deals with the second and third matters addressed in the OSC, as noted above. The Court does not remand on these bases. Both of those defects are procedural defects, not relating to the Court's subject matter jurisdiction. See Parrino v. FHP, Inc., 146 F.3d 699, 703 (9th Cir. 1999) (superseded by statute on other grounds, as recognized in Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 681-82 (9th Cir. 2006)). The Ninth Circuit has held that a district court may not remand sua sponte for defects in removal procedure. Kelton Arms Condominium Owners Association, Inc., 346 F.3d at 1193. The basis of this holding was that 28 U.S.C. 1447(c) "'consigns procedural formalities to the care of the parties.'" Id. at 1192 (quoting In re Allstate Ins., 8 F.3d 219, 223 (5th Cir. 1993)). In this case, Defendants removed on August 12, 2009. To the extent there were procedural defects with the removal, Plaintiff failed to challenge them within thirty days of removal, or by Friday, September 11, 2009. The Court has heard nothing from Plaintiff at all in fact. Thus, Plaintiff (and any other party with potential objections) waived such procedural objections, if any, and the Court does not remand on either of those bases.
B. Federal Question Jurisdiction
The Court remands this case solely because Defendants have not shown that the Court has subject matter jurisdiction. To begin with, the only operative and relevant Complaint in this action is the June 9, 2009 state court complaint attached to the Notice of Removal.*fn1 In their Objection/Response to the OSC, Defendants argue that Plaintiff "Artfully Pled" state causes of action that are preempted by federal law. Defendants' Opposition/Response is largely premised on the unsupported assertion, which this Court is expected to take on faith, that "Defendant Wells Fargo NA as Trustee is a federally chartered and regulated [bank] by the Office of Thrift Supervision." (Opposition/Response at 5:21-22). Defendants argue that regulation 12 C.F.R. § 560.2, which was promulgated by the Office of Thrift Supervision (the "OTS"), makes "clear that state laws do not apply to the lending practices of federal thrifts." Section 560.2(b) includes "loan-related fees" as a preempted category. Section 560.2(c) includes "[p]rocessing, origination, servicing, sale or purchase of, or investment or participation in, mortgages" as a preempted category. Thus, argue Defendants, Plaintiff's state law claims, in particular the claim for breach of fiduciary duty,*fn2 is preempted by 12 CF.R. § 560.2. Into this, Defendants appear to shoehorn an argument that Plaintiff's allegations are essentially Truth in Lending Act, 15 U.S.C. § 1601 et seq. (hereinafter, "TILA") allegations in disguise. (Opposition/Response at 6:1).
Second, Defendants argue that removal was proper under the "complete preemption" doctrine, which provides that:
"[W]here a statute enjoys 'extraordinary' or 'unique preemptive force,' the presence of a preemption defense under that statute converts 'an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." (citation omitted). Once an area of state law has been completely pre-empted, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law."
Caterpillar, Inc., 482 U.S. at 392. Unfortunately, Defendants fail to specify clearly in this subsection of the Opposition/Response which federal statute or regulation might be completely preemptive. The Court is left to assume it is the previously discussed OTS regulation, though at the end of this sub-section of their Opposition/Response, Defendants again make the argument that Plaintiff's claims secretly arise under federal law because they appear to be Truth in Lending Act Claims. (Opposition/Response, at 8:1-11).
First, the Court finds Defendants have not demonstrated that the Complaint on its face presents a TILA claim implicating federal question jurisdiction. Defendants appear to make this argument at least twice (see Opposition/Response at 6:1-5; 8:1-12), while arguing in favor of preemption. Plaintiff's fifth cause of action, containing the allegations relied upon by Defendants, and quoted by the Court in footnote 2, is titled a state fiduciary duty cause of action. There is no reference to TILA. Along with language about duty and proximate cause, there is certainly language in that claim relating to loan disclosures (not surprising, since that appears to be at the center of the dispute), but no federal question is presented on the face of paragraphs 43 and 44 of the Complaint.*fn3 See Caterpillar, Inc., 482 U.S. at 392. Similarly, no federal question is presented simply because Plaintiff at times in the Complaint referred generically to both "federal and state" claims. All of the causes of action delineated in the Complaint are facialy based on state statutory and/or common law.
The Court next addresses Defendants' first stated argument, in Part II(A)(1) of their Opposition/Response, which is that Plaintiff artfully pled state causes of action that are preempted by federal law. Defendants rely in this section entirely on their unsupported assertion that "Defendant Wells Fargo NA as Trustee is a federally chartered and regulated [bank] by the Office of Thrift Supervision" (Opposition/Response at 5:21-22). To the full extent that Defendants rely on 12 C.F.R. § 560.2 or on any other rule, regulation or pronouncement of the OTS, Defendants have provided no evidence to the Court, not even a declaration (the Declaration of Kevin R. Broersma in support of the Opposition/Response does not address the issue), that "Wells Fargo NA as Trustee" is in fact regulated by the OTS at all. Though it is not necessary to the court's decision, and the Court is not officially taking judicial notice of it, the Court notes that Wells Fargo Bank, National Association, appears in fact to be a National Bank, which is primarily regulated by the Office of the Comptroller of the Currency,*fn4 not by the OTS. Whether 12 C.F.R. § 560.2, a regulation promulgated by the OTS, applies at all to the Wells Fargo defendant in this case, is not for the Court to expend its resources researching and determining on its own; Defendants, given the opportunity, have certainly not demonstrated that it does apply. "[T]he burden is on the defendant to prove that removal is proper. Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992) (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir. 1990)).
If the removal is challenged by the court, the removing party must provide competent proof that removal jurisdiction is proper. Id. at 567. The Court may "demand that the party alleging jurisdiction justify his allegations by a preponderance of evidence." Id. The removal statute is strictly construed, and any doubt about the right of removal is resolved in favor of remand. Id. at 564 (citations omitted). Accordingly, because Defendants have not established that the only potentially preemptive federal statute or regulation cited by them in this subsection even applies, Defendants' have not established in Part II(A)(1) of their Opposition/Response that the removal was proper.*fn5
The Court next addresses Defendants' second primary argument, contained in Part II(A)(2) of their Opposition/Response, that removal was proper based upon federal questions under the "complete preemption" doctrine. Ordinary preemption, as discussed in note 5, is merely a federal law defense to a state-law claim, and "is insufficient to confer federal jurisdiction if the complaint on its face does not present a federal question." Moore-Thomas, 553 F.3d at 1244 (citing Valles, 410 F.3d at 1075 (9th Cir.2005)). However, it is true a defendant may remove a state-law claim "[w]hen [a] federal statute completely pre-empts [a] state-law cause of action," because "a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law. This claim is then removable under 28 U.S.C. § 1441(b), which authorizes any claim that 'arises under' federal law to be removed to federal court ." Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003).
The Supreme Court has identified but four federal statutes that completely preempt state law: the Price-Anderson Act (specifically, section 42 U.S.C. § 2014(hh)); Section 301 of the Labor Management Relations Act (29 U.S.C. § 185 et seq.); the Employee Retirement Income Security Act (29 U.S.C. § 1001 et seq.), and certain usury provisions of the National Bank Act. Id. at 6-8, 11. These statutes "provide[ ] the exclusive cause of action for the claim asserted and also set forth procedures and remedies governing that cause of action." Id. at 8. Whether or not a statute provides the exclusive cause of action for certain claims is thus "the dispositive question." Id. at 9. See also Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 688 (9th Cir. 2007) (holding that the Carmack Amendment completely preempts certain state law claims).
In the present case, the Court has already determined that Defendants have failed to demonstrate that 12 C.F.R. § 560.2 is even applicable in this case, so the Court declines to consider whether it completely preempts Plaintiff's state law claim(s). The Court notes that another court in this district has quite recently held that it does not completely preempt similar state law claims, writing in almost exactly this context. Barela v. Downey Savings & Loan Ass'n, F.A., No. CV 09-3757, 2009 WL 2578889, *2-4 (C.D. Cal., Aug. 18, 2009).
Finally, to the extent Defendants are attempting to argue it, the Court also finds that TILA does not completely preempt state law claims. That is because it does not provide the exclusive cause of action, which is "the dispositive question." Beneficial Nat'l Bank, 539 U.S. at 9; Hall, 476 F.3d at 688. By contrast, TILA has a savings clause stating that it preempts state law only if the state law is inconsistent with TILA. See 15 U.S.C. § 1610(b); Barela, 2009 WL 2578889 at *4 (finding TILA does not completely preempt state law claims). See also In re Nos Commc'ns, MDL No. 1357, 495 F.3d 1052, 1058 (9th Cir.2007) ("A savings clause [in this case, a very broad one] is fundamentally incompatible with complete field preemption ...."). Thus, because TILA does not completely preempt Plaintiff's state law claims, they are not "in reality based on federal law" (Beneficial Nat'l Bank, 539 U.S. at 8) sufficient to confer removal jurisdiction on this Court.
Defendants have not met their burden of showing this Court possesses subject matter jurisdiction over this matter, and this action is REMANDED to The Superior Court of the State of California in and for the County of Los Angeles -- Southeast Division. Pending motions are moot and all hearing dates are removed from the Court's calender.
IT IS SO ORDERED.