MEMORANDUM AND ORDER RE: MOTION TO DISMISS AND ORDER TO SHOW CAUSE
Plaintiff Cassius Beecham brought this action in state court against defendants HomEq, Fidelity National Title Company, and Deutsche Bank National Trust ("Deutsche Bank") alleging violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f; the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601-2617; the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code §§ 1788.1-1788.33; and California's Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200-17210, as well as claims for breach of contract, breach of the implied covenant of good faith and fair dealing, wrongful foreclosure, breach of fiduciary duty, and fraud. Defendants subsequently removed the action to this court. After plaintiff filed an Second Amended Complaint that no longer asserted any federal claims, the court issued an order to show cause why this action should not be remanded to the state court.
I. Factual and Procedural Background
Plaintiff is a borrower who obtained two purchase money mortgage loans from Deutsche Bank on January 29, 2007. (Defs.' Mot. Dismiss 1:7-9.) Plaintiff secured the loans by deeds of trust on a property located at 180 Caravaggio Street, Sacramento, California, which he purchased using the funds from the loans. (Second Am. Compl. 4:1-5.) Plaintiff alleges that he expressed concerns about his ability to pay the loans, but was allegedly told by a Deutsche Bank loan officer that plaintiff could refinance to a lower interest rate and payment after one year. (Id. at 3:23-28.) Plaintiff also claims Deutsche Bank approved plaintiff's loans despite its knowledge that he was unqualified to obtain them. (Id.) Plaintiff allegedly did not receive disclosures required by law concerning the terms of the loan and his right to cancel at the time of the loan transaction. (Id. at 5:17-22.)
Plaintiff was unable to continue making payments on his loans, and defendant HomEq, the servicer of his loans, allegedly did not respond to plaintiff's requests modify his payments. (Id. at 4:7-9.) A Notice of Default was filed against plaintiff in Sacramento County, and plaintiff claims he subsequently received a Notice of Trustee Sale in November 2008 which stated that Fidelity National, no longer a party to this action, would institute a foreclosure sale on plaintiff's property.*fn1 (Id. at 5:23-27.) Plaintiff argues that this notice was inadequate because he was not supplied the time or location of the sale. (Id.) Plaintiff also alleges that defendants were not entitled to foreclose on his property because defendants sold the note on his home to "other financial entities" which then sold securities based off of "pooled" trusts of home loans. (Id. at 6:5-16.)
Plaintiff filed this action in state court on March 11, 2009. (See Notice of Removal Ex. A ("First Amended Complaint"*fn2 ).) Defendants subsequently removed the action to this court under 28 U.S.C. § 1331 on the basis of plaintiff's federal causes of action. (Notice of Removal ¶¶ 8-10.)
On June 19, 2009, plaintiff filed his Second Amended Complaint that eliminated his federal causes of action and alleged only violations of the Rosenthal Fair Debt Collection Practices Act and California's Unfair Competition Law, as well as state law claims for breach of contract, breach of the covenant of good faith and fair dealing, breach of statutory duties, conversion, and wrongful foreclosure. (See Second Am. Compl.) On July 9, 2009 defendants filed a Motion to Dismiss the Second Amended Complaint. (Docket No. 11.)
In light of plaintiff's abandonment of his federal claims, on August 27, 2009, the court issued an order to show cause why this action should not be remanded to state court. (Docket No. 14.) In response, plaintiff indicated that he did not oppose remand. Defendants argue that the court should retain jurisdiction because plaintiff's claims are completely preempted by federal law and plaintiff's references to the federal TILA and RESPA in the "Factual Background" of his Second Amended Complaint give rise to substantial federal questions.
"Under 28 U.S.C. § 1441, a defendant may remove an action filed in state court to federal court if the federal court would have original subject matter jurisdiction over the action." Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1243 (9th Cir. 2009). Federal courts have original subject matter jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331.
"[J]urisdiction must be analyzed on the basis of the pleadings filed at the time of removal without reference to subsequent amendments . . . ." Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1046 n.3 (9th Cir. 2000) (quoting Sparta Surgical Corp. v. Nat'l Ass'n of Sec. Dealers, 159 F.3d 1209, 1213 (9th Cir. 1998)). Nonetheless, when removal is based on federal question jurisdiction and all federal claims drop from the proceedings, "[i]t is generally within a district court's discretion either to retain jurisdiction to adjudicate the pendent state claims or to remand them to state court." Harrell v. 20th Century Ins. Co., 934 F.2d 203, 205 (9th Cir. 1991) (citing Price v. PSA, Inc., 829 F.2d 871, 876 (9th Cir. 1987)). A district court may consider sua sponte whether to remand pendent state claims to state court. Acri v. Varian Assocs., Inc., 114 F.3d 999, 1000-01 (9th Cir. 1997) (en banc).
To determine whether an action "arises under" federal law, courts apply the "well-pleaded complaint rule," which provides that "a claim arises under federal law 'only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.'" Moore-Thomas, 553 F.3d at 1243 (quoting Valles v. Ivy Hill Corp., 410 F.3d 1071, 1075 (9th Cir. 2005)). As a corollary to the well-pleaded complaint rule, the "complete preemption doctrine" instructs that Congress "may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Id. (quoting Toumajian v. Frailey, 135 F.3d 648, 653 (9th Cir. 1998)) (internal quotation marks omitted). Under this doctrine, "if a federal cause of action completely preempts a state cause of action[,] any complaint that comes within the scope of the federal cause of action necessarily 'arises under' federal law." Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 24 (1983). In such cases, "any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1107 (9th Cir. 2000) (citations and internal quotation marks omitted). Ordinary preemption, on the other hand, is a federal law defense to a state law claim and is therefore "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).
A finding of complete preemption is rare, and so far the Supreme Court has only identified § 301 of the Labor Management and Relations Act, 29 U.S.C. § 185; § 502 of the Employee Retirement and Income Security Act of 1974, 29 U.S.C. § 1132; and §§ 85 and 86 of the National Bank Act, 12 U.S.C. §§ 85-86, as federal statutes that completely preempt state claims. See Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6-11 (2003). Whether a statute completely preempts state law depends on "whether Congress intended the federal cause of action to be exclusive." Id. at 9 n.5. The Ninth Circuit has articulated that "[t]he test is whether Congress clearly manifested an intent to convert state law claims into federal question claims." Ansley v. Ameriquest Mortg. Co., 340 F.3d 858, 862 (9th Cir. 2003) (quoting Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1184 (9th Cir. 2002)).
Defendants assert that the court has subject matter jurisdiction over this case because plaintiff's claims are completely preempted by the Home Owners Loan Act ("HOLA"), 12 U.S.C. §§ 1461, and a regulation made by the Office of Thrift Supervision ("OTS") pursuant to HOLA, 12 C.F.R. § 560.2. To prove that plaintiff's state claims are completely ...