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Maxion v. Beazer Homes Holdings Corp.

February 8, 2010

ANGEL MAXION AND DAISY MAXION, RICHARD GERHART AND DONNA GERHART, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
BEAZER HOMES HOLDINGS CORPORATION DBA BEAZER HOMES, A DELAWARE CORPORATION; BEAZER HOMES HOLDINGS CORP., A DELAWARE CORPORATION; SECURITY INSURANCE COMPANY, A VERMONT CORPORATION; AND DOES 1-1000, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on plaintiffs Richard and Donna Gerhart's ("plaintiffs") motion to remand this action to the Placer County Superior Court (the "Superior Court") on the ground the court lacks subject matter jurisdiction over plaintiffs' claims. More specifically, plaintiffs argue:

(1) their complaint alleges only state law claims which do not present any federal questions; and (2) there is no basis for removal under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d), because defendants untimely removed on that basis and/or the substantive requirements of CAFA are not met. Defendants Beazer Homes Holdings Corporation dba Beazer Homes and Beazer Mortgage Corporation ("defendants") oppose the motion, arguing plaintiffs' state law claims are predicated on the determination of a federal question under the Real Estate Settlement Practices Act ("RESPA"), and their motion under CAFA was timely because plaintiffs failed to unambiguously establish a basis for federal jurisdiction until the filing of their third amended complaint ("TAC").*fn1

BACKGROUND

The original complaint in this case was filed on March 12, 2008, in the Superior Court. On June 2, 2008, plaintiffs filed a first amended complaint ("FAC") alleging a violation of RESPA and state law claims for breach of written contract, negligence, fraud, fraudulent concealment, unjust enrichment, violation of California Business & Professions Code § 17200 ("UCL" or "unfair business practices"), and declaratory relief.

On July 17, 2008, defendants removed the case to this court. On August 28, 2008, defendants filed a motion to dismiss or, in the alternative, for summary judgment, with respect to the claims of the sole-named plaintiffs at that time, Angel Maxion and Daisy Maxion. Prior to a final ruling on the motion, however, plaintiffs filed a second amended complaint ("SAC") on November 26, 2008. The SAC substituted Richard and Donna Gerhart as the named plaintiffs in the action.

On January 9, 2009, defendants filed a motion to dismiss the SAC. In a memorandum and order of March 23, 2009, this court dismissed the sole federal claim, alleging a violation of RESPA, and declined to exercise supplemental jurisdiction over the remaining state law claims. The court remanded the case to the Superior Court.

On June 18, 2009, defendants filed a demurrer to the remaining state law claims. On September 2, 2009, the Superior Court entered an order sustaining the demurrer in its entirety, but granting plaintiffs leave to amend certain claims. On September 18, 2009, plaintiffs filed their TAC in the Superior Court. Plaintiffs alleged three state law claims: (1) "unfair business practices," (2) "breach of written contract," and

(3) "declaratory judgment."

On September 29, 2009, defendants again removed the case to this court, on the basis of an alleged federal question under RESPA and also pursuant to CAFA. On October 29, 2009, plaintiffs filed the instant motion to remand.

STANDARD

A civil case may be removed to federal court if the district court has original federal question jurisdiction. 28 U.S.C. § 1441(b). Federal district courts have original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. The party invoking removal bears the burden of establishing federal jurisdiction. See Harris v. Provident Life and Acc. Ins. Co., 26 F.3d 930, 932 (9th Cir. 1994) (quoting Gould v. Mutual Life Ins. Co., 790 F.2d 769, 771 (9th Cir. 1986)). Furthermore, 28 U.S.C. § 1441 is construed strictly against removal jurisdiction. Fardella v. Downey Savings & Loan Ass'n, No. 00-4393, 2001 WL 492442, at *1 (N.D. Cal. May 9, 2001) (citing Prize Frize, Inc. v. Matrix, Inc., 167 F.3d 1261, 1265 (9th Cir. 1999)). Removal is proper where a plaintiff's complaint asserts claims created by federal law or where a substantial federal issue of law exists. Merrell Dow Pharm. v. Thompson, 478 U.S. 804, 808-10 (1986). As a general rule, the court determines the existence of removal jurisdiction by considering the allegations on the face of the plaintiff's "well-pleaded complaint." See City of Chicago v. Int'l College of Surgeons, 522 U.S. 156 (1997). However, this general rule does not apply when a plaintiff attempts to defeat removal by using "artful pleading" to characterize or disguise a federal claim as a state claim. See Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1393 (9th Cir. 1988). When the plaintiff has "artfully pleaded" his claims, the district court may examine the entire record to determine the true nature of the claims, regardless of the plaintiff's characterization thereof. See Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 397 n.2 (1981).

Also, under CAFA, district courts have original jurisdiction over civil class actions filed under federal or state law in which any member of a class of plaintiffs is a citizen of a state different from any defendant and the amount in controversy for the putative class members in the aggregate exceeds the sum or value of $5,000,000, exclusive of interest and costs. 28 ...


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