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Guerra v. Carrington Mortgage Services LLC

June 29, 2010

ELADIO GUERRA ET AL
v.
CARRINGTON MORTGAGE SERVICES LLC ET AL



The opinion of the court was delivered by: Honorable Gary Allen Feess

CIVIL MINUTES - GENERAL

Proceedings: (In Chambers)

ORDER REMANDING CASE

I. INTRODUCTION & BACKGROUND

On April 26, 2010, plaintiffs Eladio and Juan Guerra (collectively, "Plaintiffs") filed this lawsuit against defendants Carrington Mortgage Services, LLC, New Century Mortgage Corp, Wells Fargo, N.A., Atlantic & Pacific Foreclosure Services, LLC, and Atlantic & Pacific Real Estate (CA), Inc. (collectively, "Defendants") in Los Angeles County Superior Court. In sum and substance, the complaint alleges Plaintiffs relied on Defendants' "false representations" and became victims of a "deceptive scheme" "designed to sell risky and costly loans" to homeowners. (Compl. ¶¶ 36-72.)

Plaintiffs assert the following claims: (1) fraud and intentional misrepresentation; (2) general negligence in not avoiding foreclosure or modifying loan terms; (3) negotiating in bad faith, violation of CAL. CIV. PROC. CODE § 1161 et seq., and relief from foreclosure (CAL. CIV. . CODE § 1179); and (4) unlawful business practices in violation of California Business & Professions Code § 17200, the Unfair Competition Law ("UCL").

To support their Section 17200 claim, Plaintiffs allege violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO") (18 U.S.C. §§ 1961-1968), the Fair Debt Collection Practices Act ("FDCPA"), and 42 U.S.C. §§ 1981, 1982. (Id. ¶ 113.) Defendants removed the suit to this Court pursuant to 28 U.S.C. § 1331, and contend that "Plaintiffs allege federal questions in the Complaint." (Not. ¶ 2.)

Because reference to federal law in a Section 17200 claim does not present a federal question, the Court REMANDS the present case for lack of subject matter jurisdiction. The Court explains its ruling in greater detail below.

II. DISCUSSION

LEGAL STANDARD

Under 28 U.S.C. § 1447(c), "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." The removal statute is strictly construed against removal jurisdiction. Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1086 (9th Cir. 2009). The "mere presence of a federal issue in a state cause of action does not automatically confer federal question jurisdiction." Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 814 (1986). Rather, "federal courts are under an independent obligation to examine their own jurisdiction." FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 229 (1990).

APPLICATION

1. APPLICABLE LAW

In Rains v. Criterion Sys., Inc., the Ninth Circuit considered whether federal jurisdiction extends to a state law claim that alleges a number of alternative theories of relief, some of which are supported by reference to federal law. 80 F.3d 339, 341 (9th Cir. 1996). The plaintiff in referred to Title VII of the Civil Rights Act of 1964 as one aspect of his claims for wrongful termination in violation of public policy and intentional interference with contractual relations. Id. at 342. In remanding the case for lack of subject matter jurisdiction, the Ninth Circuit held that "even though ...


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