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Flores v. American Home Equity Corp.

July 6, 2010

MARTIN VIDRIO FLORES, PLAINTIFF,
v.
AMERICAN HOME EQUITY CORPORATION; COMMONWEALTH LAND TITLE; FIRST AMERICAN TITLE COMPANY; FIRST AMERICAN LOANSTAR TRUSTEE SERVICE; HSBC BANK, NATIONAL ASSOCIATION; AND DOES 1-200, DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER: (1) GRANTING PLAINTIFF'S MOTION TO REMAND (Doc. No. 13); and (2) DENYING AS MOOT DEFENDANT HSBC'S MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT (Doc. No. 5).

BACKGROUND

Presently before the Court is Defendant HSBC Bank, National Association's ("HSBC") motion to dismiss Plaintiff Martin Vidrio Flores' ("Plaintiff") First Amended Complaint for failure to state a claim. (Doc. No. 10.) Also before the Court is Plaintiff's motion to remand. (Doc. No. 13.)

These motions are suitable for disposition without oral argument pursuant to Local Civil Rule 7.1(d)(1). For the reasons stated herein, the Court GRANTS Plaintiff's motion to remand, and DENIES AS MOOT HSBC's motion to dismiss.

This case involves two loans obtained by Plaintiff for the purchase of property, and the alleged concealment of material information by his lenders. Plaintiff commenced the action in state Superior Court on September 11, 2009, and Defendants subsequently removed the action to this court on February 10, 2010, on the basis of federal question jurisdiction. (Doc. No. 1.)

On February 17, 2010, HSBC filed a motion to dismiss Plaintiff's Complaint for failure to state a claim. (Doc. No. 5.) The Court denied the motion as moot after Plaintiff filed a First Amended Complaint ("FAC").*fn1 (Doc. No. 8.)

Plaintiff's FAC names as defendants HSBC, American Home Equity Corporation, Commonwealth Land Title, First American Title Company, First American Loanstar Trustee Service, and Does 1-200. Plaintiff asserts twelve causes of action: (1) violation of the Truth in Lending Act; (2) violation of California Business and Professions Code § 17200; (3) unfair business practices in violation of several state and federal statutes; (4) fraudulent omission; (5) unfair business practices in violation of California Financial Code § 2-2302; (6) quiet title; (7) breach of contract; (8) breach of implied covenant of good faith and fair dealing; (9) declaratory and injunctive relief; (10) fraud; (11) violation of several sections of the California Civil Code; and (12) rescission based on violation of California Civil Code § 1632.

On March 29, 2010, HSBC filed the instant motion to dismiss the FAC. (Doc. No. 10.) On April 14, 2010, Plaintiff filed an opposition, which consisted entirely of a motion to remand and proposed Second Amended Complaint ("SAC"). (Doc. No. 11.) Pursuant to the Court's instruction, Plaintiff withdrew the opposition and re-filed it as a motion to remand. (Doc. No. 13.) In his motion, Plaintiff moves the Court to remand the case to state court based on the proposed SAC, which deletes the federal claims and references to federal law.

The Court granted HSBC leave to file a late opposition to Plaintiff's motion to remand, and Plaintiff filed a reply. (Doc. No. 20.) In its opposition, HSBC argues the Court cannot remand this case because the Court has diversity jurisdiction. Because Plaintiff's subsequent reply did not address this issue, the Court ordered Plaintiff to file supplemental briefing. (Doc. No. 23.) Plaintiff failed to do so. Despite Plaintiff's failure to comply with this order, the Court addresses the motion to remand on the merits.

DISCUSSION

I. Plaintiff's Request for Leave to Amend

Federal Rule of Civil Procedure 15 allows a party to amend its pleading with leave of court after the period for amendment as a matter of course has expired. See FED. R. CIV. P. 15(a)(2). Rule 15 provides, "[t]he court should freely give leave when justice so requires." Id. The Ninth Circuit has construed this broadly, requiring that leave to amend be granted with "extreme liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990) (citation omitted). The Supreme Court has articulated five factors the courts should consider in deciding whether to grant leave to amend: (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4) futility of amendment; and (5) whether the party has previously amended its pleadings. Forman v. Davis, 371 U.S. 178, 182 (1962); see also Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003).

Upon weighing these five factors, the Court finds it appropriate to grant Plaintiff leave to amend. First, HSBC has not demonstrated bad faith or undue delay. HSBC argues Plaintiff's proposed SAC attempts to disguise federal claims as state claims. Based on review of the proposed SAC, this argument has no merit. The Court also relies on Plaintiff's representation he has "removed any reference and/or what could be interpreted as reliance, to federal rule of law." (Mot. to Remand at 7:14-16.) Furthermore, it is not improper for Plaintiff to seek dismissal of the federal claims with leave of the court, and seek remand based on the remaining state law claims.*fn2

See Baddie v. Berkeley Farms, Inc., 64 F.3d 487, 490 (9th Cir. 1995) (when a plaintiff files both state and federal causes of action in state court, and the defendant removes the case, the plaintiff is entitled to settle certain claims or dismiss them with leave of the ...


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