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Shepherd v. GMAC Mortgage

September 10, 2010

DWAYNE SHEPHERD; SELINA SHEPHERD, PLAINTIFFS,
v.
GMAC MORTGAGE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge

ORDER DENYING MOTION TO DISMISS OR STRIKE; AND ORDER OF REMAND [Docket numbers 5, 6]

I. Background

This action was removed from the California Superior Court for the County of San Diego, Eastern District. Only two Defendants, GMAC Mortgage, LLC and ETS Services, LLC (the "Removing Defendants"), removed the action; the others, they represented, had not yet appeared. Defendants then filed a motion to dismiss or strike, and Plaintiffs moved to remand. As part of the motion to remand, Plaintiffs seek attorney's fees.

The complaint lists thirteen causes of action, two of which arise under federal law.*fn1 The claims all arise from a foreclosure on Plaintiffs' real property, which has already taken place. The two federal claims arise under the Truth in Lending Act, 15 U.S.C. § 160 et seq.

("TILA") and the Real Estate Settlement and Procedures Act 12 U.S.C. § 2601 et seq. ("RESPA"), respectively.

Plaintiffs ask that this action be remanded because not all Defendants joined in the removal. There is a "strong presumption" against removal jurisdiction, and the party seeking removal has the burden of establishing that removal is proper. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992). If there is any doubt as to the propriety of removal, federal jurisdiction must be rejected. Id.

Plaintiffs have presented proof of service showing most Defendants were served on October 19 or 20, 2009, and the Removing Defendants have not disputed this nor submitted evidence to the contrary. See Orozco v. EquiFirst Corp., 2008 WL 5412364, *1 (C.D.Cal., Dec. 22, 2008) (holding that removing defendants must affirmatively explain the absence of any defendants not joining in removal). They have done no more than to say they don't know whether Harvest Capital, Home Mortgage Solutions, and Isis Financial, Inc. were properly served. (Decl. of Andrew Bao in Supp. of Notice of Removal, ¶ 5.) There is no indication the remaining Defendant, IndyMac Bank, has been served. On November 6, the Removing Defendants removed this action. Harvest Capital, Home Mortgage Solutions, Isis Financial, Inc., and IndyMac Bank did not join in the notice of removal, nor have they yet appeared in this action. The two federal claims are directed at GMAC and IndyMac Bank.

II. Discussion

A. Unanimous Joinder Rule

Plaintiffs cite Emrich v. Touche Ross & Co., 846 F.2d 1190, 1193 n.1 (9th Cir. 1998) for the principle that, under 28 U.S.C. § 1446(a), all named and served Defendants (except nominal, unknown, or fraudulently joined parties) must consent to removal of an action. This is sometimes called the Martin rule (after Chicago, R.I. & P.R. Co. v. Martin, 178 U.S. 245 (1900)), the unanimous joinder requirement or simply the unanimity requirement. See Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208, 1225 (9th Cir. 2009). If all Defendants have not joined and an exception applies, the burden falls on the removing parties to explain this. Prize Frize, Inc. v. Matrix (U.S.), Inc., 167 F.3d 1261, 1266 (9th Cir. 1999), superseded by statute as stated in Abrego v. Abrego v. The Dow Chemical Co., 443 F.3d 676, 681 (9th Cir. 2006). Under this rule, the consent of IndyMac Bank was not required for removal, but the consent of Harvest Capital, Home Mortgage Solutions, and Isis Financial, Inc. would ordinarily be required because these three Defendants were served.

The Removing Defendants point to and rely on one of several exceptions to the unanimous joinder rule. Citing the holdings of several federal district courts, they contend only those Defendants who are subject to the removable claims are required to join in removal. See, e.g., Moscovitch v. Danbury Hosp., 25 F. Supp. 2d 74, 78 (D.Conn. 1999); Hill v. City of Boston, 706 F. Supp. 966, 968 (D.Mass. 1989); Gorman v. Abbot Laboratories, 629 F. Supp. 1196, 1199 (D.R.I. 1986). They argue based on these decisions that this exception to the unanimity requirement is "relatively uniform."

The Hill exception, as it is sometimes known, could be described as a variation on a commonly recognized exception to the unanimous joinder rule. The more commonly recognized exception is available when the removable claims are "separate and independent" of the nonremovable claims; in that case, only defendants to the removable claims need to consent to removal. See Emrich, 846 F.2d at 1197 (noting "separate and independent" exception). See also Aura Sys., Inc. v. Loeb & Loeb, 2009 WL 904132, *2 (C.D.Cal., March 31, 2009) (equating the Hill exception with the "separate and independent" exception). The Hill exception is noted in a major practice guide, William W. Schwarzer, A. Wallace Tashima, & James M. Wagstaffe, Federal Civil Procedure Before Trial § 2:981.1 (Rutter Group 2008), but it is not so widespread that it can rightly be called uniform, or even relatively uniform. Most notably, the Fifth Circuit rejected the Hill exception in Doe v. Kerwood, 969 F.2d 165, 167 (5th Cir. 1992) (finding the Hill exception incompatible with the Supreme Court's holding in Martin). Other cases in various U.S. district courts agree with this conclusion. See, e.g., Mayo v. Christian Hosp. Northeast-Northwest, 962 F. Supp. 1203, 1205 (E.D.Mo. 1997); Mullins v. Hinkle, 953 F. Supp. 744, 750 (S.D.W.Va., 1997); Regalado v. City of Chicago, 946 F. Supp. 560, 562 (N.D.Ill., 1996); Gibson v. Inhabitants of Town of Brunswick, 899 F. Supp. 720, 721 (D.Me. 1995); Chaghervand v. CareFirst, 909 F. Supp. 304, 308 (D.Md., 1995).

It is not entirely clear whether Moscovitch even relies on the Hill exception; it may in fact rely on the commonly accepted "separate and independent claim" exception. See Henry v. Independent American Savings Ass'n, 857 F.2d 995, 999 (5th Cir. 1988) ("[I]f one defendant's removal petition is premised on removable claims 'separate and independent' from the claims brought against other defendants, consent of the other defendants is not required.") (citations omitted). Moscovitch recognized that, where a case involves a removable claim and a separate and non-removable claim, only defendants against whom the removable claim is brought need to consent to removal. 25 F. Supp. 2d at 78. Moscovitch used the word "separate" without explaining whether it meant simply one of the claims in the complaint, or whether it meant a claim independent of the non-removable claims. Moscovitch has been interpreted both ways. Compare Schwarzer, § 2:981.1 (citing Moscovitch for the principle that "defendants named only in nonremovable claims . . . need not join" in removal) and Lanford v. Prince George's County, MD, 175 F. Supp. 2d. 797, 804 (D.Md., 2001) (interpreting Moscovitch as holding that consent of a party only named in a separate and independent nonremovable claim is not required).

The Removing Defendants have cited several other cases, including Intercoastal Refining Co. v. Jalil, 487 F. Supp. 606, 607--08 (S.D.Tex. 1980), Radi v. Travelers Insurance Co., 1992 WL 131048 (S.D.N.Y. April 13, 1992), and Parisi v. Rochester Cardiothoracic Associates, P.C., 1992 WL 470521 (W.D.N.Y. 1992). These do not support the Removing Defendants' positions, however. Intercoastal Refining merely held that a plaintiff's post-removal conduct in federal court waived any objection to improper removal. 487 F. Supp. at 608 ("[T]his Court holds that the Plaintiff's post-removal conduct, occurring prior to ...


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