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Romero Chua v. America's Wholesale Lender

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


December 17, 2010

ROMERO CHUA,
PLAINTIFF,
v.
AMERICA'S WHOLESALE LENDER,
DEFENDANT;

The opinion of the court was delivered by: M. James Lorenz United States District Court Judge

ORDER OF REMAND AND RELATED COUNTERCLAIM.

Plaintiff Romero Chua, proceeding pro se, filed a complaint in State court against America's Wholesale Lender (Countrywide Home Loans) seeking to rescind a mortgage, receive reimbursement of the closing costs and accrued interest, and prevent it from transferring the mortgaged property. Defendant Countrywide Home Loans, Inc. ("Countrywide") removed this action from state court based on federal question jurisdiction pursuant to 28 U.S.C. Sections 1441(b) and 1331.

After removal Plaintiff filed an amended complaint naming Barratt American, America Wholesale Lender and Countrywide Home Loans as Defendants. He alleged that he borrowed funds from Countrywide to purchase a residence, and secured the repayment of the loan with a deed of trust. He contended that Barratt American, the real estate agent and broker as well as a loan broker associated with the purchase, and Countrywide, the lender, violated several federal statutes, including the Truth in Lending Act ("TILA"), and California Business and Professions Code Section 17500. He requested the court to rescind the mortgage, reimburse closing costs and all accrued interest, and preclude Defendants from transferring the residence.

BAC Home Loans Servicing, L.P. fka Countrywide Home Loans, L.P. d/b/a/ America's Wholesale Lender ("BAC") filed a pleading styled as a counterclaim*fn1 against Plaintiff, Consuelo Chua, R & C Trust and All Persons Known and Unknown Claiming Right, Interest or Title to the Property. BAC alleged that the Chuas fraudulently filed full reconveyances of two deeds of trust encumbering the residence. BAC requested a declaratory judgment that the reconveyances are void, cancellation of the reconveyances, and a declaratory judgment that Plaintiff's claim for rescission of the mortgage pursuant to TILA, 15 U.S.C. § 1635, is invalid.

Subsequently, Countrywide and BAC filed a motion to dismiss Plaintiff's amended complaint under Federal Rule of Civil Procedure 12(b)(6). The motion was granted with leave to amend. (Mar. 17, 2010 Order Granting Motion to Dismiss with Leave to Amend.) However, Plaintiff did not file a second amended complaint and the action was dismissed. (See May 19, 2010 Order Denying Defendants' Ex Parte Application.)

Remaining before the court are only BAC's State law claims. With the order granting the To the extent any named Defendant had transferred to BAC its interest in this litigation, BAC should have followed Federal Rule of Civil Procedure 25(c). See In re Bernal, 207 F.3d 595, 598 (9th Cir. 2000) (either the suit may continue in the transferor's name and the judgment may be binding on the transferee, or the transferee may move for substitution of parties).

Even if BAC were a party who could file a counterclaim, a counterclaim cannot be filed in the absence of an answer. See Fed. R. Civ. Proc. 7(a); see also Schwarzer et al., Fed. Civ. Proc. Before Trial ¶ 8:1255. BAC did not file an answer, but instead joined in Defendant Countrywide's Rule 12(b)(6) motion to dismiss, which was granted.

motion to dismiss and Plaintiff's failure to amend the complaint, all federal claims have been disposed of, including BAC's third counterclaim for declaratory judgment, which was based entirely on the request for a finding that Plaintiff's claim for rescission under TILA was invalid. The only claims remaining are BAC's State law claims for declaratory judgment finding the recorded reconveyances void and for cancellation of instruments.

Based on the foregoing, the court declines to exercise supplemental jurisdiction. This action is therefore remanded to the Superior Court of California, County of San Diego pursuant to 28 U.S.C. Section 1367(c)(3).

IT IS SO ORDERED.

COPY TO: HON. WILLIAM V. GALLO UNITED STATES MAGISTRATE JUDGE ALL PARTIES/COUNSEL


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