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Racquel C. Benas and Benjie C. Benas v. Shea Mortgage Inc.; Ibm Lender Business Process Services

October 4, 2011

RACQUEL C. BENAS AND BENJIE C. BENAS, PLAINTIFFS,
v.
SHEA MORTGAGE INC.; IBM LENDER BUSINESS PROCESS SERVICES, INC.; CHASE HOME FINANCE, LLC; AND DOES I - XX, INCLUSIVE,
DEFENDANTS.



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

ORDER (1) DENYING PLAINTIFFS' MOTION TO REMAND [Doc. No. 5] (2) GRANTING DEFENDANT SHEA, IBM, AND CHASE'S MOTIONS TO DISMISS [Doc. Nos. 2, 4, 14] (3) DENYING AS MOOT SHEA'S MOTION TO STRIKE[Doc. No. 2]

Presently before the Court is a motion to remand brought by Plaintiffs Racquel C. Benas and Benjie C. Benas ("Plaintiffs"), [Doc. No. 5], three motions to dismiss Plaintiffs' complaint brought by Defendants Shea Mortgage Inc. ("Shea"), IBM Lender Process Services, Inc. ("IBM"), and Chase Finance, LLC ("Chase") (collectively "Defendants"), [Doc. Nos. 2, 4, 14], and a motion to strike portions of Plaintiffs' complaint brought by Defendant Shea. [Doc. No. 2.] The motions have been fully briefed and are suitable for disposition without oral argument under Civil Local Rule 7.1(d)(1). For the reasons set forth below, the Court DENIES Plaintiffs' motion to remand, the Court GRANTS Defendants' motions to dismiss, and DENIES AS MOOT Shea's motion to strike.

BACKGROUND

This is a mortgage case. Plaintiffs allege they purchased the subject property, located at 538 Trovita Court, Escondido, California, on March 17, 2008. [Doc. No. 1-2, Compl. ¶¶ 2, 8, Exs. 2, 4.] To fund that purchase, Plaintiffs secured a loan for $417,000 from Defendant Shea, secured by a Deed of Trust. [Id. ¶ 10, Ex. 4.] On February 11, 2011, there was a notice of default on Plaintiffs' property, [id. ¶ 27, Ex. 28], and on May 6, 2011, there was a notice of trustee's sale stating that the sale of Plaintiffs' property would take place on June 1, 2011. [Id. ¶ 34, Ex. 35.]

On May 27, 2011, Plaintiffs filed the present action against Defendants Shea, IBM, and Chase in San Diego Superior Court alleging causes of action for (1) violation of the Real Estate Settlement and Procedures Act ("RESPA"), 12 U.S.C. §§ 2604(a), (b), (d); (2) violation of RESPA, 12 U.S.C. §§ 2604(c), (d); (3) violation of RESPA, 12 U.S.C. § 2605(a); (4) violation of RESPA, 12 U.S.C. § 2607(c)(4)(A); (5) violation of RESPA, 12 U.S.C. § 2603(a); (6) violation of RESPA, 12 U.S.C. § 2609(e); (7) violation of RESPA, 12 U.S.C. § 2605(e); (8) breach of fiduciary duties under California Civil Code §§ 2923.1 and 2079.24 and California Business and Professions Code § 10176; (9) constructive fraud under California Civil Code § 1573; (10) negligent misrepresentation and concealment under California Civil Code §§ 1709-1710; and (11) violation of California Business and Professions Code § 17200. [Compl.] Plaintiffs also filed on May 25, 2011 a motion for a temporary restraining order staying the foreclosure proceedings, which was granted by the state court on May 26, 2011. [Doc. Nos. 1-3, 1-4.] On July 1, 2011, Defendants removed the action from state court to this Court on the basis of federal question jurisdiction under 28 U.S.C. § 1331 and supplemental jurisdiction under 28 U.S.C. § 1367(a). [Doc. No. 1, Notice of Removal.]

DISCUSSION

I. Plaintiffs' Motion to Remand

Plaintiffs move to remand this action back to state court. [Doc. No. 5-1.] Plaintiffs argue that the case should be remanded due to the doctrine of abstention.*fn1 [Id. at 3-6.] Defendant Shea argues that removal is proper as this Court has jurisdiction over Plaintiffs' claims, and the Court does not have to abstain from hearing Plaintiffs' state law claims. [Doc. No. 13.]

A defendant may remove "any civil action brought in a State Court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). District courts have original jurisdiction over cases that arise under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. For a case to be removable as a federal question, it must be a case that could have been brought in a district court as a federal question under 28 U.S.C. § 1331. Further, when a district court has original jurisdiction over a claim, it "shall have supplemental jurisdiction over all other claims that are so related to claims in the action . . . that they form part of the same case or controversy . . . ." 28 U.S.C. § 1367(a). "The burden of establishing federal jurisdiction is on the party seeking removal, and the removal statute is strictly construed against removal jurisdiction." Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1265 (9th Cir. 1999).

Plaintiffs bring seven causes of action under the Real Estate Settlement and Procedures Act, a federal statute. [Compl.] Accordingly, the Court has original jurisdiction over these claims, see 28 U.S.C. § 1331, and the Court also has supplemental jurisdiction over Plaintiffs' state law claims as all of Plaintiffs' claims are related to their mortgage loan and subsequent foreclosure proceedings. See 28 U.S.C. 1367(a). Therefore, removal by Defendants is proper unless one of the abstention doctrines cited by Plaintiffs is applicable.

Plaintiffs first argue that remand is appropriate pursuant to 28 U.S.C. § 1441(c) because its state law causes of action predominate. However, Plaintiffs' contention that "the entire action, including the [RESPA claims], could be remanded because state law claims predominate is not supported by 28 U.S.C. § 1441(c)." Rawak-German v. Countrywide Bank, 2010 U.S. Dist. LEXIS 13088, at *4 (S.D. Cal. Feb. 16, 2010). The Court is not entitled to decline jurisdiction over Plaintiffs' RESPA claims on the grounds that there are more state statutes at issue than federal ones. See id.

Plaintiffs next argue that abstention is proper under the Burford abstention doctrine because there are difficult questions of state law presented in their case. The Burford abstention doctrine only applies in extraordinary circumstances where there are complex state regulatory systems at issue. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 725-27 (1996). Burford abstention is not proper in this action as there is no complex state regulatory system at issue. See Patel v. Wash. Mut., 2010 U.S. Dist. LEXIS 8420, at *3 (S.D. Cal. Feb. 2, 2010).

Plaintiff also argues that remand is appropriate under the Younger abstention doctrine because there are ongoing proceedings in state court. Younger abstention is proper where (1) there are ongoing state judicial proceedings, (2) that implicate important state interests, and (3) there is an adequate opportunity in the state proceedings to raise federal questions. Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432 (1982). Here, there are no ongoing state court proceedings. When a case is removed to federal court, the state court "shall proceed no further unless and until the case is remanded. 28 U.S.C. § 1446(d); see also Rawak-German, 2010 U.S. Dist. LEXIS 13088, at *4-5; Patel, 2010 U.S. Dist. LEXIS 8420, at *3. Because there are no ongoing proceedings, Younger abstention is not appropriate.

Finally, Plaintiffs argue that the action should be remanded because Plaintiffs' choice of forum should be given strong deference. [Doc. No. 5-1 at 6.] However, "[r]especting a plaintiff's choice of forum does not permit a court to remand a properly removed action." Rawak-German, 2010 U.S. Dist. ...


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