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Federal National Mortgage Assoc. v. Martinez

December 12, 2011

FEDERAL NATIONAL MORTGAGE ASSOC.
v.
MARTINEZ, ET AL.



CIVIL MINUTES - GENERAL

Present: The Honorable MARGARET M. MORROW ANEL HUERTA N/A

Deputy Clerk Court Reporter

Attorneys Present for Plaintiffs: Attorneys Present for Defendants: None None

Proceedings: Order to Show Cause Why Action Should Not Be Remanded For Lack of Federal Question and Diversity Jurisdiction

I. BACKGROUND

On August 25, 2011, plaintiffs filed this complaint for unlawful detainer following a foreclosure sale, under California Code of Civil Procedure § 1161a(b)(3).*fn1 The case was designated as a limited civil case, where the amount demanded did not exceed $10,000. The complaint alleges that plaintiff, Federal National Mortgage Association, is entitled to possession of a parcel of real property located at 210 North Spring Avenue, Compton, CA 90221, after purchasing the property following a foreclosure sale pursuant to a deed of trust executed by defendants.

Defendants David Garcia Martinez and Nora Martinez are currently in possession of the premises, and are the former trustors or holdover occupants of the former trustors. They allegedly defaulted under the terms of the deed of trust that secured the property, and a trustee's sale was subsequently held. The complaint prays for restitution of the property, as well as damages in an amount to be determined at trial.

The defendants removed this action, invoking the court's federal question and diversity jurisdiction. Defendants contend that complete diversity exists between the parties, and that the total amount in controversy exceeds $75,000. They also allege that this complaint presents a federal question under the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq, as "[t]he loan was originated on January 4, 2008," and the statute of limitations "expires on or about January 4, 2012." Defendants contend that plaintiffs' failure to comply with TILA led to the illegal sale and wrongful foreclosure of the subject property, which ultimately resulted in the filing of this unlawful detainer

Defendants have also filed a motion to consolidate this action with another action, Martinez v. HSCB Bank USA N.A., et al., CV No. 11-07649 MMM (PJWx). In that case, the Martinezes are the plaintiffs and allege various causes of action against HSBC Bank and other defendants regarding the foreclosure of the subject property.

II. DISCUSSION

A. Federal Question Jurisdiction

Under 28 U.S.C. § 1331, the district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States" (emphasis added). Federal question jurisdiction is presumed absent unless defendants, as the party seeking to invoke this court's jurisdiction, McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936), show that plaintiffs have either alleged a federal cause of action, American Well Works Co. v. Layne & Bowler , 241 U.S. 257, 260 (1916) ("a suit arises under the law that creates the action"), a state cause of action that turns on a substantial dispositive issue of federal law, Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9 (1983); Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199 (1921), or a state cause of action that Congress has transformed into an inherently federal cause of action by completely preempting the field of its subject matter, Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 560 (1968); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987).

The question of whether a claim "arises under" federal law must be determined by reference to the "well-pleaded complaint." Franchise Tax Bd., supra, 463 U.S. at 9-10. Since a defendant may remove a case under 28 U.S.C. § 1441(b) only if the claim could have been brought in federal court, the question for removal jurisdiction must also be determined by reference to the "well-pleaded complaint." Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808 (1986). The well-pleaded complaint rule makes the plaintiff the "master of the claim" for purposes of removal jurisdiction. Caterpillar, supra, 482 U.S. at 392. Thus, where the plaintiff could maintain claims under both federal and state law, plaintiff can prevent removal by ignoring the federal claim and alleging only state law claims. Rains v. Criterion Systems, Inc., 80 F.3d 339, 344 (9th Cir.1996).

For federal question jurisdiction to attach,"a right or immunity created by the Constitution or laws of the United States must be an element, and an essential ...


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