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Richard Kohl v. American Home Shield Corp

December 14, 2011

RICHARD KOHL, PLAINTIFF,
v.
AMERICAN HOME SHIELD CORP., DEFENDANT.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER REMANDING ACTION FOR LACK OF SUBJECT MATTER JURISDICTION

Pending before the court are Plaintiff Richard Kohl's motion to amend and a motion to intervene by Debora L. Robinson. Defendant American Home Shield Corp. ("AHS") opposes both motions. Pursuant to Local Rule 7.1(d)(1), the matters presented are appropriate for decision without oral argument. For the reasons set forth below, the court concludes that it lacks subject matter jurisdiction over the action. The Clerk of Court is instructed to remand this action to state court and to close the file.

BACKGROUND

On April 6, 2011, AHS removed this action based upon diversity, 28 U.S.C. §1332(d), the Class Action Fairness Act of 2005 ("CAFA"), and federal question jurisdiction. 28 U.S.C. §1331. Plaintiff alleged a single claim for violation of the Unfair Competition Law ("UCL"), Bus. & Prof. Code §17200. The predicate for the UCL claim is the alleged violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §2607(a). At the time of removal, Plaintiff sought to represent a class of individuals defined as:

All persons residing in California who have purchased a home warranty from AHS in connection with the sale or purchase of a home financed by a federally related mortgage in the past four years, where any portion of the premium was paid to any real estate agent involved in the transaction, where such payments were conditioned upon the successful completion of the transaction selling the home warranty. (Compl. ¶20). The class period allegedly commences on March 4, 2007, (Notice of Removal, Exh. 2), and continues through the present time.

At the time of removal, an action involving the same underlying occurrence or transaction had obtained preliminary approval of a nationwide class action settlement. On May 26, 2009, a nationwide class action was commenced against AHS in the United States Court for the Northern District of Alabama, Southern Division, entitled Abney v. American Home Shield Corp., No. 2:09-1018 RDP (the "Abney action"). On January 20, 2011, the parties in Abney reached a settlement and filed a motion for preliminary approval of the settlement. On March 4, 2011, the district court in Alabama approved the settlement in Abney. (AHS Exh. 2). Pursuant to the class notice of settlement, each class member will receive payment of $40, representing "2/3 of the typical $60.00 kickback paid by AHS to real estate agents." (Oppo. to Motion to Dismiss at p.4:12). Plaintiff is the only identified California resident opt-out of the settlement in Abney.

On August 24, 2011 the court applied the well-pleaded complaint rule and determined that the court possessed subject matter jurisdiction pursuant to 28 U.S.C. §1331. (Ct. Dkt. 23). The Order did not directly address whether the court also possessed CAFA jurisdiction at the time of removal.

The court remands this action to state court because AHS fails to show that the court possesses CAFA jurisdiction over the action.*fn1

DISCUSSION

"Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause." Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264 (1868)).

Accordingly, federal courts are under a continuing duty to confirm their jurisdictional power and are even "obliged to inquire sua sponte whenever a doubt arises as to [its] existence. . . ." Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977) (citations omitted).

In relevant part, the court possesses subject matter jurisdiction over the present action only where (1) there is a federal question or (2) "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs." 28 U.S.C. §1332(d)(2); (Ct. Dkt. 1; Notice of Removal ¶¶1, 2). Up to this point, the court has treated this action as one arising under federal law. Federal Question Jurisdiction At the time of removal, for the reasons set forth in this court's August 24, 2011 Order, the court possessed federal question jurisdiction over the action. (Ct. Dkt. 23). However, in the Proposed First Amended Complaint ("PFAC"), Plaintiff has abandoned the basis for his federal claim.*fn2 As there is no allegation that the court possess supplemental jurisdiction over potential transactionally related state law claims, even if appropriate under 28 U.S.C. §1367, the court concludes that it lacks federal question or supplemental jurisdiction over the claims alleged in this action.*fn3

In sum, the court finds that there is no basis for the court to exercise federal question ...


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