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Gregory Smith and Amy Smith v. Quality Loan Service Corp

January 20, 2012



This matter comes before the court on Plaintiffs' Motion to Remand, and Defendants' Motion to Dismiss and Motion to Strike. ECF Nos. 6, 7 and 9. Having read and considered the arguments presented by the parties in the papers submitted to the court, the court finds this matter appropriate for resolution without a hearing. The court hereby DENIES plaintiffs' motion to remand and GRANTS defendants' motion to dismiss as to plaintiff's sole federal claim. It further REMANDS the remaining state law claims to state court and DENIES defendants' motion to strike as moot.

I. Background

A. The Complaint

Plaintiffs Gregory Smith and Amy Smith are residents and citizens of Placer County, California. ECF No. 1--3, Ex. 1 ¶ 1. Defendants MetLife Home Loans and MetLife Bank, N.A. are both banking associations whose main offices are in New Jersey. ECF No. 1. Quality Loan Service Corp. (Quality) is a California corporation with its principal place of business in California. ECF No. 1.

On July 18, 2011, plaintiffs filed an action in Placer County Superior Court against Quality, MetLife Home Loans, a division of MetLife Bank N.A. and MetLife Bank N.A. (collectively referred to as MetLife Bank), and ten Doe defendants, alleging seven claims including violation of the Fair Credit Reporting Act, fraud, unjust enrichment, violations of California Business and Professions Code section 17200, breach of a security instrument, wrongful foreclosure, and quiet title. ECF No. 1-3, Ex. 1. All the claims are related to the events surrounding the 2005 mortgage approval, the 2009 Notice of Default, and the currently-pending foreclosure of plaintiffs' home.

B. Procedural Background

On July 18, 2011, plaintiffs filed their complaint in Placer County Superior Court.

ECF No. 1-3, Ex. 1. The following day, plaintiffs filed for a temporary restraining order and preliminary injunction to enjoin Quality and MetLife Bank from foreclosing on plaintiffs' property during this action. ECF No. 1--3, Ex. 6.

On July 28, 2011, Quality filed a declaration for non-monetary status as provided by California Civil Code section 2924l.*fn1 ECF No. 13, Ex. 1.

On August 5, 2011, plaintiffs filed their memorandum of points and authorities in support of their application for preliminary injunction and in response to Quality's declaration of non-monetary status. ECF No. 13, Ex. 2.

On August 9, 2011, defendants filed a notice of removal to this court. ECF No. 1. On August 11, 2011, the Placer County Superior Court denied plaintiffs' request for a preliminary injunction. ECF No. 20, Ex. A (Decl. of Janet C. Song).

On August 16, 2011, defendants filed a motion to dismiss all of plaintiffs' claims for failure to state a claim for relief, as well as a motion to strike various statements in the complaint.*fn2 ECF Nos. 6--7. Plaintiffs subsequently file a motion to remand on September 7, 2011, challenging both diversity and federal question jurisdiction. ECF No. 9.

II. Motion To Remand

A defendant in state court may remove a pending action to federal court so long as the action could have originally been filed in federal court. See 28 U.S.C. § 1441(b); City of Chicago v. International College of Surgeons, 522 U.S. 156, 163 (1997). Removal may be based on diversity jurisdiction or on federal question jurisdiction. See 28 U.S.C. § 1441(b). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction because of improvident removal, the case shall be remanded to state court. See 28 U.S.C. § 1447(c); Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1065 (9th Cir. 1979). Even if no party questions the court's subject matter jurisdiction, the court is under a duty to raise the issue sua sponte. See Harris v. Provident Life and Accident Ins. Co., 26 F.3d 930, 931 (9th Cir. 1994). The removal statute is construed restrictively; doubts about removal are resolved in favor of remanding the case to state court. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992). The court determines the propriety of removal by asking whether the action could have been brought in federal court at the time of removal; that is, given the parties involved in the action and the causes of action asserted in the complaint, the court asks whether there was an actual basis for original federal subject matter jurisdiction when the defendant removed the action. See Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68--69 (1996); Libhart, 592 F.2d at 1065; United Food & Commercial Workers Union, Local 919 v. Centermark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994). In the instant case, defendants removed under both theories of jurisdiction, diversity and federal question.

A. Diversity Jurisdiction

In order to bring a diversity case in federal court against multiple defendants, each plaintiff must be diverse from each defendant. 28 U.S.C. ยง 1332(a). In the case of removal based on diversity jurisdiction, there must be complete diversity both at the time the action was filed and at the time of removal. Strotek Corp. v. Air Transport Ass'n of Am., 300 F.3d 1129, 1131--32 (9th Cir. 2002). Defendants argue that diversity is established under multiple theories, reviewed ...

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