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Tran v. Select Portfolio Servicing, Inc.

United States District Court, N.D. California

April 16, 2015

HUNG TRAN, Plaintiff,
v.
SELECT PORTFOLIO SERVICING, INC., et al., Defendants.

ORDER REMANDING ACTION TO ALAMEDA COUNTY SUPERIOR COURT

HAYWOOD S. GILLIAM, Jr., District Judge.

I. INTRODUCTION

Plaintiff Hung Tran ("Plaintiff") filed this action against Defendants Select Portfolio Servicing ("SPS"), U.S. Bank N.A. and JPMorgan Chase Bank ("Chase") (collectively "Defendants") in Alameda County Superior Court. Compl. (Dkt. No. 1, Ex. 1). Plaintiff alleges that two loan modification agreements with Defendants contained "arrearages... discharged in bankruptcy, " denying him "the benefit of his bankruptcy discharge." Compl. ¶ 8. Plaintiff also alleges that Defendants erroneously instituted foreclosure proceedings on the subject property, and are violating the modification agreements by charging him more than he owes on the loan. Id. ¶¶ 8, 11-12.

SDS and U.S. Bank subsequently removed the action to this Court on two grounds: (1) federal question jurisdiction under 28 U.S.C §§ 1331(a) and 1441(a) based on Plaintiff's claim under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et. seq.; and (2) jurisdiction under 28 U.S.C. §§ 1334(a)(b) and 1452(a) based on the theory that Plaintiff's complaint alleges causes of action sounding in or "related to" bankruptcy. Not. of Removal (Dkt. No. 1). On April 14, 2015, the Court granted Defendants' motions to dismiss with prejudice as to Plaintiff's sole federal claim under the FDCPA. Order on Mot. to Dismiss (Dkt. No. 37).

Having dismissed the sole federal claim in the complaint without leave to amend, the Court must determine whether to retain jurisdiction over the remaining state law causes of action. Defendants argue that the Court should retain jurisdiction over these claims on two grounds: (1) as an exercise of its jurisdiction over issues "related to" a bankruptcy proceeding under 28 U.S.C. §§ 1334 and 1452; and (2) as an exercise of its general supplemental jurisdiction under 28 U.S.C. § 1367(a). For the reasons discussed below, the Court concludes that these claims should be remanded to the Alameda County Superior Court.

II. "RELATED TO" BANKRUPTCY JURISDICTION

A. Legal Standard

Under Section 1334(a), federal courts are courts of "original, " but not "exclusive, " jurisdiction for all civil proceedings "arising in or related to a [bankruptcy] case under title 11." 28 U.S.C. § 1334(a). A civil proceeding is considered "related to bankruptcy" if the outcome could "alter the debtor's rights, liabilities, options or freedom of action (either positively or negatively)... in any way [that] impacts upon the handling and administration of the bankrupt estate." In re Fietz, 852 F.2d 455, 457 (9th Cir. 1988) (citing Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)). Where "related to" jurisdiction exists, a party may remove a claim to the "district court for the district where the civil action is pending if that court has jurisdiction pursuant to § 1334." 28 U.S.C. § 1452(a). However, even where such removal jurisdiction exists, "[t]he court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground." 28 U.S.C. § 1452(b).

B. Assuming "Related To" Jurisdiction Exists Here, Discretionary Factors Weigh Substantially in Favor of Equitable Remand

Defendants contend that Plaintiff's claims are "related to" Plaintiff's previous bankruptcy action because he alleges that Defendants are attempting to require him to pay a debt that was partially discharged in his 2012 bankruptcy proceeding. See Not. of Removal at 3; see, e.g., Compl., ¶¶ 6-8, 10, 11. For purposes of this Order, the Court assumes, without deciding, that Plaintiff's state law claims are "related to" the prior bankruptcy proceeding.[1]

"Section 1452(b) gives courts an unusually broad grant of authority in determining whether remand is equitable." Charles Schwab Corp. v. Banc of America Securities, No. 10-CV-03489-LHK, 2011 WL 864978 at *7 (N.D. Cal. Mar. 11, 2011) (internal quotation marks and citations omitted). District courts in this circuit "have typically identified seven factors governing the decision to remand: (1) the effect of the action on the administration of the bankruptcy estate; (2) the extent to which issues of state law predominate; (3) the difficulty of applicable state law; (4) comity; (5) the relatedness of the action to the bankruptcy case; (6) any jury trial right; and (7) prejudice to plaintiffs from removal." Parke v. Cardsystems Solutions, No. C 06-04857 WHA, 2006 WL 2917604, at *4 (N.D. Cal. Oct. 11, 2006) (quoting Hopkins v. Plant Insulation Co., 349 B.R. 805, 813 (N.D. Cal. 2006)).

Assessing these factors, the Court concludes that equitable remand of Plaintiff's remaining claims to the state court is appropriate.

1. State Law Issues Thoroughly Predominate Plaintiff's Claims

In the Court's view, the most significant factors weighing in favor of remand are the undeniable prevalence of substantial (and, in at least one case, unsettled) state law issues (factors (2), (3) and (4)). Now that the FDCPA claim has been dismissed, all six of Plaintiff's claims arise under California law, and disputes over California law dominate both sides' arguments in their briefs. At least two of Plaintiff's claims, regarding the assignment of the deed of trust on Plaintiff's home and the attempted foreclosure thereon, involve the application of legal standards currently under review by the California Supreme Court. See Yvanova v. New Century Mortgage Corp., 331 P.3d 1275 (Cal. 2014) (granting review regarding whether, in an action for wrongful ...


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