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Yhudai v. Mortgage Electronic Registration Systems, Inc.

United States District Court, C.D. California

July 18, 2017

Moshe Yhudai
Mortgage Electronic Registration Systems, Inc. et al.

          Present: Honorable Philip S. Gutierrez, United States District Judge


         Proceedings (In Chambers): Order GRANTING Plaintiff's Motion to Remand and RENDERING MOOT Defendants' Motion to Dismiss

         Before the Court is Plaintiff Moshe Yhudai's motion to remand. Dkt. # 15 (“Mot.”). Also before the Court is Defendants' motion to dismiss the complaint. Dkt. # 7. The Court finds the matters appropriate for decision without oral argument. Fed.R.Civ.P. 78; Local R. 7-15. After considering the papers submitted by the parties, the Court GRANTS the motion to remand and RENDERS MOOT Defendants' motion to dismiss.

         I. Background

         On March 22, 2017, Plaintiff Moshe Yhudai (“Plaintiff”) filed this suit in California state court against Defendants Mortgage Electronic Registration Systems, Inc. (“MERS”), Select Portfolio Servicing, Inc. (“SPS”); Deutsche Bank National Trust Company as trustee, on behalf of the holders of the Impac Secured Assets Corp. Mortgage Pass-Through Certificates Series 2007-2 (“Deutsche Bank”), and Recontrust Company N.A. See Dkt. # 1-1 (“Complaint” or “Compl.”). This suit is based on allegations that Defendants engaged in unlawful lending and foreclosure practices in connection with a mortgage obtained by Plaintiff. See id. The Complaint lists the following causes of action: (1) violation of the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788.17(a); (2) fraud-intentional misrepresentation; (3) violation of California Corporations Code §§ 2100 et seq.; (4) fraud-concealment; (5) fraud-violation of California Penal Code § 115.5; (6) quiet title; and (7) declaratory and injunctive relief. Id.

         On April 24, 2017, pursuant to provisions of 28 U.S.C. § 1441(b), MERS, SPS, and Deutsche Bank (together, “Defendants”) removed the case to this Court on the basis of federal jurisdiction under 28 U.S.C. § 1331. See Dkt. # 1, Notice of Removal (“NOR”) ¶ 3. Defendants assert that Plaintiff's “first causes of action, beginning at paragraph 16 and ending at paragraph 33, arise out of alleged violations of federal law.” Id. ¶ 4. Shortly thereafter, Defendants filed a motion to dismiss the Complaint. Dkt. # 7. On May 24, 2017, Plaintiff filed a motion to remand the case to state court on grounds that removal was improper because no federal question appears on the face of the Complaint. See Mot. 5. For the reasons stated below, the Court finds it lacks subject matter jurisdiction over this case and remands it to state court.

         II. Legal Standard

         Federal courts are courts of limited jurisdiction. See Gunn v. Minton, 133 S.Ct. 1059, 1064 (2013). Under 28 U.S.C. § 1441, a defendant may remove a civil action from state court to federal district court only if the federal court has subject matter jurisdiction over the case. See Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163 (1997) (“The propriety of removal thus depends on whether the case originally could have been filed in federal court.”). The case shall be remanded to state court if at any time before final judgment it appears a removing court lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c); Int'l Primate Prot. League v. Adm'rs of Tulane Educ. Fund, 500 U.S. 72, 87 (1991). There is a strong presumption against removal jurisdiction, so the party seeking removal always has the burden of establishing that removal is proper. See Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010) (citing Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992)). If there is any doubt as to the propriety of removal, federal jurisdiction must be rejected. Gaus, 980 F.2d at 567.

         III. Discussion

         Plaintiff asserts only state causes of action in his complaint, including an alleged violation of California's Fair Debt Collections Practices Act, known as the Rosenthal Act (“State FDCPA”). See Compl. ¶¶ 16-33; Mot. 8. Defendants contend that Plaintiff's claims nonetheless “arise under” federal law because Plaintiff's first cause of action for violation of the State FDCPA includes allegations that Defendant violated the federal Fair Debt Collection Practices Act (the “Federal FDCPA”). See Dkt. # 20 (“Opp.”) at 3.

         To determine whether a claim made under a state law cause of action nevertheless “arises under” federal law, a court must consider whether the claim “necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved of federal and state judicial responsibilities.” See Grable & Sons Metal Prods. v. Eng'g & Mfg., 545 U.S. 308, 314 (2005). A “substantial” federal question is one that “involves the interpretation of a federal statute that actually is in dispute in the litigation and is so important that it ‘sensibly belongs in federal court.'” Eastman v. Marine Mech. Corp., 438 F.3d 544, 552 (6th Cir. 2006) (quoting Grable & Sons, 545 U.S. at 314). Thus, as the Supreme Court has noted, “federal issue” is not “a password opening federal courts to any state action embracing a point of federal law.” Grable & Sons, 545 U.S. at 314.

         As Plaintiff rightly notes, the State FDCPA creates state law liability for violations of the Federal FDCPA. See Mot. 7-8; Cal. Civ. Code § 1788.17. It also incorporates by reference the statutory remedies provided for under the Federal FDCPA. See id. As a result, where a party has violated the Federal FDCPA, it has generally also violated the State FDCPA and is subject to an additional award of the statutory damages described in the Federal FDCPA. See id. Here, it is apparent from the manner in which Plaintiff has pleaded his first cause of action that he is alleging State FDCPA liability and refers to federal law only to the extent that it has been incorporated by reference in the State FDCPA. The Complaint does not appear to involve the interpretation of a federal statute, and Defendants do not argue otherwise. Above all, perhaps, the Court cannot say that the claim implicates federal issues in such a manner that Plaintiff's suit “sensibly belongs in federal court.” Eastman, 438 F.3d 544 at 552 (internal quotation omitted). Therefore, because there is no “substantial” federal question raised by Plaintiff's claims, this suit should be remanded to state court for lack of federal subject matter jurisdiction.[1]

         IV. Conclusion

         In light of the foregoing, the Court GRANTS Plaintiff's motion and REMANDS the action to state court. Defendants' ...

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