Opinion
NO. CIV. S-09-1374 LKK/KJM.
June 9, 2009
ORDER
Plaintiff has brought suit against defendants for various actions she alleges were improper in relation to the refinancing of her home loan and eventual foreclosure sale of her home. Pending before the court is plaintiff's motion to remand. For the reasons stated herein, the court grants the motion.
I. BACKGROUND
Defendant requests the court take judicial notice of the plaintiff's trial brief filed in the unlawful detainer action. The court does not find that this document is relevant to resolution of the motion and denies the request.
Plaintiff's suit against defendants originated as an adversarial complaint brought in the Bankruptcy Court of the Eastern District of California, Adversary Case No. 09-02010. In that complaint, she alleged that defendants' conduct surrounding her purchase of a home loan and, later, the foreclosure sale of her home violated various state and federal laws. Specifically, she pled that defendants committed fraud, wrongful foreclosure and slander of title; breached fiduciary duties, an oral contract and the duty of good faith and fair dealing; violated California Welfare and Institutions Code § 15600 and Business and Professions Code § 17200;, and violated the Truth in Lending Act, the Real Estate Settlement Procedures Act.
Defendants moved to withdraw the reference to the Bankruptcy Court in that case, which plaintiff did not oppose. Plaintiff then moved for a temporary restraining order to enjoin defendants from proceeding with an unlawful detainer hearing in state court.See Case No. 2:09-cv-00717, Docket No. 7. The court concluded that under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) and Princess Lida of Thurn Taxis v. Thompson, 305 U.S. 456 (1939), it was prohibited from interfering with a quasi in rem action where the state court had first obtained jurisdiction. The application for a temporary restraining order was denied on this basis.
On May 15, 2009, defendants removed to this court the instant action, which plaintiff had filed in state court on that day. In this action, plaintiff appears to have filed an identical complaint in state court as she filed in the adversarial action in the Bankruptcy Court. The cases were related on May 28, 2009. Pending before the court is plaintiff's motion to remand the instant case.
II. STANDARD
The removing defendant always has the burden of establishing federal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). A defendant may remove any state court action to federal district court if the latter court has original jurisdiction under "a claim or right arising under the Constitution, treaties or laws of the United States." 28 U.S.C. § 1441; see also 28 U.S.C. § 1331. Whether a cause of action arises under the Constitution, treaties, or laws of the United States must be determined solely from what is contained in the plaintiff's well-pleaded complaint. Taylor v. Anderson, 234 U.S. 74, 75-76 (1914). Federal jurisdiction is not proper when the federal question only arises through the defendant's defense or the plaintiff's necessary response thereto. Id.; Christianson v.Colt Indus. Operating Corp., 486 U.S. 800, 809 (1988).
Civil actions not involving a federal question are removable to a federal district court only if there is diversity of citizenship between the parties. 28 U.S.C. § 1332(a)(1). The defendants do not predicate removal on this basis, nor could they. Rather, they assert that removal is proper because the action implicates federal law. The court cannot agree.
III. ANALYSIS
Here, defendants removed plaintiff's action on the grounds that it presents a federal question. That appears indisputable, as plaintiff has pled two causes of action under federal statutes, the Truth in Lending Act and the Real Estate Settlement Procedures Act.Plaintiff argues that the case "belongs" in state court because this court, in ruling on the application for a temporary restraining order, held that it could not interfere with the state court's concurrent proceeding in this quasi in rem action.See Pl.'s Mot. to Remand at 5. Removal, she argues, prevents the court hearing the unlawful detainer action from also resolving the instant suit. Essentially, she argues that concerns of equity and comity demand remand.
Generally, a federal court has no discretion to decline to exercise jurisdiction if jurisdiction is otherwise proper. See,e.g., Buchner v. FDIC, 981 F.2d 816 (5th Cir. 1993). In certain narrow circumstances, courts have remanded cases that had been removed from state court and that were duplicative of extant cases filed in federal court. See Walton v. UTV of San Francisco, Inc., 776 F. Supp. 1399, 1403 (N.D. Cal. 1991); see also Wathan v. Pazin, Case No. F-07-cv-0874, 2007 WL 4181716 (E.D. Cal. Nov. 21, 2007) (Ishii, J.). In Walton, 776 F. Supp. at 1400, the plaintiff had filed Title VII claims and state-law claims in federal court. The court then declined to exercise supplemental jurisdiction over the state claims and dismissed them. Id. at 1401. Plaintiff then filed suit in state court, asserting state claims as well as the Title VII claims pending in federal court. Id. Defendant removed to federal court and the plaintiff sought remand. Id.
An exception to this rule is the court's ability to decline to exercise jurisdiction in cases where only declaratory relief is sought, Am. Cas. Co. of Reading, Pennsylvania v. Krieger, 181 F.3d 1113, 1118 (9th Cir. 1999), which does not apply here.
The court granted the motion to remand. Id. at 1404. Preliminarily, however, it explained that state and federal courts may "proceed[] on the same cause of action in two different courts of concurrent jurisdiction at the same time, if jurisdiction is in personam." Id. at 1401. As support for this conclusion, the court cited Princess Lida of Thurn Taxis v. Thompson, 305 U.S. 456, 466 (1939), and others for the proposition that in in rem actions or quasi in rem actions, the court that first obtains jurisdiction of the res in question possesses jurisdiction to the exclusion of all other courts. Id. at 1401.
Here, the situation is more complicated, as the plaintiff seeks injunctive relief that plainly encompasses the res over which the court has determined, in its order denying the application for a temporary restraining order, the state court possesses exclusive jurisdiction. This includes plaintiff's prayer for relief seeking an injunction and declaration relating to her interest in the real property at issue. However, plaintiff also seeks additional injunctive relief and damages that do not implicate the res, such as recision of the home loan and damages under state and federal law.
The Court of Appeals has given guidance in such a situation. In 40235 Washington Street Corp. v. Lusardi, 976 F.2d 587, 589 (9th Cir. 1992) (per curium), the court considered a claim where the plaintiff sought to have a declaration that a tax sale of real property was void under federal law and sought to quiet title on the property. The court held that the quiet title action was an action in rem and that, because the state court had obtained exclusive jurisdiction over the property in a previously-filed quiet title action there, the federal court was required to abstain under Colorado River.
Plaintiff then argued that, notwithstanding this, the federal district court nevertheless should have continued to have exercised jurisdiction on the claims arising under federal law.Id. at 589. The Court of Appeals disagreed. Id. It explained,
We reject the suggestion that where a merits claim and a declaratory relief claim are combined in one action a different abstention inquiry is required for each claim. Such a rule would increase, not decrease, the likelihood of piecemeal adjudication or duplicative litigation, and thus would undermine both the Colorado River and Brillhart doctrines. . . . We hold that in such circumstances, where abstention is required with respect to the merits claim it is required with respect to the declaratory relief claim as well. The federal question raised in the declaratory relief claim can be answered in the state court proceeding on the merits. There is no justification here for the simultaneous prosecution of lawsuits in two different fora.Id. (citations omitted).
That holding appears to govern here. As the court explained in its previous order denying plaintiff's application for temporary restraining order in the related case, the state court has exclusive jurisdiction over the real property at issue in this case. The unlawful detainer determination to be made by the state court inextricably involves the issues raised in this case, specifically the validity of relevant homes loans and whether defendants were barred from proceeding in the foreclosure sale. Under Lusardi, the court is obligated to decline to exercise jurisdiction over this case in favor of the state court. Plaintiff's motion is therefore granted.
As explained previously, the same real property is at issue in both this case and case number 09-cv-00717, in which the application for a temporary restraining order was filed.
IV. CONCLUSION
For the reasons stated herein, the plaintiff's motion is GRANTED.
The Clerk is directed to close the case.
IT IS SO ORDERED.