Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-04040/USCOURTS-cand-3_05-cv-04040-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1441 Petition for Removal

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

DIVINA DUEY, et al,

Plaintiffs,

v

AMBER BARBOSA, et al,

Defendants. /

No C-05-4040 VRW

ORDER

On October 6, 2005, defendants filed notice to remove

this action from Contra Costa county superior court. Doc ##1, 3-4. 

Removal was based on plaintiffs’ first amended complaint, which was

served on September 9, 2005, and which alleged, inter alia,

violations of the Truth in Lending Act, 15 USC § 1501, et seq;

Federal Reserve Regulation Z, 12 CFR § 226.1, et seq; Real Estate

Settlement Procedures Act, 12 USC § 2601, et seq and Regulation X,

24 CFR § 3500.1, et seq. Doc #1, Ex B.

On October 27, 2005, plaintiffs and defendants Fidelity

National Title Company (“Fidelity”), Fremont Investment and Loan,

New Century Financial Corporation (“New Century”), Fasa Uwhuba and

Case 3:05-cv-04040-VRW Document 34 Filed 01/06/06 Page 1 of 8
United States District Court

For the Northern District of California

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Noro Okunday stipulated to allow plaintiffs to amend their

complaint. Doc #18. Defendants Amber Barbosa (“Barbosa”), Patric

Cuspard (“Cuspard”) and Prominent Funding did not join in the

stipulation. On November 10, 2005, the court granted plaintiffs

leave to amend their complaint. Doc #21. On November 30, 2005,

plaintiffs filed a second amended complaint (“SAC”), which did not

include any federal claims. SAC (Doc #24).

Two motions filed by Barbosa and Cuspard (“B&C”) are

currently pending: a motion to vacate the order granting

plaintiffs leave to file the SAC (Doc #23) and a motion to quash

service of the SAC (Doc #25). Additionally, both New Century and

Fidelity have filed motions to dismiss the SAC (Doc ##26, 30). For

the reasons stated below, the court DENIES B&C’s motion to vacate,

DENIES B&C’s motion to quash service, DENIES AS MOOT New Century’s

motion to dismiss and DENIES AS MOOT Fidelity’s motion to dismiss. 

As there are no federal claims in the SAC and no reason to retain

supplemental jurisdiction over the state law claims, the court

REMANDS the case to Contra Costa county superior court.

I

In their motion to vacate the order granting plaintiffs

leave to file the SAC, B&C state that they “did not sign the

stipulation upon which the order was granted, despite intimations

within the written stipulation that all parties had stipulated to

allowing [p]laintiffs to amend their complaint for a second time.” 

Doc #23 at 5. Accordingly, B&C assert that the stipulation at the

base of the order violated both Civ L R 7-12, which states in part

that “[e]very stipulation requesting judicial action must be in

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United States District Court

For the Northern District of California

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writing signed by all affected parties or their counsel,” and FRCP

15(a), which states in part that after a party has amended its

pleading once as a matter of course, the “party may amend the

party’s pleading only by leave of the court or by written consent

of the adverse party.” Moreover, B&C argue that the stipulation

violates the state court judge’s mandate for expedience, that

granting leave to amend would unduly prejudice B&C by depriving

them of the opportunity to oppose the filing of the SAC and that

the SAC did not cure deficiencies in the first amended complaint. 

Doc #23 at 5, 7, 10-11.

FRCP 15(a) provides a liberal stance toward allowing

amendments, particularly when, as here, an amendment seeks to add

claims rather than parties. Union Pac RR Co v Nevada Power Co, 950

F2d 1429, 1432 (9th Cir 1991). “In the absence of any apparent or

declared reason —— such as undue delay, bad faith or dilatory

motive on the part of the movant, repeated failure to cure

deficiencies by amendments previously allowed, undue prejudice to

the opposing party by virtue of allowance of the amendment,

futility of the amendment, etc —— the leave sought should, as the

rules require, be ‘freely given.’” Foman v Davis, 371 US 178, 182

(1962) (quoting FRCP 15(a)).

Many courts have held —— and this court agrees —— that an

amended complaint may be accepted as properly introduced, even if

the moving party did not follow procedural formalities, if leave to

amend would otherwise have been granted and defendant is not

prejudiced by allowing the change. Sapiro v Encompass Ins, 221 FRD

513, 517 (ND Cal 2004) (“[M]any courts have accepted untimely

amended pleadings, even when the relevant party did not first

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United States District Court

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obtain judicial permission or the consent of the opposing party.”);

Ritzer v Gerovicap Pharmaceutical Corp, 162 FRD 642, 644 (D Nev

1995) (“The Court finds that it may consider this [amended]

pleading served without judicial permission as properly introduced

if the Court would have granted leave to amend the pleading had it

been sought.”); Straub v Desa Industries, Inc, 88 FRD 6, 8-9 (MD Pa

1980) (“Permitting an amendment without formal application to the

court under these circumstances is in keeping with the overall

liberal amendment policies of Rule 15(a) and the general policy of

minimizing needless formalities.”).

In this case, B&C have not provided any convincing reason

why this court would have denied plaintiffs leave to amend. B&C

have not provided any evidence that plaintiffs acted in bad faith,

or that plaintiffs were dilatory. Although B&C claim that

plaintiffs’ SAC did not cure certain “legal, factual, and

procedural problems” in the FAC, B&C do not specify what those

problems are. And B&C’s assertion that the state court judge

requested that the parties act expediently does not bear on whether

this court should grant leave to amend.

Moreover, B&C’s assertion of undue prejudice is not

persuasive. B&C never opposed the stipulation nor alerted the

court about their omission from the stipulation, even though they

both filed motions before the court after the stipulation was filed

(Doc ##19, 20). And B&C did not file their motion to vacate until

November 30, 2005 —— over a month after the stipulation had been

filed, twenty days after leave to amend had been granted and the

same day that plaintiffs filed the SAC. B&C’s dilatory behavior

suggests that they were not, in fact, unduly prejudiced by granting

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leave to amend.

Accordingly, based on the liberal stance of FRCP 15(a) in

allowing amendment and the absence of any countervailing factors,

the court in all likelihood would have granted a motion for leave

to amend. Hence, the failure of B&C to join the stipulation is not

fatal to plaintiffs’ SAC, and the court DENIES B&C’s motion to

vacate.

II

B&C also filed a motion to quash service of the SAC,

rehashing the argument that plaintiffs improperly amended their

complaint without first receiving leave of the court. Doc #25. 

According to B&C, because “there has been no Court order granting

[p]laintiffs the right to serve their Second Amended Complaint on

[B&C] * * * service of the [complaint] should be quashed.” Id at

6.

Quashing service might be appropriate if the sufficiency

of service were at issue. In the cases cited by B&C, quashing

service was a less harsh alternative to dismissing the complaint

under FRCP 12(b)(5) for failure to meet the sufficiency of process

requirements of FRCP 4. Hickory Travel Sys v Tui Ag, 213 FRD 547,

553 (ND Cal 2003); R Griggs Group v Filanto Spa, 920 F Supp 1100,

1102 (D Nev 1996); see also Montalbano v Easco Hand Tools, Inc, 766

F2d 737, 740 (2d Cir 1985); Derfner v Cosgrove, 2005 US Dist LEXIS

24565, at *9 (ND Cal 2005).

In this case, however, B&C challenge neither the contents

of the summons nor the manner of service of the complaint. Rather,

B&C apparently seek to quash service as a roundabout way of

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challenging the court’s decision to grant plaintiffs leave to

amend. But the proper way to challenge this decision would have

been to oppose the stipulated motion, or to file a motion to vacate

the court’s decision, as B&C did. When the act of service is not

at issue, quashing service is inappropriate. Accordingly, the

court DENIES B&C’s motion to quash service.

III

The court notes that plaintiffs eliminated all federal

claims in the SAC, which only has California state law claims. 28

USC § 1367(c)(3) provides that “[t]he district courts may decline

to exercise supplemental jurisdiction over a [supplemental] claim *

* * [if] the district court has dismissed all claims over which it

has original jurisdiction.” And 28 USC § 1447(c) provides that

“[i]f at any time before final judgment it appears that the

district court lacks subject matter jurisdiction, the case shall be

remanded.” The Ninth Circuit has held that these provisions give

federal courts discretion either to retain or to remand a case

after all federal claims have been dismissed. Albingia

Versicherungs AG v Schenker Int'l, 2003 US App LEXIS 24302, *13-15

(9th Cir 2003). When determining whether to retain supplemental

jurisdiction, the court is guided by the values “of economy,

convenience, fairness, and comity.” Acri v Varian Assocs, 114 F3d

999, 1001 (9th Cir 1997) (en banc) (quoting Allen v City of Los

Angeles, 92 F3d 842, 846 (9th Cir 1996)) (internal quotation marks

omitted). Nonetheless, “in the usual case in which all federal-law

claims are eliminated before trial, the balance of factors * * *

will point toward declining to exercise jurisdiction over the

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remaining state-law claims.” Executive Software N Am v United

States Dist Court, 24 F3d 1545, 1553 n4 (9th Cir 1994) (emphasis

omitted) (quoting Carnegie-Mellon Univ v Cohill, 484 US 343, 350 n7

(1988)) (internal quotation marks omitted).

The court finds that remanding this case is the most

appropriate course of action. Exercising supplemental jurisdiction

would neither promote judicial economy nor convenience to the

parties because the case is still in its early stages —— the case

was removed only a few months ago, plaintiffs’ SAC was filed about

one month ago and the parties have yet to appear before this court. 

And aside from New Century’s current motion to dismiss, the court

has yet to consider any dispositive motions in this case. 

Moreover, a California state court would be better able than this

court to deal with the California state-law issues in this case. 

Accordingly, the court REMANDS this case to Contra Costa county

superior court. Both New Century’s and Fidelity’s motions to

dismiss are DENIED AS MOOT without prejudice.

IV

In sum, the court DENIES B&C’s motion to vacate (Doc

#23), DENIES B&C’s motion to quash service (Doc #25), DENIES AS

MOOT New Century’s motion to dismiss (Doc #26) and DENIES AS MOOT

Fidelity’s motion to dismiss (Doc #30). The court REMANDS the case

to Contra Costa county superior court. The clerk is DIRECTED to

close the file and TERMINATE all motions.

//

//

// 

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United States District Court

For the Northern District of California

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IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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