Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-03225/USCOURTS-cand-3_09-cv-03225-3/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California 

i i

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

ADAUTO REYNOSO, 

Plaintiff, 

v. 

PAUL FINANCIAL, LLC, SAXON 

MORTGAGE SERVICES, INC., QUALITY 

LOAN SERVICE CORP., CITYMUTUAL 

FINANCIAL, MORTGAGE ELECTRONIC 

REGISTRATION SYSTEMS, INC., BANK 

OF NEW YORK MELLON, KEVIN 

CULLINANE, LISA CULLINANE, and 

DOES 1 though 100, 

Defendants. 

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Case No. 09-3225 SC 

SUA SPONTE ORDER REMANDING 

ACTION FOR LACK OF SUBJECT 

MATTER JURISDICTION

I. INTRODUCTION

Plaintiff filed this action in Superior Court of the State of 

California for the County of San Mateo, alleging a total of twentyfour causes of action. See Notice of Removal ("NOR"), Docket No. 

1, Ex. A ("Compl."). The Complaint included a number of federal 

causes of action, including alleged violations of the Real Estate 

Settlement Procedures Act ("RESPA"), the Truth in Lending Act 

("TILA"), the Fair Debt Collection Practices Act ("FDCPA"), and the 

Racketeer Influenced and Corrupt Organizations Act ("RICO"). Id.

Defendants thereafter removed this action to federal court, citing 

the federal questions raised by Plaintiff's federal causes of 

Case 3:09-cv-03225-SC Document 65 Filed 03/09/10 Page 1 of 8
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United States District Court

For the Northern District of California 

action. NOR ¶ 7. 

 After removal, and in response to a number of motions to 

dismiss filed by various Defendants, this Court dismissed large 

portions of Plaintiff's Complaint, but granted Plaintiff leave to 

amend. Docket No. 44. Plaintiff thereafter submitted his First 

Amended Complaint ("FAC"). Docket No. 52. The FAC does not 

include the many federal claims that were listed in the original 

Complaint. Although the FAC makes several references to documents 

that are related to TILA, Plaintiff does not base any particular 

cause of action on the mandates of this or any other federal 

provision. The Court notes that complete diversity between the 

parties is lacking. 

II. LEGAL STANDARD

 District courts have original jurisdiction over cases that 

arise under the Constitution, laws, or treaties of the United 

States. 28 U.S.C. § 1331; See also U.S. Const. art. III, § 2, 

cl.1. For a case to be removable as a federal question, it must be 

a case that could have been brought in a district court because it 

raises substantial federal questions under 28 U.S.C. § 1331. 

However, "[i]f at any time before final judgment it appears that 

the district court lacks subject matter jurisdiction, the case 

shall be remanded." 28 U.S.C. § 1447(c). 

 When all federal causes of action have been dismissed and no 

other basis for original jurisdiction exists, or when an amended 

complaint does not present a federal question, the district court 

has discretion to decline supplemental jurisdiction over the 

remaining claims. See Id. §§ 1367(c), 1447(c); Cal. Dep't of Water 

Case 3:09-cv-03225-SC Document 65 Filed 03/09/10 Page 2 of 8
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United States District Court

For the Northern District of California 

Res. v. Powerex Corp., 533 F.3d 1087, 1091 (9th Cir. 2008); 

Albingia Versicherungs A.G. v. Schenker Int'l Inc., 344 F.3d 931, 

938 (9th Cir. 2003). When deciding whether to retain jurisdiction 

under these circumstances, a district court's discretion is 

informed by considerations "of economy, convenience, fairness, and 

comity." See Acri v. Varian Assocs., Inc., 114 F.3d 999, 1001 (9th 

Cir. 1997) (en banc) (citing United Mine Workers of Am. v. Gibbs, 

383 U.S. 715, 726-27 (1966)). 

III. DISCUSSION

A. The FAC Presents No Federal Question

 The first question is whether remand is permissible; i.e., 

whether this suit still involves a substantial federal question 

over which this Court may assert original jurisdiction. Under the 

well-pleaded complaint rule, "federal jurisdiction exists only when 

a federal question is presented on the face of the plaintiff's 

properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 

U.S. 386, 391 (1987). Because a plaintiff is "the master of the 

complaint," he "may, by eschewing claims based on federal law, 

choose to have the cause heard in state court." Id. at 398-99. It 

appears that this is what occurred in this instance, as the FAC 

does not include a single facial federal claim within its ten 

causes of action, even though Plaintiff previously asserted claims 

under various federal statutes. 

 An "independent corollary to the well-pleaded complaint rule" 

is that "once an area of state law has been completely preempted, 

any claim purportedly based on that preempted state law is 

considered, from its inception, a federal claim, and therefore 

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United States District Court

For the Northern District of California 

arises under federal law." Id. at 392. Subject matter 

jurisdiction may therefore still exist where a plaintiff has 

"artfully pled" a federal claim as a state claim. "Artful pleading 

exists where a plaintiff articulates an inherently federal claim in 

state law terms." Brennan v. Southwest Airlines Co., 134 F.3d 

1405, 1409 (9th Cir. 1998). Several of Plaintiff's causes of 

action, such as his second cause of action for fraud, his ninth 

cause of action for reformation, and his tenth cause of action for 

breach of the broker's duty to disclose, could also be pled as 

colorable federal claims. However, the fact that the federal 

claims would have been closely related to the state claims does not 

give a district court federal question jurisdiction when only state 

claims are pursued. Instead, the "dispositive question" is whether 

or not a federal statute provides the exclusive cause of action for 

the claims at issue. Beneficial Nat'l Bank v. Anderson, 539 U.S. 

1, 9 (2003). This Court, and numerous other courts, have 

previously concluded that neither TILA nor RESPA completely preempt 

state law claims of the type contained in the FAC. See, e.g., 

Bartolome v. Homefield Fin. Inc., No. 09-7258, 2009 U.S. Dist. 

LEXIS 122148, *4-11 (C.D. Cal. Dec. 11, 2009); Montes v. HomEq 

Servicing, No. 09-5871, 2009 U.S. Dist. LEXIS 95402, *16 (C.D. Cal. 

Sept. 29, 2009); U.S. N.A. v. Almanza, No. 09-0028, 2009 U.S. Dist. 

LEXIS 6896, *5 n.1 (E.D. Cal. 2009); Fardella v. Downey S&L Ass'n, 

No. 00-4393, 2001 U.S. Dist. LEXIS 6037, *6-7 (N.D. Cal. May 8, 

2001). The Court finds no basis for concluding that Plaintiff has 

"artfully pled" around any necessary federal claims. 

 A substantial federal question might also exist where "the 

claim is necessarily federal in character, or where the right to 

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United States District Court

For the Northern District of California 

relief depends on the resolution of a substantial, disputed federal 

question." Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d 

1033, 1041-42 (9th Cir. 2003) (citations omitted). This may occur 

where a substantial issue of federal law must be resolved to 

address a plaintiff's state causes of action. Grable & Sons Metal 

Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 313 (2005). 

However, courts have typically resisted jurisdiction where 

interpreting a federal law is not necessary to resolving a 

plaintiff's claim, such as where a plaintiff's causes of action 

rest on several alternative theories, some of which need not 

implicate federal law in any way. See, e.g., Lippitt, 340 F.3d at 

1042-43; Baker v. BDO Siedman, L.L.P., 390 F. Supp. 2d 919, 921 

(N.D. Cal. 2005) (finding no jurisdiction where plaintiff could 

recover under alternate and independent theory); see also Ortega v. 

HomEq Servicing, No. 09-2130, 2010 U.S. Dist. LEXIS 4591, *16-18 

(C.D. Cal. Jan 11, 2010) (collecting cases). This is the case in 

the current dispute, as Plaintiff pleads numerous alternative 

theories of recovery under each cause of action that could 

potentially implicate a federal question. 

 The Court finds that none of Plaintiff's remaining claims 

necessarily require resolution of questions of federal law. 

Because either Plaintiff has dropped or "the district court has 

dismissed all claims over which it has original jurisdiction," this 

Court "may decline to exercise supplemental jurisdiction" over the 

remaining claims. See 28 U.S.C. § 1367(c). 

B. Whether Continued Jurisdiction Is Appropriate

 Having concluded that this case no longer presents any 

substantial federal questions to anchor jurisdiction in this Court, 

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United States District Court

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the Court must next consider whether the factors "of economy, 

convenience, fairness, and comity" warrant remand or the continued 

exercise of supplemental jurisdiction. See Acri, 114 F.3d at 1001. 

"[I]n the usual case in which all federal-law claims are eliminated 

before trial, the balance of [these] factors . . . will point 

toward declining to exercise jurisdiction over the remaining statelaw claims." Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 

n.7. (1988). 

 In this instance, the interests of convenience and fairness 

weigh neither for nor against remand. The Superior Court in San 

Mateo is not remote from this Court, and both courts are at least 

competent to address the legal issues involved in this dispute. 

See Bader v. Elecs. for Imaging, Inc., 195 F.R.D. 659, 662 (N.D. 

Cal. 2000) ("[W]hile a change from federal to state court might 

create a tactical disadvantage to defendants, that is not legal 

prejudice."). 

 The consideration of comity, however, weighs strongly in favor 

of remand. "Needless decisions of state law should be avoided both 

as a matter of comity and to promote justice between the parties, 

by procuring for them a surer-footed reading of applicable law." 

Gibbs, 383 U.S. at 726. Where there are no remaining federal 

issues of jurisdictional import, the state's interest in resolving 

disputes over its own law is a compelling incentive to remand. 

This is especially true where, as here, Plaintiff's allegations are 

entangled in various issues of statutory law, including the 

capacity of certain defendants to do business in the state, the 

scope and applicability of statutory provisions related to 

contracts in multilingual transactions, and the statutory scheme 

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United States District Court

For the Northern District of California 

surrounding California's non-judicial foreclosure proceedings. 

Each of Plaintiff's claims are best adjudicated by a California 

court, and this Court risks overstepping by retaining jurisdiction 

of a case in which the federal interest is now minimal. 

 The issue of economy cuts both ways. On the one hand, 

Defendants currently have two motions to dismiss that are fully 

briefed, as well as a third motion to dismiss that has been filed 

and opposed. Remand would surely delay resolution of these 

motions. In addition, this Court has already addressed an early 

round of motions to dismiss, and is therefore acquainted with the 

original allegations. 

 On the other hand, this suit remains in its nascent stages. 

Although judicial resources have been spent resolving the first 

round of motions to dismiss, the result was the dismissal of 

superfluous and overreaching causes of action. Any benefit from 

this expenditure of resources will not be lost on remand. 

Moreover, in light of the fact that Plaintiff has substantially 

overhauled his allegations in the FAC, the legal analysis of most 

of Plaintiff's claims will now need to begin at square one, 

regardless of the forum. The resources of the parties will also 

not be unreasonably taxed upon remand, as the parties should be 

able to simply refile their pending motions without a substantial 

increase in costs. Having concluded that this matter is now best 

suited for resolution in state court, this Court is hesitant to 

expend any additional resources on these motions, or play any 

greater role in shaping the dispute as it moves into its next 

stages. The interest of economy therefore weighs in favor or 

remand. 

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United States District Court

For the Northern District of California 

 This Court finds that the interests of comity and judicial 

economy support remand of this suit to the Superior Court of San 

Mateo County. The Court therefore declines to exercise continued 

supplemental jurisdiction over this matter. 

IV. CONCLUSION

 This Court finds that the First Amended Complaint lacks any 

substantial question of federal law, and that this dispute now 

involves only state law issues. Having considered the interests of 

economy, convenience, fairness, and comity, this Court concludes 

that an exercise supplemental jurisdiction would be imprudent, and 

that remand is appropriate. All pending motions are DENIED WITHOUT 

PREJUDICE for this reason. This action is to be REMANDED to the 

Superior Court of California, in and for the County of San Mateo. 

IT IS SO ORDERED. 

Dated: March 9, 2010 

UNITED STATES DISTRICT JUDGE

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