Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00558/USCOURTS-azd-2_11-cv-00558-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Tamara Schultz, an individual, 

Plaintiff, 

vs.

BAC Home Loans Servicing, LP; third

party not at fault Recontrust Company,

NA; Doe Mortgage Backed Securities 1-

10; Does 1-100, 

Defendants. 

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No. CV-11-00558-PHX-NVW

ORDER

Before the Court is Plaintiff’s Motion for Remand (Doc. 8), which will be denied for

the reasons stated below.

I. Background

This action arises from a dispute regarding Plaintiff’s mortgage loan in the amount of

$304,200, secured by real property located at 1611 West Mulberry Drive, Phoenix, Arizona

85015. Plaintiff filed her complaint in the Superior Court of Maricopa County, Arizona on

March 8, 2011, seeking damages, injunctive and declaratory relief for breach of contract,

quiet title, and bad faith (Doc. 1). Plaintiff applied for and obtained a temporary restraining

order to prohibit a foreclosure sale of her property from the Superior Court on March 15,

2011 (Doc. 8). On March 25, 2011, Defendants removed the case to this Court on the basis

of diversity jurisdiction (Doc. 1). Plaintiff filed the pending motion to remand on April 4,

Case 2:11-cv-00558-NVW Document 16 Filed 05/10/11 Page 1 of 7
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2011 (Doc. 8).

II. Legal Standard

Under 28 U.S.C. § 1441(a), “any civil action brought in a State court of which the

district courts of the United States have original jurisdiction, may be removed by the

defendant . . . to the district court of the United States for the district and division embracing

the place where such action is pending.” While there is a “strong presumption” against

removal, see Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992), diversity jurisdiction is

not discretionary. See First State Ins. Co. v. Callan Assoc., 113 F.3d 161, 162 (9th Cir. 1997)

(“[T]he obligation to exercise jurisdiction is ‘virtually unflagging.’ ”). Diversity jurisdiction

exists for “all civil actions where the matter in controversy exceeds the sum or value of

$75,000, exclusive of interests and costs, and is between ... citizens of different States[.]” 28

U.S.C. § 1332(a)(1). Defendants have the burden of establishing that the requirements for

diversity jurisdiction have been satisfied. See Singer v. State Farm Mut. Auto. Ins. Co., 116

F.3d 373, 376 (9th Cir. 1997) (“Where the complaint does not demand a dollar amount, the

removing defendant bears the burden of proving by a preponderance of the evidence that the

amount in controversy exceeds [$75,000].”). Abstention by a federal court that otherwise

has jurisdiction over a matter is the “exception rather than the rule.” AmerisourceBergen

Corp. v. Roden, 495 F.3d 1143, 1148 (9th Cir. 2007) (internal citations omitted).

III. Analysis

Plaintiff requests that this case be remanded because 1) it involves “state substantive

issues of first impression”; 2) the Court lacks subject matter jurisdiction; and 3) the requisite

amount in controversy is not met (Doc. 1).

A. Jurisdiction

Plaintiff argues that this Court lacks subject matter jurisdiction over this matter

because (1) Plaintiff did not plead any federal causes of action to support original jurisdiction

pursuant to 28 U.S.C. § 1331; and (2) the amount in controversy is not sufficient to support

diversity jurisdiction under 28 U.S.C. § 1332(a). Defendants do not claim that Plaintiff has

raised any federal claims, but instead assert that this action is properly before the Court based

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on diversity jurisdiction. See 28 U.S.C. § 1332(a). In their notice of removal, Defendants

state that there is complete diversity of citizenship between the parties because Plaintiff is

a citizen of Arizona, Defendant Bank of America, N.A. is a citizen of North Carolina, and

Defendant ReconTrust Company, N.A. is a citizen of California (Doc. 1). Further,

Defendants assert (and Plaintiff has not claimed otherwise) that Plaintiff’s property is valued

at $128,800 and that her mortgage loan has a current outstanding principal balance of

$299,055.16 (Doc. 12).

Plaintiff has not challenged the diversity of the parties. Instead, she claims that the

the amount in controversy has not been met because Plaintiff is “seeking an establishment

of rights and not necessarily damages[,]” and that she is simply challenging “the validity of

the Defendants [sic] standing to collect on the debt, if one exists, and/or right to exercise the

power of sale of her primary residence because of bifurcation of the note and deed of trust.”

(Doc. 13.) Plaintiff’s contentions here are disingenuous. Her complaint clearly challenges

the validity of her loan and in fact explicitly seeks “Rescission of the Contract(s)” as well as

compensatory, general and punitive damages (Doc. 1-1 at 72-73). Further, Plaintiff seeks

quiet title to the property, which would also require rescission of the promissory note. The

Court is thus persuaded that the value of this lawsuit is at least the value of the subject

property and, more likely, the value of the loan. Defendants have accordingly met their

burden of establishing that the amount in controversy more likely than not exceeds $75,000.

See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996) (noting

defendant’s burden is to establish it is “more likely than not” that amount in controversy

exceeds $75,000). Therefore, the Court has subject matter jurisdiction over this matter based

on diversity. 28 U.S.C. § 1332(a).

Plaintiff’s additional arguments against this Court’s jurisdiction also lack merit.

Plaintiff argues that Defendants have failed to establish federal jurisdiction because she has

pled only state law, not federal, claims. In so arguing, Plaintiff appears to conflate original

jurisdiction with federal question jurisdiction. However, the Court has original jurisdiction

over an action where there is either federal question jurisdiction, 28 U.S.C. § 1331, or

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diversity jurisdiction, 28 U.S.C. § 1332(a). As discussed above, the Court has original

jurisdiction over this action based on diversity jurisdiction.

Further, Plaintiff argues that she has the right to choose the forum for this action and

can “avoid federal jurisdiction by relying exclusively on state law.” (Doc. 8). However, the

case she cites for this proposition concerns a situation where there was neither federal

question jurisdiction nor diversity jurisdiction. See Caterpillar, Inc. v. Williams, 482 U.S.

386, 398-99 (1987). There is no authority to support Plaintiff's argument that remand is

warranted because Plaintiff's decision to select a state forum “should be given due respect

and consideration.” (Doc. 8). The Court has original jurisdiction over a properly removed

action pursuant to diversity jurisdiction.

Finally, Plaintiff argues that the Court should decline to exercise supplemental

jurisdiction over her state law claims (Doc. 8). However, as established above, Defendants

properly removed this action pursuant to the Court’s diversity jurisdiction. Therefore, the

Court has original jurisdiction based on diversity and is not exercising supplemental

jurisdiction over Plaintiff’s state law claims.

B. Abstention

Plaintiff also argues that the Court should remand this action because Arizona state

courts need to rule on issues of first impression concerning foreclosures, which are a state

policy problem and of substantial public importance. Plaintiff cites the Burford abstention

doctrine, Burford v. Sun Oil Co., 319 U.S. 315 (1943), the Younger abstention doctrine,

Younger v. Harris, 401 U.S. 37 (1971) , and the Rooker-Feldman doctrine, Rooker v. Fidelity

Trust Co., 263 U.S. 413, (1923), District of Columbia Court of Appeals v. Feldman, 460 U.S.

462 (1983), to support her argument. Plaintiff has asserted claims for breach of contract,

quiet title, and bad faith. Defendants argue, and the Court agrees, that none of Plaintiff's

claims are novel issues that require abstention.

1. Burford Abstention Doctrine

Under Burford, abstention may be appropriate in order to avoid federal intrusion into

issues that are of largely local concern and that are within the special competence of state

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1

Contrary to Plaintiff’s assertions, decisions by other state court evaluating the validity of

MERS operations in accordance with their respective state statutes (Doc. 13) do not provide

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courts. See New Orleans Pub. Serv., Inc. v. Council of the City of New Orleans, 491 U.S.

350, 361 (1989). “While Burford is concerned with protecting complex state administrative

processes from undue federal interference, it does not require abstention whenever there

exists such a process, or even in all cases where there is a ‘potential for conflict’ with state

regulatory law or policy.” See Tucker v. First Md. Sav. & Loan, Inc., 942 F.2d 1401, 1404-

05 (9th Cir. 1991) (quoting New Orleans Pub. Serv., 491 U.S. at 362). In order to limit

Burford’s application, the following factors are generally required for abstention to apply:

“(1) that the state has concentrated suits involving the local issue in a particular court; (2) the

federal issues are not easily separable from complicated state law issues with which the state

courts may have special competence; and (3) that federal review might disrupt state court

efforts to establish a coherent policy.” Id. at 1405 (citing Knudsen Corp. v. Nevada State

Dairy Comm’n, 676 F.2d 374, 377 (9th Cir. 1982)).

Plaintiff has not persuaded the Court that Burford abstention is appropriate here. The

Court, sitting in diversity, will “apply the substantive law of Arizona . . . [and thus sits] in

the same posture as the Arizona state court.” Id. at 1406. There should accordingly “be no

different result in the federal proceedings than would have been achieved in the state court

proceeding.” Id. Further, Arizona does not require that suits brought under Arizona’s deed

of trust statutes must be filed in any specific court. There is no concern that federal issues

are not easily separable from complicated state law issues because there are no federal claims

raised in or implicated by Plaintiff’s suit, nor do Plaintiff’s claims arise out of a complicated

state regulatory scheme or challenge any state administrative order or regulation. While

Arizona state courts may not have had the opportunity to resolve some of the complicated

questions that have arisen in recent years with respect to home mortgage loans transactions,

the claims Plaintiff has pled here implicate only the Arizona deed of trust statutes, not

complicated state administrative policies or regulatory schemes.1

 For these reasons, this

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28 support for this Court to abstain from hearing this action.

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action does not warrant abstention under Burford.

2. Younger Abstention Doctrine

In Younger v. Harris, 401 U.S. 37 (1971), the Supreme Court established that a federal

court generally must abstain from hearing a case that would enjoin or otherwise interfere

with ongoing state criminal proceedings. Younger can also apply “not only when the pending

state proceedings are criminal, but also when certain civil proceedings are pending, if the

State’s interests in the proceeding are so important that exercise of the federal judicial power

would disregard the comity between the States and the National Government.” Pennzoil Co.

v. Texaco, Inc., 481 U.S. 1, 11 (1987). Younger abstention is required if four elements are

met: (1) state proceedings are ongoing; (2) the state proceedings implicate important state

interests; (3) the state proceedings provide the federal litigant an adequate opportunity to

raise the federal claims; and (4) the federal proceedings would interfere with the state

proceedings in a way that Younger disapproves. See San Jose Silicon Valley Chamber of

Commerce Political Action Comm. v. City of San Jose, 546 F.3d 1087, 1092 (9th Cir. 2008);

AmerisourceBergen Corp. v. Roden, 495 F.3d 1143, 1148-49 (9th Cir. 2007).

Younger abstention is neither required nor appropriate here. Defendants are pursuing

a non-judicial foreclosure of Plaintiff’s property; there are no ongoing state proceedings in

this matter with which this Court’s exercise of jurisdiction would interfere. “Contrary to

Plaintiff’s assertions, non-judicial foreclosure proceedings, such as the trustee’s sale in this

action, are not ongoing state court proceedings, and do not fall within the purview of the

Younger abstention doctrine.” Frame v. Cal-Western Reconveyance Corp., No. CV11-0201-

PHX-JAT, 2011 WL 1576712, at *4 (D. Ariz Apr. 27, 2011).

3. Rooker-Feldman Doctrine

The Rooker-Feldman doctrine similarly fails to support remand of this action. The

Rooker-Feldman doctrine prohibits a federal district court from hearing a direct appeal from

the final judgment of a state court. See Noel v. Hall, 341 F.3d 1148, 1154 (9th Cir. 2003).

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 However, Plaintiff has not alleged that there is any final state court order or judgment that

this suit challenges. Without an earlier state court judgment being challenged, the RookerFeldman doctrine is inapplicable and does not remove this Court’s subject matter jurisdiction

over this action.

IT IS THEREFORE ORDERED that Plaintiff’s Motion for Remand (Doc. 8) is

denied.

DATED this 10th day of May, 2011.

Case 2:11-cv-00558-NVW Document 16 Filed 05/10/11 Page 7 of 7