Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-00218/USCOURTS-casd-3_09-cv-00218-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

KAREN GILMORE; LARRY GILMORE,

Plaintiffs,

CASE NO. 09-CV-0218-IEG (LSP)

ORDER: 

(1) GRANTING PLAINTIFFS’

MOTION TO REMAND CASE TO

STATE COURT [Doc. No. 19]; and

(2) DENYING AS MOOT

DEFENDANTS’ MOTION TO

DISMISS COMPLAINT [Doc. No.

18.]

vs.

BANK OF NEW YORK; COUNTRYWIDE

HOME LOANS; AMERICA’S

WHOLESALE LENDER; BANK OF

AMERICA; AMERICAN MORTGAGE

PROFESSIONAL, INC.; and DOES 1-10,

Defendants.

Plaintiffs Karen and Larry Gilmore (“Plaintiffs”) have filed a motion to remand this case to

state court. (Doc. No. 19.) Defendants Bank of New York (“BNY”), Countrywide Home Loans

(“Countrywide”), America’s Wholesale Lender (“AWL”), and Bank of America (“BOA”)

(collectively, “Defendants”) have filed a motion to dismiss Plaintiffs’ first amended complaint under

Fed. R. Civ. P. 12(b)(6). (Doc. No. 18.) For the reasons stated herein, the Court grants Plaintiffs’

motion to remand and denies Defendants’ motion to dismiss as moot.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs Karen and Larry Gilmore’s claim arises from a loan Ms. Gilmore received to

purchase a home. The following facts are drawn from Plaintiffs’ first amended complaint. On March

9, 2006 Karen Gilmore purchased an Oceanside, California home (“the property”) for $780,000.

Case 3:09-cv-00218-IEG-RBB Document 26 Filed 07/09/09 Page 1 of 6
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 After 10 years, the payments were to increase 25% with the addition of principal payments.

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Using the services of a mortgage broker, Defendant American Mortgage Professional, Inc. (“AMP”),

she obtained a loan from AWL for 80% ($624,000) of the purchase price. Ms. Gilmore agreed to

make monthly payments on the loan in an amount of $4,591.74 at an interest rate of 7% for a period

of 10 years.1 Ms. Gilmore financed the remaining 20% ($156,000) of the purchase price though a

home equity line of credit (“HELOC”), allegedly funded by BOA. She agreed to monthly payments

in an amount of $1,586.71 at an interest rate of 12.375%. The combined monthly payment on

Plaintiffs’ two loans equaled $6,178.45, at a time when Plaintiffs earned a combined monthly income

of $ 7,500. At an undisclosed point in time, AWL allegedly transferred the servicing of the two loans

to its parent company, Countrywide. Plaintiffs defaulted on their loans, resulting in a trustee’s sale

of the property on September 29, 2008 to BNY, as agent for Countrywide.

Plaintiffs brought the instant action in the Superior Court of California for the County of San

Diego on January 12, 2009. Defendants removed the case to this Court on February 5, 2009. (Doc.

No. 1.) The complaint alleged: “wrongful foreclosure;” “action to set aside trustee sale;” violation

of California Civil Code §§ 1573 (constructive fraud) and 2923.5; violation of California Financial

Code §§ 4973(f) and (n); violation of 12 U.S.C. §§ 2607(a) and (b) (the Real Estate Settlement

Procedures Act, hereinafter “RESPA”); and “breach of fiduciary duties.” Plaintiffs filed a first

amended complaint on April 10, 2009 (Doc. No. 17,) alleging the following claims: “set aside of

trustee sale;” conspiracy to defraud; violation of Cal. Civ. Code §§ 1573, 1667, 1708, 1770 and

2923.5; violation of Cal. Fin. Code § 4973; “breach of fiduciary duties;” and “contractual rescission.”

On April 27, 2009, Defendants filed a motion to dismiss the first amended complaint. (Doc.

No. 18.) On May 13, 2009 Plaintiffs filed a motion to remand the case to state court. (Doc. No. 19.)

The parties have filed oppositions to each respective motion. Defendants have filed a reply brief in

support of their motion to dismiss, but Plaintiffs have not filed a reply in support of their motion to

remand. The Court finds the motions appropriate for disposition without oral argument pursuant to

Local Civil Rule 7.1(d)(1). 

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 “Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal

statute, in any civil action of which the district courts have original jurisdiction, the district courts shall

have supplemental jurisdiction over all other claims that are so related to claims in the action within

such original jurisdiction that they form part of the same case or controversy under Article III of the

United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder

or intervention of additional parties.” 28 U.S.C. § 1367(a) (2009).

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DISCUSSION

I. Plaintiffs’ Motion to Remand

A. Legal Standard

“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 or the defendants, to the district court of the

United States for the district and division embracing the place where such action is pending.” 28

U.S.C. § 1441(a) (2009). Removal jurisdiction may be based on diversity of citizenship or on the

existence of a federal question. 28 U.S.C. § 1441(b); id. at § 1331. The removal statute also provides

that “[w]henever a separate and independent claim or cause of action within the jurisdiction conferred

by [28 U.S.C. § 1331] is joined with one or more otherwise nonremovable claims or causes of action,

the entire case may be removed and the district court may determine all issues therein, or, in its

discretion, may remand all matters in which State law predominates.” 28 U.S.C. § 1441(c) (2009).

The Ninth Circuit “strictly construe[s] the removal statute against removal jurisdiction.” Gaus

v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). Accordingly, “[t]he ‘strong

presumption’ against removal jurisdiction means that the defendant always has the burden of

establishing that removal is proper.” Id. Whether removal jurisdiction exists must be determined by

reference to the well-pleaded complaint. Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S.

804, 808 (1986). 

B. Analysis

Defendants originally premised their removal of this case upon Plaintiffs’ allegations that

Defendants violated RESPA, a federal statute. (Notice of Removal at 3.) Defendants further argued

the Court had supplemental jurisdiction over Plaintiffs’ state law claims pursuant to 28 U.S.C. §

1367(a)2

 because those claims arose from the same set of operative facts as Plaintiffs’ federal claim.

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 Defendants do not dispute that the amended complaint contains no federal causes of action.

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Plaintiffs first amended complaint eliminates the RESPA claim.3 However, Defendants argue the

Court should retain supplemental jurisdiction over the amended complaint because Plaintiffs’

“voluntary amendment to their complaint after removal to eliminate the federal claim does not

automatically defeat federal jurisdiction.” (Opp. at 2.) 

Plaintiffs’ argument that the Court should remand the case pursuant to 28 U.S.C. § 1447(c)

because they have abandoned their federal cause of action misstates the applicable legal rule. Section

1447(c) provides, “[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) (2009). Notwithstanding this

rule, removal jurisdiction based on a federal question is determined from the complaint as it existed

at the time of removal. Sparta Surgical Corp. v. NASD, 159 F.3d 1209, 1213 (9th Cir. 1998).

Therefore, when removal, as in this case, is based on federal-question jurisdiction and all federal

claims are eliminated from the lawsuit, “[i]t is generally within a district court’s discretion either to

retain jurisdiction to adjudicate the pendent state claims or to remand them to state court.” Harrell v.

20th Century Ins. Co., 934 F.2d 203, 205 (9th Cir. 1991); see also Albingia Versicherungs A.G. v.

Schenker Int’l Inc., 344 F.3d 931, 938 (9th Cir. 2003) (“[S]ection 1447(c) [the ‘procedure after

removal statute’] means that if it is discovered at any time in the litigation that there is no federal

jurisdiction, a removed case must be remanded to the state court rather than dismissed. Section

1447(c) does not mean that if a facially valid claim giving rise to federal jurisdiction is dismissed, then

supplemental jurisdiction is vitiated and the case must be remanded. Once supplemental jurisdiction

exists, it remains, subject to the discretionary provision for remand in section 1441.”) Accordingly,

because Plaintiffs have abandoned their federal claim, the Court must exercise its discretion to

determine whether to retain supplemental jurisdiction over the remaining state claims. 

The Supreme Court has held, and the Ninth Circuit has reiterated that “‘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 remaining state-law claims.’” Acri v. Varian Assocs., 114

F.3d 999, 1001 (9th Cir. 1997) (en banc) (citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349

(1988)). Moreover, this discretionary decision “depend[s] upon what ‘will best accommodate the

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values of economy, convenience, fairness, and comity . . . .’” Harrell, 934 F.2d at 205 (internal

citation omitted). The Court finds this case to be a “usual case” in which the balance of factors weighs

in favor of remanding the remaining state claims to state court. 

While Defendants argue the Court should exercise its discretion to retain the case because

“Plaintiffs’ filing of the FAC is a blatant attempt to forum shop” (Opp. at 5,) and the Supreme Court

has held “[a] district court can consider whether the plaintiff has engaged in any manipulative tactics

when it decides whether to remand a case,” the Ninth Circuit has held it is not improper for a plaintiff

to exercise the tactical decision to move for remand soon after removal. See Baddie v. Berkeley

Farms, 64 F.3d 487, 490-91 (9th Cir. 1995) (“If the defendant rejects the plaintiff's offer to litigate

in state court and removes the action, the plaintiff must then choose between federal claims and a state

forum. Plaintiffs in this case chose the state forum. They dismissed their federal claims and moved

for remand with all due speed after removal. There was nothing manipulative about that

straight-forward tactical decision.”) (overruled in part on other grounds). Furthermore, Plaintiffs have

abandoned their federal claim early in the case. Cf. Albingia, 344 F.3d at 939 (holding that the

district court properly retained supplemental jurisdiction over state law claims where it disposed of

federal issues during the summary judgment phase of the case). There is also no indication that

proceeding in state court would be wasteful or duplicative because no court or party has yet invested

substantial resources into this case. The Court therefore finds that the concerns of economy,

convenience, and comity would be served by returning this case to state court, and grants Plaintiffs’

motion to remand. Accord Fletcher v. Solomon, 2006 U.S. Dist. LEXIS 96843, at *12 (N.D. Cal.

Nov. 13, 2006) (finding the relevant concerns “would be served by returning to state court what is now

at an early stage a purely state-law action.”)

II. Defendants’ Motion to Dismiss the First Amended Complaint

Defendants have filed a motion to dismiss Plaintiffs’ complaint for failure to state a claim upon

which relief may be granted under Fed. R. of Civ. P. 12(b)(6). (Doc. No. 18.) Defendants have also

filed a request for judicial notice in support of their motion. In light of the Court’s decision to remand

this case to state court, Defendants’ motion and request for judicial notice are denied as moot.

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CONCLUSION

For the reasons stated herein, the Court ORDERS that this action be REMANDED to the

Superior Court of California for the County of San Diego. The Court DENIES AS MOOT

Defendants’ motion to dismiss the complaint and request for judicial notice.

IT IS SO ORDERED.

DATED: July 9, 2009

IRMA E. GONZALEZ, Chief Judge

United States District Court

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