Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-00083/USCOURTS-cand-3_07-cv-00083-9/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

EDUARDO CARIAS, on behalf of

himself and all others similarly

situated,

Plaintiffs,

 v.

LENOX FINANCIAL MORTGAGE

CORPORATION,

Defendant.

 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Case No. 07-0083 SC

ORDER REMANDING TO

STATE COURT

I. INTRODUCTION

Federal courts are obligated to raise and decide issues of

subject matter jurisdiction sua sponte any time it appears subject

matter jurisdiction is absent. Fed. R. Civ. P. 12(h)(3);

Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983). 

Upon review of the parties' papers and the Court's prior Orders in

this action, the Court FINDS that federal subject matter

jurisdiction no longer exists. Although the Court may exercise

its discretion and exercise pendent jurisdiction over the

remaining state law claims, it declines to do so and hereby

REMANDS the action to the Contra Costa County Superior Court.

///

///

///

Case 3:07-cv-00083-SC Document 93 Filed 03/05/08 Page 1 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 2

II. BACKGROUND

The facts of this case have been extensively briefed by both

parties and have been recited in this Court's previous Orders. 

See Docket Nos. 91, 92. The parties' familiarity with the facts

is therefore assumed and the Court discusses only those facts

relevant to this Order.

The plaintiffs Eduardo Carias and all others similarly

situated ("Plaintiffs") filed their initial Complaint in Contra

Costa County Superior Court, naming as defendants Lenox Financial

Mortgage Corporation ("Lenox") and LSI Title Corporation ("LSI"). 

See Notice of Removal, Docket No. 1. Lenox and LSI then removed

the action to federal court. Id. Removal was proper as this

Court had federal subject matter jurisdiction pursuant to

Plaintiffs' claim brought under the Real Estate Settlement

Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq.

After removal, LSI and Lenox filed separate summary judgment

motions. Docket Nos. 25, 36. The Court denied Lenox's Motion and

later granted LSI's Motion. LSI, therefore, is no longer a party

to the action and Lenox is the sole remaining Defendant. Still

pending before the Court is Plaintiff's Motion for Class

Certification ("Motion"). Docket No. 75. Lenox opposed the

Motion and Plaintiffs submitted a Reply. See Docket Nos. 84, 88. 

Before reaching the issue of class certification, however, the

Court must consider, sua sponte, whether federal subject matter

jurisdiction still exists, and, if it does not, whether the Court

should exercise its discretion and permit the state law claims to

proceed under pendent jurisdiction.

Case 3:07-cv-00083-SC Document 93 Filed 03/05/08 Page 2 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 3

III. LEGAL STANDARD

If removal is based on a federal claim and this claim is

later eliminated, the federal court retains jurisdiction to

adjudicate the remaining state claims. Carnegie-Mellon Univ. v.

Cohill, 484 U.S. 343, 349 (1988). However, "[i]t is generally

within a district court's discretion [following final disposition

of all federal claims] 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 28 U.S.C. § 1447(c). Moreover, "it is generally

preferable for a district court to remand remaining pendent claims

to state court . . . ." Herrell, 934 F.2d at 205. In determining

whether to remand or retain jurisdiction, a court may consider

"what will best accommodate the values of economy, convenience,

fairness, and comity." Id. (internal quotation marks omitted). 

IV. DISCUSSION 

A. Federal Subject Matter Jurisdiction

The threshold issue for the Court is whether federal subject

matter jurisdiction now exists. Dispositive for this issue is

whether Plaintiffs' RESPA claim has survived both summary judgment

motions. In granting LSI summary judgment, the Court held that

Plaintiffs' RESPA claim "fail[ed] for a number of reasons." Order

Granting Def. LSI Title Co.'s Mot. for Summ. J. ("LSI Order"), at

6. Defendant Lenox, in its Motion for Summary Judgment, did not

address the RESPA claim, and, therefore, when the Court issued an

Order denying summary judgment for Lenox, the Court did not

Case 3:07-cv-00083-SC Document 93 Filed 03/05/08 Page 3 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 4

address the RESPA claim. See Order Denying Def. Lenox Financial

Mortgage Corp.'s Mot. for Summ. J. ("Lenox Order"). In the LSI

Order, however, the Court analyzed the RESPA claim in relation not

only to LSI but also to Lenox. See LSI Order at 5. The Court

stated, "Plaintiff's Fourth Cause of Action alleges that both

Defendants violated RESPA. In particular, Plaintiff alleges that

LSI and Lenox agreed that LSI would charge Lenox discounted title

insurance premiums and in exchange Lenox would refer title

business to LSI." Id. In summarily adjudicating the RESPA claim

against Plaintiffs in the LSI Order, the Court also necessarily

found that the RESPA claim failed against Lenox. See id. at 6-8. 

Plaintiffs' RESPA claim was based on an alleged collaboration

between Lenox and LSI. In LSI's Order, the Court found that

Plaintiffs had failed to present any evidence indicating that

Plaintiffs were affected by the discounted rates LSI allegedly

offered Lenox. See LSI Order at 8. Thus, for the same reasons

that Plaintiffs' RESPA claim failed against LSI, it also failed

against Lenox. Because the RESPA claim has been summarily

adjudicated against Plaintiffs, the Court FINDS that there is no

longer federal subject matter jurisdiction.

B. Pendent State Law Claims

The Court declines to exercise pendent jurisdiction over the

state law claims and remands the action to state court. The Court

finds that the issues of economy, convenience, fairness and comity

collectively weigh in favor of remand. See Herrell, 934 F.2d at

205. Comity weighs especially strong, given that the remaining

claims are pure state law claims with no connection to federal

Case 3:07-cv-00083-SC Document 93 Filed 03/05/08 Page 4 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 5

law. Economy also weighs in favor of remand as state courts are

better equipped to efficiently handle state law claims. In

addition, although the Court recognizes that both parties have

briefed the issue of class certification in this Court, the Court

is confident that much, if not all, of the analysis in the

parties' papers will apply in a state court class certification

procedure. Finally, neither party will be unduly inconvenienced

by remand and the Court cannot envision how notions of fairness

would in any way be impacted. To the contrary, Plaintiffs

initially filed their Complaint in state court and remand will

restore their choice of forum. For these reasons, the Court

REMANDS the action to the Contra Costa County Superior Court.

V. CONCLUSION

For the reasons stated herein, the Court REMANDS the present

action to the Superior Court of Contra Costa County.

IT IS SO ORDERED.

Dated: March 5, 2008 

UNITED STATES DISTRICT JUDGE

Case 3:07-cv-00083-SC Document 93 Filed 03/05/08 Page 5 of 5