Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02707/USCOURTS-caed-2_09-cv-02707-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1446 Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

ANGEL MAXION and DAISY MAXION,

RICHARD GERHART and DONNA

GERHART, individually and on

behalf of all others similarly

situated,

Civ. NO. S-09-2707 FCD KJM

Plaintiffs,

v. MEMORANDUM AND ORDER

BEAZER HOMES HOLDINGS

CORPORATION dba BEAZER HOMES,

a Delaware Corporation; BEAZER

HOMES HOLDINGS CORP., a

Delaware Corporation; SECURITY

INSURANCE COMPANY, a Vermont

Corporation; and DOES 1-1000,

inclusive, 

Defendants.

----oo0oo---- This matter is before the court on plaintiffs Richard and

Donna Gerhart’s (“plaintiffs”) motion to remand this action to

the Placer County Superior Court (the “Superior Court”) on the

ground the court lacks subject matter jurisdiction over

plaintiffs’ claims. More specifically, plaintiffs argue:

(1) their complaint alleges only state law claims which do not

present any federal questions; and (2) there is no basis for 

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1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs.

E.D. Cal. L.R.230(g). 

2

removal under the Class Action Fairness Act of 2005 (“CAFA”), 28

U.S.C. § 1332(d), because defendants untimely removed on that

basis and/or the substantive requirements of CAFA are not met. 

Defendants Beazer Homes Holdings Corporation dba Beazer Homes and

Beazer Mortgage Corporation (“defendants”) oppose the motion,

arguing plaintiffs’ state law claims are predicated on the

determination of a federal question under the Real Estate

Settlement Practices Act (“RESPA”), and their motion under CAFA

was timely because plaintiffs failed to unambiguously establish a

basis for federal jurisdiction until the filing of their third

amended complaint (“TAC”).1

BACKGROUND

The original complaint in this case was filed on March 12,

2008, in the Superior Court. On June 2, 2008, plaintiffs filed a

first amended complaint (“FAC”) alleging a violation of RESPA and

state law claims for breach of written contract, negligence,

fraud, fraudulent concealment, unjust enrichment, violation of

California Business & Professions Code § 17200 (“UCL” or “unfair

business practices”), and declaratory relief. 

On July 17, 2008, defendants removed the case to this court.

On August 28, 2008, defendants filed a motion to dismiss or, in

the alternative, for summary judgment, with respect to the claims

of the sole-named plaintiffs at that time, Angel Maxion and Daisy

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Maxion. Prior to a final ruling on the motion, however,

plaintiffs filed a second amended complaint (“SAC”) on November

26, 2008. The SAC substituted Richard and Donna Gerhart as the

named plaintiffs in the action. 

On January 9, 2009, defendants filed a motion to dismiss the

SAC. In a memorandum and order of March 23, 2009, this court

dismissed the sole federal claim, alleging a violation of RESPA,

and declined to exercise supplemental jurisdiction over the

remaining state law claims. The court remanded the case to the

Superior Court.

On June 18, 2009, defendants filed a demurrer to the

remaining state law claims. On September 2, 2009, the Superior

Court entered an order sustaining the demurrer in its entirety,

but granting plaintiffs leave to amend certain claims. On

September 18, 2009, plaintiffs filed their TAC in the Superior

Court. Plaintiffs alleged three state law claims: (1) “unfair

business practices,” (2) “breach of written contract,” and 

(3) “declaratory judgment.” 

On September 29, 2009, defendants again removed the case to

this court, on the basis of an alleged federal question under

RESPA and also pursuant to CAFA. On October 29, 2009, plaintiffs

filed the instant motion to remand.

STANDARD

A civil case may be removed to federal court if the district

court has original federal question jurisdiction. 28 U.S.C. 

§ 1441(b). Federal district courts have original jurisdiction

over “all civil actions arising under the Constitution, laws, or

treaties of the United States.” 28 U.S.C. § 1331. The party

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invoking removal bears the burden of establishing federal

jurisdiction. See Harris v. Provident Life and Acc. Ins. Co., 26

F.3d 930, 932 (9th Cir. 1994) (quoting Gould v. Mutual Life Ins.

Co., 790 F.2d 769, 771 (9th Cir. 1986)). Furthermore, 28 U.S.C.

§ 1441 is construed strictly against removal jurisdiction. 

Fardella v. Downey Savings & Loan Ass’n, No. 00-4393, 2001 WL

492442, at *1 (N.D. Cal. May 9, 2001) (citing Prize Frize, Inc.

v. Matrix, Inc., 167 F.3d 1261, 1265 (9th Cir. 1999)). 

Removal is proper where a plaintiff’s complaint asserts

claims created by federal law or where a substantial federal

issue of law exists. Merrell Dow Pharm. v. Thompson, 478 U.S.

804, 808-10 (1986). As a general rule, the court determines the

existence of removal jurisdiction by considering the allegations

on the face of the plaintiff’s “well-pleaded complaint.” See

City of Chicago v. Int’l College of Surgeons, 522 U.S. 156

(1997). However, this general rule does not apply when a

plaintiff attempts to defeat removal by using “artful pleading”

to characterize or disguise a federal claim as a state claim. 

See Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1393 (9th

Cir. 1988). When the plaintiff has “artfully pleaded” his

claims, the district court may examine the entire record to

determine the true nature of the claims, regardless of the

plaintiff’s characterization thereof. See Federated Dep’t

Stores, Inc. v. Moitie, 452 U.S. 394, 397 n.2 (1981).

 Also, under CAFA, district courts have original

jurisdiction over civil class actions filed under federal or

state law in which any member of a class of plaintiffs is a

citizen of a state different from any defendant and the amount in

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controversy for the putative class members in the aggregate

exceeds the sum or value of $5,000,000, exclusive of interest and

costs. 28 U.S.C. § 1332(d)(2). CAFA authorizes removal of such

actions pursuant to 28 U.S.C. § 1446. 

ANALYSIS

A. Existence of a Federal Question

Defendants contend plaintiffs’ state law claims for unfair

business practices, breach of written contract, and declaratory

judgment, while facially plead as state law claims are actually

federal claims asserting a violation of RESPA. Similar to

plaintiffs’ SAC, defendants contend plaintiffs’ TAC alleges

claims which necessarily require the determination of a federal

question; namely, whether defendants violated RESPA. 

“The presence or absence of federal question jurisdiction is

governed by the ‘well-pleaded complaint rule,’ which provides

that federal jurisdiction exists only when a federal question is

presented on the face of the plaintiff’s properly pleaded

complaint.” Sacramento Metropolitan Air Quality Management Dist.

v. United States, 215 F.3d 1005, 1014 (9th Cir. 2000). Federal

jurisdiction may also lie if “it appears that some substantial

disputed question of federal law is a necessary element of one of

the well-pleaded state claims.” Rains v. Criterion Sys., Inc.,

80 F.3d 339, 345 (9th Cir. 1996) (quoting Franchise Tax Bd. of

California v. Construction Laborers Vacation Trust for Southern

California, 463 U.S. 1, 13 (1983)). However, “[w]hen a claim can

be supported by alternative and independent theories -- one of

which is a state law theory and one of which is a federal law

theory -- federal question jurisdiction does not attach because

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federal law is not a necessary element of the claim.” Id.

(holding that the plaintiff’s wrongful discharge claim did not

give rise to federal question jurisdiction because it could be

supported by violations of the state constitution, not only

violations of a federal statute); Lippit v. Raymond James Fin.

Servs., Inc., 340 F.3d 1033, 1043 (9th Cir. 2003) (holding that

California unfair competition law claims did not give rise to

federal question jurisdiction because such claims could be based

on unfair or fraudulent conduct generally, and not necessarily

violations of federal rules and regulations); Mulcahey v.

Columbia Organic Chemicals, 29 F.3d 148. 153 (4th Cir. 1994)

(holding that negligence action alleging violations of local, 

state, and federal environmental laws did not confer federal

question jurisdiction).

In this case, plaintiffs claims do not rely solely on

violations of federal law. Specifically, in the first cause of

action for unfair business practices, plaintiffs allege, as a

predicate act to establish a violation of California Business and

Professions Code § 17200, that defendants engaged in “[s]uch

unlawful conduct includ[ing], but [] not limited to, violations

of RESPA § 2607, California Financial Code § 50505, and numerous

other federal and state statutes and regulations.” (Compl.,

attached to Notice of Removal, filed Sept. 29, 2009, ¶ 56

(emphasis added).) Similarly, in their second cause of action

for breach of written contract, while plaintiffs allege breaches

based on claimed RESPA violations, they also allege defendants

breached certain contracts “through excess charges for fees and

services.” (Compl., ¶ 70). As such, resolution of a federal

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2 Plaintiffs’ third cause of action for declaratory

relief is premised upon the first two causes of action. 

3 Because the court finds that the determination of a

federal question is not essential to adjudication of plaintiffs’

claims, the court need not reach plaintiffs’ alternative argument

relating to the law of the case doctrine. 

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question pursuant to RESPA is not essential.2 Rather, because

relief can be granted on plaintiffs’ claims on grounds

independent of federal law, determination of federal law is not a

necessary element of one of the well-pleaded state claims, and

thus, this court does not have a basis for federal question

jurisdiction. See Christianson v. Colt Industries Operating

Corp., 486 U.S. 800, 810 (1988) (“[A] claim supported by

alternative theories in the complaint may not form the basis for

[federal] jurisdiction unless [federal] law is essential to each

of those theories.”).3

B. Timeliness of Removal 

As an alternative basis to remove, defendants contend that,

pursuant to CAFA, this court has diversity jurisdiction over

plaintiffs’ class action complaint. Defendants raised CAFA as a

basis for federal jurisdiction only in their most recent removal

notice, filed September 29, 2009, some seventeen months after

plaintiffs filed their initial complaint. Defendants argue their

notice of removal is nonetheless timely because under CAFA a

claim does not become removable until a document received by

defendants “unambiguously” establishes federal jurisdiction. 

(citing Thomas v. Bank of Am. Corp., 570 F.3d 1280, 1283 (11th

Cir. 2009)). 

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Here, defendants contend that because the original

plaintiffs, the Maxions, lacked standing, they first received a

document establishing CAFA jurisdiction upon plaintiffs filing of

the TAC on September 18, 2009. As such, defendants maintain

their removal notice of September 29, 2009 was timely. 

Under CAFA, the court has original jurisdiction over any

claim that exceeds $5,000,000 in value in the aggregate and is a

class action in which any member of the class is a citizen of a

state different from any defendant. 28 U.S.C.A § 1332(d)(2)(A). 

Pursuant to Section 1446(b) an action must be removed within

thirty days after a defendant receives the initial pleading

evidencing a basis for removal. 28 U.S.C. § 1446(b). 

 Defendants argue, citing the Eleventh Circuit’s decision in

Thomas, that a claim does not become removable under CAFA until a

document received by a defendant “unambiguously establishes

federal jurisdiction.” 570 F.3d at 1283. Defendants contend

that plaintiffs’ original and first amended complaints did not

reveal a basis for CAFA jurisdiction because the named plaintiffs

lacked standing. Even assuming arguendo that defendants’

standing argument has merit, it still does not justify

defendants’ remand in September 2009. Plaintiffs substituted the

original plaintiffs, the Maxions, with the current plaintiffs,

the Gerharts, on November 26, 2008, when they filed their SAC. 

Defendants do not argue that the Gerharts lacked standing to

bring this action. Thus, defendants, at a minimum, were in

receipt of a document establishing a basis for CAFA jurisdiction

in November 2008, some ten months before they filed the instant

notice of removal. Clearly, this far exceeds the statutory,

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4 Because the court finds defendants remand action based

on CAFA was brought untimely, the court need not reach a decision

on the merits of defendants’ argument. 

9

thirty-day removal requirement. Accordingly, defendants have

failed to timely remove pursuant to CAFA.4

C. Attorneys’ Fees

Plaintiffs seek attorneys’ fees and costs for bringing the

instant motion, arguing defendants’ removal was simply a delay

tactic. Defendants contend they had a reasonable basis to seek

removal, and as such, no fees should be awarded. 

On granting a motion for remand, the court may order the

defendant to pay the plaintiff “its just costs and any actual

expenses, including attorneys’ fees, incurred as a result of the

removal.” 28 U.S.C. § 1447(c); see Martin v. Franklin Capital

Corp., 546 U.S. 132, 136 (2005). In deciding whether an award is

just, the test is whether the removing party had an “objectively

reasonable basis for removal.” Martin, 546 U.S. at 136. “Absent

unusual circumstances, fees should not be awarded when the

removing party has an objectively reasonable basis for removal.” 

Gardner v. UICI, 508 F.3d 559, 561 (9th Cir. 2007). 

Here, defendants’ removal meets this standard. Plaintiffs’

complaint is laced with both direct references to RESPA and

language lifted directly from the statute. Indeed, plaintiffs

devote an entire section of their TAC to a historical overview

and explanation of the statute. (Compl., ¶¶ 16-18). Therefore,

at a minimum, there existed a purportedly reasonable basis for

defendants to seek removal based on a federal question under

RESPA. 

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Further, as to CAFA, while the court finds defendants’

removal on this basis untimely, the court cannot find defendants’

removal wholly unreasonable. In reaching this decision, the

court has considered that defendants raised CAFA as a basis for

removal as an alternative to federal question jurisdiction under

RESPA. Because defendants’ reliance on RESPA was clearly

justifiable, considering the nature of plaintiffs’ complaint, the

court cannot fault defendants for raising additional, alternative

bases for removal. Accordingly, the court denies plaintiffs’

request for award of attorneys’ fees and costs. 

CONCLUSION 

Because the court does not have federal question

jurisdiction over plaintiffs’ wholly state law claims nor

jurisdiction under CAFA, the court REMANDS this action to the

Placer County Superior Court. Defendants’ pending motions to

dismiss and for a protective order and stay of discovery (Docket

#s 11, 15) are Denied as Moot. The hearing on said motions is

hereby vacated. 

IT IS SO ORDERED.

DATED: February 8, 2010

 

FRANK C. DAMRELL, JR.

UNITED STATES DISTRICT JUDGE

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