Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-15225/USCOURTS-ca9-13-15225-0/pdf.json

Parties Involved:
Larry L. Cox
Appellee
Renee M. Cox
Appellee
United States Department of Agriculture
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

LARRY L. COX; RENEE M. COX,

Plaintiffs-Appellees,

v.

UNITED STATES DEPARTMENT OF

AGRICULTURE,

Defendant-Appellant.

No. 13-15225

D.C. No.

3:11-cv-00454-

RCJ-WGC

ORDER AND

OPINION

Appeal from the United States District Court

for the District of Nevada

Robert Clive Jones, District Judge, Presiding

Submitted July 6, 2015*

San Francisco, California

Filed September 2, 2015

Before: Richard C. Tallman Milan D. Smith, Jr.,

and Mary H. Murguia, Circuit Judges.

Per Curiam Opinion

* The panel unanimously concludes this case is suitable for decision

without oral argument. See Fed. R. App. P. 34(a)(2).

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2 COX V. USDA

SUMMARY**

Foreclosure / Jurisdiction

The panel redesignated the memorandum disposition,

filed July 20, 2015, as a per curiam opinion in which the

panel reversed the district court’s order remanding back to

state court plaintiffs’ petition for an order modifying their

rural housing loan, and remanded with instructions that the

district court dismiss the petition for lack of jurisdiction.

The plaintiffs defaulted on a rural housing loan granted by

the U.S. Department of Agriculture. The USDA initiated

foreclosure proceedings, and the plaintiffs elected to

participate in Nevada’s Foreclosure Mediation Program. The

mediator found that USDA did not participate in mediation in

good faith, chiefly because USDA regulations prevented the

agency from entertaining the loan modifications that the

plaintiffs requested. Plaintiffs filed a petition in Nevada state

court seeking a favorable loan modification and sanctions

against the USDA, and USDA removed the plaintiffs’

petition to federal court.

The panel held that the Nevada state court lacked

jurisdiction over the action because the record contained no

evidence that USDA waived its sovereign immunity to the

plaintiffs’ petition. The panel further held that under the

derivative jurisdiction doctrine, the district court, accordingly,

also lacked jurisdiction over the petition on removal. The

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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COX V. USDA 3

panel concluded that the district court was bound to dismiss

the petition rather than remand to state court.

COUNSEL

Stuart F. Delery, Acting Assistant AttorneyGeneral, Karen L.

Loeffler, United States Attorney, Mark B. Stern and John S.

Koppel, Attorneys, Appellate Staff Civil Division, United

States Department of Justice, Washington, D.C., for

Defendant-Appellant.

No appearance for Plaintiffs-Appellees.

ORDER

Defendant-Appellant U.S. Department of Agriculture’s

request for publication, filed July 20, 2015, is GRANTED. 

The memorandum disposition filed July 13, 2015, is revised

and redesignated a per curiam opinion.

OPINION

PER CURIAM:

Plaintiffs-Appellees Larry and Renee Cox defaulted on a

rural housing loan granted by Defendant-Appellee U.S.

Department of Agriculture (“USDA”). When USDA initiated

foreclosure proceedings, the Coxes elected to participate in

Nevada’s Foreclosure Mediation Program. The mediator

found that USDA did not participate in mediation in good

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4 COX V. USDA

faith, chiefly because USDA regulations prevented the

agency from entertaining the loan modifications that the

Coxes requested. The Coxes petitioned in state court for an

order modifying their loan.

USDA then removed the Coxes’ petition to federal court,

but the district court remanded the petition back to state court. 

Because the district court should have instead dismissed the

petition for lack of jurisdiction, we now reverse the district

court’s order remanding the petition to state court.

This dispute arose when the Coxes defaulted on an almost

$45,000 home loan from the USDA. After default, USDA

accelerated the loan and instituted foreclosure proceedings. 

But, pursuant to a Nevada statute, USDA was required to

engage in a good-faith loan modification mediation with the

Coxes prior to foreclosure. Nev. Rev. Stat. § 107.086(3), (6). 

USDA attended the required mediation. The Coxes were

hoping to negotiate a lower interest rate on the home loan and

a longer payment term at the mediation. Federal regulations,

however, prevented USDA from meaningfully altering the

terms of the home loan. See 7 C.F.R. §§ 3550.201,

3550.211(h) (preventing USDA from reamortizing loans that

have been accelerated); 7 C.F.R. § 3550.208 (preventing

USDA from reamortizing loans at a lower interest rate). 

Because of these regulations, USDA’s hands were tied.

The state mediator found that USDA did not negotiate in

good faith. The Coxes filed a petition in Nevada state court

seeking a favorable loan modification and sanctions against

USDA for negotiating in bad faith.

In response, USDA properly removed the Coxes’ petition

to the District of Nevada under 28 U.S.C. § 1442(a)(1). 

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COX V. USDA 5

USDA also moved to dismiss pursuant to sovereign immunity

and other doctrines. The district court held that it lacked

subject matter jurisdiction and remanded the Coxes’ petition

back to state court. USDA now appeals, arguing that remand

was improper because USDA enjoys sovereign immunity

from suit in Nevada state courts.

Because the record contains no evidence that USDA

waived its sovereign immunity to the Coxes’ petition, the

Nevada state court lacked jurisdiction over the action. See

Neb. ex rel. Dep’t of Soc. Servs. v. Bentson, 146 F.3d 676,

679–80 (9th Cir. 1998). Accordingly, under the derivative

jurisdiction doctrine, the district court also lacks jurisdiction

over the petition on removal. See In re Elko Cnty. Grand

Jury, 109 F.3d 554, 555 (9th Cir. 1997). The district court

therefore was bound to dismiss the petition rather than

remand to state court. See id.

Because we conclude that the district court erred in failing

to dismiss the petition for lack of jurisdiction, we do not

reach the other issues raised on appeal.

The district court’s remand order is REVERSED and the

action REMANDED with instructions that the district court

dismiss the Coxes’ petition for lack of jurisdiction.

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