UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

NORTHERN DIVISION

COUNTRYWIDE HOME LOANS, INC.,

as servicer for the United States Department of

Veteran Affairs,

Plaintiff,

Case Number 08-14614-BC

v. Honorable Thomas L. Ludington

MICHIGAN DEPARTMENT OF TREASURY,

Robert J. Kleine, Treasurer, et al.,

Defendants.

______________________________________ /

ORDER DETERMINING THE COURT’S SUBJECT MATTER JURISDICTION AND

DISMISSING APRIL 24, 2009 ORDER TO SHOW CAUSE 

On October 30, 2008, Plaintiff Countrywide Home Loans, Inc. (“Plaintiff”) filed a complaint

to vacate a tax foreclosure judgment and to quiet title on a parcel of real property located at 1001

Webber Street, Saginaw, Michigan (“Webber Property”). See dkt. # 1. According to the complaint,

on July 9, 1981, Defendants Larry and Vicki Staton recorded a mortgage valued at $20,500.00 on

the Webber Property. Id. at ¶ 19. In 1995, the mortgage was assigned to the Secretary of Veteran

Affairs. Id. Plaintiff alleges that it acts as a mortgage servicer for the Department of Veteran

Affairs. Id. at ¶ 4. In 2001, Defendant Marvin Hare, as treasurer of the County of Saginaw, filed

a certificate of forfeiture on the Webber Property for delinquent property taxes. Id. at ¶ 7. In 2002,

Defendant Robert Kleine foreclosed the Webber Property, which was purchased at public auction.

Plaintiff contends that Defendants did not follow notice procedures set forth in Mich. Comp. Laws

§ 211.78i prior to effectuating the foreclose. Id. at 21-26.

 The complaint states that “this Court has jurisdiction pursuant 28 U.S.C. §1331 and 28

[U.S.C.] § 2410,” predicated on violations of the Property and Supremacy Clauses of the United

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States Constitution. Id. at ¶ 3, 21; see U.S. Const. Art. IV, § 3,Cl. 2 & Art. VI, Cl. 2. Defendant

Marvin D. Hare disputed this Court’s subject matter jurisdiction over Plaintiff’s complaint. Dkt. #

13 at ¶ 3.

On April 24, 2009, the Court ordered Plaintiff to show why the complaint should not be

dismissed for lack of subject matter jurisdiction. On May 4, 2009, Plaintiff responded to the order

to show cause. Dkt. # 17. On May 18, 2009, the Court directed Defendants to file response briefs,

which were filed on May 26, 2009. Dkt. # 18, 24-26. After reviewing the pleadings and relevant

authority, the Court is persuaded that Plaintiff’s constitutional claims establish this Court’s subject

matter jurisdiction pursuant to 28 U.S.C. § 1331.

“[F]ederal courts have an independent obligation to investigate and police the boundaries of

their own jurisdiction . . . .” Douglas v. E.G. Baldwin & Assoc., Inc., 150 F.3d 604, 607 (6th Cir.

1998) (abrogated on other grounds by Arbaugh v. Y&H Corp., 546 U.S. 500 (2006)). The burden

rests with the party asserting jurisdiction to demonstrate the complaint falls within a district court’s

limited jurisdiction. Id. at 606. 28 U.S.C. § 1331 establishes a district court’s jurisdiction “only

in those cases in which a well-pleaded Complaint establishes either that federal law creates the cause

of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial

question of federal law.” Eastman v. Marine Mech. Corp., 438 F.3d 544, 550 (6th Cir. 2006)

(quoting Thornton v. Southwest Detroit Hosp., 895 F.2d 1131, 1133 (6th Cir.1990) (quoting

Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983))). A party may

establish the Court’s original jurisdiction by advancing “causes of action [that] are created by federal

law, that is, where federal law provides a right to relief.” Id. (citing American Well Works Co. v.

Layne & Bowler Co., 241 U.S. 257, 260 (1916)).

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 The parties agree that 28 U.S.C. § 2410 does not provide an independent basis for this Court to exercise

jurisdiction.

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Here, Plaintiff seeks relief pursuant to the Property and Supremacy Clauses of the United

States Constitution.1

 In support of this proposition, Plaintiff advances Yunis v. United States, 118

F. Supp. 2d 1024, 1031 (C.D. Cal. 2000), which recognized that the Property and Supremacy

Clauses “govern[] the determination of whether title to land owned by the United States has passed

to another party.” Ultimately, the court concluded that a non-judicial foreclosure of property owned

by the federal government encroached on Congress’s authority “to determine the conditions upon

which property of the United States is sold or otherwise disposed.” Id. (citing Butte City Water Co.

v. Baker, 196 U.S. 119, 126, (1905)). 

In response, Defendants advance two arguments. First, Defendants assert that the reasoning

in Yunis is inapposite because Tunis was limited to fee ownership by the United States and does not

apply to mortgage interests. Next, Defendants contend that Plaintiff does not challenge the

constitutionality of Michigan’s foreclosure procedure. Rather, Plaintiff merely alleges that

Defendants did not respect state law notice requirements pursuant to Mich. Comp. Laws. § 211.78i.

 At this preliminary stage, the inquiry is limited to whether federal law creates a right to

relief. Notwithstanding Defendants’ arguments, Plaintiff has met its burden in advancing an

arguable basis for relief pursuant to the Constitution. See also BF Partners, LLC v. Estate of

McSorley, 2005 WL 1335150, *3-*6 (W.D. Mich. June 6, 2005) (district court nullified tax and

quitclaim deeds, finding federal agency controlled disposition of real property predicated on

authority granted in Property and Supremacy Clauses). Defendants may address outstanding

questions of law and fact advanced in their response briefs through motion practice.

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Accordingly, it is ORDERED that the Court’s April 24, 2009 Order to Show Cause [Dkt.

# 16] is DISMISSED. The complaint establishes original jurisdiction in this Court.

s/Thomas L. Ludington 

THOMAS L. LUDINGTON

United States District Judge

Dated: May 29, 2009

PROOF OF SERVICE

The undersigned certifies that a copy of the foregoing order was served

upon each attorney or party of record herein by electronic means or first

class U.S. mail on May 29, 2009.

s/Tracy A. Jacobs 

TRACY A. JACOBS

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