Opinion
CV 03-07135 FMC (RZx)
November 4, 2003
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND ACTION TO LOS ANGELES COUNTY SUPERIOR COURT
This matter is before the Court on Plaintiffs Motion to Remand the Action to Los Angeles Superior Court (docket no. 5), filed October 17, 2003. The Court deems this matter appropriate for decision without oral argument. See Fed.R.Civ.P. 78; Local Rule 7-15. Accordingly, the hearing set for November 10, 2003, is removed from the Court's calendar. For the reasons set forth below, Plaintiffs Motion to Remand is hereby granted, and this action is hereby remanded to Los Angeles Superior Court
I. Background
On August 28, 2003, Plaintiff filed this action in Los Angeles Superior Court alleging that Defendants violated California Business and Professions Code § 17200, et seq. the Unfair Competition Law ("UCL"). Plaintiff alleges that Defendants, Option One Mortgage Corporation ("Option One") and Does 1 through 20, while acting as lenders on mortgage loans, engaged in acts and practices which were unfair, fraudulent and/or illegal in violation of federal and California law. Specifically, Plaintiff alleges Defendants' practices were in violation of federal law, the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq., and Regulation X, 24 CF.R. § 3500 et seq., and in violation of California law, California Financial Code section 50505, which by its terms, is violated by any RESPA violation.
On October 3, 2003, Defendant Option One removed the case to this Court pursuant to 28 U.S.C. § 1441. Option One argued that federal jurisdiction was proper because interpretation of federal law is required to resolve the case. On October 17, 2003, Plaintiff filed a motion to remand the action to Los Angeles County Superior Court.
II. Motion to Remand
A motion to remand is the proper procedure for challenging removal See N. Cal. Dist. Council of Laborers v. Pittsburgh-Des Moines Steel Co., 69 F.3d 1034, 1038 (9th Cir. 1995). The removal statute is strictly construed, and any doubt about the right of removal is resolved in favor of remand. See Gaus v. Miles, Inc., 980 R.2d 564, 566 (9th Cir. 1992); Prize Frieze, Inc. v. Matrix, Inc., 167 F.3d 1261, 1265 (9th Cir. 1999). Consequently, if a plaintiff challenges a defendant's removal of a case, the defendant bears the burden of establishing the propriety of the removal. See Gaus, 980 F.2d at 566; Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996).
III. Discussion
Defendant Option One argues that the case must be dismissed because Plaintiff cannot litigate this case in either federal or state court. Specifically, Defendant argues that Plaintiff lacks the Article III standing necessary to present a cause of action in federal court. Additionally, Defendant argues that the matter cannot be litigated in state court because this Court has original federal jurisdiction and federal law is the foundation of Plaintiffs claims.
A. Article III Standing
The Court must first determine whether Plaintiff has standing. Plaintiffs action arises under state law — the UCL. Plaintiff brings the action as an unaffected plaintiff, one who sues as a private attorney general despite having had no conflict or contact with Defendants and having suffered no damages. Article III standing requires that the plaintiff must have suffered an "injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130 (1992).
Here, it is undisputed that Plaintiff has suffered no injury in fact. Plaintiff admits that she has not been affected by any alleged violations, that she has suffered no damages, that she is an "unaffected plaintiff," and that she has standing only in state court, not in federal court. Accordingly, Plaintiff does not have Article III standing, and cannot pursue her claims in federal court.
B. Jurisdiction
Defendant Option One argues that Plaintiff cannot proceed in state court because Plaintiffs UCL claims are based on and require interpretation of federal law. The jurisdiction issue turns on whether Plaintiffs claims are exclusively federal in nature, or whether they may be properly resolved in state court.
Plaintiff bases her UCL claims on alleged violations of federal law, RESPA and Regulation X, and alleged violations of California law, California Financial Code section 50505. RESPA provides for concurrent jurisdiction in both federal and state courts:
Any action pursuant to the provisions of section 2605, 2607, or 2608 of this title may be brought in the United States district court or in any other court of competent jurisdiction, for the district in which a the property involved is located, or where the violation is alleged 5 to have occurred.12 U.S.C. § 2614 (emphasis added). Although federal courts have original jurisdiction in cases involving RESPA violations, they do not have exclusive jurisdiction. In Bergkamp v. New York Guardian Mortgagee Corp., 667 F. Supp. 719 (D. Mont. 1987), the plaintiffs brought suit in state court asserting various tort claims. The defendants removed the action to federal court, and argued that the claim arose under federal law because that the determination of their tort liability required interpretation of RESPA. Id. at 720. The Court found there was no private right of action under Section 10 of RESPA, and "[w]ithout a private right of action, there can be no `substantial' question of federal law and no basis for removal jurisdiction under the federal question statute." Id. at 723. The Court then granted the plaintiffs' motion for remand to the state court of Montana. Id. at 724. See also Sicinski v. Reliance Funding Corp., 461 F. Supp. 649, 650-651 (S.D.N.Y. 1978) (the Court acknowledged that RESPA grants concurrent jurisdiction, and the Court held that concurrent jurisdiction does not preclude removal of the RESPA action from the state court).
Defendant Option One argues that Plaintiffs UCL claims are entirely based on federal law, and as such, federal jurisdiction is appropriate. This is not correct. In addition to alleging that Defendants' practices are illegal under federal law, Plaintiff alleges that Defendants' practices are unfair or fraudulent within the meaning of the UCL.
Defendant Option One's citation to Herman v. Salomon Smith Barney, Inc., 266 F. Supp.2d 1208 (S.D. Cal. 2003) does not support its argument. In Herman, the plaintiffs UCL claim was based on alleged violations of Municipal Securities Rulemaking Board Rules authorized by the Securities and Exchange Act of 1934, which mandates exclusive federal jurisdiction ver Exchange Act violations. Id. at 1211. Here, Plaintiffs UCL claims are based, in part, on federal laws which are not within the federal court's exclusive jurisdiction, and therefore, violations of those laws can be resolved in state court.
Accordingly, Plaintiff can pursue in state court, her UCL claims, based on Defendants' alleged unfair, fraudulent and/or illegal practices in violation of federal and California law.
IV. Conclusion
The Court hereby grants Plaintiffs Motion to Remand (docket no. 5), and this action is hereby remanded to Los Angeles Superior Court.