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Mitchell v. Swartley

United States District Court, Ninth Circuit

January 23, 2014

G. DANIEL MITCHELL and JOYCE L. MITCHELL, Plaintiffs,
v.
CHRISTOPHER B. SWARTLEY, as successor Trustee to Sterling Title Services, and DOES 1-20 INCLUSIVE, jointly and severally, Defendants.

ORDER

DANA L. CHRISTENSEN, District Judge.

Plaintiffs G. Daniel and Joyce Mitchell ("Mitchells") seek remand of this case to state court based on lack of subject matter jurisdiction, alleging specifically that there is no federal question for this Court to resolve. Defendant Christopher B. Swartley, as successor Trustee to Sterling Title Services, responds that the Mitchells' motion to remand should be denied because: (1) this Court has jurisdiction due to the fact that the Mitchells' complaint implicates a substantial issue of federal law; and (2) the interests of judicial economy, fairness, and avoidance of conflicting rulings support denial of the motion.

The Mitchells also seek reasonable attorneys' fees and costs associated with the motion to remand this action.

The Mitchells' motion will be granted because the Defendant has not met his burden to establish that removal to federal court is proper. However, the Court declines to award attorneys' fees and associated costs.

I. Background

In July, 2012, the Mitchells filed suit in this Court against multiple defendants, including SunTrust Bank ("STB") and SunTrust Mortgage ("STM"), alleging, essentially, that a deed of trust they entered into in 2005 was void and unenforceable ("Federal case"). The Court found that all of Mitchells' claims failed as a matter of law, granted the Defendants' motion to dismiss the Mitchells' Amended Complaint, and dismissed the case on May 7, 2013. (CV 12-127-M-DLC, Doc. 93.) The Court denied the Mitchells' request for reconsideration on July 8, 2013. The Mitchells then filed their notice of appeal with the Ninth Circuit on July 29, 2013. The parties' appellate mediation is scheduled for February 17, 2014, and the Mitchells' appellate brief is due in March of 2014.

After the Federal Case was dismissed, STB, as beneficiary under the deed of trust[1] appointed Christopher Swartley - Defendant in the instant case - as the successor trustee by filing a substitution of trustee in the office of the clerk and recorder for Flathead County. Pursuant to STB's instructions, Swartley filed the Notice of Sale Under Deed of Trust on August 20, 2013, setting the sale for January 7, 2014.

Meanwhile, the Mitchells filed the instant action on or about November 15, 2013 in the Montana Eleventh Judicial District. The complaint was filed to enjoin the Trustee-Defendant from conducting the scheduled foreclosure sale on two grounds: (I) void notice of sale under Montana's Small Tract Financing Act ("SFTA"); and (II) because the deed of trust on which Trustee is proceeding is the subject of the Mitchells' pending appeal of the Federal case. Defendant removed the instant case to this Court on November 26, 2013, and the Mitchells filed their motion to remand on December 3, 2013. The sale is currently scheduled for February 6, 2014, pursuant to this Court's order of December 16, 2013. (Doc. 10.)

II. Discussion

A. Removal & Remand

"[R]emoval statutes are strictly construed against removal." Luther v. Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th Cir. 2008). "The presumption against removal means that the defendant always has the burden of establishing that removal is proper." Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir.1979)).

Defendant based his removal of this action on the premise that this Court has subject matter jurisdiction pursuant to 29 U.S.C. ยง 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States") - most commonly referred to as "federal question jurisdiction, " or "arising under" jurisdiction.
Under the well-pleaded complaint rule, a federal question must be present on the face of the complaint. Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d 1033, 1040 (9th Cir. 2003). This rule "severely limits the number of cases in which state law creates the cause of action' that may be initiated in or removed to federal district court." Id. (quoting Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust/or California, 463 U.S. 1, 9-10 (1983)).
Additionally, a plaintiff "may not avoid federal jurisdiction by omitting from the complaint allegations of federal law that are essential to the establishment of the claim." Id. (quoting Hansen v. Blue Cross of Cal., 891 F.2d 1384, 1389 (9th Cir. 1989). Under this artful-pleading doctrine, removal is proper where a claim is "necessarily federal in character... or where the right to relief depends on the resolution of a substantial, disputed federal question." Id. (citations omitted). Courts should "invoke the doctrine only in limited circumstances as it raises ...

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