Ansley v. Ameriquest Mortg. Co.

• Decision Date: 20 August 2003
• Docket Number: No. 02-55848.,02-55848.
• Citation: 340 F.3d 858
• Parties: Turner ANSLEY, Plaintiff-Appellee, v. AMERIQUEST MORTGAGE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

340 F.3d 858

Turner ANSLEY, Plaintiff-Appellee, v. AMERIQUEST MORTGAGE COMPANY, Defendant-Appellant.

No. 02-55848.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 11, 2003 — Pasadena, California.

Filed August 20, 2003.

COPYRIGHT MATERIAL OMITTED

Rachael H. Berman and David Sturgeon-Garcia, Buchalter, Nemer, Fields & Younger, San Francisco, California, for the defendant-appellant.

Jeffrey Wilens, Lakeshore Law Center, Mission Viejo, California, for the plaintiff-appellee.

Appeal from the United States District Court for the Central District of California; Alicemarie H. Stotler, District Judge, Presiding. D.C. No. CV-02-00012-AHS.

Before: Mary M. SCHROEDER, Chief Judge, Susan P. GRABER, Circuit Judge, and James K. SINGLETON,^* District Judge.

OPINION

SINGLETON, District Judge.

Ameriquest Mortgage Company ("Ameriquest") appeals the district court's order awarding attorney fees to Turner Ansley, following the court's order remanding Ansley's action to Orange County Superior Court. 28 U.S.C. § 1447(c). Ansley's state court complaint alleged that Ameriquest charged him a mortgage prepayment penalty in an amount exceeding that permitted by California Civil Code § 2954.9 and California Business & Professions Code § 10242.6. Ameriquest removed the action to federal court, arguing that the federal Alternative Mortgage Transaction Parity Act of 1982, 12 U.S.C. §§ 3801-3805 ("Parity Act"), completely preempts California law and gives jurisdiction to the federal courts. The district court remanded the action, reasoning that the Parity Act must completely preempt all California laws relating to alternative mortgage transactions in order to create federal jurisdiction, and finding that it failed to do so. For the reasons set forth below, we affirm.

BACKGROUND AND PROCEDURAL HISTORY

On December 3, 2001, Turner Ansley filed a complaint in Orange County Superior Court. The complaint alleged that Ameriquest violated the California Consumer Legal Remedies Act, Cal. Civ.Code § 1770 (West 2003), by requiring prepayment penalty assessments in excess of amounts allowed by California law. Specifically, Ansley alleged that he obtained a mortgage loan from Ameriquest, subsequently refinanced, and was charged a prepayment penalty of six months' interest on 100 percent of the balance of the loan. Section 2954.9 of the Civil Code and Section 10242.6 of the Business & Professions Code, however, limit prepayment penalties to six months' advanced interest on 80 percent of the loan. Ansley also alleged that Ameriquest's conduct constituted an unfair trade practice under Section 17200 of the Business & Professions Code.

The operative agreement for the parties' mortgage transaction states:

12. Governing Law Provision

This Note and the related Security Interest are governed by the Alternative Mortgage Transaction Parity Act of 1982, 12 USC § 3802 et. seq., and, to the extent not inconsistent therewith, Federal and State law applicable to the jurisdiction of the Property.

Ameriquest filed a notice of removal on January 4, 2002, and a corrected notice of removal on January 16, 2002. On February 28, 2002, Ansley filed a motion to remand and a request for attorney fees. On April 9, 2002, the district court granted Ansley's motion and remanded the case to Orange County Superior Court. The district court also awarded attorney fees to Ansley in the amount of $3,600. Ameriquest timely filed its notice of appeal on May 10, 2002. We have jurisdiction pursuant to 28 U.S.C. § 1291. Gibson v. Chrysler Corp., 261 F.3d 927, 932 (9th Cir.2001), cert. denied, 534 U.S. 1104, 122 S.Ct. 903, 151 L.Ed.2d 872 (2002).

DISCUSSION

An award of fees and costs associated with removal or remand under 28 U.S.C. § 1447(c) is reviewed for an abuse of discretion. Kanter v. Warner-Lambert Co., 265 F.3d 853, 861 (9th Cir.2001). Although an order remanding a case to state court is not reviewable, 28 U.S.C. § 1447(d), "review of a fee award under § 1447(c) must include a de novo examination of whether the remand order was legally correct," Gibson, 261 F.3d at 932 (citation and quotation marks omitted). Accordingly, in reviewing the award of attorney fees, we must first consider the merits of Ameriquest's arguments in favor of removal to the district court. Id.

A. Alternative Mortgage Transaction Parity Act of 1982

Ameriquest filed its notice of removal and corrected notice of removal under 28 U.S.C. § 1441(b). "The threshold requirement for removal under 28 U.S.C. § 1441 is a finding that the complaint contains a cause of action that is within the original jurisdiction of the district court." Toumajian v. Frailey, 135 F.3d 648, 653 (9th Cir.1998). Here, Ameriquest contends that Ansley's claims arise under federal law, specifically, the Parity Act, and thus fall within the district court's federal question jurisdiction pursuant to 28 U.S.C. § 1331. In scrutinizing a complaint in search of a federal question, a court applies the well-pleaded complaint rule. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). For removal to be appropriate under the well-pleaded complaint rule, a federal question must appear on the face of a properly pleaded complaint. Rivet v. Regions Bank of La., 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998).

Ameriquest does not argue that a federal question appears on the face of Ansley's complaint. Rather, Ameriquest argues that federal jurisdiction is proper because Ansley's claims are completely preempted by the Parity Act and applicable regulations promulgated by the Office of Thrift Supervision. The jurisdictional doctrine of complete preemption serves as an exception to the well-pleaded complaint rule. Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1107 (9th Cir. 2000). It provides that, in some instances, "the preemptive force of [federal statutes] is so strong that they completely preempt an area of state law. In such instances, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Id. (citations and quotation marks omitted). "[C]omplete preemption occurs only when Congress intends not merely to preempt a certain amount of state law, but also intends to transfer jurisdiction of the subject matter from state to federal court." Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1183 (9th Cir.2002).

Complete preemption, however, arises only in "extraordinary" situations. Id. at 1183-84. "The test is whether Congress clearly manifested an intent to convert state law claims into federal-question claims." Id. at 1184. The United States Supreme Court has identified only three federal statutes that satisfy this test: (1) Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185; (2) Section 502 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132; and (3) the usury provisions of the National Bank Act, 12 U.S.C. §§ 85, 86. Beneficial Nat'l Bank v. Anderson, ___ U.S. ___, 123 S.Ct. 2058, 2062-64, 156 L.Ed.2d 1 (2003).

Accordingly, we must address whether the Parity Act provides a basis for complete preemption. Congress enacted the Parity Act in 1982 after finding that "increasingly volatile and dynamic changes in interest rates" had "seriously impaired the ability of housing creditors to provide consumers with fixed-term, fixed-rate credit secured by interests in real property." 12 U.S.C. § 3801(a)(1). Congress noted that the availability of loans other than traditional fixed-rate, fixed-term transactions was essential to an adequate supply of loans secured by residential property. Id. §§ 3801(a)(2), 3802(1). Accordingly, Congress enacted the Parity Act

to eliminate the discriminatory impact that ... regulations [authorizing federal institutions to engage in alternative mortgage financing] have upon nonfederally chartered housing creditors and provide them with parity with federally chartered institutions by authorizing all housing creditors to make, purchase, and enforce alternative mortgage transactions so long as the transactions are in conformity with the regulations issued by the Federal agencies.

Id. § 3801(b).

The Parity Act provides:

In order to prevent discrimination against State-chartered depository institutions, and other nonfederally chartered housing creditors, with respect to making ... alternative mortgage transactions, housing creditors may make ... alternative mortgage transactions, except that this section shall apply —

(1) with respect to banks, only to transactions made in accordance with [certain regulations issued by the Comptroller of the Currency];

(2) with respect to credit unions, only to transactions made in accordance with [other regulations issued by the National Credit Union Administration Board]; and

(3) with respect to all other housing creditors ... only to transactions made in accordance with regulations governing alternative mortgage transactions as issued by the Director of the Office of Thrift Supervision for federally chartered savings and loan associations, to the extent that such regulations are authorized by rulemaking authority granted to the Director of the Office of Thrift Supervision with regard to federally chartered savings and loan associations under laws other than this section.

Id. § 3803(a). Regarding preemption, the Parity Act provides that "[a]n alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any State constitution, law, or regulation." Id. § 3803(c).

In discussing the preemption provision quoted above, the court in Black v. Financial Freedom Senior Funding Corp., 92 Cal.App.4th 917, 112 Cal.Rptr.2d 445 (Cal. App.2001), cert. denied, 536 U.S. 959, 122 S.Ct. 2662, 153 L.Ed.2d 837 (2002), analyzed two possible interpretations. First, Black considered that the phrase "any State constitution, law, or regulation"...