Arnold v. First Greensboro Home Equity Inc.
| Decision Date | 15 April 2004 |
| Docket Number | No. 4:03-CV-1849 CAS.,4:03-CV-1849 CAS. |
| Citation | 327 F.Supp.2d 1022 |
| Parties | Kevin ARNOLD, et al., Plaintiffs, v. FIRST GREENSBORO HOME EQUITY, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
David W. Bauman, Michael J. Flannery, James J. Rosemergy, David Danis Law Firm, P.C., Jeffrey S. Singer, Fox and Goldblatt, St. Louis, MO, for Plaintiffs.
James B. Day, Blackwell and Associates, P.C., O'Fallon, MO, for Consolidated Filer Plaintiff.
Edward O. Gramling, Todd W. Ruskamp, Shook and Hardy, Kansas City, MO, for Defendants.
This removed matter is before the Court on plaintiffs' Motion to Remand, defendants' Motion to Dismiss pursuant to Rules 12(b)(1) and (6), Federal Rules of Civil Procedure, and the Chapter 7 Bankruptcy Trustee's Motion to Intervene and for Substitution of Party Plaintiff. For the following reasons, the Court will grant the motion to remand and the other motions will remain pending for resolution by the state court.
This action was originally filed in the Circuit Court of St. Louis County, Missouri on November 18, 2003 by plaintiffs Kevin Arnold and Olive "Bing" Dempewolf-Arnold. Plaintiffs' putative class action petition alleges one count against defendants First Greensboro Home Equity, Inc. and Household Financial Services, Inc. for violation of Mo.Rev.Stat. § 408.036 (2000). Plaintiffs allege that defendants have attempted to collect a prepayment penalty under certain loan agreements executed by plaintiffs and First Greensboro, in violation of the state statute. Defendants removed the matter to this Court on December 24, 2003, pursuant to 28 U.S.C. §§ 1331 and 1334. Defendants' notice of removal cited two grounds: (1) federal question jurisdiction arising from the complete preemption of plaintiffs' claim under the Alternative Mortgage Transaction Parity Act of 1982, 12 U.S.C. §§ 3801, et seq., and (2) bankruptcy-related jurisdiction under 28 U.S.C. § 1334, based on plaintiffs' bankruptcy filing on July 31, 2002. Defendants subsequently filed their motion to dismiss asserting that plaintiffs lack standing to assert the claims alleged, as any action must be prosecuted by the bankruptcy trustee as the real party in interest.
Plaintiffs move to remand, asserting that the case is not properly removable because their petition asserts a purely state law cause of action which is not completely preempted by federal law. Plaintiffs also state that their alleged lack of standing is a defense which may not serve as a basis for the exercise of federal jurisdiction. Finally, plaintiffs assert that their claim is not related to their bankruptcy cases within the meaning of 28 U.S.C. § 1334(b), but even if it is, the Court must abstain from exercising jurisdiction pursuant to 28 U.S.C. § 1334(c)(2).
The party invoking jurisdiction bears the burden of proof that all prerequisites to jurisdiction are satisfied. Hatridge v. Aetna Cas. & Sur. Co., 415 F.2d 809, 814 (8th Cir.1969). Removal statutes are strictly construed, and any doubts about the propriety of removal are resolved in favor of state court jurisdiction and remand. Transit Cas. Co. v. Certain Underwriters at Lloyd's of London, 119 F.3d 619, 625 (8th Cir.1997), cert. denied, 522 U.S. 1075, 118 S.Ct. 852, 139 L.Ed.2d 753 (1998). In determining whether a claim "arises under" federal law, courts must be "mindful that the nature of federal removal jurisdiction — restricting as it does the power of the states to resolve controversies in their own courts — requires strict construction of the legislation permitting removal." Nichols v. Harbor Venture, Inc., 284 F.3d 857, 861 (8th Cir.2002) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941)). If "at any time before final judgment it appears that the district court lacks subject matter jurisdiction," the case must be remanded to the state court from which it was removed. 28 U.S.C. § 1447(c).
The propriety of removal to federal court depends on whether the claim comes within the scope of the federal court's subject matter jurisdiction. See 28 U.S.C. § 1441(b). "A defendant may remove a state court claim to federal court only if the claim originally could have been filed in federal court, and the well-pleaded complaint rule provides that a federal question must be presented on the face of the properly pleaded complaint to invoke federal court jurisdiction." Gore v. Trans World Airlines, 210 F.3d 944, 948 (8th Cir.2000) (citing Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)), cert. denied, 532 U.S. 921, 121 S.Ct. 1358 (2001).1
A federal question is raised 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." Peters v. Union Pacific Railroad Co., 80 F.3d 257, 260 (8th Cir.1996) (quoting Franchise Tax Bd. of State of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). In most instances, the presence or absence of a federal question is governed by the well-pleaded complaint rule "which provides that federal jurisdiction exists only when a federal question is presented on the face of plaintiff's properly pleaded complaint." Caterpillar, 482 U.S. at 392, 107 S.Ct. 2425. A plaintiff is the master of his complaint, and may avoid federal removal jurisdiction by exclusive reliance on state law. Id.
"Congress has long since decided that federal defenses do not provide a basis for removal." Id. at 399, 107 S.Ct. 2425. "Thus, a case may not be removed to federal court on the basis of a defense, even if the defense in anticipated in the plaintiff's complaint, and even if both parties admit that the defense is the only question truly at issue in the case." Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998) (internal quotations and alterations omitted). There are limited circumstances, however, in which the presentation of a federal defense will give rise to federal jurisdiction. The doctrine of complete preemption is a narrow exception to the well-pleaded complaint rule. Krispin v. May Dep't Stores Co., 218 F.3d 919, 922 (8th Cir.2000). Complete preemption applies in circumstances where certain federal statutes are deemed to possess "`extraordinary pre-emptive power,' a conclusion courts reach reluctantly." Gaming Corp. of America v. Dorsey & Whitney, 88 F.3d 536, 543 (8th Cir.1996) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). Under this doctrine, "[o]nce an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425. The artful pleading doctrine, which provides that a plaintiff may not defeat removal by omitting to plead necessary federal questions, Rivet, 522 U.S. at 475, 118 S.Ct. 921, is limited to federal statutes which "so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal." Metropolitan Life, 481 U.S. at 63, 107 S.Ct. 1542.
"Whether federal law pre-empts a state-law cause of action is a question of congressional intent." Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 252, 114 S.Ct. 2239, 129 L.Ed.2d 203 (1994). Courts "must determine whether Congress has clearly manifested an intent to make a cause of action pleaded under state law removable to federal court, mindful that in the ordinary case federal preemption is merely a defense to a plaintiff's lawsuit." Magee v. Exxon Corp., 135 F.3d 599, 602 (8th Cir.1998) (internal citation omitted) (complete preemption doctrine did not apply to Truth-in-Lending Act to create federal-question removal jurisdiction). The complete preemption doctrine only applies where a statutory scheme has "extraordinary preemptive power." State ex rel. Nixon v. Coeur D'Alene Tribe, 164 F.3d 1102, 1108 (8th Cir.), cert. denied, 527 U.S. 1039, 119 S.Ct. 2400, 144 L.Ed.2d 799 (1999). The Supreme Court has approved its use in only three areas: (1) claims under Section 301 of the Labor Management Relations Act, 29 U.S.C. §§ 141, et seq., see Avco Corp. v. Aero Lodge No. 735, Int'l. Ass'n of Machinists & Aerospace Workers, 390 U.S. 557, 561-62, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968); (2) claims under Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq., by a participant or beneficiary, see Metropolitan Life, 481 U.S. at 66-67, 107 S.Ct. 1542; and (3) claims alleging a present right to possession of Indian tribal lands, see Oneida Indian Nation of New York State v. County of Oneida, New York, 414 U.S. 661, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974). "[T]he prudent course for a federal court that does not find a clear congressional intent to create removal jurisdiction will be to remand the case to state court." Metropolitan Life at 69, 107 S.Ct. 1542 (J. Brennan, concurring).
The Court addresses plaintiffs' motion to remand first, because it must determine whether subject matter jurisdiction exists in this case.
In opposing the motion to remand, defendants argue the case is properly removable because it is related to plaintiffs' prior bankruptcy case under Title 11, United States Code, citing 28 U.S.C. §§ 1452(a) and 1334(b). In the alternative, defendants argue that the petition raises a claim that is completely preempted by the Alternative Mortgage Transaction Parity Act ("AMTPA" or the "Parity Act") and regulations promulgated thereunder. In their Notice of Removal, defendants also argue that the...
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...right to relief necessarily depends on resolution of a substantial question of federal law." Arnold v. First Greensboro Home Equity Inc., 327 F.Supp.2d 1022, 1025 (E.D.Mo. 2004). Here, the complaint filed before state court does not state a cause of action created by federal law. Moreover, ......