Blair v. Source One Mortg. Services Corp.

• Decision Date: 01 April 1996
• Docket Number: Civ. No. 3-95-792.
• Citation: 925 F. Supp. 617
• Parties: James J. BLAIR and Jane A. Blair, on behalf of themselves and all others similarly situated, Plaintiffs, v. SOURCE ONE MORTGAGE SERVICES CORPORATION and Republic Mortgage Insurance Company, Defendants.
• Court: U.S. District Court — District of Minnesota

925 F. Supp. 617

James J. BLAIR and Jane A. Blair, on behalf of themselves and all others similarly situated, Plaintiffs, v. SOURCE ONE MORTGAGE SERVICES CORPORATION and Republic Mortgage Insurance Company, Defendants.

Civ. No. 3-95-792.

United States District Court, D. Minnesota, Third Division.

April 1, 1996.

Ronald S. Goldser, J. Gordon Rudd, Jr., Minneapolis, MN, for plaintiffs.

Margaret K. Savage, Minneapolis, MN, for Source One Mortgage Services Corp.

Catherine A. Gnatek, William L. Kirkman, Minneapolis, MN, for Republic Mortgage Ins. Co.

ORDER

ERICKSON, United States Magistrate Judge.

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to a general assignment, made in accordance with the provisions of Title 28 U.S.C. § 636(b)(1)(A) and (B), upon the Plaintiffs' Motion to Remand the matter to the Minnesota District Court for Dakota County, and upon the Defendants' Motions to Dismiss or, alternatively, for Summary Judgment.

A Hearing on the Motions was conducted on November 29, 1995, at which time the Plaintiffs appeared by Ronald S. Goldser and J. Gordon Rudd, Jr., Esqs.; the Defendant Source One Mortgage Services Corporation ("Source One") appeared by Margaret K. Savage, Esq.; and the Defendant Republic Mortgage Insurance Company ("Republic") appeared by Catherine A. Gnatek and William L. Kirkman, Esqs.

For reasons which follow we grant the Motion to Remand and, accordingly, the Defendants' Motions are denied as jurisdictionally mooted.¹

II. Factual and Procedural Background

This putative class action was commenced, in the Minnesota District Court for Dakota County, on July 14, 1995, and seeks the recovery of certain premiums, that class members are purported to have wrongly paid for private mortgage insurance, together with a request for injunctive relief, and any attendant attorneys' fees. As originally framed, the Plaintiffs' Complaint alleged the following causes of action against one Defendant or the other: breach of contract; unjust enrichment; breach of duty of good faith and fair dealing; breach of fiduciary duty; fraud; violation of the Minnesota Consumer Fraud Act, Minnesota Statutes Section 325F.68 et seq.; conversion; violation of the Minnesota Deceptive Practices Act, Minnesota Statutes Section 325D.43 et seq.; and, negligence.

On or about August 18, 1995, the Defendants filed their joint Notice of Removal, pursuant to Title 28 U.S.C. § 1441, asserting as jurisdictional bases both Diversity of Citizenship, and Federal Question jurisdiction. See, Title 28 U.S.C. § 1332 and 1331. On August 29, 1995, the Plaintiffs filed their Amended Class Action Complaint² and, on September 21 and 22, respectively, Source One and Republic filed their alternative Motions for dismissal, or for Summary Judgment. As they relate to the Plaintiffs' Motion to Remand, the facts may be briefly summarized.

In accordance with the terms of the pertinent mortgage agreement, Source One required the Plaintiffs to maintain "mortgage insurance as a condition of making the loan secured" by the mortgage. See, Exhibit B to Affidavit of John Cleary at page 2. The purpose of the mortgage insurance was to protect Source One in the event that the Plaintiffs should default on their mortgage loan payments. Source One secured private mortgage insurance, to cover the Plaintiffs' mortgage, from Republic. The Plaintiffs contend that they are committed to pay for mortgage insurance only until such time as the ratio, between their loan and the value of the secured real estate, should be 80% or less. In contrast, Source One contends that the Plaintiffs are obligated to retain mortgage insurance "until the requirement for mortgage insurance ends in accordance with any written agreement between Borrower and Lender or applicable law." Id.

Among the allegations of the Plaintiffs' Complaint are assertions that the Plaintiffs have been injured as a result of Republic's payment of unauthorized and improper "commissions," "kickbacks" and "rebates" to Source One. On account of these purported wrongdoings, the Plaintiffs have alleged a series of State law violations, but they deny that the Defendants' conduct has violated any of the provisions of the Real Estate Settlement Procedures Act, Title 12 U.S.C. § 2601 et seq. ("RESPA").³ Although denying any wrongdoing, the Defendants contend that the Plaintiffs are seeking to vindicate their Federal rights, under RESPA, in the garb of their State law claims, and that, therefore, removal of this action from the State Courts was authorized by their invocation of the Court's Federal Question jurisdiction. Alternatively, the Defendants maintain that their resort to Federal jurisdiction can be pinioned upon Diversity of Citizenship grounds. In contrast, the Plaintiffs acknowledge that the citizenship of the opposing parties is diverse, but they deny that the Defendants can persuasively demonstrate that the amount in controversy exceeds the jurisdictional threshold of $50,000.00.

III. Discussion

Since they are independently based, we separately address the Defendants' jurisdictional arguments, as they relate to Federal Question and Diversity jurisdiction but, in each instance, the Defendants bear the burden of establishing the existence of Federal jurisdiction. See, Missouri ex rel. Pemiscot County v. Western Sur. Co., 51 F.3d 170, 173 (8th Cir.1995) ("When a federal complaint alleges a sufficient amount in controversy to establish jurisdiction, but the opposing party or the court questions whether the amount alleged is legitimate, the party invoking federal jurisdiction must prove the requisite amount by a preponderance of the evidence."), citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936); In re Business Men's Assurance Co., 992 F.2d 181, 183 (8th Cir.1993).

A. Federal Question Jurisdiction.

1. Standard of Review. "Removal of a state court action without regard to the citizenship of the parties is appropriate if the suit could have been brought in federal district court, as `founded on a claim or right arising under the constitution, treaties or laws of the United States.'" M. Nahas & Co. v. First Nat'l Bank of Hot Springs, 930 F.2d 608, 611 (8th Cir.1991), citing Title 28 U.S.C. § 1441(b). Such Federal Question jurisdiction is only presented when the pertinent Federal issue appears on the face of the Plaintiffs' Complaint. Nelson v. Citibank (South Dakota) N.A., 794 F.Supp. 312, 314 (D.Minn.1992).

"Under the `well-pleaded complaint' doctrine, the plaintiff is master of his claim and may avoid federal removal jurisdiction by exclusive reliance on state law." M. Nahas & Co. v. First Nat'l Bank of Hot Springs, supra at 611, citing Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). Indeed, as the Court observed in Caterpillar Inc. v. Williams, supra at 393, 107 S.Ct. at 2430, "it is now settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Emphasis in original. Accordingly, "a district court's federal-question jurisdiction * * * extends over `only those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal law,' * * * in that `federal law is a necessary element of one of the well-pleaded * * * claims.'" Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 808, 108 S.Ct. 2166, 2173, 100 L.Ed.2d 811 (1988), quoting Franchise Tax Board of California v. Construction Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 2855-56, 77 L.Ed.2d 420 (1983).

"However, there is an exception to the well-pleaded complaint rule: `a plaintiff cannot thwart the removal of a case by inadvertently, mistakenly or fraudulently concealing the federal question that would necessarily have appeared if the complaint had been well pleaded.'" M. Nahas & Co. v. First Nat'l Bank of Hot Springs, supra at 612. This is a narrow exception, and it is reserved for those Federal statutes that "so completely pre-empt a particular area, that any civil complaint raising this select group of claims is necessarily federal." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55 (1987). In the final analysis, we resolve all doubts concerning the existence of a Federal Question in favor of remand. In re Business Men's Assurance Co., supra at 183.

2. Legal Analysis. Notwithstanding the Defendants' flat pronouncement, that "federal law creates the plaintiffs' cause of action, or * * * plaintiffs' Complaint establishes that their right to relief `necessarily depends on a resolution of a substantial question of federal law,'" our thorough review of the Plaintiffs' Complaint has failed to corroborate either alternative. Indeed, we find no evidence, and the Defendants do not seriously assert, that the Plaintiffs' State law claims have been preempted by RESPA, for the Act makes unmistakably clear that jurisdiction over RESPA claims is concurrently shared by the State and Federal Courts. See, Title 12 U.S.C. § 2614. In fact, when Congress has intended to preempt State law, in the context of RESPA, it has expressly and lucidly made its intent known. See, Title 12 U.S.C. § 2605(h). Insofar as the Plaintiffs' State law claims are concerned, no such preemption has been enunciated by Congress.

Nor is there any merit to the Defendants' gloss, that the Plaintiffs' claims are premised upon Federal law. One can search the Plaintiffs' Complaint in vain, without the least suggestion that the laws, treaties or Constitution of the United States is implicated, in...