Estate of Cornell v. Bayview Loan Servicing, LLC
Decision Date | 13 November 2018 |
Docket Number | No. 18-1245,18-1245 |
Parties | ESTATE OF Robert CORNELL, Jr.; Audrey D. Bantom, as Personal Representative of the Estate of Robert L. Cornell, Jr.; ANTHONY CORNELL, Plaintiffs-Appellants, v. BAYVIEW LOAN SERVICING, LLC; Thien Hoang Tran, Defendants-Appellees. |
Court | U.S. Court of Appeals — Sixth Circuit |
ON BRIEF: Vanessa G. Fluker, VANESSA G. FLUKER, ESQ., PLLC, Detroit, Michigan, for Appellants. Deborah S. Lapin, Martin S. Frenkel, MADDIN, HAUSER, ROTH & HELLER, P.C., Southfield, Michigan, for Appellee Bayview Loan Servicing. Joseph J. Bernardi, BERNARDI, RONAYNE & GLUSAC, P.C., Plymouth, Michigan, for Appellee Thien Hoang Tran.
Before: SUHRHEINRICH, MOORE, and BUSH, Circuit Judges.
SUHRHEINRICH, J., delivered the opinion of the court in which BUSH, J., joined. MOORE, J. (pp. 1017–28), delivered a separate dissenting opinion.
This appeal concerns a non-judicial foreclosure under Michigan law. After reviewing the pleadings, we conclude that the district court lacked subject matter jurisdiction to hear the case. Thus, we VACATE the judgment of the district court with instructions to REMAND to Michigan state court.
Robert Cornell, Jr. ("Robert") died on July 29, 2015, owing an outstanding mortgage amount of $113,358.12 on his home at 8615 Wisconsin Street in Detroit, Michigan. At the time of Robert’s death, the monthly mortgage payments on the Wisconsin Street home were up to date. Yet in the five months following his death, the mortgage went unpaid. Defendant Bayview Loan Servicing, LLC ("Bayview"), the mortgage holder, sent a delinquency notice to the home on December 16, 2015, showing an unpaid balance of $5,813.95. On November 3, 2016, Bayview foreclosed on the mortgage and purchased the home by sheriff’s deed at public auction. Bayview later sold the home to Defendant Thien Hoang Tran ("Tran").
On May 25, 2017, Plaintiffs-Appellants Estate of Robert L. Cornell, Jr. ("Estate"), by and through Personal Representative Audrey D. Bantom and Anthony Cornell (collectively, "Plaintiffs") filed a complaint in Michigan state court alleging four causes of action against Bayview, including most notably a lack of standing to foreclose under the Garn-St. Germain Depository Institutions Act of 1982, codified at 12 U.S.C. § 1701j-3 ( or "Act") and MICH . COMP . LAWS § 445.1626. Bayview timely removed to federal court on the basis of federal question jurisdiction under 28 U.S.C. § 1331, citing the Garn-St. Germain Act. Plaintiffs did not object to removal or seek remand. Instead, Plaintiffs filed an amended complaint asserting an additional claim of quiet title against Tran (Count V). Defendants moved for judgment on the pleadings in part on the argument that the Garn-St. Germain Act does not authorize a private right of action. The district court agreed, ruling that the Garn-St. Germain Act does not authorize a private right of action, the Garn-St. Germain Act did not apply to Plaintiffs’ claims, or both. The district court granted Defendants’ motion on all counts and entered a judgment in their favor. The district court denied Plaintiffs’ motion for reconsideration, and Plaintiffs filed this timely appeal.
"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). The district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. A defendant may remove a case only if the claim could have been brought in federal court. 28 U.S.C. § 1441(a). Removal jurisdiction is determined from the "well-pleaded complaint." Merrell Dow Pharm. Inc. v. Thompson , 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986).
Although no one has specifically addressed subject matter jurisdiction to this point, we have an independent obligation to consider it and may do so sua sponte . Answers in Genesis of Kentucky, Inc. v. Creation Ministries Int’l, Ltd. , 556 F.3d 459, 465 (6th Cir. 2009) ; see also United States v. Cotton , 535 U.S. 625, 630, 122 S.Ct. 1781, 152 L.Ed.2d 860 (2002) ( ). We must correct any defect in subject matter jurisdiction regardless of whether the district court considered it, Cotton , 535 U.S. at 630, 122 S.Ct. 1781, even if "many months of work on the part of the attorneys and the court may be wasted," Henderson ex rel. Henderson v. Shinseki , 562 U.S. 428, 435, 131 S.Ct. 1197, 179 L.Ed.2d 159 (2011) ; see also Hampton v. R.J. Corman R.R. Switching Co. , 683 F.3d 708, 711–12 (6th Cir. 2012) ( ).
The face of the complaint references a federal statute, the Garn-St. Germain Act, 12 U.S.C. § 1701j-3, which was the sole basis for federal question jurisdiction removal from state court. Before Congress passed the Garn-St. Germain Act, many states had laws restricting the enforcement of due-on-sale clauses.1 Dupuis v. Yorkville Fed. Sav. & Loan Ass’n , 589 F.Supp. 820, 822 (S.D.N.Y. 1984). The Garn-St. Germain Act prohibits states from banning due-on-sale clauses, providing in principal part that "[n]otwithstanding any provision of the constitution or laws (including judicial decisions) of any State to the contrary, a lender may, subject to subsection (c) of this section, enter into or enforce a contract containing a due-on-sale clause with respect to a real property loan." 12 U.S.C. § 1701j-3(b)(1). That means a due-on-sale clause is presumptively valid unless it qualifies as one of nine exceptions listed in § 1701j-3(d) :
In other words, after the Garn-St. Germain Act, states can only regulate nine types of due-on-sale clauses. In response to the Garn-St. Germain Act, Michigan created its own cause of action for lendees harmed by one of those nine banned due-on-sale clauses. See MICH . COMP . LAWS § 445.1626 () ; MICH . COMP . LAWS § 445.1628 ( ).
To fulfill our obligation of ascertaining subject matter jurisdiction, we must determine whether a private cause of action "arises under" the statute sufficient to confer federal subject matter jurisdiction. The "arising under" gateway into federal court in fact has two distinct paths: 1) "litigants whose causes of action are created by federal law," and 2) "state-law claims that implicate significant federal issues." Hampton , 683 F.3d at 711 (quoting Eastman v. Marine Mech. Corp. , 438 F.3d 544, 550 (6th Cir. 2006) ). Because the Garn-St. Germain Act does not meet this first test, we join those courts, including this one, that have concluded 12 U.S.C. § 1701j-3 does not establish subject matter jurisdiction based on a federal cause of action. Turman v. Wells Fargo Bank, N.A. , No. 16-6546, 2018 WL 1840199, at *2 (6th Cir. Mar. 21, 2018) (order) (" section 1701j–3... does not provide a right of action") because ; Dupuis , 589 F.Supp. at 823 ( ); Nelson v. Nationstar Mortg. LLC , No. 7:16-CV-00307-BR, 2017 WL 1167230, at *2 (E.D.N.C. Mar. 28, 2017) ) . As we explain below, subject matter jurisdiction is also not established under the second test.
"[T]he vast majority of cases brought under the general federal-question jurisdiction of the federal courts are those in which federal law creates the cause of action." Hampton , 683 F.3d at 711 (quoting Merrell Dow , 478 U.S. at 808, 106 S.Ct. 3229 ). To determine whether a private cause of action exists, we must begin with the text of the statute.
Touche Ross & Co. v. Redington , 442 U.S. 560, 568, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). The cause of action may be express, Ohlendorf v. United Food & Commercial Workers Int’l Union, Local 876 , 883 F.3d 636, 640 (6th Cir. 2018), or implied, California v. Sierra Club , 451 U.S. 287, 292–93, 101 S.Ct. 1775, 68...
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