Peters v. Alaska Tr., LLC, Case No. 3:17–cv–00104–TMB
| Decision Date | 30 March 2018 |
| Docket Number | Case No. 3:17–cv–00104–TMB |
| Citation | 305 F.Supp.3d 1019 |
| Parties | Dawn M. PETERS, Plaintiff, v. ALASKA TRUSTEE, LLC, Defendant. |
| Court | U.S. District Court — District of Alaska |
James J. Davis, Jr., Jonathan Fork, Alaska Legal Services Corporation, Anchorage, AK, for Plaintiff.
Alaska Trustee, LLC, Bellevue, WA, pro se.
Richard N. Ullstrom, RCO Legal–Alaska, Inc., Michael Bruce Baylous, Lane Powell LLC, Anchorage, AK, for Defendant.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND
This matter is before the Court on Plaintiff Dawn M. Peters' Motion to Remand, filed at docket 14,1 which Defendant Alaska Trustee, LLC ("Alaska Trustee") opposes at docket 17. Neither party requested oral argument, nor is oral argument necessary to resolve the pending motion.2 For the reasons that follow, Plaintiff's Motion to Remand is GRANTED.
According to her complaint, Peters secured a home loan, memorialized by a Deed of Trust ("DOT") recorded in the Kenai Recording District on May 20, 2011, from Residential Mortgage, LLC ("Residential Mortgage").3 As security for the loan, Peters pledged her primary residence, identified as Plat No. 72–48, Tract 7, Riverwind 1 Subdivision.4 First American Title of Alaska ("First American") was the original trustee, and the Mortgage Electronic Registration Systems, Inc. ("MERS") has been named as the "nominee" for Residential Mortgage and the beneficiary of the DOT.5 The DOT states that "[i]f there is a surplus of Funds held in escrow ..., Lender shall account to Borrower for the excess funds in accordance with [the Real Estate Settlement Procedures Act]."6
Four years later, on June 18, 2015, the Kenai Recording District recorded a corporate assignment of deed of trust transferring the beneficial interest in Peters' DOT from MERS to Wells Fargo Bank, N.A. ("Wells Fargo").7
About a year after that, on June 13, 2016, Alaska Trustee sent Peters a notice informing Peters that Wells Fargo "ha[d] referred your loan to us for foreclosure."8 The notice states that Peters owes $135,007.40, but "[b]ecause of interest, late charges, and other charges that may vary from day to day, the amount due of the day you pay may be greater."9
On or about November 9, 2016, Wells Fargo sent Peters an escrow account disclosure statement informing her that although she had an overage of $495.27 in her escrow account, Wells Fargo was not crediting the amount to her because her loan was delinquent.10
Alaska Trustee conducted a foreclosure sale of Peters' home on January 3, 2017, and transferred the property to Wells Fargo.11 Wells Fargo conveyed the home to the Federal Home Loan Mortgage Corporation ("Freddie Mac") one day later, on January 4, 2017.12
Three months later, on April 3, 2017, Peters filed a lawsuit for declaratory relief and damages against Alaska Trustee, Wells Fargo, and Freddie Mac in the Superior Court for the State of Alaska, Third Judicial District at Anchorage.13 Her complaint alleges four causes of action: breach of fiduciary duty against Alaska Trustee (Count I); unfair debt collection practices under Alaska's Unfair Trade Practices and Consumer Protection Act ("UTPCPA") against Alaska Trustee (Count II); breach of contract against Wells Fargo (Count III); and quiet title against Freddie Mac (Count IV).14
Alaska Trustee removed the action on May 4, 2017 pursuant to 28 U.S.C. §§ 1331, 1441, and 1446.15 Wells Fargo and Freddie Mac consented to the removal on May 5, 2017,16 and, on May 11, 2017, filed their own notice of removal pursuant to 28 U.S.C. §§ 1331, 1441, and 1446.17 Wells Fargo and Freddie Mac were dismissed with prejudice pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii) on June 28, 2017.18 Shortly thereafter, on July 5, 2017, Peters filed the Motion to Remand currently pending before the Court.19
Under 28 U.S.C. § 1441, a defendant may remove to federal court any civil action that could have originally been brought in federal district court.20 A plaintiff may seek to have a case remanded to the state court from which it was removed if, inter alia , the district court lacks subject matter jurisdiction.21 A district court must remand the case "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction."22
The removal statute is to be " ‘strictly construed’ against removal jurisdiction,"23 and the defendant "always has the burden of establishing that removal is proper."24 "[A]ny doubts as to the right of removal are to be resolved in favor of remand to the state court."25
Federal courts have original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States."26 An action "arises under" federal law when "federal law creates the cause of action."27 "But even where a claim finds its origins in state rather than federal law," the Supreme Court has "identified a ‘special and small category’ of cases in which arising under jurisdiction still lies."28 The Supreme Court uses the four-part Grable test to identify the claims that fit within that "special and small category" of exceptional cases. "[F]ederal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress."29
Applying the Grable factors here, the Court concludes that this case does not fall within the "special and small category" of cases, as explained below.
Alaska Trustee argues that this case satisfies the first Grable factor because Peters' UTPCPA claim, as pled and under Alaska law, is entirely dependent upon a violation of the Fair Debt Collection Practices Act ("FDCPA").30 Peters, however, maintains that Alaska Trustee cannot show under Baker v. Robinson Tait, P.S. and applicable Ninth Circuit case law that her UTPCPA claim necessarily raises a federal issue.31
In Rains v. Criterion Systems, Inc. , the Ninth Circuit considered "whether a plaintiff may allege a violation of Title VII of the Civil Rights Act of 1964's policy against religious discrimination as part of a state law cause of action without converting his claim into ... an action that depends on a substantial federal question."32 The panel held that the plaintiff could, because his complaint set out three alternative means for establishing a disputed element of his state-law claim, only one of which clearly rested on a federal theory: "Although the complaint refers to Title VII as one basis for demonstrating that there is a public policy against employment discrimination on the basis of religious belief, the complaint also refers to the California Constitution and to the [California Fair Employment and Housing Act], both of which prohibit employment discrimination on the basis of religion."33
In so holding, the Rains Court explained that "[w]hen a claim can be supported by alternative and independent theories—one of which is a state law theory and one of which is a federal law theory—federal question jurisdiction does not attach because federal law is not a necessary element of the claim."34 When undertaking that inquiry, a court's job "is not to focus on the prima facie elements of the state cause of action, but rather to determine the litigation reality."35 That is, "the court must determine if the claim itself, as brought in each particular case, ‘actually turn[s] on construction of [a] federal law.’ "36
Here, the Court finds that Peters' UTPCPA claim actually turns on the construction of the FDCPA, and that the first Grable factor is satisfied. To begin with, Peter's complaint premises her UTPCPA cause of action exclusively on a violation of the FDCPA, asserting that "Alaska Trustee violated the FDCPA, and thus, the UTPCPA."37 Her complaint does not identify any other grounds for why Alaska Trustee's alleged conduct violates the UTPCPA,38 and resolution of her UTPCPA claim will therefore require "an independent assessment about whether [Alaska Trustee] violated [the FDCPA]."39
What is more, the Alaska Supreme Court has foreclosed Peters any alternative means of establishing her UTPCPA claim. In Alaska Trustee, LLC v. Bachmeier , the Alaska Supreme Court held that "the [UTPCPA] does not apply to nonjudicial deed of trust foreclosures"40 like the foreclosure at issue in this case. Two years later, in Alaska Trustee, LLC v. Ambridge , the Alaska Supreme Court held that, its decision in Bachmeier notwithstanding, "violations of the FDCPA in the course of nonjudicial foreclosures" remain "unfair or deceptive acts or practices" actionable under the UTCPCA.41 Reading these cases together, it is clear that post- Bachmeier , Peters' right to relief under the UTPCPA, based on the facts alleged in her complaint, depends entirely on whether Alaska Trustee was in violation of the FDCPA.42 This case therefore necessarily raises a federal issue.43
To the extent the Court's holding is in conflict with Baker v. Robinson Tait, P.S. , on which Peters relies,44 the Court respectfully disagrees with that decision, and in particular its reading of the Ninth Circuit's decision in Nevada v. Bank of America Corp.45 The "gravamen" of the complaint at issue in Nevada was that the defendant "violated Nevada's [Deceptive Trade Practices Act ("DTPA") ] through numerous misrepresentations, some about the [Home Affordable Mortgage Program], and some which also violate the FDCPA."46 The Ninth Circuit accordingly held that because the plaintiff's DTPA claims could be supported by "alternate and independent" state law theories, the complaint's "glancing reference to federal law" was "insufficient to confer federal jurisdiction over Nevada's state law claims."47 As explained above, Peters' reference to federal law is not "glancing," but rather essential to her right to relief under the UTCPCA,...
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