Silving v. Wells Fargo Bank, NA, CV11–0676–PHX–DGC.

• Decision Date: 07 July 2011
• Docket Number: No. CV11–0676–PHX–DGC.,CV11–0676–PHX–DGC.
• Citation: 800 F.Supp.2d 1055
• Parties: Marcus SILVING, et al., Plaintiffs, v. WELLS FARGO BANK, NA, et al., Defendants.
• Court: U.S. District Court — District of Arizona

800 F.Supp.2d 1055

Marcus SILVING, et al., Plaintiffs,

v.WELLS FARGO BANK, NA, et al., Defendants.

No. CV11–0676–PHX–DGC.

United States District Court, D. Arizona.

July 7, 2011.

Barbara Janet Forde, Barbara J. Forde PLC, Scottsdale, AZ, for Plaintiff.

Daniel W. Huitink, Gregory James Marshall, Adam Lee Wilkes, Matthew David Bedwell, Snell & Wilmer LLP, Phoenix, AZ, for Defendant.

ORDER

DAVID G. CAMPBELL, District Judge.I. Motion to Remand.

Plaintiffs move to remand this case to the Arizona Superior Court for Maricopa County (Doc. 20), and all defendants other than First American Title Insurance Company (“First American”) oppose (Doc. 26). The motion has been fully briefed (Docs. 20, 26, 30), and the parties did not request oral argument.

Plaintiffs allege that their house was offered for sale at a trustee sale on January 11, 2011, and that Defendant U.S. Bank, N.A. as Trustee for CSMC Mortgage–Backed Pass–Through Certificates, Series 2006–2 (“US Bank”) bid for the property. Doc. 1–1 at 22. A Trustee Deed was issued and recorded. Id. at 22–23. On March 10, 2011, Plaintiffs filed a complaint in Maricopa County Superior Court alleging eleven causes of action. Doc. 1–1 at 28–48. The case was removed to this Court on April 6, 2011 (Doc. 1 at 4), and on May 6, 2011 Plaintiffs moved for remand and attorney fees (Doc. 20). For the reasons that follow, the Court will deny the motion to remand and the request for fees.

A. Costs and Fees.

As a prefatory matter, it bears mention that all eleven causes of action in Plaintiffs' complaint were brought under Arizona law (Doc. 1–1 at 28–48), and Defendants' notice of removal asserts federal diversity jurisdiction under 28 U.S.C. § 1332 (Doc. 1 at 2). Plaintiffs do not appear to argue that removal was defective, but rather assert that the Court should abstain from exercising jurisdiction under Burford abstention and the Rooker–Feldman doctrine.¹ Doc. 20 at 3:10, 100–11; see Doc. 30. Plaintiffs cite no case for the proposition that costs and fees may be awarded where remand is based solely on discretionary abstention or a defendant's possible affirmative defense. Therefore, the request for costs and fees is denied.

B. Burford Abstention.

Plaintiffs' starting premise is that “[t]he Ninth Circuit strictly construes the removal statute against removal jurisdiction” (Doc. 20 at 2 (emphasis deleted)), but Plaintiffs have not argued lack of subject matter jurisdiction or a defect in removal. Their sole argument is abstention, a different doctrine. The Ninth Circuit's construction of the removal statute is irrelevant to abstention arguments. See Kamm v. ITEX Corp., 568 F.3d 752, 756 (9th Cir.2009) (“The Supreme Court has explicitly held that remands based on abstention ... are not covered by § 1447(c).” (citation omitted)).

The starting presumption in cases of abstention is that “federal courts have a strict duty to exercise the jurisdiction that is conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996); accord Southern Cal. Edison Co. v. Lynch, 307 F.3d 794, 805–06 (9th Cir.2002) (“District courts have an obligation and a duty to decide cases properly before them, and abstention from the exercise of federal jurisdiction is the exception, not the rule.” (internal quotation marks and citations omitted; alterations deleted)). A district court nonetheless has discretion to abstain under certain “exceptional circumstances.” Quackenbush, 517 U.S. at 731, 116 S.Ct. 1712. Abstention pursuant to Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), which Plaintiffs raise, is available under a narrow set of unique circumstances. Quackenbush, 517 U.S. at 723–726, 116 S.Ct. 1712 (narrowing Burford to its facts). The circumstances unique to Burford were: (1) the presence of a state regulatory system; (2) “the difficulty of regulatory issues presented”; (3) “the need for uniform regulation in the area”; (4) “the important state interests [the] uniform system of [regulatory] review was designed to serve”; (5) “the detrimental impact of ongoing federal court review,” more specifically the concern that the “federal forum threatened to frustrate the purpose of the complex administrative system that [the State] established”; and (6) where remand or dismissal (as opposed to a stay) is requested from the federal court, whether the relief sought by the complaint is “equitable or otherwise discretionary.” Id. at 725, 736, 116 S.Ct. 1712. In evaluating the regulatory aspects discussed above, courts look primarily at the actions of the state government that established the regulatory system. Id. at 725, 116 S.Ct. 1712.

Plaintiffs' case does not meet the unique circumstances in Burford. Arizona has enacted statutes that govern trustee sales, but has not created a complex regulatory scheme. Arizona's trustee sale statutes are a far cry from Burford 's regulatory scheme which included a state agency (the Railroad Commission) that had “exclusive regulatory authority” over permits for oil drilling in the state, and vested jurisdiction over cases arising from the Commission's decisions in a “single set of state courts, ‘[t]o prevent the confusion of multiple review’ ... and to permit an experienced cadre of state judges to obtain ‘specialized knowledge’ in the field.” Id. at 723–24, 116 S.Ct. 1712 (citations omitted). Arizona has not crested such a system and has not designated specialized judges to deal with trustee sale issues. The fact that Arizona has chosen not to implement a complex regulatory scheme suggests that it does not consider trustee sales to present particularly difficult regulatory issues. Furthermore, although enactment of statutes may reflect some desire for uniformity, Arizona appears content to have that uniformity implemented though the statutes as they are applied by a variety of judges. ²

Plaintiffs argue that many of the issues raised in their complaint are issues of first impression under Arizona law, and that removal by defendants in this case and others is depriving Arizona courts of the opportunity to pass on these important matters of state public policy and create a coherent jurisprudence. Doc. 20 at 6–10. Even assuming for the sake of argument that these assertions are true, and recognizing that federal intrusion into state policy is a valid ground for abstention, the Court is not persuaded that Ninth Circuit precedent would support Burford abstention in a diversity action seeking to interpret Arizona trustee-sale statutes under the facts here.³ See, e.g., Hawthorne Sav. F.S.B. v. Reliance Ins. Co. of Ill., 421 F.3d 835, 848 (9th Cir.2005) (“Adjudication of the pertinent issues of California law, including California law concerning whether to defer to insurance insolvency proceedings in other states, will not entail any more federal intrusion into state policy or federal disruption of a state regulatory scheme than in any other diversity case.” (emphasis deleted)).

In light of the allegations in this complaint, the present state of Arizona's trustee-sale law, and the Burford arguments made by Plaintiffs, this Court will not abstain from exercising its diversity jurisdiction in this case. Plaintiffs' motion to remand on this ground is therefore denied.

C. Rooker–Feldman Doctrine.

The motion argues that “[t]he Rooker–Feldman doctrine, as applied to a foreclosed deed of trust, essentially provides that a federal court should not engage in an appellate-like review over the state laws and contract rights, pursuant to which the Defendants foreclosed.” Doc. 20 at 11. The motion also asserts, quoting from Forde v. First Horizon Home Loan Corp., 2010 WL 5758614 at *3 (D.Ariz. Dec. 6, 2010), that recent unpublished decisions of the federal courts have uniformly determined that federal suits seeking the rescission of a mortgage loan contract, or alleging that a lender's malfeasance resulted in a foreclosure, belong in state court. Doc. 20 at 10.

The “string of recent unpublished decisions” cited in Forde involved state judicial actions—including judicial foreclosure. Parker v. Potter, 368 Fed.Appx. 945 (11th Cir.2010); Dempsey v. JP Morgan Chase Bank, 272 Fed.Appx. 499 (7th Cir.2008); Jacobowitz v. M & T Mortg. Corp., 372 Fed.Appx. 225 (3d Cir.2010); Battah v. ResMAE Mortg. Corp., 746 F.Supp.2d 869 (E.D.Mich.2010); Poindexter v. Wells Fargo Bank, 2010 WL 3023895 (W.D.N.C.2010). By contrast, there is no allegation of judicial foreclosure or another state-court judgment in this case. As Forde aptly summarized, Rooker–Feldman applies where “(1) there was a state court action; (2) one party lost; (3) judgment was entered in the state court action against the losing party; (4) the losing party commenced a new action complaining of injuries caused by the state court judgment; and (5) the new action invited the district court to review and reject the state court judgment.” 2010 WL 5758614 at *4 (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005)). Plaintiffs' motion fails to establish even one of these elements, let alone all five. Plaintiffs' motion to remand on this ground is denied.⁴

II. Motion for Summary Disposition.

Plaintiffs filed a motion for summary disposition of remand against First American in light of its failure to oppose the motion to remand. Doc. 31. First American concedes that it “did not file a separate response or join in its Co–Defendants' response,” and agrees to litigate in whatever forum is decided by the Court's ruling on the motion to remand. Doc. 32 at 1. Plaintiffs' reply appears to suggest that even if the Court decides to retain jurisdiction over the claims against the other Defendants, it should remand the claims against First American under LRCiv. 7.2(i). See Doc. 32.

Even if First American were deemed to have consented to abstention under LRCiv. 7.2(i)—a conclusion the rule permits but does not...