State v. Bank of America Corp.
| Decision Date | 02 March 2012 |
| Docket Number | No. 12–15005.,12–15005. |
| Citation | 672 F.3d 661,2012 Daily Journal D.A.R. 3032,12 Cal. Daily Op. Serv. 2677 |
| Parties | State of NEVADA, Plaintiff–Appellant, v. BANK OF AMERICA CORPORATION; Bank of America National Association; BAC Home Loans Servicing, LP; Reconstruct Company, N.A.; Countrywide Financial Corporation; Countrywide Home Loans, Inc.; Full Spectrum Lending, Inc., Defendants–Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
Catherine Cortez Masto, Binu Palal, Jeffrey Segal, Office of the Nevada Attorney General, Las Vegas, NV, Linda Singer, Cohen Milstein Sellers & Toll PLLC, Washington, DC, for Plaintiff–Appellant State of Nevada.
Matthew W. Close, O'Melveny & Myers LLP, Los Angeles, CA, Leslie Bryan Hart, John D. Tennert, Lionel Sawyer & Collins, Reno, NV, for Defendants–Appellees Bank of America Corporation et al.
Bernard A. Eskandari, Office of the California Attorney General, LA, for Amici Curiae State of California, State of Oregon, and State of Arizona.Nina F. Simon, Center for Responsible Lending, Washington, DC, for Amici Curiae Center for Responsible Lending, AARP, and Consumer Law Center.Appeal from the United States District Court for the District of Nevada, Robert Clive Jones, Chief District Judge, Presiding. D.C. No. 3:11–cv–00135–RCJ–WGC.Before: STEPHEN REINHARDT, KIM McLANE WARDLAW, and CONSUELO M. CALLAHAN, Circuit Judges.
The State of Nevada, through its Attorney General, Catherine Cortez Masto, filed this parens patriae lawsuit against Bank of America Corporation and several related entities (collectively, “Bank of America”) in Clark County District Court. Nevada alleges that Bank of America misled Nevada consumers about the terms and operation of its home mortgage modification and foreclosure processes, in violation of the Nevada Deceptive Trade Practices Act, Nev.Rev.Stat. §§ 598.0903–.0999. Nevada also alleges that Bank of America violated an existing consent judgment (“Consent Judgment”) in a prior case between Nevada and several of Bank of America's subsidiaries, entered in Clark County District Court.
Bank of America removed this action to federal district court, asserting federal subject matter jurisdiction as either a “class action” or “mass action” under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), and as arising under federal law, 28 U.S.C. § 1331. Denying Nevada's motion to remand, the federal district court concluded that it has jurisdiction over this action as a CAFA “class action,” but not as a “mass action,” and that it also has federal question jurisdiction because resolving the state claims will require an interpretation of federal law.
We granted Nevada's request for leave to appeal the district court's denial of its motion to remand pursuant to 28 U.S.C. § 1453(c)(1). We conclude that because parens patriae actions are not removable under CAFA, and the action does not otherwise satisfy CAFA's “mass action” requirements, the district court lacks jurisdiction under CAFA. We also exercise our interlocutory appellate jurisdiction under 28 U.S.C. § 1453(c) to review the district court's determination that it has federal question jurisdiction because the complaint references the federal Home Affordable Mortgage Program and the Fair Debt Collection Practices Act. We conclude that the district court lacks federal question jurisdiction. Because there is no basis for federal subject matter jurisdiction, this case must be remanded to Nevada state court.
The Nevada Deceptive Trade Practices Act (“DTPA”) authorizes the Nevada Attorney General to “bring an action in the name of the State of Nevada” against any person whom the Attorney General “has reason to believe ... has engaged or is engaging in a deceptive trade practice.” Nev.Rev.Stat. § 598.0963(3). The State of Nevada filed its amended complaint (“Complaint”) in the Clark County District Court on January 19, 2011. The Complaint alleges that Bank of America violated the DTPA by misleading Nevada consumers who sought modifications of residential mortgages. It also alleges that Bank of America violated the terms of a February 24, 2009, Consent Judgment between Nevada and several of the bank's subsidiaries. The Clark County District Court entered the Consent Judgment and retains enforcement jurisdiction.
This action is based on complaints Nevada has reviewed and investigated from more than 150 consumers, housing counselors and other industry sources. The Complaint alleges that Bank of America has engaged in a pattern of misconduct in which it has and continues to:
a. Mislead consumers with false promises that it will act on their modifications within a set period of time, but keeps them waiting for months, and sometimes more than a year, beyond the promised term;
b. Mislead consumers with assurances that they will not be foreclosed upon while the Bank considered their requests for modifications. However Bank of America has sold the homes of some Nevada consumers and sent foreclosure notices to many more while their requests for modifications were still pending;
c. Misrepresent to consumers that they must be delinquent on their loans in order to qualify for assistance, even though neither Bank of America's proprietary programs nor the federal HAMP 1 program requires that homeowners have missed payments; d. Mislead consumers with false promises that their initial, trial modifications would be made permanent if and when they made the required three payments on those plans, but then failed to convert those modifications;
e. Tell consumers their modifications were denied for reasons that were untrue, such as that: (i) the owner of the loan refused to allow the modification when Bank of America had full authority to modify the loan without the investor's approval; (ii) the Bank had tried unsuccessfully to reach the consumer, even though the consumer repeatedly called the Bank; (iii) the loan was previously modified when it was not; (iv) the borrower failed to make trial payments, when they made all payments; and (v) the borrower was current on his or her loan, when delinquency is not a condition of a modification;
f. Falsely notify consumers or credit reporting agencies that consumers are in default when they are not;
g. Mislead consumers with offers of modification on one set of terms, and then provide agreements with materially different terms, or inform consumers that their modifications had been approved, but then tell them that their requests were denied, often months before.
The Complaint also alleges that Bank of America is in contempt of the Consent Judgment because of its failure to offer loan modifications to eligible consumers and its practice of conducting foreclosures while consumers are being considered for modifications. The Complaint seeks declaratory and injunctive relief, civil penalties, restitution for defrauded Nevada consumers, attorney's fees and the costs of investigation.
Bank of America removed the case to the United States District Court for the District of Nevada on February 23, 2011, asserting three theories of federal jurisdiction: (1) jurisdiction under CAFA, as both a “class action,” 28 U.S.C. § 1332(d)(2)-(10), and a “mass action,” 28 U.S.C. § 1332(d)(11); (2) federal question jurisdiction, 28 U.S.C. §§ 1331, 1441(b); and (3) bankruptcy jurisdiction, 28 U.S.C. §§ 1334(b), 1452. On March 22, 2011, Nevada moved to remand the case to state court.
The district court denied Nevada's remand motion on July 5, 2011, concluding that the case was a “class action” under CAFA, 28 U.S.C. § 1332(d). As an alternative basis for federal jurisdiction, the district court concluded that the case presented a federal question under 28 U.S.C. § 1331. The district court also determined that the case did not satisfy CAFA's “mass action” prong, 28 U.S.C. § 1332(d)(11). On July 15, 2011, Nevada timely requested permission to appeal the denial of the remand motion pursuant to 28 U.S.C. § 1453(c). We held the petition for permission to appeal in abeyance pending disposition of Washington v. Chimei Innolux Corp., 659 F.3d 842 (9th Cir.2011), which presented the question of whether a state Attorney General parens patriae action is a “class action” as defined by CAFA, and then accepted the appeal on January 3, 2012.
“Determinations regarding subject matter jurisdiction are reviewed de novo.” Chapman v. Deutsche Bank Nat'l Trust Co., 651 F.3d 1039, 1043 (9th Cir.2011) (citation omitted). “We review the ‘construction, interpretation, or applicability’ of CAFA de novo.” Chimei, 659 F.3d at 846–47 (quoting Bush v. Cheaptickets, Inc., 425 F.3d 683, 686 (9th Cir.2005)). “We review de novo a district court's denial of a motion to remand to state court for lack of federal subject matter jurisdiction.” Chapman, 651 F.3d at 1043 (citation omitted). Removal statutes are to be “strictly construed” against removal jurisdiction. Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32, 123 S.Ct. 366, 154 L.Ed.2d 368 (2002) (citation omitted).
We first consider whether the district court correctly concluded that this case was removable under CAFA. CAFA provides for the removal of class actions and mass actions involving parties with minimal diversity. 28 U.S.C. § 1332(d)(2)(A). Under CAFA, a “class action” is defined as “any civil action filed under Rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.” 28 U.S.C. § 1332(d)(1)(B). A “mass action” is defined as “any civil action ... in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs' claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(11)(B)(i).
Since the district court issued its order holding that this action is a CAFA “class action,” we have held to the...
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