TWIN CITY FEDERAL SAV. AND LOAN ASS'N v. Gelhar
Decision Date | 03 November 1981 |
Docket Number | No. Civ. 3-81-827,Civ. 3-81-347.,Civ. 3-81-827 |
Citation | 525 F. Supp. 802 |
Parties | TWIN CITY FEDERAL SAVINGS AND LOAN ASSOCIATION, a United States of America corporation, Plaintiff, v. Joseph L. GELHAR and Pamela R. Gelhar, husband and wife, Robert L. McDonough, and Diane M. Fuhr, Defendants. TWIN CITY FEDERAL SAVINGS AND LOAN ASSOCIATION, a United States of America corporation, Plaintiff, v. Kenneth B. HOEG and Margean E. Hoeg, husband and wife, Defendants. |
Court | U.S. District Court — District of Minnesota |
Mackall, Crounse & Moore, Gregory J. Pulles, Minneapolis, Minn., for plaintiff.
Holmes & Graven, Larry M. Wertheim, Minneapolis, Minn., Moratzka, Dillon & Kunkel, Phillip L. Kunkel, Hastings, Minn., for defendants.
In these declaratory judgment actions by Twin City Federal Savings and Loan Association ("TCF"), a federally chartered savings and loan association, against several of its mortgagors, we are asked to determine the validity of a home mortgage "due on sale" clause. TCF is chartered under the provisions of the Home Owners' Loan Act of 1933, 12 U.S.C. §§ 1461 et seq. These are two of eighteen similar lawsuits pending in this district and of many brought, some already decided, in other federal and state courts occasioned in large part by the unsettled home mortgage market. Jurisdiction is alleged under 28 U.S.C. §§ 1331 and 1337.
Defendants Hoeg and Gelhar are parties to real estate mortgages with TCF as mortgagee. Both mortgages contain standard "due on sale" clauses which provide for acceleration of the balance due on the promissory note secured by the mortgage in the event of sale or transfer of the property without TCF's consent. Minnesota law, Minn.Stat. § 47.20, subd. 6, prohibits under certain conditions the enforcement of this type of due on sale clause against residential mortgagors. Federal Home Loan Bank Board Regulation § 545.8-3(f), 12 C.F.R. § 545.8-3(f) (1981) permits federally chartered savings and loan associations to include due on sale clauses in their loan instruments. The seeming conflict between these two laws is the basis of the assertion of federal jurisdiction in these lawsuits. Plaintiff seeks a declaration that state law is preempted by federal law in this field, and that it is entitled to prevail in state court foreclosure proceedings. The Minnesota Supreme Court has held that Minnesota law in this field is not preempted by federal law. Holiday Acres No. 3 v. Midwest Federal Savings & Loan Ass'n, 308 N.W.2d 471 (Minn.1981). Defendants move to dismiss under Fed.R.Civ.P. 12 for lack of federal jurisdiction.
Consideration of the issue of whether federal jurisdiction exists in this case is the same under both 28 U.S.C. §§ 1331 and 1337; in either case the action must "arise under" the laws of the United States. See Madsen v. Prudential Federal Savings & Loan Ass'n, 635 F.2d 797, 800, n.6 (10th Cir. 1980); Yancoskie v. Delaware River Port Authority, 528 F.2d 722, 725 (3d Cir. 1975); Springfield Television, Inc. v. City of Springfield, Mo., 428 F.2d 1375, 1379 (8th Cir. 1970).
In order to establish federal jurisdiction, the asserted federal right must be an essential element of the plaintiff's cause of action, and the federal controversy must be "disclosed upon the face of the complaint, unaided by the answer ...." Gully v. First National Bank, 299 U.S. 109, 113, 57 S.Ct. 96, 98, 81 L.Ed. 70 (1936).
In this case the claim of federal preemption is made in anticipation of defendants' expected defense to the intended foreclosure action, i.e., that state law prohibits enforcement of the due on sale clause. This is not an appropriate basis for federal jurisdiction. A complaint "`will not avail as a basis of federal jurisdiction insofar as it goes beyond a statement of plaintiff's cause of action and anticipates or replies to a probable defense.'" Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-28, 94 S.Ct. 1002, 1003-04, 39 L.Ed.2d 209 (1974), quoting, Gully v. First National Bank, 299 U.S. at 113, 57 S.Ct. at 98 (emphasis supplied). The claim of federal preemption in this context is defensive in nature and as such will not support federal jurisdiction. See Home Federal Savings & Loan Ass'n v. Insurance Dept. of Iowa, 571 F.2d 423 (8th Cir. 1978).
This position is consonant with that recently reached by Judges MacLaughlin and Renner in remanding to state court two removed cases seeking federal jurisdiction of the preemption issue. See Colton v. Twin City Federal Savings and Loan Ass'n, Civ. 3-81-279 (D.Minn., filed August 10, 1981) (Renner, J.); Torgerson-Forstcom H.I of Willmar, Inc. v. Olmstead Federal Savings and Loan Ass'n, Civ. 4-80-122 (D.Minn., filed April 29, 1980) (MacLaughlin, J.).
Even if this court had jurisdiction over these cases, they are not appropriate for declaratory judgment. The Declaratory Judgment Act, 28 U.S.C. § 2201, grants district courts the discretion to declare rights, but it does not impose a duty to do so. E.g., Public Service Commission of Utah v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 239, 97 L.Ed. 291 (1952); Alsager v. District Court of Polk Cty, Iowa, (Juv. Div.), 518 F.2d 1160, 1163 (8th Cir. 1975); Universal Underwriters Insurance Company v. Wagner, 367 F.2d 866, 871 (8th Cir. 1966). An action for declaratory relief properly should be entertained where a judgment will serve a useful purpose in clarifying and settling legal relations, and where it will terminate the proceedings and afford relief from uncertainty, insecurity and controversy. Id. at 1163-64.
In this instance, a declaratory judgment would not terminate the controversy between the parties. It...
To continue reading
Request your trial-
Martin v. Peoples Mut. Sav. and Loan Ass'n
... ... her the written "Notice to Customers Required by Federal Law--Federal Reserve Regulation Z." That notice, placed ... we quoted from Richmond v. Dubuque & Sioux City R. Co., 26 Iowa 191, 202, as follows: "* * * the power of ... 8-3(f)-(g) (1981); see Williams, 651 F.2d at 921-22; Twin City Fed. Sav. & Loan Ass'n v. Gelhar, 525 F.Supp. 802, ... ...
-
Cotner v. Knight
... ... Wycoff Co., 344 U.S. 237 (1952); Twin City Federal Sav. and Loan Ass'n. v. Gelhar, 525 ... ...
-
Michigan Sav. and Loan League v. Francis
... ... Defendant-Appellee (80-1393 & 80-1452), ... FEDERAL HOME LOAN BANK BOARD, Defendant-Appellant (80-1452) ... v. Harbert, 527 F.Supp. 284 (S.D.Fla.1981); Twin City Federal Savings and Loan Association v. Gelhar, 525 ... ...
-
First Federal Savings and Loan Association of Harrison, Arkansas v. Anderson (Delwyn C.), s. 81-2115
... ... and wife, Appellees ... TWIN CITY FEDERAL SAVINGS AND LOAN ASSOCIATION, a United ... tes of America corporation, Appellant, ... Joseph L. GELHAR and Pamela R. Gelhar, husband and wife, ... Robert L ... , Minneapolis, Minn., for appellant Twin City Federal Sav. and Loan Ass'n ... Moratzka, Dillon & ... ...