United States District Court, D. Nevada
ORDER ACCEPTING AND MODIFYING REPORT AND
RECOMMENDATION AND DISMISSING CASE WITHOUT PREJUDICE (ECF NO.
P. GORDON UNITED STATES DISTRICT JUDGE.
January 24, 2017, Magistrate Judge Leen issued a report and
recommendation that I dismiss plaintiff Ervin Middleton's
claims in this case with prejudice. ECF No. 5. Judge Leen
recommended I find this court lacks personal jurisdiction
over defendant Carrington Mortgage Services, LLC because
there are no allegations Carrington has any contacts with
Nevada. Id. at 3. She also recommended I dismiss for
lack of venue because Carrington is based in California and
the property at issue is located in Virginia. Id. at
4. Judge Leen further recommended I dismiss with prejudice
because Middleton lacks standing to assert TJLA claims, the
right to rescission on which his claims depend has expired,
and the statute of limitations bars his claims. Id.
objects. First, he contends he did not consent to the
Magistrate Judge handling dispositive matters. However, Judge
Leen issued a report and recommendation that is subject to my
de novo review. See 28 U.S.C. § 636(b). Thus,
Judge Leen did not act outside her authority, and I now
conduct that de novo review.
Middleton argues that Carrington should anticipate being sued
in Nevada because it has threatened to foreclose on his
property three times. ECF No. 8 at 2. He also argues that
although the property is located in Virginia, he is suing
over the mortgage and he is a Nevada resident. Id.
complaint alleges that Carrington is based in Santa Ana,
California. ECF No. 6 at 2. According to the complaint,
Carrington was the lender or the lender's representative
in relation to a mortgage on a property located in Virginia.
Id. at 3. Middleton alleges he sent Carrington a
notice of rescission under TILA to which Carrington did not
respond. Id. at 4. He thus seeks a declaration that
the mortgage is terminated and he seeks monetary relief based
on Carrington's alleged violations of law following the
purported rescission. Id. at 4-7.
allegations do not support the exercise of either general or
specific personal jurisdiction over Carrington in the
District of Nevada. To establish general personal
jurisdiction outside Carrington's domicile of California,
Middleton must demonstrate Carrington has sufficient contacts
with Nevada to "constitute the kind of continuous and
systematic general business contacts that 'approximate
physical presence.'" Glencore Grain Rotterdam B.
V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1119
(9th Cir. 2002) (quoting Bancroft & Masters, Inc. v.
Augusta Nat'lInc., 223 F.3d 1082, 1086 (9th Cir.
2000), modified by Yahoo! Inc. v. La Ligue Contre Le
Racisme EtL'Antisemitisme, 433 F.3d 1199, 1207 (9th
Cir. 2006)). See also Daimler AG v. Bauman, 134
S.Ct. 746, 761 (2014) (the inquiry "is whether that
corporation's 'affiliations with the State are so
"continuous and systematic" as to render [it]
essentially at home in the forum State.'")(citation
omitted). Neither the complaint nor Middleton's objection
provides facts showing Carrington is subject to general
personal jurisdiction in Nevada.
specific personal jurisdiction, a nonresident defendant's
contacts with the forum state may permit the exercise of
specific jurisdiction if: (1) the defendant has performed
some act or transaction within the forum or purposefully
availed himself of the privileges of conducting activities
within the forum, (2) the plaintiffs claim arises out of or
results from the defendant's forum-related activities,
and (3) the exercise of jurisdiction over the defendant is
reasonable. Pebble Beach Co. v. Caddy, 453 F.3d
1151, 1155 (9th Cir. 2006). In evaluating whether the
defendant has minimum contacts with the state to support
exercising personal jurisdiction, I must look to the
"contacts that the defendant himself creates with the
forum State." Walden v. Fiore, 134 S.Ct. 1115,
1122 (2014) (quotation and emphasis omitted). I also
"look to the defendant's contacts with the forum
State itself, not the defendant's contacts with persons
who reside there." Id. "[T]he plaintiff
cannot be the only link between the defendant and the forum.
Rather, it is the defendant's conduct that must form the
necessary connection with the forum State that is the basis
for its jurisdiction over him." Id.
Middleton has not identified facts showing that Carrington
has any contacts with Nevada other than that it is attempting
to foreclose on a property in Virginia that happens to be
owned by a Nevada resident. Under Walden, that is
insufficient. Middleton offers no other basis for the court
to exercise personal jurisdiction over Carrington.
therefore accept Judge Leen's recommendation that I
dismiss Middleton's complaint for lack of personal
jurisdiction over defendant Carrington. However, I cannot
dismiss with prejudice because I lack personal jurisdiction
over Carrington, and I therefore cannot address the merits.
See Sinochem Int'l Co. v. MalaysiaInt
7Shipping Corp., 549 U.S. 422, 430-31 (2007)
(stating that "a federal court generally may not rule on
the merits of a case without first determining that it has
jurisdiction over the category of claim in suit
(subject-matter jurisdiction) and the parties (personal
ordinarily should grant jurisdictional discovery where the
parties dispute pertinent facts bearing on the question of
jurisdiction or where more facts are needed. Laub v.
United States Dep 't of Interior, 342 F.3d 1080,
1093 (9th Cir. 2003). However, a court may decline to permit
further discovery if it is clear that it would not produce
evidence of facts supporting jurisdiction. Id. Thus,
if the plaintiffs claim of personal jurisdiction
"appears to be both attenuated and based on bare
allegations in the face of specific denials made by the
defendants, the Court need not permit even limited discovery
. . . ." Pebble Beach Co., 453 F.3d at 1160.
Whether to permit discovery on jurisdictional facts lies
within my discretion. Id. at 1154.
has not requested jurisdictional discovery and he has not
offered any basis for me to conclude that further
jurisdictional discovery would be helpful. I therefore
decline to grant it, particularly in a case where, as
discussed below, Middleton's claims would fail on the
merits as a matter of law.
whenever a court "finds there is a want of
jurisdiction" in a civil action, the court
"shall" transfer the action to "any other such
court in which the action or appeal could have been brought
at the time it was filed or noticed, " but only if the
transfer is "in the interest of justice." 28 U.S.C.
§ 1631. Additionally, 28 U.S.C. § 1406(a)
"authorize[s] the transfer of a case so as to cure the
lack of personal jurisdiction in the district where the case
was first brought" if the transfer is in the interest of
justice. Wood v. Santa Barbara Chamber of Commerce,
Inc., 705 F.2d 1515, 1523 (9th Cir. 1983).
transfer would not be in the interest of justice because
Middleton's claims fail on the merits as a matter of law.
Even if Middleton had standing to assert a TILA claim as a
successor-in-interest on the note, that does not change the
fact that the right of rescission under TILA has expired.
See 15 U.S.C. § 1635(f) ("An obligor's
right of rescission shall expire three years after the date
of consummation of the transaction or upon the sale of the
property, whichever occurs first. . . ."); 12 C.F.R.
§ 226.23(a)(3) ("If the required notice or material
disclosures are not delivered, the right to rescind shall
expire 3 years after consummation, upon transfer of all of
the consumer's interest in the property, or upon sale of
the property, whichever occurs first."). Middleton
alleges in his complaint that the original borrower, Matthew
Ice, bought the property in 2008 and that the property was
transferred to Middleton in 2014. ECF No. 6 at 3.
Consequently, the right to rescind expired in 2011. Both of
Middleton's claims rely on rescission. Count one seeks a
declaration that the mortgage is terminated because Middleton
exercised rescission under TILA. Id. at 5. Count two
seeks damages based on the lender's noncompliance with
the statute following rescission under TILA. Id.
Because the right to rescission expired, Middleton's
claims are barred.
reliance on the Supreme Court's decision m Jesinoski
v. Countrywide Home Loans, Inc.,135 S.Ct. 790 (2015) is
misplaced. He argues that under Jesinoski, a
rescission, whether disputed or undisputed, is effective by
operation of law once it is mailed and the lender's only
options at that point are to either re-convey the property or
initiate a lawsuit. However, Jesinoski addressed
only "whether a borrower exercises [the rescission]
right by providing written notice to his lender, or whether
he must also file a lawsuit before the 3-year period
elapses." 135 S.Ct. at 791. The Supreme Court held that
"rescission is effected when the borrower notifies the
creditor of his intention to rescind" and "so long
as the borrower ...