United States District Court, D. Nevada
M. Navarro, Chief Judge
case comes before the Court through the Petition for Removal,
(ECF No. 1), filed by Defendant Federal National Mortgage
Association (“Fannie Mae”). Plaintiff Richard
Salomon (“Plaintiff”) first filed this action in
state court on January 5, 2015, seeking to quiet title to the
real property located at 1150 N. Buffalo Dr., Unit 1055, Las
Vegas, Nevada 89128. (Compl., Ex. 1 to Pet. Removal, ECF No.
1-1). Fannie Mae removed the action pursuant to 28 U.S.C.
§ 1331, citing to the Ninth Circuit Court of
Appeals' decision in Lightfoot v. Cendant Mortgage
Corp., 769 F.3d 681, 683 (9th Cir. 2014).
January 18, 2017, the Supreme Court overturned the Ninth
Circuit, holding that Fannie Mae's authority to
“sue and to be sued, and to complain and to defend in
any court of competent jurisdiction, State or Federal,
” does not confer federal jurisdiction over all cases
involving Fannie Mae. Lightfoot v. Cendant Mortgage
Corp., 137 S.Ct. 554, 558 (2017). Rather, the Court
found that Fannie Mae's charter “permits suit in
any [state or] federal court already endowed with
subject-matter jurisdiction over the suit.”
Id. at 561 (emphasis added). Thus, where removal is
based solely on the “sue or be sued” clause in
its charter, Fannie Mae fails to establish that a federal
district court has jurisdiction over the suit. Id.
March 17, 2017, the Court issued an order to show cause
requiring Fannie Mae to show why, in light of the Supreme
Court's decision, the case should not be remanded for
lack of jurisdiction. (ECF No. 80). Both Fannie Mae and
Plaintiff responded. (ECF Nos. 81, 83). For the reasons
discussed herein, the Court finds that Fannie Mae has failed
to provide a basis for federal jurisdiction, and therefore
the case will be remanded to the Clark County District Court.
courts are courts of limited jurisdiction, possessing only
those powers granted by the Constitution and by statute.
See United States v. Marks, 530 F.3d 799, 810 (9th
Cir. 2008). “If at any time before final judgment it
appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.” 28 U.S.C.
§ 1447(c). Removal statutes are strictly construed
against removal jurisdiction. Gaus v. Miles, Inc.,
980 F.2d 564, 566 (9th Cir. 1992). “Federal
jurisdiction must be rejected if there is any doubt as to the
right of removal in the first instance.” Id.
(citing Libhart v. Santa Monica Dairy Co., 592 F.2d
1062, 1064 (9th Cir. 1979)). In evaluating diversity
jurisdiction, the defendant has the burden of overcoming the
“strong presumption” against removal.
Gaus, 980 F.2d at 566.
28 U.S.C. § 1332, a federal district court has original
jurisdiction over all civil actions between citizens of
different states where the amount in controversy exceeds $75,
000. See 28 U.S.C. § 1332(a)(1). Section 1332
requires complete diversity among the parties; each of the
plaintiffs must be a citizen of a different state than each
of the defendants. Morris v. Princess Cruises, Inc.,
236 F.3d 1061, 1067 (9th Cir. 2001).
28 U.S.C. § 1331, a federal district court has original
jurisdiction over all civil actions arising under the laws of
the United States. See 28 U.S.C. § 1331.
“The presence or absence of federal-question
jurisdiction is governed by the ‘well-pleaded complaint
rule, ' which provides that federal jurisdiction exists
only when a federal question is presented on the face of the
plaintiff's properly pleaded complaint.”
Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987). “[A] case may not be removed to federal court
on the basis of a federal defense.” Id. at
Mae argues that even after Lightfoot, the Court
retains jurisdiction because it had independent valid
justifications for jurisdiction at the time of removal.
(Fannie Mae Resp. 2:9- 12, ECF No. 81). Specifically, Fannie
Mae argues that: (1) federal question jurisdiction exists
under the coercive action doctrine; and (2) diversity
jurisdiction exists because the non-diverse defendants were
fraudulently joined. (Id. 2:13-27). The Court
addresses each argument in turn.
Federal Question Jurisdiction
federal question jurisdiction turns on the face of the
plaintiff's well-pleaded complaint. See Franchise Tax
Bd. of State of Cal. v. Constr. Laborers Vacation Trust for
S. Cal., 463 U.S. 1, 9-10 (1983). A narrow exception to
this rule exists, however, in the context of certain
“coercive” actions for declaratory judgment.
Medtronic, Inc. v. Mirowski Family Ventures, LLC,
134 S.Ct. 843, 848 (2014). In such instances, courts look to
both the plaintiff's complaint and the “character
of the threatened action” in considering federal
question jurisdiction. Id. “That is to say,
they ask whether ‘a coercive action' brought by
‘the declaratory judgment defendant . . . would
necessarily present a federal question.'”
Id. (quoting Franchise Tax Bd. of State of
Cal., 463 U.S. at 19).
common application of this doctrine occurs in suits between
patent holders and alleged patent infringers. See, e.g.,
Medtronic Inc., 134 S.Ct. at 843. In such suits, an
alleged infringer may file an action seeking a declaratory
judgment that he is not violating any patents, or that the
patents at issue are invalid. Because this declaratory
judgment is meant to defend against an eventual claim against
the plaintiff for patent infringement, federal courts have
consistently recognized jurisdiction on the theory that an
infringement suit by the defendant would clearly raise a
federal question. See Franchise Tax Bd. of State of
Cal., 463 U.S. at 27 n. 19.
case, Fannie Mae argues that it-like the defendant in
Medtronic-is a defendant in a declaratory judgment
suit who had a viable and related federal claim against
Plaintiff. Specifically, Fannie Mae argues that it
“could have asserted quiet title and declaratory
judgment claims . . . seeking recognition that the HOA Sale
did not extinguish the Deed of Trust.” (Fannie Mae
Resp. 5:25-27). According to Fannie Mae, these claims would