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Hollyvale Rental Holdings, LLC v. Baum

United States District Court, D. Nevada

March 31, 2018

HOLLYVALE RENTAL HOLDINGS, LLC, Plaintiff,
v.
JARED K. BAUM, et al., Defendants. FEDERAL NATIONAL MORTGAGE ASSOCIATION, Counterclaimant,
v.
HOLLYVALE RENTAL HOLDINGS, LLC, Counterdefendant.

          ORDER PLAINTIFF'S MOTION TO REMAND (ECF NO. 39)

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before this Court comes Plaintiff / Counterdefendant Hollyvale Rental Holdings, LLC (“Hollyvale”)'s Motion to Remand (ECF No. 39). For the reasons stated below, the Motion to Remand is DENIED.

         II. BACKGROUND

         On November 22, 2016, Hollyvale filed a Complaint in the Eighth Judicial District Court of Clark County, Nevada. (ECF No 1-2). Hollyvale filed a First Amended Complaint in the state court on December 9, 2016. (ECF No. 1-5). Hollyvale brought the following causes of action: (1) quiet title, against all Defendants; (2) declaratory relief, against all Defendants; and (3) injunctive relief, against Federal National Mortgage Association and Quality Loan Service Corporation. Defendant Federal National Mortgage Association (“Fannie Mae”) filed a Petition for Removal on December 14, 2016. (ECF No. 1). Fannie Mae asserted in the Petition: “The ground for this removal is federal question jurisdiction over claims brought against Fannie Mae. Fannie Mae owns the loan secured by the first Deed of Trust recorded against the subject property and is the beneficiary of record of the Deed of Trust. Pursuant to 28 U.S.C. 1331, ‘[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.' Fannie Mae's federal corporate charter confers federal question jurisdiction over claims brought against Fannie Mae. Lightfoot v. Cendant Mortg. Corp., 769 F.3d 681 (9th Cir. 2014).” On January 3, 2017, Fannie Mae filed an Answer and Counterclaim. (ECF No. 6). In the Counterclaim, Fannie Mae asserted the following causes of action: (1) declaratory relief under 12 U.S.C. § 4617(j)(3); (2) quiet title under 12 U.S.C. § 4617(j)(3); (3) declaratory relief under the Fifth and Fourteenth Amendments; (4) quiet title under the Fifth and Fourteenth Amendments; (5) permanent and preliminary injunction; and (6) unjust enrichment. Hollyvale filed an Answer to the Counterclaim on January 12, 2017. (ECF No. 7).

         On August 21, 2017, Hollyvale filed the instant Motion to Remand. (ECF No. 39). Fannie Mae filed its Response on September 5, 2017. (ECF No. 43). Hollyvale filed its Reply on September 8, 2017. (ECF No. 44). On August 23, 2017, the Court entered a minute order staying the case pending a decision on a question certified to the Nevada Supreme Court, and setting a hearing on the Motion to Remand. (ECF No. 41). Also on August 23, Hollyvale filed its Second Amended Complaint, adding Red Rock Financial Services and Villas at Terra Linda Homeowners Association as Defendants. (ECF No. 42). On October 6, 2017, the Court held a hearing on the matter and took the motion under submission. (ECF No. 55).

         III. LEGAL STANDARD

         A. Removal Jurisdiction

         28 U.S.C. § 1441(a) grants federal district courts jurisdiction over state court actions that originally could have been brought in federal court. “Removal and subject matter jurisdiction statutes are strictly construed, and a defendant seeking removal has the burden to establish that removal is proper and any doubt is resolved against removability.” Hawaii ex rel. Louie v. HSBC Bank Nevada, N.A., 761 F.3d 1027, 1034 (9th Cir. 2014) (citation and quotation marks omitted).

         B. Federal Question Jurisdiction

         A district court has “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. An action “arises under” federal law when “federal law creates the cause of action.” Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986). But even where a claim finds its origins in state rather than federal law, the Supreme Court has identified a “special and small category” of cases in which federal question jurisdiction still exists. Empire Healthchoice Assurance, Inc., v. McVeigh, 547 U.S. 677, 699 (2006). Federal jurisdiction over a state law claim may lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. See Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005) (explaining that the “the question is, does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.”). Grable does not provide a per se “test” for federal question jurisdiction. However, the presence of all four Grable factors suggests that federal jurisdiction is proper because there is a “serious federal interest in claiming the advantages thought to be inherent in a federal forum, ” which can be vindicated without disrupting Congress's intended division of labor between state and federal courts. Id. at 313 (citations omitted).

         IV. DISCUSSION

         a. Initial Grounds for Removal

         In its Petition for Removal, Fannie Mae asserted as the grounds for removal the Ninth Circuit's decision in Lightfoot v. Cendant Mortg. Corp., 769 F.3d 681 (2014). In that case, the Ninth Circuit held that the “sue-and-be-sued” clause of 12 U.S.C. § 1723a(a) (“the Fannie Mae charter”) grants federal courts jurisdiction over cases in which Fannie Mae is a party. Lightfoot, 769 F.3d at 683. The statute specifically allows Fannie Mae to “in its corporate name, to sue and to be ...


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