Hernandez v. Credit Acceptance Corp.

Opinion

1 2 3 4 6 7 8 9 10 11 UNITED STATES DISTRICT COURT 12 SOUTHERN DISTRICT OF CALIFORNIA 13 14 ELIJAH D. HERNANDEZ, Case No.: 3:20-cv-00112-H-BLM 15 Plaintiff, ORDER REMANDING CASE FOR 16 v. LACK OF SUBJECT MATTER JURISDICTION 17 CREDIT ACCEPTANCE CORP., AUTO AND FINANCE EXPERTS, TY HAJJAN 18 [Doc. No. 3.] and JOHN BASS, 19 Defendants. 20 21 On December 12, 2019, Plaintiff Elijah D. Hernandez (“Plaintiff”) filed a complaint 22 against Credit Acceptance Corp. (“CAC”), Auto and Finance Experts, Ty Hajjan, and John 23 Bass (collectively, “Defendants”) in the Superior Court of California, San Diego County. 24 (Doc. No. 1.) On January 15, 2020, Defendants removed the case to this Court. (Id.) On 25 January 22, 2020 Defendants filed a Motion to Compel Arbitration. (Doc. No. 3.) On 26 February 14, 2020, this Court acting sua sponte, issued an order requiring the Parties to 27 show cause as to why this case should not be remanded to state court for lack of subject 28 matter jurisdiction. (Doc. No. 4.) Defendant responded on February 21, 2020. (Doc. No. 1 5.) After reviewing the pleadings filed in this case, and for the reasons set forth below, this 2 Court finds that it lacks subject matter jurisdiction over the complaint and, therefore, 3 REMANDS the case to the San Diego Superior Court. Accordingly, the Court DENIES 4 as moot Defendant’s motion to compel arbitration. (Doc. No. 3.) 5 BACKGROUND 6 On or about July 12, 2019 Plaintiff signed a $6,612.94 retail installment sales 7 contract (the “Agreement”) with Carfinance Centers LLC, to finance the purchase of a 8 Chevy Tahoe from Co-Defendant Auto Finance Experts, LLC (the “Dealership”). (Doc. 9 No. 1 Ex. 1. at 10.) Plaintiff alleges that the Dealership was unable to sell him the Chevy 10 Tahoe because the transmission in the vehicle was damaged. (Id.) The Dealership was 11 unable to find Plaintiff another vehicle and returned Plaintiff’s deposit to him on or around 12 July 21, 2019. (Id.) Plaintiff alleges that the Dealership did not inform CAC about the 13 cancellation of the Agreement until September 11, 2019 and this negatively impacted his 14 credit score. (Id.) 15 On December 12, 2019, Plaintiff filed a complaint against Defendants in the 16 Superior Court of California, San Diego County for violating of California Civil Code § 17 1770. On January 15, 2020, Defendants removed the case to this Court arguing that the 18 claims in Plaintiffs case are completely preempted by the Fair Credit and Reporting Act, 19 15 U.S.C. § 1681, et seq. (the “FCRA”). (Id. at 3) Defendants moved to compel arbitration. 20 (Doc. No. 3) 21 DISCUSSION 22 I. Legal Standards 23 Federal courts are of limited jurisdiction, having subject matter jurisdiction only over 24 matters authorized by the Constitution and Congress. See, e.g., Kokkonen v. Guardian Life 25 Ins. Co., 511 U.S. 375, 377 (1994). A “strong presumption” against removal jurisdiction 26 exists. Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992). In seeking removal, the 27 defendant bears the burden of proving that jurisdiction exists. Scott v. Breeland, 792 F.2d 28 925, 927 (9th Cir. 1986). 1 Suits filed in state court may be removed to federal court if the federal court would have 2 had original jurisdiction over the suit. 28 U.S.C. § 1441(a). A removed action must be 3 remanded to state court if the federal court lacks subject matter jurisdiction. 28 U.S.C. § 4 1447(c). The “burden of establishing federal subject matter jurisdiction is on the party 5 seeking removal . . . .” Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1265 (9th Cir. 6 1999). An action may be remanded to state court if the federal court lacks subject matter 7 jurisdiction. 28 U.S.C. § 1447(c). “The removal statute is ‘strictly construed against 8 removal jurisdiction and any doubt must be resolved in favor of remand.’ ” Hofler v. Aetna 9 US Healthcare of Cal., Inc., 296 F.3d 764, 767 (9th Cir. 2002) (quoting Ethridge v. Harbor 10 House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988)). The removing party has the burden of 11 establishing that removal is proper. Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992) 12 Here, the Complaint filed by Plaintiff only asserts claims for violations of 13 California’s Consumer’s Legal Remedies Act, Cal Civ. Code § 1770. (Doc. No. 1. Ex 1. at 14 10.) There are no federal causes of action alleged in the complaint. Defendant contends 15 that the Court nevertheless possesses federal question jurisdiction over the action because 16 the Fair Credit and Reporting Act “‘preempts state law claims if said claims relate to the 17 “responsibilities of furnishers of credit information governed…[by] FCRA.’” (Id. at 3, 18 (citing Miller v. Bank of Am., 858 F.Supp.2d 1118, 1124 (S.D. Cal. 2012.) 19 “[I]t is ‘settled law that a case may not be removed to federal court on the basis of a 20 federal defense, including a defense of preemption, even if the defense is anticipated in the 21 plaintiff's complain, and even if both parties concede that the federal defense is the only 22 question truly at issue.’ ” Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 23 1106 (9th Cir. 2000) (quoting Franchise Tax Bd. of Cal. V. Construction Laborers Vacation 24 Trust for S. Cal., 463 U.S. 1, 14 (1983)). Although the jurisdictional doctrine of “complete 25 preemption” serves as an exception to the well-pleaded complaint rule, it “arises only in 26 ‘extraordinary’ situations” and the Supreme Court has “identified only three federal 27 statutes that satisfy” its complete preemption test. Ansley v. Ameriquest Mortg. Co., 340 28 F.3d 858, 861-62 (9th Cir. 2003) (explaining that the Supreme Court has only applied 1 complete preemption in actions involving section 502 of the Employee Retirement Income 2 Security Act, Section 301 of the Labor Management Relations Act, and the usury 3 provisions of the National Bank Act). 4 Neither the Supreme Court nor the Ninth Circuit has ever concluded that the FCRA's 5 preemption provisions “completely preempt” state claims for purposes of supporting 6 removal based on the existence of a federal question, and numerous District Courts within 7 the Ninth Circuit have rejected removals based on FCRA preemption. See Alan v. Austin 8 Capital Bank, SSB., CV-19-9618 (AFMx), 2019 WL 6002406 (C.D. Cal. Nov. 12, 2019) 9 (rejecting removal based on complete preemption of FCRA); Stone-Molloy v. Midland 10 Funding LLC, CV 15-8017 ODW (AJWx), 2015 WL 6159104, at *2 (C.D. Cal. Oct. 19, 11 2015) (same); Cordes v. Select Portfolio Servicing, Inc., SACV 12-315 CJC (RNBx), 2012 12 WL 12904077, at *1-2 (C.D. Cal. May 22, 2012)(same); Chase Bank USA, N.A. v. Duran, 13 CV 06-2258 MMC, 2006 WL 889432, at *1 (N.D. Cal. Apr. 5, 2006)(same); Sehl v. Safari 14 Motor Coaches, Inc., CV 01-1750 SI, 2001 WL 940846, at *6-7 (N.D. Cal. Aug. 13, 15 2001)(same). 16 The Court therefore concludes that Defendant has failed to establish that Plaintiff's 17 claims for violations of California’s Consumer’s Legal Remedies Act are completely 18 preempted or otherwise state a federal claim that supports the Court's exercise of federal 19 question jurisdiction over this action. 20 CONCLUSION 21 For the foregoing reasons, the Court concludes that Defendant's Notice of Removal 22 has failed to establish the existence of either federal question or diversity jurisdiction over 23 this action. The Court therefore remands this action to San Diego County Superior Court, 24 case number 37-02019-00065874-SC-SC-CTL. See 28 U.S.C. § 1447(c). 25 IT IS SO ORDERED. 26 DATED: February 24, 2020 27 MARILYN L. HUFF, District Judge 28 UNITED STATES DISTRICT COURT