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Snellgrove v. Common Bond Title, LLC

United States District Court, M.D. Alabama, Southern Division

September 30, 2019

JAMES SNELLGROVE, Plaintiff,
v.
COMMON BOND TITLE, LLC, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          W. KEITH WATKINS, UNITED STATES DISTRICT JUDGE,

         In this removed action, after providing Plaintiff with notice, the Magistrate Judge filed a Recommendation (Doc. # 45) that the court, on its own motion, dismiss Plaintiff’s sole federal-law claim for lack of subject-matter jurisdiction, decline to exercise supplemental jurisdiction over the state-law claims, and remand the state-law claims to state court. Plaintiff timely objected to the Recommendation (Doc. # 46), to which Defendants filed a consolidated response (Doc. # 50). Upon a de novo review of the record, see 28 U.S.C. § 636, the objections to the Recommendation are due to be overruled. The Recommendation is due to adopted, but on different grounds. The Recommendation treats the issue of whether Plaintiff pleads an element of his federal-law claim, see Fed. R. Civ. P. 12(b)(6), as an issue impacting the court’s subject-matter jurisdiction, see Fed. R. Civ. P. 12(b)(1). For the reasons that follow, Plaintiff’s claim brought under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601, et seq., is due to be dismissed without prejudice for failure to state a claim, and supplemental jurisdiction over the state-law claims will be declined.[1]

         I. DISCUSSION

         A. The court has subject-matter jurisdiction over the RESPA claim.

         In Bell v. Hood, 327 U.S. 678 (1946), the Supreme Court distinguished pleading defects that are jurisdictional and those that fail to state a claim:

Jurisdiction . . . is not defeated . . . by the possibility that the averments might fail to state a cause of action on which petitioner could actually recover. For it is well settled that the failure to state a proper cause of action on which relief can be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy. If the court does later exercise its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction.

Id. at 776; see also Marine Coatings of Ala., Inc. v. United States, 792 F.2d 1565, 1567 (11th Cir. 1986) (“According to Bell, if a complaint seeks relief under the Constitution or laws of the United States, dismissal generally must be for failure to state a claim, not for want of jurisdiction.”) (citing Bell, 327 U.S. at 681–83).

         The Supreme Court has, however, recognized two exceptions to the foregoing general rule. In Bell, the Supreme Court explained: “[A] suit may sometimes be dismissed for want of jurisdiction where the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous.” Bell, 327 U.S. at 682–83. The Court has continued to adhere to Bell’s principles. See Shapiro v. McManus, 136 S.Ct. 450, 455 (2015) (“We have long distinguished between failing to raise a substantial federal question for jurisdictional purposes . . . and failing to state a claim for relief on the merits; only ‘wholly insubstantial and frivolous’ claims implicate the former.”).

         In removed actions, federal courts have subject-matter jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331; see also 28 U.S.C. § 1441(a). Subject-matter jurisdiction “must be judged at the time of the removal.” Sierminski v. Transouth Fin. Corp., 216 F.3d 945, 949 (11th Cir. 2000) (citation and internal quotation marks omitted). “Removal jurisdiction based on a federal question is governed by the well-pleaded complaint rule.” Ervast v. Flexible Prod. Co., 346 F.3d 1007, 1012 (11th Cir. 2003). Under the well-pleaded complaint rule, “[a] case does not arise under federal law unless a federal question is presented on the face of the plaintiff’s complaint.” Kemp v. Int’l Bus. Machines Corp., 109 F.3d 708, 712 (11th Cir. 1997). Removal “based on federal question jurisdiction” is proper “only when the plaintiff’s statement of his own cause of action shows that it is based on federal law.” Blab T.V. of Mobile, Inc. v. Comcast Cable Commc’ns, Inc., 182 F.3d 851, 854 (11th Cir. 1999) (citation and internal quotation marks omitted).

         The original Complaint - the operative one for examining subject-matter jurisdiction at the time of removal - alleges that Defendant Common Bond “charged for title services that were not performed and were not earned” in violation of RESPA. (Doc. # 1-2, at ¶ 73.) The Complaint tethers these allegations to RESPA and inferentially to RESPA’s anti-kickback provision. See 12 U.S.C. § 2607(b) (“No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.”). Additionally, the Complaint seeks treble damages, which are expressly authorized under RESPA. See § 2607(d)(2) (permitting awards of treble damages under RESPA). The Complaint’s express reliance on RESPA and its remedies, in combination with the nature of the allegations, demonstrates that the complaint pleads a cause of action that is “based on federal law.” Blab T.V. of Mobile, Inc., 182 F.3d at 854; see also Marine Coatings, 792 F.2d at 1567 (“According to Bell, if a complaint seeks relief under the Constitution or laws of the United States, dismissal generally must be for failure to state a claim, not for want of jurisdiction.”) (citing Bell, 327 U.S. at 681–83). Plaintiff’s RESPA claim “arises under the . . . laws . . . of the United States.” § 1331.

         Bell’s exceptions are inapplicable. First, Plaintiff brought his action in state court, only to have it removed to federal court, so clearly he did not bring a RESPA claim “solely for the purpose of obtaining jurisdiction” in this court. Bell, 327 U.S. at 682. Second, as the Recommendation correctly concludes, Plaintiff fails to plausibly allege one of the elements of his RESPA claim. This conclusion rests on Rule 12(b)(6), not Rule 12(b)(1). Neither the Recommendation nor the parties have cited a decision that would support a finding that the RESPA claim is so frivolous as to deprive the court of subject-matter jurisdiction. See Reed v. Columbia St. Mary’s Hosp., 782 F.3d 331, 336 (7th Cir. 2015) (“Failure to state a claim does not deprive a court of subject-matter jurisdiction unless the claim is ‘wholly insubstantial and frivolous, ’ which is a much more stringent standard that is rarely satisfied.”). In fact, the parties insist that there is subject-matter jurisdiction over the RESPA claim. (Docs. # 43, 44.)

         Because the Complaint sufficiently invokes RESPA and its remedies, subject-matter jurisdiction is proper.

         B. The Amended Complaint fails to state a RESPA claim.

         Because subject-matter jurisdiction exists, the issue turns to whether the Amended Complaint’s “allegations entitle [Plaintiff] to relief” under RESPA.[2]Lobo v. Celebrity Cruises, Inc., 704 F.3d 882, 891 (11th Cir. 2013). The Recommendation succinctly sets out the standard of review for evaluating whether Plaintiff’s RESPA cause of action states a claim for relief. (Doc. # 45, at 5 (first full paragraph).) As ...


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