Laura Jordan v. Nationstar Mortgage LLC ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LAURA ZAMORA JORDAN, as her No. 14-35943
separate estate, and on behalf of
others similarly situated, D.C. No.
Plaintiff-Appellee, 2:14-cv-00175-
TOR
v.
NATIONSTAR MORTGAGE LLC,
Defendant-Appellant.
LAURA ZAMORA JORDAN, as her No. 15-35113
separate estate, and on behalf of
others similarly situated, D.C. No.
Plaintiff-Appellee, 2:14-cv-00175-
TOR
v.
NATIONSTAR MORTGAGE LLC, OPINION
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Washington
Thomas O. Rice, District Judge, Presiding
Argued and Submitted
March 9, 2015—San Francisco, California
2 JORDAN V. NATIONSTAR MORTGAGE
Filed April 1, 2015
Before: J. Clifford Wallace, Milan D. Smith, Jr.,
and Paul J. Watford, Circuit Judges
Opinion by Judge Milan D. Smith, Jr.
SUMMARY*
Class Action Fairness Act / Removal
The panel reversed the district court’s order remanding
the class action proceeding to state court on the basis that the
removal was untimely under 28 U.S.C. § 1446(b).
Defendant Nationstar Mortgage LLC removed the case
within thirty days of ascertaining removability under the
Class Action Fairness Act (“CAFA”), but more than two
years after the case became removable on federal question
grounds pursuant to 28 U.S.C. § 1331.
The panel held that a case becomes removable for
purposes of 28 U.S.C. § 1446 when the CAFA ground for
removal is first disclosed. The panel held that a defendant
may remove a case from state court within thirty days of
ascertaining that the action is removable under CAFA, even
if an earlier pleading, document, motion, order, or other paper
revealed an alternative basis for federal jurisdiction. The
panel concluded that Nationstar’s removal under CAFA was
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
JORDAN V. NATIONSTAR MORTGAGE 3
timely, and that the action therefore properly belonged in
federal court. Finally, because the removal under CAFA was
timely, the panel reversed the district court’s award of
attorneys’ fees to the plaintiff that was premised on improper
removal under 28 U.S.C. § 1447(c).
COUNSEL
Jan T. Chilton (argued), Severson & Werson PC, San
Francisco, California; John A. Knox, Williams, Kastner &
Gibbs PLLC, Seattle, Washington, for Defendant-Appellant.
Clay M. Gatens (argued), Jeffers, Danielson, Sonn &
Aylward, P.S., Wenatchee, Washington; Michael D. Daudt,
Terrell Marshall Daudt & Willie PLLC, Seattle, Washington,
for Plaintiff-Appellee.
OPINION
M. SMITH, Circuit Judge:
Defendant-Appellant Nationstar Mortgage LLC
(Nationstar) appeals from the district court’s order granting
Plaintiff-Appellee Laura Zamora Jordan’s (Jordan) motion to
remand this class action proceeding to state court because its
removal was untimely under 28 U.S.C. § 1446(b). Section
1446(b)(1) permits defendants to remove state-court actions
to federal court within thirty days of receiving an initial
pleading or other document that reveals a basis for removal.
However, if the initial pleading does not provide a basis for
removal, a defendant may remove an action within thirty days
of receiving “an amended pleading, motion, order, or other
4 JORDAN V. NATIONSTAR MORTGAGE
paper” from which it may first be ascertained that the case is
removable. 28 U.S.C. § 1446(b)(3). Nationstar removed the
case within thirty days of ascertaining removability under the
Class Action Fairness Act (CAFA), 28 U.S.C. §§ 1332, 1453,
but more than two years after the case became removable on
federal question grounds pursuant to 28 U.S.C. § 1331.
Nationstar urges us to extend to the CAFA context the
logic of our decision in Durham v. Lockheed Martin Corp.,
445 F.3d 1247, 1253 (9th Cir. 2006), which held that the
thirty-day removal clock is reset when a defendant discovers
that a case is removable on federal officer grounds under
28 U.S.C. § 1442(a)(1), even if the defendant was previously
aware of a different basis for federal jurisdiction. In light of
the Supreme Court’s recent opinion in Dart Cherokee Basin
Operating Co., LLC v. Owens, 135 S. Ct. 547 (2014), and
mindful of Congress’s intent to “strongly favor the exercise
of federal diversity jurisdiction of class actions with interstate
ramifications,” S. Rep. No. 109–14, at 35 (2005), reprinted
in 2005 U.S.C.C.A.N. 3, at 34 (2005), we agree that the
approach to “federal officer” removal taken in Durham must
now be extended to CAFA claims. We hold that a defendant
may remove a case from state court within thirty days of
ascertaining that the action is removable under CAFA, even
if an earlier pleading, document, motion, order, or other paper
revealed an alternative basis for federal jurisdiction.
FACTUAL AND PROCEDURAL BACKGROUND
Laura Zamora Jordan obtained a loan to purchase a house
in Washington state. To secure the loan, Jordan executed a
deed of trust encumbering the house. Nationstar is the
beneficiary of the deed of trust secured by Jordan’s home.
The deed of trust contains provisions permitting the
JORDAN V. NATIONSTAR MORTGAGE 5
beneficiary to enter the house and change the locks if the
borrower fails to perform the covenants and agreements
contained in the deed of trust, or if the borrower abandons the
property. In April 2011, after Jordan defaulted on her loan,
Nationstar’s agents entered Jordan’s home without notice,
removed the existing locks, and installed a lockbox. Jordan
was later permitted to re-enter the house to gather her
personal belongings. Jordan claims that, “Nationstar still has
not commenced foreclosure proceedings against Jordan’s
home, which she still owns,” and that she “has been deprived
of the use and fair rental value of her home for over three
years.”
On April 3, 2012, Jordan, “as her separate estate, and on
behalf of others similarly situated,” sued Nationstar in
Washington state court, alleging six causes of action,
including violations of the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. § 1692, et seq. On January 3, 2013,
Jordan filed her Second Amended Complaint (SAC), adding
additional allegations and defining the proposed class. Jordan
did not specify an amount in controversy in the complaint,
but requested “damages in an amount to be proven at trial,
including treble damages . . . .” The state court certified the
proposed class on May 9, 2014. On June 3, 2014, Jordan
submitted responses to Nationstar’s Fifth Interrogatories,
stating that “the total amount of monetary damages is
expected to exceed $25,000,000.00.”1 On June 5, 2014,
1
We note that Jordan’s answers to Nationstar’s Fifth Interrogatories are
dated June 6, 2014, but the record indicates that they were filed in the
district court as an exhibit to Nationstar’s Notice of Removal on June 5,
2014. The district court stated that Jordan served her responses to the
interrogatories on June 3, 2014, and Jordan confirms this date in her brief
on appeal. Accordingly, we consider that the case first became removable
under CAFA on June 3, 2014.
6 JORDAN V. NATIONSTAR MORTGAGE
Nationstar filed a notice of removal to federal court pursuant
to CAFA.
Jordan moved to remand the case to state court, arguing
that Nationstar’s notice of removal was untimely because it
was filed more than two years after Jordan’s initial complaint
triggered federal jurisdiction under the FDCPA. See
28 U.S.C. § 1331. Nationstar countered that removal was
timely because Jordan’s answers to Nationstar’s fifth set of
interrogatories were the first “other paper from which it could
be ascertained that the matter in controversy exceed[ed]
$5,000,000,” one of the three necessary elements for
triggering removal under CAFA. Nationstar urged the district
court to extend the logic of our opinion in Durham v.
Lockheed Martin Corp., 445 F.3d 1247 (9th Cir. 2006), and
recognize “a second and separate ground for removal, even if
the initial complaint provided some other ground for
removal,” thereby “reopen[ing]” the thirty-day removal
window.
The district court, conscientiously seeking to follow our
circuit’s case law, remanded the case to state court because it
was “not persuaded by Defendant’s policy argument not
supported by the wording of the statute or case law.” The
court found that “the general principles of removal
jurisdiction apply in CAFA cases,” and “the relevant removal
date is the date on which the case itself becomes removable,
rather than the date on which the case first becomes
removable under CAFA.” Because Jordan’s First Amended
Complaint “included a federal cause of action, violation of
the FDCPA,” this “rendered the action removable based on
federal question jurisdiction,” within thirty days of that filing.
The district court awarded Jordan her attorney fees and costs
in the amount of $16,886.76 because it found that Nationstar
JORDAN V. NATIONSTAR MORTGAGE 7
“did not have an objectively reasonable basis for removal.”
See Martin v. Franklin Capital Corp., 546 U.S. 132, 140
(2005); 28 U.S.C. § 1447(c).
Nationstar filed this appeal.
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction to review the district court’s remand
order under 28 U.S.C. § 1453(c)(1), and jurisdiction to review
the court’s award of attorney fees pursuant to 28 U.S.C.
§ 1291. We review whether an action was properly remanded
to the state court from which it was removed de novo.
“Similarly, we review the ‘construction, interpretation, or
applicability’ of CAFA de novo.” Washington v. Chimei
Innolux Corp., 659 F.3d 842, 846–47 (9th Cir. 2011) (quoting
Bush v. Cheaptickets, Inc., 425 F.3d 683, 686 (9th Cir.
2005)). The district court’s decision to award attorney fees
under 28 U.S.C. § 1447(c) is reviewed for an abuse of
discretion, and will be overturned if it is based on clearly
erroneous findings of fact, or an erroneous determination of
law. Patel v. Del Taco, Inc., 446 F.3d 996, 999 (9th Cir.
2006).
DISCUSSION
Nationstar argues that “[t]he same three reasons Durham
cited for applying the broad interpretation of ‘removable’ to
federal officer removals apply with equal force to CAFA
removals.” First, Congress and the Supreme Court have
instructed that section 1453, like section 1442 in Durham,
should be interpreted broadly in favor of removal. Second,
both section 1442 and section 1453 permit a single defendant
to remove without the consent of other defendants, and a
8 JORDAN V. NATIONSTAR MORTGAGE
strict interpretation of “removable” would effectively
eliminate single-defendant removals. Durham, 445 F.3d at
1253. Finally, as with section 1442, interpreting “removable”
strictly would “encourage gamesmanship and defeat the
policies underlying” CAFA. Id.
A defendant who is sued in state court may remove the
action to federal court on various grounds, such as if the case
presents a federal question under 28 U.S.C. § 1331, or if the
requirements for diversity of citizenship are met under
28 U.S.C. § 1332. 28 U.S.C. § 1441(a), (b). Section
1446(b)(1) requires the defendant to file a notice of removal
“within 30 days after the receipt by the defendant, through
service or otherwise, of a copy of the initial pleading setting
forth the claim for relief upon which such action or
proceeding is based.” 28 U.S.C. § 1446(b)(1). However,
if the case stated by the initial pleading is not
removable, a notice of removal may be filed
within 30 days after receipt by the defendant,
through service or otherwise, of a copy of an
amended pleading, motion, order or other
paper from which it may first be ascertained
that the case is one which is or has become
removable.
28 U.S.C. § 1446(b)(3). The removal of class actions is also
governed by section 1446. 28 U.S.C. §1453(b).
In 2005, Congress passed CAFA to permit defendants to
remove class actions to federal court if they meet three
requirements: there must be minimal diversity of citizenship
between the parties; the proposed class must have at least 100
members; and the aggregated amount in controversy must
JORDAN V. NATIONSTAR MORTGAGE 9
equal or exceed the sum or value of $5 million. 28 U.S.C.
§ 1332(d); Class Action Fairness Act of 2005, Pub. L. No.
109–2, § 4, 119 Stat. 4, 12 (2005). The Senate Report on
CAFA explains that “[b]ecause interstate class actions
typically involve more people, more money, and more
interstate commerce ramifications than any other type of
lawsuit, the Committee firmly believes that such cases
properly belong in federal court.” S. Rep. No. 109–14, at 5;
see Dart Cherokee, 135 S. Ct. at 554.
In Durham, we recognized that “there are two plausible
ways to construe” the term “removable” in section 1446. The
first way to interpret “removable” is as “binary—either
there’s some basis for removal, or there’s not. . . . The second
way to interpret ‘removable’ is to look to each ground for
removal separately. Under this reading, a case does not
become removable until the particular basis on which
removal is sought becomes apparent from the record.” Id.
The plaintiff in Durham sued Lockheed Martin in state
court. Id. at 1249. The initial complaint made the case eligible
for removal on federal enclave grounds, but Lockheed Martin
chose not to remove the case at that time. Id. Durham’s
answers to the defendant’s subsequent interrogatories,
however, revealed that the case was also removable on
federal officer grounds under section 1442(a)(1). Id.
Lockheed Martin removed the case to federal court within
thirty days of discovering this new basis for removal, but
more than thirty days after the initial basis for removal had
been disclosed. Id. We therefore addressed whether Lockheed
was “entitled to a new thirty-day period to remove” the case
when it discovered a basis for federal jurisdiction under
section 1442(a)(1), or whether removal was untimely based
on the date of the initial complaint. Id. at 1250.
10 JORDAN V. NATIONSTAR MORTGAGE
We held that “a federal officer defendant’s thirty days to
remove commence when the plaintiff discloses sufficient
facts for federal officer removal, even if the officer was
previously aware of a different basis for removal.” Id. at
1253. In doing so, we noted that Congress passed section
1442 in order “to protect the federal government from South
Carolina’s attempt to nullify federal tariff laws in the 1830s.”
Id. at 1252. We also noted that “the Supreme Court has
mandated a generous interpretation of the federal officer
removal statute ever since: ‘It scarcely need be said that such
measures are to be liberally construed to give full effect to the
purposes for which they were enacted.’” Id. (quoting
Colorado v. Symes, 286 U.S. 510, 517 (1932)). “We t[ook]
from this history a clear command from both Congress and
the Supreme Court that when federal officers and their agents
are seeking a federal forum, we are to interpret section 1442
broadly in favor of removal.” Id. at 1252.
We recognize that we have generally “strictly construed”
the requirements of removal, Washington v. Chimei Innolux
Corp., 659 F.3d 842, 847 (9th Cir. 2011), and that in the past,
“[w]e have declined to construe CAFA more broadly than its
plain language indicates,” Progressive W. Ins. Co. v.
Preciado, 479 F.3d 1014, 1018 (9th Cir. 2007). See also
Nevada v. Bank of Am. Corp., 672 F.3d 661, 667 (9th Cir.
2012) (“Removal statutes are to be ‘strictly construed’ against
removal jurisdiction.”); Luther v. Countrywide Home Loans
Servicing LP, 533 F.3d 1031, 1034 (9th Cir. 2008) (“In
general, removal statutes are strictly construed against
removal.”). However, we are persuaded that the Supreme
Court’s recent decision in Dart Cherokee makes clear that the
“federal officer” category we identified in Durham as an
JORDAN V. NATIONSTAR MORTGAGE 11
exception to the strict construction of removal statutes must
now be expanded to include CAFA claims.2
In Dart Cherokee, the Supreme Court addressed
“[w]hether a defendant seeking removal to federal court is
required to include evidence supporting federal jurisdiction
in the notice removal, or [whether] alleging the required
‘short and plain statement of the grounds for removal’ [is]
enough.” 135 S. Ct. at 552–53. There, the defendant removed
a case from state to federal court under CAFA, alleging that
the three elements triggering CAFA jurisdiction were present.
Id. at 552–53. The plaintiff argued, and the district court
agreed, that the notice of removal was “deficient as a matter
of law” because it included “no evidence” proving that the
amount in controversy exceeded $5 million. The district court
remanded the action to state court, and the Tenth Circuit
denied review. Id. at 552. The Supreme Court reversed,
noting that,
In remanding the case to state court, the
District Court relied, in part, on a purported
‘presumption’ against removal. . . . We need
not here decide whether such a presumption is
proper in mine-run diversity cases. It suffices
to point out that no antiremoval presumption
attends cases invoking CAFA, which
Congress enacted to facilitate adjudication of
2
We are not bound by our court’s prior rulings on this issue because the
Supreme Court’s decision in Dart Cherokee “undercut[s] the theory or
reasoning underlying the prior circuit precedent in such a way that the
cases are clearly irreconcilable.” Miller v. Gammie, 335 F.3d 889, 900
(9th Cir. 2003) (en banc). This obviates the need for en banc
reconsideration that would otherwise be required in our circuit. See id.
12 JORDAN V. NATIONSTAR MORTGAGE
certain class actions in federal court. See
Standard Fire Ins. Co., 568 U.S.[ —, —],
133 S. Ct.[ 1345,] 1350 [(2013)] (“CAFA’s
primary objective” is to “ensur[e] ‘Federal
court consideration of interstate cases of
national importance.’” (quoting § 2(b)(2), 119
Stat. 5)); S. Rep. No. 109-14, p. 43 (2005)
(CAFA’s “provisions should be read broadly,
with a strong preference that interstate class
actions should be heard in a federal court if
properly removed by any defendant.”).
Id. at 554. Jordan urges us to ignore this statement as mere
“dicta” incapable of “negat[ing] the Ninth Circuit’s long-
applied general rule of strict construction against removal” of
class actions. Jordan further argues that “the passage quoted
from the Senate Report in Dart Cherokee specifically
referenced § 1332(d) subject matter jurisdiction,” not removal
procedure under section 1446, and therefore cannot serve as
a basis for extending the Durham presumption in favor of
removal to the CAFA context.
We disagree. Even though Dart Cherokee focused
primarily on how specifically the “amount in controversy”
requirement must be asserted in a defendant’s removal notice
under CAFA, the Supreme Court left no doubt “that no
antiremoval presumption attends cases involving CAFA.”
135 S. Ct. at 554. This declaration is bolstered by the Court’s
reference to Congress’s “overall intent . . . to strongly favor
the exercise of federal diversity jurisdiction over class actions
with interstate ramifications.” S. Rep. No. 109–14, at 35.
Jordan’s alternative argument that any presumption in favor
of removal expressed in Dart Cherokee and the Senate Report
on CAFA applies only to section 1332, and not to removal
JORDAN V. NATIONSTAR MORTGAGE 13
procedure under section 1446, is also unavailing. In Durham,
we specifically addressed the “clear command from both
Congress and the Supreme Court . . . to interpret section 1442
broadly in favor of removal,” and then recognized the need to
“extend section 1442's liberal interpretation to section 1446.”
Durham, 445 F.3d at 1253. Similarly, Congress and the
Supreme Court have instructed us to interpret CAFA’s
provisions under section 1332 broadly in favor of removal,
and we extend that liberal construction to section 1446. A
case becomes “removable” for purposes of section 1446 when
the CAFA ground for removal is disclosed.
Applying our holding to the facts of this case, we
conclude that Nationstar’s removal under CAFA was timely,
and that the action therefore properly belongs in federal court.
Jordan filed her initial complaint on April 3, 2012. The only
basis for removal at that time was under section 1331 for
alleged violations of the FDCPA. On May 9, 2014, the state
court certified Jordan’s proposed class. Not until June 3,
2014, when Jordan specified in her answers to Nationstar’s
interrogatories that the total amount in controversy exceeded
$25 million, did the case become removable under CAFA.
Two days later on June 5, 2014, Nationstar removed the case
to federal court. Nationstar’s removal was timely.
We turn, finally, to the district court’s award of attorney’s
fees and costs to Jordan. A district court may, in its
discretion, “require payment of just costs and any actual
expenses, including attorney fees, incurred as a result of
[improper] removal.” 28 U.S.C. § 1447(c). “Absent unusual
circumstances, courts may award attorney’s fees under
§ 1447(c) only where the removing party lacked an
objectively reasonable basis for seeking removal.” Martin,
546 U.S. at 141. At the time the district court entered its
14 JORDAN V. NATIONSTAR MORTGAGE
order, Dart Cherokee had not yet been decided, and our case
law still suggested that removal procedure under CAFA
should be strictly construed. Understandably, the district
court concluded that Nationstar did not have a reasonable
basis for seeking removal. However, because we now hold
that Nationstar’s removal under CAFA was timely, the
district court’s award of attorney fees to Jordan must be
reversed.
CONCLUSION
In light of the Supreme Court’s clear statement in Dart
Cherokee that Congress intended for no antiremoval
presumption to attend CAFA cases, we hold that a case
becomes “removable” for purposes of section 1446 when the
CAFA ground for removal is first disclosed. Nationstar’s
notice of removal was therefore timely. The judgment of the
district court is REVERSED, and the case is REMANDED
to the district court for proceedings consistent with the views
expressed in this opinion. The pending motion is denied as
moot. Each party shall bear its own costs on appeal.