Dutcher v. Matheson

16 F. Supp. 3d 1327, 2014 WL 1660585, 2014 U.S. Dist. LEXIS 58155
District Court, D. Utah·Decided April 25, 2014·No. Case No. 2:11-CV-666 TS·Published·Cited by 2 cases

Opinion

MEMORANDUM DECISION AND ORDER ON CAFA JURISDICTION

TED STEWART, United States District Judge.

This matter is before the Court on remand from the Court of Appeals for the [1331] Tenth Circuit for the limited purpose of determining whether this Court has jurisdiction over Plaintiffs’ claims by virtue of the Class Action Fairness Act (“CAFA”). Also before the Court is ReconTrust Company, N.A.’s (“ReconTrust”) Motion to Transfer.1 In its Motion, ReconTrust seeks to transfer a recently filed case—Allred v. ReconTrust Co. N.A., Case No. 2:13-CV-1124 BJ — to this Court. For the reasons discussed below, the Court finds that it has jurisdiction under CAFA and will deny ReeonTrust’s Motion.

I. BACKGROUND

Plaintiffs are Utah residents whose homes have been subject to foreclosure sales performed by Defendants in Utah. Plaintiffs’ Complaint brings six causes of action based on a central theme — that Defendant ReconTrust did not have authority to conduct a trustee sale in Utah because it was not an authorized trustee under Utah law. Plaintiffs also bring their claims on behalf of all persons subject to the allegedly unlawful foreclosure actions of Defendants. Plaintiffs allege that the proposed class exceeds 10,000 members. Plaintiffs also allege, on information and belief, that more than 75% of the proposed class members are citizens of Utah.

Plaintiffs originally filed suit in Utah state court on June 24, 2011. Defendants subsequently removed the action to this Court and collectively moved to dismiss Plaintiffs’ claims. Plaintiffs moved for a temporary restraining order and preliminary injunction and also sought to remand this matter to state court. In a memorandum decision entered February 8, 2012, the Court denied Plaintiffs’ motions and granted Defendants’ motion to dismiss.2 In that decision, the Court concluded that the Utah foreclosure statute at issue, Utah Code Ann. § 57-1-21, was preempted by the National Banking Act.

Plaintiffs appealed the Court’s ruling. On appeal, the Tenth Circuit requested supplemental briefing on whether this Court had jurisdiction to hear Plaintiffs’ claims. The Tenth Circuit subsequently held (1) the Court erred in concluding that federal question jurisdiction was proper under the doctrine of federal preemption and (2) that Defendants had not met their burden to prove fraudulent joinder and, therefore, diversity jurisdiction was not established. The Court of Appeals noted that Defendants had also argued that jurisdiction was proper under CAFA but indicated that “we do not believe it appropriate to resolve this thorny question without further factual development in the district court.”3 Accordingly, the court concluded that “[wjhether the requirements of the Class Action Fairness Act have been met is a question that is best left to the district court to decide in the first instance on remand.”4

II. DISCUSSION

Congress enacted CAFA to “respond to perceived abusive practices by plaintiffs and their attorneys in litigating major class actions with interstate features in state courts.”5 Pursuant to CAFA, the federal district court’s diversity jurisdiction was expanded to include certain class action suits where complete diversity did not exist. Congress “relaxed the requirements for demonstrating diversity jurisdiction and for removing class actions to allow [1332] federal courts more readily to supervise those class actions that are interstate eases of national importance.”6

“CAFA jurisdiction exists when the proposed class contains at least one-hundred persons, the amount in controversy exceeds $5,000,000.00, and there is minimal diversity.”7 It is undisputed that these requirements have been met in this case.8 At issue are the exceptions to CAFA jurisdiction.

CAFA contains two statutory exceptions that, if met, mandate that a district court decline to exercise jurisdiction. These exceptions are characterized as the “local controversy exception” and the “home state exception.”9 CAFA also contains a permissive exception that grants district courts discretion to decline jurisdiction over a class action otherwise subject to CAFA jurisdiction where certain expressly enumerated factors are met.10

The exceptions to CAFA jurisdiction are “intended to be narrow, ‘with all doubts resolved in favor of exercising jurisdiction over the case.’ ”11 Because the exceptions are treated as exceptions to jurisdiction, “the party seeking remand has the burden to show that the ... exception[s] appl[y].”12

A. LOCAL CONTROVERSY EXCEPTION

The local controversy exception was created to exempt from CAFA jurisdiction “those cases consisting of primarily local, intrastate matters.”13 The exception is “intended to respond to concerns that class actions with a truly local focus should not be moved to federal court under [CAFA] because state courts have a strong interest in adjudicating such disputes.”14 The local controversy exception is found at 28 U.S.C. § 1332(d)(4)(A). That section states that a district court shall decline to exercise jurisdiction over a class action in which

(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;
(II) at least 1 defendant is a defendant—
(aa) from whom significant relief is sought by members of the plaintiff class;
(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally filed; and
[1333] (III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and
[IV] during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons .... 15

The Court will consider each of these elements and the parties’ arguments individually below.

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Dutcher v. Matheson, 16 F. Supp. 3d 1327, 2014 WL 1660585, 2014 U.S. Dist. LEXIS 58155 (D. Utah 2014).

16 F. Supp. 3d 1327 (Dutcher v. Matheson) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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