Opinion
No. C 02-03 648 CRB
November 22, 2002
ORDER DISMISSING CASE AND DENYING PLAINTIFFS' MOTION FOR JUDGMENT OF DEFAULT
The allegations giving rise to the complaint in this case involve a foreclosure on plaintiffs' property. Plaintiffs claim that they fell into arrears on a line of credit from defendant Ameriquest that was secured by a note on plaintiffs' property; that they then negotiated an amendment to their payment schedule with Ameriquest; and that they made timely payments according to the amended schedule through May 2002. The First Amended Complaint ("FAC") alleges that Ameriquest wrongfully foreclosed on plaintiffs' property in May 2002; that defendant Town Country Title Servicing acted as trustee in that wrongful foreclosure; and that defendant David Wong wrongfully purchased the property in a foreclosure sale and subsequently conveyed it to defendant Kenneth Jones, who then wrongfully evicted plaintiffs from the property. The FAC states causes of action for breach of contract, fraud, violation of the "right to contract" under 42 U.S.C. § 1981, and wrongful eviction. Plaintiff now comes before the Court seeking a judgment of default against defendant Wong.
Federal courts are courts of limited jurisdiction. As a general rule, absent diversity of citizenship, federal law must create or play a necessary role in the cause of action pled by the plaintiff in order for jurisdiction to lie in federal court. See Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804, 808 (1986). When, as here, "entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties, " and to dismiss the case when such jurisdiction is lacking. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999).
Although plaintiffs assert that this Court has federal question jurisdiction under 28 U.S.C. § 1331, none of the counts pled by plaintiffs in their First Amended Complaint states a cause of action under federal law or "tum[s] on some construction of federal law." Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9 (1983). The causes of action for breach of contract, fraud, and wrongful eviction present issues of state law and must be adjudicated in state court. Plaintiffs' fourth cause of action, entitled "Quiet Title, " is not a cause of action at all. The count for violation of the right to contract, although pled as a violation of 42 U.S.C. § 1981, does not state a claim under that section because defendants are not alleged to have acted with racial or class-based discriminatory animus. See Evans v. McKay, 869 F.2d 1341, 1344 (9th Cir. 1989). Accordingly, plaintiffs have not pled a cause of action over which this Court may properly exercise subject matter jurisdiction.
Unlike the complaint that plaintiffs filed with the Court on July 30, 2002, the First Amended Complaint does not assert that this Court has jurisdiction over plaintiffs' claims by virtue of its jurisdiction over cases arising under or related to the Bankruptcy Code. See 28 U.S.C. § 1334. This appears to be because plaintiff Columbus Randel's Chapter 13 bankruptcy case was dismissed prior to confirmation on July 25, 2002.
In the absence of subject matter jurisdiction, plaintiffs' complaint must be, and hereby is, DISMISSED in its entirety. Lacking jurisdiction over the case, the Court must DENY plaintiffs' motion for entry of a default judgment against defendant Wong.