Summary
finding no subject matter jurisdiction over state law claims of common law fraud and negligence
Summary of this case from Williams v. Dep't of Soc. Servs.Opinion
No. 07-20470 Summary Calendar.
November 1, 2007.
Randall S. Perrier, Houston, TX, for Plaintiff-Appellant.
Robert T. Mowrey, Locke Liddell Sapp, Dallas, TX, for Defendants-Appellees.
Appeal from the United States District Court for the Southern District of Texas, No. 4:06-CV-2423.
Before REAVLEY, SMITH, and BARKSDALE, Circuit Judges.
Ali Saadat filed suit in state court against Landsafe Flood Determination, Inc., and Countrywide Home Loans, Inc., alleging that the defendants erroneously informed him that his property was located in a flood zone, which necessitated flood insurance. Following the defendants' removal of the suit to federal court, the district court granted the defendants' FED. R.CIV.P. 12(b)(6) motion, and Saadat now appeals. Concluding that there was no basis for federal removal jurisdiction, we vacate the district court's dismissal of Saadat's claims and remand the case to the district court with instructions to remand the case to state court.
On August 30, 2005, Saadat closed on a real estate transaction in Magnolia, Texas. He was informed at that time that the property he had purchased was not in a flood zone. Countrywide subsequently acquired Saadat's mortgage. Two months after the closing, Countrywide sent Saadat a letter informing him that his property was located within a Special Flood Hazard Area ("SFHA") and that he would be required to purchase flood insurance pursuant to the National Flood Insurance Act ("NFIA"). Saadat alleged that he then incurred unnecessary costs to purchase flood insurance and to retain an attorney and consultants to refute Countrywide's SFHA determination. He also alleged that Countrywide's letter caused him to suffer stress and chest pains. He filed suit alleging claims for deceptive trade practices, common law fraud, fraud in a real estate transaction, and negligent misrepresentation.
Although the parties have not explicitly addressed the issue of subject matter jurisdiction, we are required to examine sua sponte whether jurisdiction was proper in the district court. Sandy Creek Investors, Ltd. v. City of Jonestown, 325 F.3d 623, 626 (5th Cir. 2003). A defendant may remove a case to federal court based on the presence of a federal question when a plaintiff asserts "a claim or right arising under the Constitution, treaties or laws of the United States." 28 U.S.C. § 1441(b). Under the well-pleaded complaint rule, "there is generally no federal jurisdiction if the plaintiff properly pleads only a state law cause of action." MSOF Corp. v. Exxon Corp., 295 F.3d 485, 490 (5th Cir. 2002). A plaintiff may not avoid removal jurisdiction by simply failing to plead a necessary federal question in the complaint. Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 22, 103 S.Ct. 2841, 2853, 77 L.Ed.2d 420 (1983).
Saadat's complaint does not invoke federal law and alleges only state law claims for fraud and negligence arising from Countrywide's notification that his property was in a flood zone when it either knew or should have known that the property was not in a SFHA. The defendants contend that Saadat's complaint necessarily stems directly from the NFIA because his claimed damages resulted from the NFIA notification letter, which they sent pursuant to their duties under the statute. They argue that the complaint was properly dismissed because there is no private right of action for alleged violations of the NFIA. A complaint that alleges a violation of a federal statute as an element of a state cause of action, when there is no private cause of action under the statute, does not state a claim conferring federal question jurisdiction. Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 817, 106 S.Ct. 3229, 3237, 92 L.Ed.2d 650 (1986). Furthermore, the defendants' arguments sound as a defense to Saadat's claims, which is insufficient to justify removal to federal court. See Carpenter v. Wichita Falls Ind. Sch. Dist., 44 F.3d 362, 366 (5th Cir. 1995) ("A defendant may not remove on the basis of an anticipated or even inevitable federal defense, but instead must show that a federal right is an element, and an essential one, of the plaintiff's cause of action.") (internal quotation and citation omitted). We see no complete preemption present in order to avoid the well-pleaded complaint rule, and the resolution of Saadat's claims does not turn on the answer to a federal question. See MSOF Corp., 295 F.3d at 490-91.
Because Saadat's complaint alleged only state law claims, the district court improperly exercised removal jurisdiction over this case. Accordingly, the district court's dismissal of Saadat's claims is VACATED, and the case is KEMANDED to the district court with instructions to remand the case to state court.