Sodano v. Chase Bank USA, NA

TIFFANY SODANO; JASON SODANO, Plaintiffs,

v.CHASE BANK USA, NA; CHASE BANK CARD SERVICES, Defendants.

No. 2:12-cv-00369 KJM KJN PS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

DATED: April 30, 2012

FINDINGS AND RECOMMENDATIONS

Presently before the court are: (1) plaintiffs' motion to remand this case to the Small Claims Division of the Yolo County Superior Court (Dkt. No. 3); and (2) Chase Bank USA, Inc.'s ("Chase") motion to dismiss plaintiffs' amended complaint and, in the alternative, motion to strike (Dkt. No. 10).¹ Although plaintiffs did not properly notice their motion to remand for a hearing as provided in Local Rule 230 (see Minute Order, Feb. 24, 2012, Dkt. No. 7), and plaintiffs did not re-notice that motion, the court considers plaintiffs' motion to remand because it is fully briefed and challenges whether this court can exercise removal and subject matter jurisdiction over plaintiffs' claims.

The court heard this matter on its April 26, 2012 law and motion calendar.Plaintiffs, who are proceeding without an attorney, appeared at the hearing and represented themselves. Attorney George G. Weickhardt appeared on behalf of Chase.

The undersigned has fully considered the various moving and opposition papers, the parties' oral arguments, and appropriate portions of the record in this case. For the reasons that follow, the undersigned recommends that: (1) plaintiffs' motion to remand be denied, (2) Chase's motion to dismiss be granted, but that plaintiffs be granted leave to amend in part; and (3) Chase's motion to strike be denied.

I. BACKGROUND

On January 18, 2012, plaintiffs initiated this case by filing a form complaint in the Small Claims Division of the Yolo County Superior Court ("Small Claims Court"), naming Washington Mutual Bank, F.A. and Washington Mutual Finance, Inc. as defendants ("Washington Mutual Defendants"). (See Pls.' Claim and Order to Go to Small Claims Court ("Complaint"), attached as Ex. A to Notice of Removal, Dkt. No. 1 at 6-11.² ) Plaintiffs claimed that the Washington Mutual Defendants were liable to plaintiffs for $7,500 pursuant to the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681 et seq., for, in part, "selling off fraudulent debts that did not belong to either [plaintiff]." (Compl. at 2, Dkt. No. 1 at 7.)

Plaintiffs contend that the amount of an underlying alleged debt—an alleged credit card charge—was disputed by plaintiffs and thereafter "removed from the credit bureaus," but that the Washington Mutual Defendants continued to "sell fraudulent claims to collection agencies." (Compl. at 2, Dkt. No. 1 at 7.) Plaintiffs sought relief from the Washington Mutual Defendants pursuant to un-enumerated provisions of the FCRA for "providing false information to all credit bureaus and ignoring the affidavits, police report, and removal of the accounts fromall credit reporting agencies."³ (Compl. at 2-3, Dkt. No. 1 at 7-8.) Although the exact nature of the alleged credit card debt at issue is unclear, a hand-written attachment to the form Complaint, which appears to have been prepared by plaintiff Tiffany Sodano, includes the following narrative summary plaintiffs' claim or claims:

This is not my debt. It never was my debt. I followed proper procedure in disputing this claim. I filed an affidavit issued by WaMu, then obtained a police report and disputed the writing on the check.

The Credit Reporting agencies removed any connection to this WaMu account and Walmart because I was a victim of identity theft. WaMu has continually sold this fraudulent account balance as well as charged it off. Now they have sold this balance to a company who is now billing both my husband and I for charges we did not make. We are suing for the balance, of the fraudulent charges, the interest we have been subjected to. The mental anguish, the violations against FCRA for providing improper information to consumer reporting agencies—$1000 for me and $1000 for my husband, the damage they are continuing to do to our peace of mind and the negligence of handling this dispute properly as WaMu should have done when it was filed and proved to Not belong nor never belonged to either Jason Sodano or myself. The total damages being sought are the maximum that can be awarded due to the blatant disregard for proper procedure. And for the improper use of positions of authority and privacy by selling debts to collection agencies with balances we never owed.

(Compl. at 3-5, Dkt. No. 1 at 8-10.)

On February 6, 2012, plaintiffs filed an amended version of their form "Claim and Order to Go to Small Claims Court," which is referred to herein as the "Amended Complaint" and is attached as an exhibit to plaintiffs' motion to remand (Dkt. No. 3 at 7-12). The allegations in the Amended Complaint do not materially differ from the original Complaint, except that the named defendants are listed as Chase Bank USA, N.A. and Chase Bank Card Services. (Am. Compl. at 2, Dkt. No. 3 at 8.) The Amended Complaint attaches the same narrative descriptionof plaintiffs' claims that was attached to the original Complaint. (Am. Compl. at 3-5, Dkt. No. 3 at 8-10.)

Chase removed plaintiffs' case to federal court on February 10, 2012, "appearing specially in this action as a defendant." (Notice of Removal ¶ 4.) Chase indicated that it was appearing specially "as assignee of certain assets and liabilities of Washington Mutual, F.A from the Federal Deposit Insurance Corporation acting as receiver," (id. at 1), but that Chase Bank USA, N.A. had not "assumed liability for borrower claims related in any way to any loan or commitment to lend made by Washington Mutual Bank, F.A. prior to its September 2008 failure." (Id. ¶ 3.)

Chase's removal was premised on the filing and service of plaintiffs' original Complaint because, according to Chase, it had not been served with the Amended Complaint prior to the date of removal to federal court. (See Notice of Removal ¶ 8; Chase's Opp'n to Mot. to Remand at 2, Dkt. No. 5.) Chase asserts that it was served with plaintiffs' Amended Complaint on February 16, 2012, which was the date that plaintiffs filed and served their motion to remand. (Chase's Opp'n to Pls.' Mot. to Remand at 2-3.)

As noted above, plaintiffs filed a motion to remand this matter to the Small Claims Court on February 16, 2012 (Dkt. No. 3). Plaintiffs defectively noticed their motion and did not properly re-notice that motion after prompting by the court. (See Minute Order, Feb. 24, 2012.) Nevertheless, Chase filed an opposition to plaintiffs' motion to remand, again "appearing specially," and the motion to remand is now fully briefed.

Prior to any resolution of plaintiffs' motion to remand, Chase filed its motion to dismiss and, in the alternative, motion to strike (Dkt. No. 10). Unlike Chase's Notice of Removal and opposition to the motion to remand, Chase's motion to dismiss and strike does not include a representation that Chase is "appearing specially." Plaintiffs filed a timely opposition to Chase's motion, which again indicates plaintiffs' desire that this case be remanded to the Small Claims Court. (See Pls.' Opp'n to Mot. to Dismiss & Strike at 1, Dkt. No. 14).

II. DISCUSSION

A. Plaintiffs' Motion to Remand

Plaintiffs move to remand this case to the Small Claims Court on the ground that a jurisdictional provision in the FCRA providing concurrent federal and state jurisdiction over FCRA claims, see 15 U.S.C. § 1681p, authorized plaintiffs to file their lawsuit in the Small Claims Court. (See Mot. to Remand at 1-3.) Plaintiffs' motion also appears to rely on a venue provision found in the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., although it is unclear from plaintiffs' filings what substantive provision or provisions of the FDCPA, if any, underlie plaintiffs' Amended Complaint. (See Mot. to Remand at 3.)

In relevant part, the general federal removal statute provides:

(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending. . . .

28 U.S.C. § 1441(a). "The defendant bears the burden of establishing that removal is proper." Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009), cert. denied, 131 S. Ct. 65 (2010). "The removal statute is strictly construed against removal jurisdiction," id., and removal jurisdiction "must be rejected if there is any doubt as to the right of removal in the first instance" Geographic Expeditions, Inc. v. Estate of Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010) (citation and quotation marks omitted).

Here, Chase argues, in essence, that although the FCRA permitted plaintiffs to initiate their lawsuit in the Small Claims Court, the provision of concurrent jurisdiction in the FCRA did not prevent Chase from removing the case to federal court on the basis of plaintiffs' claims arising under federal law. Chase contends that plaintiffs' claims premised on the FCRA rendered this case removable because this federal court has original, federal question subject matter jurisdiction over the FCRA claims pursuant to 28 U.S.C. § 1331.

Plaintiffs rely on 15 U.S.C. § 1681p as the basis for their argument that this courtlacks subject matter jurisdiction over their claims. In relevant part, 15 U.S.C. § 1681p provides: "An action to enforce any liability created under this subchapter may be brought in any appropriate United States district court, without regard to the amount in controversy, or in any other court of competent jurisdiction . . . ." The parties do not dispute that 15 U.S.C. § 1681p authorized plaintiffs to file their lawsuit in the Small Claims Court. But as Chase persuasively argues that the FCRA's provision permitting the filing of suit...