Here's one that we've had in our "to read" stack for a while, but put off since it didn't look all that interesting. But after finally reading it recently, there's a line in the opinion that jumped out at us. Read on.
Araya v. JPMorgan Chase Bank, N.A., No. 13-7036 (Dec. 30, 2014) is a pro se case in which, after foreclosure and sale of rental property to a third person, a property owner sued in D.C. Superior Court claiming the defendants (Fannie Mae, the bank, a law firm, and the person who purchased the property at the auction) had not provided him proper notice or an opportunity to cure the default. The plaintiff also asserted that the defendants took his property without just compensation under the Fifth Amendment. The defendants removed the case to federal court and sought dismissal and summary judgment. In response, the plaintiff asked to amend his complaint to eliminate the takings claim. The court dismissed the claims against the subsequent owner of the property as a bona fide purchaser, denied the plaintiff's motion to remand, and denied leave to amend the complaint. The district court:
dismissed Fannie Mae and denied leave to add Freddie Mac on the grounds that “the second amended complaint fails to state a claim for relief on any ground.” Id. at 124-25. Although Fannie Mae’s presence in the suit was the perceived linchpin of federal subject matter jurisdiction, the District Court did not consider whether it should proceed to the other claims or remand them to the Superior Court. The District Court instead ruled against Araya on all of his state-law claims, construing D.C. law to do so.
Slip op. at 6. The district court concluded that Fannie Mae had been named by the plaintiff by mistake, when the correct party would have been Freddie Mac. A mistake, but an understandable one by a pro se plaintiff.
The issue before the D.C. Circuit was whether the case belonged in federal court or the "state" court of the District of Columbia. The opinion went through the usual analysis, cited the usual statutes and cases, and considered whether the plaintiff's Fifth Amendment claims were enough to have given rise to federal question jurisdiction, such that the case could have been brought in federal court originally (and thus was removable).
The court concluded that the plaintiff's "Fifth Amendment claim against Chase and Shapiro & Burson is insufficient to sustain jurisdiction because it is foreclosed by the Supreme Court." Slip op. at 8. The defendants are private actors, and not the federal government, and the court concluded "[i]t is beyond dispute that the Fifth Amendment 'appl[ies] to and restrict[s] only the Federal Government and not private persons." Id. (quoting Pub. Utils. Comm'n of D.C. v. Pollack, 343 U.S. 451, 461 (1952)). "Understandably, the District Court did not rely upon the takings claim as a basis for jurisdiction when it denied Araya's request to remand, and it later granted the motion to dismiss that claim." Slip op. at 9.
The court then analyzed whether Fannie Mae's presence as a defendant gave rise to federal jurisdiction, "a more complicated question" because everyone agreed it didn't belong there in the first place. Id. We'll leave the details of the analysis to your reading (pages 9-11), but the short story is the court concluded that even though Fannie Mae had been named by mistake, it was an "accident" by a pro se plaintiff who sought to correct his mistake, and that Fannie Mae had not pointed out the error ("It is not lost on us that Fannie Mae waited until after it had defeated plaintiff's choice of forum to inform the District Court of this rather salient fact."). Slip op. at. 10. Thus, "we are satisfied that the District Court had original jurisdiction." Id. at 11. Following so far?
But after the District Court dismissed Fannie Mae, the basis for federal jurisdiction "vanished," and the District Court "went on to rule on the merits of Araya's state-law claims against Chase and Shapiro & Burson." Id. at 12. The D.C. Circuit concluded that after dismissal of Fannie Mae, and the attendant loss of federal jurisdiction, the District Court should not have retained supplemental jurisdiction, but should have declined to consider the state law claims. With no basis left for the court to have exercised jurisdiction, and state law claims being all that remained, the court should not have ruled on the merits.
And here's the part that caught our eye: the D.C. Circuit summed up its analysis this way:
This case is functionally indistinguishable from Edmondson [& Gallagher v. Alban Towers Tenants Ass'n, 48 F.3d 1260 (D.C. Cir. 1995)]. Here, as there, the District Court dismissed all claims over which it had original jurisdiction; here, as there, “[t]here has been no trial of the common law claims,” Edmondson, 48 F.3d at 1266; here, as there, the local claims involve novel and complex issues, id.; here, as there, “there seems little difference in convenience for the parties whether they litigate in D.C. or federal court,” id. at 1267; and here, as there, the District Court had an obligation to exercise its discretion to remand the case to the District of Columbia courts once the federal question, like Elvis, had left the building.
Slip op. at 16-17. Yes, this from the most important federal circuit court of appeals, the D.C. Circuit (don't believe it is? Just google "most important federal circuit").
Case remanded with instructions to remand the case to the D.C. Superior Court. Plaintiff's only comment was "Thank you. Thank you very much."