Estate of Robert Cornell, Jr.; Audrey D. Bantom, as Personal Representative of the Estate of Robert L. Cornell, Jr.; Anthony Cornell, Plaintiffs-Appellants,
Bayview Loan Servicing, LLC; Thien Hoang Tran, Defendants-Appellees.
from the United States District Court for the Eastern
District of Michigan at Detroit. No. 2:17-cv-12121-Gershwin
A. Drain, District Judge.
Vanessa G. Fluker, VANESSA G. FLUKER, ESQ., PLLC, Detroit,
Michigan, for Appellants.
Deborah S. Lapin, Martin S. Frenkel, MADDIN, HAUSER, ROTH
& HELLER, P.C., Southfield, Michigan, for Appellee
Bayview Loan Servicing.
J. Bernardi, BERNARDI, RONAYNE & GLUSAC, P.C., Plymouth,
Michigan, for Appellee Thien Hoang Tran.
Before: SUHRHEINRICH, MOORE, and BUSH, Circuit Judges.
SUHRHEINRICH, CIRCUIT JUDGE.
appeal concerns a non-judicial foreclosure under Michigan
law. After reviewing the pleadings, we conclude that the
district court lacked subject matter jurisdiction to hear the
case. Thus, we VACATE the judgment of the
district court with instructions to REMAND
to Michigan state court.
Cornell, Jr. ("Robert") died on July 29, 2015,
owing an outstanding mortgage amount of $113, 358.12 on his
home at 8615 Wisconsin Street in Detroit, Michigan. At the
time of Robert's death, the monthly mortgage payments on
the Wisconsin Street home were up to date. Yet in the five
months following his death, the mortgage went unpaid.
Defendant Bayview Loan Servicing, LLC ("Bayview"),
the mortgage holder, sent a delinquency notice to the home on
December 16, 2015, showing an unpaid balance of $5, 813.95.
On November 3, 2016, Bayview foreclosed on the mortgage and
purchased the home by sheriff's deed at public auction.
Bayview later sold the home to Defendant Thien Hoang Tran
25, 2017, Plaintiffs-Appellants Estate of Robert L. Cornell,
Jr. ("Estate"), by and through Personal
Representative Audrey D. Bantom and Anthony Cornell
(collectively, "Plaintiffs") filed a complaint in
Michigan state court alleging four causes of action against
Bayview, including most notably a lack of standing to
foreclose under the Garn-St. Germain Depository Institutions
Act of 1982, codified at 12 U.S.C. § 1701j-3
("Garn-St. Germain Act" or "Act") and
Mich. Comp. Laws § 445.1626. Bayview timely removed to
federal court on the basis of federal question jurisdiction
under 28 U.S.C. § 1331, citing the Garn-St. Germain Act.
Plaintiffs did not object to removal or seek remand. Instead,
Plaintiffs filed an amended complaint asserting an additional
claim of quiet title against Tran (Count V). Defendants moved
for judgment on the pleadings in part on the argument that
the Garn-St. Germain Act does not authorize a private right
of action. The district court agreed, ruling that the
Garn-St. Germain Act does not authorize a private right of
action, the Garn-St. Germain Act did not apply to
Plaintiffs' claims, or both. The district court granted
Defendants' motion on all counts and entered a judgment
in their favor. The district court denied Plaintiffs'
motion for reconsideration, and Plaintiffs filed this timely
courts are courts of limited jurisdiction." Kokkonen
v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994). The district courts "have original jurisdiction
of all civil actions arising under the Constitution, laws, or
treaties of the United States." 28 U.S.C. § 1331. A
defendant may remove a case only if the claim could have been
brought in federal court. 28 U.S.C. § 1441(a). Removal
jurisdiction is determined from the "well-pleaded
complaint." Merrell Dow Pharm. Inc. v.
Thompson, 478 U.S. 804, 808 (1986).
no one has specifically addressed subject matter jurisdiction
to this point, we have an independent obligation to consider
it and may do so sua sponte. Answers in Genesis
of Kentucky, Inc. v. Creation Ministries Int'l,
Ltd., 556 F.3d 459, 465 (6th Cir. 2009); see also
United States v. Cotton, 535 U.S. 625, 630 (2002)
(Subject matter jurisdiction "can never be forfeited or
waived."). We must correct any defect in subject matter
jurisdiction regardless of whether the district court
considered it, Cotton, 535 U.S. at 630, even if
"many months of work on the part of the attorneys and
the court may be wasted," Henderson ex rel.
Henderson v. Shinseki, 562 U.S. 428, 435 (2011); see
also Hampton v. R.J. Corman R.R. Switching Co., 683 F.3d
708, 711-12 (6th Cir. 2012) (vacating district court's
grant of summary judgment after determining that Federal
Railroad Safety Act did not create a private cause of
face of the complaint references a federal statute, the
Garn-St. Germain Act, 12 U.S.C. § 1701j-3, which was the
sole basis for federal question jurisdiction removal from
state court. Before Congress passed the Garn-St. Germain Act,
many states had laws restricting the enforcement of
due-on-sale clauses. Dupuis v. Yorkville Fed. Sav. &
Loan Ass'n, 589 F.Supp. 820, 822 (S.D.N.Y. 1984).
The Garn-St. Germain Act prohibits states from banning
due-on-sale clauses, providing in principal part that
"[n]otwithstanding any provision of the constitution or
laws (including judicial decisions) of any State to the
contrary, a lender may, subject to subsection (c) of this
section, enter into or enforce a contract containing a
due-on-sale clause with respect to a real property
loan." 12 U.S.C. § 1701j-3(b)(1). That means a
due-on-sale clause is presumptively valid unless it qualifies
as one of nine exceptions listed in § 1701j-3(d):
With respect to a real property loan secured by a lien on
residential real property containing less than five dwelling
units, including a lien on the stock allocated to a dwelling
unit in a cooperative housing corporation, or on a
residential manufactured home, a lender may not exercise its
option pursuant to a due-on-sale clause upon-
(1) the creation of a lien or other encumbrance subordinate
to the lender's security instrument which does not relate
to a transfer of rights of occupancy in the property;
(2) the creation of a purchase money security interest for
(3) a transfer by devise, descent, or operation of law on the
death of a joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or
less not containing an option to purchase;
(5) a transfer to a relative resulting from the death of a
(6) a transfer where the spouse or children of the borrower
become an owner of the property;
(7) a transfer resulting from a decree of a dissolution of
marriage, legal separation agreement, or from an incidental
property settlement agreement, by which the spouse of the
borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the
borrower is and remains a beneficiary and which does not
relate to a transfer of rights of occupancy in the property;
(9) any other transfer or disposition described in
regulations prescribed by the Federal Home Loan Bank Board.
other words, after the Garn-St. Germain Act, states can only
regulate nine types of due-on-sale clauses. In response to
the Garn-St. Germain Act, Michigan created its own cause of
action for lendees harmed by one of those nine banned
due-on-sale clauses. See Mich. Comp. Laws §
445.1626 ("A lender shall not enforce a due-on-sale
clause in a residential real property loan in any
circumstances under which enforcement is prohibited under
section 341(d) of the Garn-St. Germain depository
institutions act of 1982, 12 U.S.C. 1701j-3, as currently in
force."); Mich. Comp. Laws § 445.1628 (creating a
private cause of action for a violation of § 445.1626).
fulfill our obligation of ascertaining subject matter
jurisdiction, we must determine whether a private cause of
action "arises under" the statute sufficient to
confer federal subject matter jurisdiction. The "arising
under" gateway into federal court in fact has two
distinct paths: 1) "litigants whose causes of action are
created by federal law," and 2) "state-law claims
that implicate significant federal issues."
Hampton, 683 F.3d at 711 (quoting Eastman v.
Marine Mech. Corp., 438 F.3d 544, 550 (6th Cir. 2006)).
Because the Garn-St. Germain Act does not meet this first
test, we join those courts, including this one, that have
concluded 12 U.S.C. § 1701j-3 does not establish subject
matter jurisdiction based on a federal cause of action.
Turman v. Wells Fargo Bank, N.A., No. 16-6546, 2018
WL 1840199, at *2 (6th Cir. Mar. 21, 2018) (order)
(dismissing because "section 1701j-3 . . . does not
provide a right of action"); Dupuis, 589
F.Supp. at 823 (concluding "§ 1701j-3(d)(1) does
not create a cause of action for damages"); Nelson
v. Nationstar Mortg. LLC, No. 7:16-CV-00307-BR, 2017 WL
1167230, at *2 (E.D. N.C. Mar. 28, 2017) (dismissing because
"the Garn-St. Germain Act does not create a cause of
action for damages"). As we explain below, subject
matter jurisdiction is also not established under the second
Causes of Action Created by Federal Law
vast majority of cases brought under the general
federal-question jurisdiction of the federal courts are those
in which federal law creates the cause of action."
Hampton, 683 F.3d at 711 (quoting Merrell
Dow, 478 U.S. at 808). To determine whether a private
cause of action exists, we must begin with the text of the
statute. Touche Ross & Co. v. Redington, 442
U.S. 560, 568 (1979). The cause of action may be express,
Ohlendorf v. United Food & Commercial Workers
Int'l Union, Local 876, 883 F.3d 636, 640 (6th Cir.
2018), or implied, California v. Sierra Club, 451
U.S. 287, 292-93 (1981).
Express Cause of Action
Garn-St. Germain Act does not create an express cause of
action because it does not state, "in so many words,
that the law permits a claimant to bring a claim in federal
court." Ohlendorf, 883 F.3d at 640 (quoting
Traverse Bay Area Intermediate Sch. Dist. v. Mich.
Dep't of Educ., 615 F.3d 622, 627 (6th Cir. 2010)).
Section 1701j-3(b)(1) tells states that they cannot pass laws
that restrict the use of due-on-sale clauses, subject to nine
exceptions. And while § 1701j-3(d) lists the nine things
a lender may not do, it does not offer an aggrieved lendee
recourse in federal court.
Implied Cause of Action
does the Garn-St. Germain Act create an implied cause of
action. "[T]he fact that a federal statute has been
violated and some person harmed does not automatically give
rise to a private cause of action in favor of that
person." Touche Ross, 442 U.S. at 568 (quoting
Cannon v. Univ. of Chicago, 441 U.S. 677, 688
(1979)). Instead, we must discern congressional intent before
implying a remedy. Thompson v. Thompson, 484 U.S.
174, 179 (1988). Absent congressional intent, we may not
imply a remedy, no matter how desirable it may be.
Bowling Green v. Martin Land Dev. Co., 561 F.3d 556,
559 (6th Cir. 2009).
Congress wishes to create new rights-even implied rights of
action-"it must do so in clear and unambiguous
terms." Gonzaga Univ. v. Doe, 536 U.S. 273, 290
(2002). Congress implies a right of action when its
rights-creating language is "clear and
unambiguous." Ohlendorf, 883 F.3d at 641
(quoting McCready v. White, 417 F.3d 700, 703 (7th
Cir. 2005)). Thus, the statute must specify the right and
identify the beneficiary.Id.; see also Alexander v.
Sandoval, 532 U.S. 275, 289 (2001) ("Statutes that
ban conduct but do not identify specific beneficiaries do not
suffice."). This Act does not do both. Section
1701j-3(a)(1) bans states from passing laws restricting
due-on-sale clauses, and § 1701j-3(d) bans lenders from
exercising due-on-sale clauses in certain scenarios. Neither
section identifies specific beneficiaries. Although
mortgagors may benefit, because § ...