908 F.3d 1008
6th Cir.2018Background
- Robert Cornell Jr. died owning a mortgage on Detroit property; mortgage was current at death but went unpaid for months thereafter.
- Bayview Loan Servicing foreclosed non-judicially in Michigan, purchased the property at sheriff’s sale, and later sold it to Tran.
- Estate (by personal representative Audrey Bantom and Anthony Cornell) sued in Michigan state court alleging Bayview lacked standing under the Garn‑St. Germain Depository Institutions Act (12 U.S.C. § 1701j‑3) and Michigan statutes implementing it (Mich. Comp. Laws §§ 445.1626, 445.1628), and added a quiet title claim against Tran.
- Defendants removed to federal court invoking federal‑question jurisdiction based on the Garn‑St. Germain Act; plaintiffs did not move to remand.
- District court ruled the Garn‑St. Germain Act does not authorize a private federal cause of action and dismissed all counts; plaintiffs appealed.
- Sixth Circuit majority held the district court lacked subject‑matter jurisdiction and vacated the judgment, instructing remand to state court; Judge Moore dissented.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Garn‑St. Germain Act creates a federal private right of action | Estate contended federal law (12 U.S.C. § 1701j‑3) bars enforcement of due‑on‑sale clauses and supports federal jurisdiction | Bayview argued § 1701j‑3 contains no express or implied private cause of action | Held: Act contains no express or implied federal private right; Congress did not unambiguously create a private remedy |
| Whether removal produced federal‑question jurisdiction because claim references a federal statute | Estate argued Michigan statute adopts federal standards so federal question is presented | Bayview argued reference alone is insufficient where federal statute supplies no private remedy | Held: Reference to federal statute in state cause of action does not automatically create federal‑question jurisdiction |
| Whether the state‑law claim “arises under” federal law under Grable (substantial federal question) | Estate argued the state claim turns exclusively on federal law exemptions and thus raises a substantial federal issue | Bayview (and majority) argued the embedded federal issue is not substantial and would intrude on state regulation of property/contract | Held: Majority — federal issue is not sufficiently substantial under Grable; no federal jurisdiction. Dissent — the federal question is substantial and federal jurisdiction exists |
| Remedy/Procedure after finding lack of federal jurisdiction | Estate sought federal adjudication | Defendants sought dismissal in federal court | Held: Case vacated and remanded to Michigan state court for resolution under state statutory cause of action |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts are courts of limited jurisdiction)
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (mere violation of federal statute in state tort claim does not automatically confer federal jurisdiction)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (state claim may arise under federal law if it necessarily raises a substantial federal question)
- City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156 (federal claim may confer jurisdiction even if other claims are state law; focus on the federal claim for jurisdiction)
- Gonzaga Univ. v. Doe, 536 U.S. 273 (rights‑creating statutory language must be clear to imply a private cause of action)
- Alexander v. Sandoval, 532 U.S. 275 (statutes that ban conduct but do not identify beneficiaries do not create private rights)
- Mikulski v. Centerior Energy Corp., 501 F.3d 555 (Sixth Circuit factors for assessing substantiality under Grable)
- Hampton v. R.J. Corman R.R. Switching Co., 683 F.3d 708 (federal‑question jurisdiction and private‑right analysis are distinct; courts must police jurisdiction sua sponte)