Predatory Lending Litigation: The lenders love federal court – dont forget the motion for REMAND to STATE COURT!

Here is the scenario……you file a predatory lending lawsuit alleging all sorts of causes of action.  Here are a few of the typical causes of action you might raise in a predatory lending lawsuit:

• Fraud
• Misrepresentation
• Deceit
• Elder Abuse
• Truth in Lending Violation (Rescission, etc.)
• RESPA
• Civil Conspiracy
• Breach of contract
• Unjust enrichment
• etc.

You are all reved up because you just filed a lawsuit against the lender, and maybe even te loan servicer (sometimes people sue the loan servicer by accident because they are think, or are lead to believe the servicer owns the loan).  Anyway, that is another story.  So you file the lawsuit, and then a few weeks later you get notice that the DEFENDANTS ARESEEKING TO REMOVE THE CaSE FROM STATE COURT TO FEDERAL COURT.

I recently had this happen in a trial plan fraud / breach of contract case.  Now, there are two ways to get to federal court:

(1) One of your causes of action raises a “federal question” (ex. the TILA and RESPA claim in the above example wouldraise federal questions) and;

(2) There is “diversity of citizenship” among the defendants (meaning essentially you and each of the defendants are from different states), AND the lawsuit must be seeking more than $75,000 in damages.

Now there are alot of little nuances to these two requirements, but suffice to say meeting either test will allow them to remove your case to federal courts.  Federal courts, at least in my opinion, are harder to win in for homeowners based on the research I have done in other cases.  To me, federal court is where “predatory lending claims go to die.”  Now this is just one mans opinion, based on alot fo the cases I have read.

Anyway, in this case I informed the other attorney that there were no grounds to take the case to federal court, but that did not stop them.  I immediately filed a motion for remand and cited extensively the cases supporting my position.  At the end of the day, we won, and the case was remanded back to federal court where it should have been in the first place.  There are some things you can do to make it less likely that they lender will remove the case, but that is why you might want to hire a lawyer rather than go in pro per.

At any rate, the lesson here is to be careful what claims you are bringing in your predatory lending lawsuit.  Federal claims will probably land you in federal court where the costs might be higher, the procedural rules may trip you, etc.  Do not let the lenders have thier way.