IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

FEDERAL HOME LOAN MORTGAGE CORPORATION Plaintiff vs. GREGORY J. MONTELARO AND STEVEN MATTHEW DEKKER Defendants

CIVIL ACTION NO. 4:09-CV-02962

Removed from Harris County District Court, 151st Judicial District, Cause No. 2006-78064

DEFENDANTS BRIEF IN OPPOSITION TO REMAND Gregory J. Montelaro and Steven M. Dekker (Defendants) file this Brief in Opposition to Remand in an effort to address the Courts comments during conference with all parties on November 30, 2009, specifically that the Court, save any objection, would act sua sponte and remand this matter to state court.

REMOVAL SUMMARY AND REMAINING PARTIES

In September of 2009, the Defendants removed this matter pursuant to 12 U.S.C. 1446(b)(2)(B)(i). Shortly thereafter, Plaintiff Federal Home Loan Mortgage Corporation (Freddie Mac) appeared, joined in and consented to the Defendants removal of this matter from state court. However, Freddie Mac specifically denied any adoption or accent to the factual contentions in the Defendants notice of removal and instead asserted the Courts original jurisdiction over this matter pursuant to 12 U.S.C.

1452(f)1 through which Freddie Mac is deemed a federal agency for purposes of 28 U.S.C. 1345 and 28 U.S.C. 1442. On November 2, 2009, Third Party Defendant Shadrick Bogany made his appearance through counsel filing his initial disclosures pursuant to Fed.R.Civ.P. Rule 26(a). On November 30, 2009, Plaintiff Freddie Mac filed an Agreed Order with the Court through which the Plaintiff dismissed with Prejudice all claims against the Defendants and the Defendants likewise dismissed with Prejudice all claims against Plaintiff Freddie Mac. In conference with all parties, the Court determined that all

parties to the Agreed Order accented to the terms therein, entertained and then granted Plaintiffs motion for entry of same. Concluding the November 30, 2009 conference, the Court commented that, save any objection, it would act sua sponte to remand this matter back to state court as to the claims of the Defendants and Third Party Defendant Shadrick Bogany, the two remaining parties.
QUESTIONS PRESENTED

1.

Given that the jurisdiction of the District Court is determined at the time of removal, does a subsequent change in parties divest the Court of jurisdiction? Does the Court have discretionary remand authority given the special removal statute provided by 12 U.S.C. 1452(f) under which this case was removed?

12 U.S.C. 1452(f) - Notwithstanding section 1349 of Title 28 or any other provision of law, (1) [Freddie Mac] shall be deemed to be an agency included in sections 1345 and 1442 of such Title 28; (2) all civil actions to which [Freddie Mac] is a party shall be deemed to arise under the laws of the United States, and the district courts of the United States shall have original jurisdiction of all such actions, without regard to amount or value; and (3) any civil or other action, case or controversy in a court of a State, or in any court other than a district court of the United States, to which [Freddie Mac] is a party may at any time before the trial thereof be removed by [Freddie Mac], without the giving of any bond or security, to the district court of the United States for the district and division embracing the place where the same is pending, or, if there is no such district court, to the district court of the United States for the district in which the principal office of [Freddie Mac] is located, by following any procedure for removal of causes in effect at the time of such removal.

3.

Does the actions of a remaining party to this matter under a contract of agency to Freddie Mac meet the special removal provisions of 12 U.S.C. 1452(f) so that there is no discretionary removal authority?

ARGUMENT

Given that the jurisdiction of the District Court is determined at the time of removal, does a subsequent change in parties divest the Court of jurisdiction? Freddie Mac originally joined in the removal of this matter from state court pursuant to 12 U.S.C. 1452(f), specifically that Plaintiff Freddie Mac shall be deemed a federal agency for the purposes of 28 U.S.C 1345 and 1442. Further, and consistent with these statues, all civil actions to which Freddie Mac is a party shall be deemed to arise under the laws of the United States and at any time before trial, Freddie Mac may remove the matter to the district court of the United States for the district and division embracing the place where the same is pending. Every court of appeals to have considered the issue has decided that a federal officer or agency may unilaterally remove an entire case to federal court under 1442, regardless of whether other defendants join in the removal notice. 2 Section 1442(a) provides, in pertinent part, that [a] civil action. . .commenced in a State court against any of the following persons may be removed by them to the appropriate United States district court. 28 U.S.C. 1442(a). Subsection (1) of the statute reveals that the

language any of the following persons includes [a]ny officer of the United States or any agency thereof, or person acting under him. 28 U.S.C. 1442(a)(1).
2

See, e.g., Akin v. Ashland Chem. Co., 156 F.3d 1030, 1034 (10th Cir. 1998); Doe v. Kerwood, 969 F.2d 165, 168 (5th Cir. 1992); Ely Valley Mines, Inc. v. Hartford Accident and Indem. Co., 644 F.2d 1310, 131415 (9th Cir. 1981); Bradford v. Harding, 284 F.2d 307, 310 (2d Cir. 1960); see also 14C Wright, Miller & Cooper, FEDERAL PRACTICE AND PROCEDURE 3727, at 166-68 (3d ed. 1998).

Meaning must be given to the language that Freddie Mac shall be deemed to be an agency under the federal officer removal provision in 28 U.S.C. 1442. By

including this specific reference to the federal officer removal statute, Congress evidenced a judgment that suits involving Freddie Mac implicate a federal interest. Thus the threshold question of jurisdiction consistent with Freddie Macs original removal is well established and conclusively demonstrates this Courts original jurisdiction over this matter. Turning to the question of whether this Court maintains that jurisdiction when Freddie Mac is no longer a party was reviewed by the Fifth Circuit in Federal Sav. & Loan Ins. Corp. v. Griffin 935 F.2d 691, 696 (5th Cir. 1991). In Griffin, the Federal Savings & Loan Insurance Corporation ("FSLIC"), as receiver of a failed savings and loan, filed a state court action to recover money due on a promissory note. FSLIC removed the case to federal court pursuant to 12 U.S.C. 1730(k) which, similar to Section 1452(f), provided for federal subject matter jurisdiction in cases to which FSLIC is a party.3 After FSLIC's responsibilities were transferred by statute to FDIC, FDIC replaced FSLIC as receiver and, as is relevant here, was later voluntarily dismissed from the action. Addressing the defendant's motion to dismiss for lack of subject matter jurisdiction because FDIC was no longer a party, the Fifth Circuit held that jurisdiction was to be determined at time of removal and that a subsequent change in parties did not divest the court of jurisdiction.4 The court concluded that the "policy reasons for insuring federal jurisdiction over cases involving the actions of failed thrifts continue when the

3 4

See 12 U.S.C. 1730(k) (repealed 1989). See Griffin, 935 F.2d at 696

FDIC is [no longer a party to the case]. Moreover, the Supreme Court has recognized that "[t]he existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed,"5 and that "if jurisdiction exists at the time an action is commenced, such jurisdiction may not be divested by subsequent events."6 Thus this Courts original jurisdiction over this matter, which existed at the time of Freddie Macs removal, continues even when Freddie Mac is no longer party to the case. Does the Court have discretionary remand authority given the special removal statute provided by 12 U.S.C. 1452(f) under which this case was removed? In Spring Garden Associates v. Resolution Trust Corp., the Third Circuit addressed this issue with respect to the Resolution Trust Corporations (RTC) special removal provision. 26 F.3d 412 (3d Cir. 1994). The RTC provision, 12 U.S.C. 1441a(l) (1), confers federal jurisdiction over any action, suit or proceeding to which the [RTC] is a party. The Third Circuit decided that, by this language, Congress intended to confer federal jurisdiction over an entire case to which the RTC is a party. 7 The language in Freddie Macs removal provision differs from the language that the Court of Appeals discussed in Spring Garden, but the difference is not significant for purposes of the analysis in this brief specifically, Freddie Macs removal provision confers federal jurisdiction over all civil actions to which [Freddie Mac] is a party. In Spring Garden, the Court of Appeals reached the conclusion that 1441a(l)(1) confers federal jurisdiction over an entire suit to which RTC is a party after pursuing
5 6

Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989) Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428, 111 S.Ct. 858, 112 L.Ed.2d 951 (1991) (per curiam). 7 Id. at 417

three lines of reasoning. The court (1) examined the commonly understood meaning of the words in the provision; (2) examined opinions by other Circuits that interpreted the RTC provision and similar language in other provisions; and (3) compared this language to the Supreme Courts interpretation of the jurisdiction provision in the Federal Tort Claims Act (FTCA). First, the Third Circuit, citing the 5th, 7th, 8th and 9th Circuits, stated that the commonly understood meaning of the wording any action, suit or proceeding to which the [RTC] is a party encompasses the entire case and not just those claims brought by or against the RTC.8 Second, the Third Circuit found that its interpretation of 1441a(l)(1) was in agreement with decisions by other Circuits that found that the RTC and the FDICs respective removal statutes created federal jurisdiction over an entire action.9 Third, the Court of Appeals compared the language in 1441a(l)(1) to the Supreme Courts interpretation of the jurisdiction provision in the Federal Tort Claims Act (FTCA).10 The Court noted that the relevant language in 1441a(l)(1) is similar to the hypothetical statutory language that the Supreme Court suggested would be sufficient to create jurisdiction over an entire cause of action.11 These three lines of inquiry also support the conclusion that the statutory language in 1452(f) confers federal jurisdiction over an entire action to which Freddie Mac is a party. Thus the language all civil

actions to which [Freddie Mac] is a party suggests that jurisdiction extends to the entire
8 9

Id. at 415- 416 (internal quotations omitted). Id. (citing California v. Keating, 986 F.2d 346 (9th Cir. 1993); Kansas Pub. Employees Retirement Sys. v. Reimer & Koger Assocs., Inc., 4 F.3d 614 (8th Cir. 1993); Natl Union Fire Ins. Co. v. Baker & McKenzie, 997 F.2d 305 (7th Cir. 1993); Walker v. FDIC, 970 F.2d 114 (5th Cir. 1992)). 10 Id. at 417 (citing Finley v. United States, 490 U.S. 545 (1989)). 11 Id. (finding the statutory language at issue analogous to the hypothetical language civil actions in which there is a claim against the United States).

suit. This language is also similar to the Supreme Courts hypothetical language civil actions in which there is a claim against the United States. Just as the Courts of

Appeals have decided that the presence of the RTC or the FDIC confers federal jurisdiction over an entire suit, there is no apparent reason to reach a different conclusion with respect to Freddie Mac in the instant case.

Does the actions of a remaining party to this matter under a contract of agency to Freddie Mac meet the special removal provisions of 12 U.S.C. 1452(f) so that there is no discretionary removal authority? Third Party Defendant Shadrick Bogany, a remaining party in this matter, relies in part as a defense to claims in the instant case, on his position as agent for Freddie Mac. As such, the very question of Boganys agency would rise to the same federal question jurisdiction as the principal Freddie Mac. Bognays actions as agent for Freddie Mac rises to the language in Section 1 of 28 U.S.C. 1442(a)(1) of anyperson acting under [Freddie Mac]12 and thus conclusively demonstrates the Courts original and continuing jurisdiction over this matter. Several of the Defendants claims are component claims, the elements of which relate directly to damages caused by Third Party Defendant Bognay acting in his capacity as agent for Freddie Mac. Given that Congress evidenced a judgment that suits

involving Freddie Mac implicate a federal interest,13 and given that several of the Defendants claims against Bogany are specific to his behavior while contracted and acting in the capacity as agent for Freddie Mac, it follows that this Courts original jurisdiction, invoked by Freddie Macs removal action, is equally applicable to the
12 13

28 U.S.C. 1442(a)(1). Freddie Mac shall be deemed to be an agency under the federal officer removal provision in 28 U.S.C. 1442.

agency principal relationship and as yet, has not been disturbed by the agreed dismissal of Freddie Mac from this action. The 5th Circuits holding in Laurents addressed these component claims based on precedent when the Court determined a court "may not remand the component claims that are conclusively deemed to have arisen under federal law, absent a defect in the removal procedure or circumstances rendering the retention of jurisdiction 'inappropriate.'" (quoting Laurents v. Arcadian Corp., 69 F.3d 535 (5th Cir. 1995)).

CONCLUSION AND PRAYER

Under Freddie Macs special removal statute, 12 U.S.C. 1452(f), the entire case is deemed to arise under the laws of the United States so that there is no discretionary remand authority under 28 U.S.C. 1441(c). Additionally, the removal addressed by 1441 only applies to actions removable generally and not to actions removed pursuant to a special removal provision. Finally, the federal question claims are not separate and independent from any non-removable claims. This Courts original jurisdiction was determined at time of removal and the subsequent change in parties did not divest this Court of jurisdiction. Additionally,

Bognays actions as agent for Freddie Mac rises to the language in Section 1 of 28 U.S.C. 1442(a)(1) of anyperson acting under [Freddie Mac]14 and conclusively demonstrates this Courts original and continuing jurisdiction over this matter. WHEREFORE, for the foregoing reasons, the Defendants pray that this Court not act sua sponte to remand this matter to state court and, in the use of that restraint,

14

28 U.S.C. 1442(a)(1).

maintain this matter on its docket, and for any other relief to which your Movants may be entitled. Date: December 1, 2009 Respectfully Submitted,

BY:_________________________________ Gregory J. Montelaro, Pro Se 1499 N Post Oak Rd, Suite 119 Houston, TX 77007 (832) 343-0928

BY:_________________________________ Steven M. Dekker, Pro Se 1499 N Post Oak Rd, Suite 119 Houston, TX 77007 (832) 343-0928

CERTIFICATE OF CONFERENCE By our signature below, we hereby certify that we have conferenced with the parties below on December 1, 2009. Federal Housing Finance Agency 1700 G St., N.W. Washington, DC 20552 (866) 796-5595 Counsel for FHFA, Edward J. Hennessy Hennessy, Gardner & Barth 2900 Weslayan, Suite 550 Houston, TX 77027 (713) 224-5055

Conservator for Freddie Mac

Counsel for Shadrick Bogany

BY:

_____________________________________ Steven M. Dekker, Pro Se 1499 N Post Oak Rd #119 Houston, Texas 77055 (832) 343-0928

BY: _____________________________________ Gregory J. Montelaro, Pro Se 1499 N Post Oak Rd #119 Houston, Texas 77055 (832) 343-0928

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CERTIFICATE OF SERVICE By our signature below, we hereby certify that a true and correct copy of the foregoing document has been sent to the following consistent with the Federal Rules of Civil Procedure on December 1, 2009. Alfred Pollard General Counsel Federal Housing Finance Agency 1700 G St., N.W. Washington, DC 20552 (866) 796-5595 Counsel for FHFA, Conservator for Freddie Mac Edward J. Hennessy Hennessy, Gardner & Barth 2900 Weslayan, Suite 550 Houston, TX 77027 (713) 224-5055 Counsel for Shadrick Bogany

BY:

_____________________________________ Steven M. Dekker, Pro Se 1499 N Post Oak Rd #119 Houston, Texas 77055 (832) 343-0928

BY: _____________________________________ Gregory J. Montelaro, Pro Se 1499 N Post Oak Rd #119 Houston, Texas 77055 (832) 343-0928

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