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Darilyn Baker, Individually and On Behalf of All Persons Similarly v. Autos

April 19, 2012


The opinion of the court was delivered by: Daniel L. Hovland, District Judge United States District Court


Before the Court are Plaintiff Darilyn Baker's "Motion to Remand Pursuant to 28 U.S.C. § 1447(c)" and "Motion for Summary Judgment on Federal Law Compliance Question," filed on January 27, 2012. See Docket Nos. 6 and 9. The Defendants filed responses in opposition to the motion to remand on February 13, 2012. See Docket Nos. 15 and 16. Baker filed a reply brief on February 15, 2012. See Docket No. 19. The Defendants filed responses in opposition to the motion for summary judgment on February 20 and 21, 2012. See Docket Nos. 21 and 22. For the reasons outlined below, the motions are denied.


On November 22, 2011, Darilyn Baker filed a summons and complaint in state district court in Ward County, North Dakota. See Docket No. 1-1. Baker asserts that she resides on the Turtle Mountain Indian Reservation. She brings her claims: on her own behalf and on behalf of a class of persons known and unknown who have financed the purchase of automobiles with the financing being provided by either Defendant Autos, Inc., and/or Defendant RW Enterprises, Inc., directly or indirectly, at anytime during the six year period immediately preceding the commencement of this civil action.

See Docket No. 1-1. Defendants Robert Opperude and James Hendershot are the principal owners of Defendant Autos, Inc. Defendant Randy Westby is the principal owner of Defendant RW Enterprises, Inc. ("RW Enterprises").

On July 28, 2007, Baker purchased a 2003 Pontiac Grand Am from Autos, Inc. See Docket No. 7-1. The purchase price of the vehicle was $6,990. As part of the transaction, Baker paid a $200 "Loan Fee" and a $195 "Document Administration Fee." Baker also entered into a Retail Installment Contract and Security Agreement ("Contract") with Autos, Inc. that required her to make installment payments of $247.08 per month. See Docket No. 7-2. The Contract states that the annual percentage rate is 25%, the finance charge is $1,941.61, and the amount of financing provided to Baker by Autos, Inc. is $5,470.94.

Baker alleges that Autos, Inc. unlawfully failed to include the loan fee and document administration fee in the finance charge. Baker stated in an affidavit that if those fees had been included in the finance charge, the actual annual percentage rate would have been 28.35%, and she would not have purchased the vehicle if the annual percentage rate was over 25%. See Docket No. 7-4.

Baker's first cause of action is usury. Baker contends the rate of interest charged by Autos, Inc. exceeds the maximum rate allowed by North Dakota law. Baker's second cause of action is unfair trade practices. Baker alleges the Defendants have violated the Unlawful Sales or Advertising Practices Act, N.D.C.C. § ch. 51-15, by "among other practices, intentionally misrepresentation of the cost of credit incident to the financing of retail sales; intentionally charge usurious rates of interest upon the accounts of retail customers; and intentionally charge unlawful late fees and penalties." See Docket No. 1-1. Specifically, Baker alleges the Defendants have engaged in conduct that violates N.D.C.C. §§ 51-13-03(4) and 51-15-09 and the Truth in Lending Act, 18 U.S.C. § 1605. Baker's third cause of action is racketeering. Baker alleges the Defendants engaged in racketeering by conspiring to charge usurious interest rates and fraudulently misrepresent finance charges and annual percentage rates.

Defendants Autos, Inc., Opperude, and Hendershot removed the case to federal district court on January 12, 2012. See Docket No. 1. The removing Defendants contend the Court has jurisdiction under 28 U.S.C. § 1331 because Baker has alleged a violation of federal law, specifically the Truth in Lending Act, 15 U.S.C. §§ 1601-1667e. The removing Defendants further contend the Court has supplemental jurisdiction over Baker's state law claims under 28 U.S.C. § 1367.

On January 27, 2012, Baker filed a motion to remand the case to state district court. See Docket No. 6. Baker contends the federal court does not have jurisdiction because her claims do not arise under federal law. Baker concedes she made reference to the Truth in Lending Act in her second cause of action, which is a violation of North Dakota's Unfair Trade Practice Law. She argues, however, that her claims arise exclusively under state law. In the alternative, Baker moved for summary judgment solely on the question of whether the Defendants have violated the federal Truth in Lending Act. See Docket No. 9. Baker requests that the Court decide the federal law question, then remand the case to state court.

The Defendants argue that federal jurisdiction is proper because a federal question is present on the face of the complaint. The Defendants contend that Baker is the master of her complaint; that it was her decision to allege the Defendants violated the Truth in Lending Act in her second cause of action; and the allegation of a violation of federal law in the complaint provides a basis for jurisdiction in the federal court. With respect to Baker's motion for summary judgment, the Defendants assert that the Truth in Lending Act's one-year statute of limitations has expired. They also argue that questions of material fact exist that preclude summary judgment. Defendants Auto, Inc., Opperude, and Hendershot also contend that the Court should deny the motion under Federal Rule of Civil Procedure 56(d) because more discovery is required.



Following removal of a case to federal court, a plaintiff can seek remand of the action back to state court. 28 U.S.C. § 1447(c). The removing party bears the burden of showing that removal was proper. Nagel v. Wal-Mart Stores, Inc., 319 F. Supp. 2d 981, 982 (D.N.D. 2004) (citing In re Bus. Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993); Capehart-Craeger Enters., Inc. v. O'Hara & Kendall Aviation, Inc., 543 F. Supp. 259, 262 (W.D. Ark. 1982)). "Removal statutes are strictly construed in favor of state court jurisdiction." Id. (citing ...

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