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GRANT CTY. S&L ASSN. v. ARKANSAS CUSTOM HOMES

November 1, 1988

GRANT COUNTY SAVINGS AND LOAN ASSOCIATION, PLAINTIFF
v.
ARKANSAS CUSTOM HOMES, INC., ET AL., DEFENDANTS



The opinion of the court was delivered by: ROY

 ELSIJANE T. ROY, UNITED STATES DISTRICT JUDGE

 Before the Court is the plaintiff's Motion to Remand this matter to state court. The defendant, Arkansas Custom Homes, Inc., has responded, and the matter is now ripe for determination.

 This case was originally filed in Chancery Court of Grant County, Arkansas. In the original complaint and amended complaint, Grant County Savings & Loan Association sought judgment on certain promissory notes and that the judgments be declared to be liens on the pledged real property and also sought replevin of certain personal property.

 In its answer and counterclaim, defendant Arkansas Custom Homes, Inc. alleges certain affirmative defenses, inter alia, that as to plaintiff's claim on the James Toney contract, plaintiff should be barred from recovery because the contract is usurious.

 In the amended and substituted reply to the counterclaim, the plaintiff denies that the contracts are usurious. The plaintiff then sets out affirmative defenses stating that each of the loans referred to in Count I of the counterclaim is "governed by 12 U.S.C. § 1735f-7 Note, and not by Arkansas law, and, therefore, is not usurious." Plaintiff further contends that Arkansas Custom Homes does not have standing to claim usury because it is not a consumer to whom the provisions of 12 C.F.R. § 590.4 apply. In its sixth affirmative defense, plaintiff contends that the parties mutually intended to make the contracts in question "federal preemption contracts."

 In the motion to remand, plaintiff asserts that the matter should be remanded for the following reasons:

 
1. This Court does not have subject matter jurisdiction.
 
2. Complete diversity of citizenship of the parties is lacking.
 
3. No federal question is present.
 
4. The suit could not have been brought in federal district court originally and is, therefore, nonremovable to federal district court.

 In response to the motion, defendant Arkansas Custom Homes, Inc. concedes that plaintiff's complaint and amended complaint, as stated, do not present a federal question or any other basis for federal jurisdiction. Nor is it disputed that complete diversity is lacking. However, defendant contends that plaintiff must prove that it is entitled to federal preemption of the Arkansas usury ceiling in order to prove its case-in-chief on the James Toney contract. Defendant contends that plaintiff has failed to plead an essential element of its case as a means to avoid federal jurisdiction. Plaintiff also contends that even though all of the defendants in this matter have not joined in the petition of removal, the Arkansas Department of Labor and the Internal Revenue Service are nominal or formal parties and may be disregarded with regard to joining in or consenting to removal.

 The right of removal is a congressionally imposed infringement on a state court's power to determine controversies, and, therefore, the removal statutes must be strictly construed. Voors v. National Women's Health Organization, Inc., 611 F. Supp. 203, 205 (N.D. Ind. 1985). Courts should resolve ...


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