Latino v. Wells Fargo Bank, N.A. et al

Filing 27

MEMORANDUM AND ORDER signed by Judge Morrison C. England, Jr on 10/14/11 REMANDING CASE to Sacramento County Superior Court: Plaintiff's 12 Motion to Stay all State Court proceedings is DENIED, and Plaintiff's Motion for Attorney's Fees and Costs is DENIED. 20 Motion to Dismiss and 21 Motion to Strike are DENIED without prejudice. Copy of remand order sent to Superior Court. CASE CLOSED. (Kaminski, H)

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 SAM LOUIS LATINO, 12 13 14 15 16 17 No. 2:11-cv-02037-MCE-DAD Plaintiff, v. MEMORANDUM AND ORDER WELLS FARGO BANK, N.A., also known as WACHOVIA MORTGAGE, a division of WELLS FARGO BANK, N.A., formerly known as WACHOVIA MORTGAGE, FSB, formerly known as WORLD SAVINGS BANK, FSB; et al., 18 Defendants. 19 ----oo0oo---- 20 Plaintiff Sam Latino (“Plaintiff”) originally brought this 21 action in the Superior Court of the State of California, County 22 of Sacramento, against Defendants Wells Fargo Bank, N.A. (“Wells 23 Fargo”),1 Cal-Western Reconveyance Corporation (“Cal-Western”), 24 Golden West Savings Association Service Company (“Golden West”) 25 and Does 1-20 (collectively “Defendants”). 26 1 27 28 Wells Fargo is officially named as “Wells Fargo Bank, N.A., also known as Wachovia Mortgage, a division of Wells Fargo Bank, N.A., and formerly known as Wachovia Mortgage, FSB, formerly known as World Savings Bank, FSB.” 1 1 Defendants Wells Fargo and Golden West (“Removing Defendants”) 2 timely removed the case to this Court. 3 Court are Plaintiff’s Motion to Remand, Motion for Stay of all 4 State Court Proceedings and Motion for Fees and Costs 5 (“Plaintiff’s Motion”) and Removing Defendants’ Motion to Dismiss 6 and Motion to Strike (“Removing Defendants’ Motions”). 7 following reasons, Plaintiff’s Motion is granted in part and 8 denied in part, and Removing Defendants’ Motions are denied.2 Presently before the For the 9 BACKGROUND3 10 11 12 On March 22, 2007, Plaintiff entered into a loan transaction 13 with World Savings Bank (“World Savings”), now Wells Fargo, to 14 purchase a residence in Sacramento, California (the “Property”). 15 Plaintiff executed a promissory note (the “Note”)in connection 16 with the transaction, and World Savings took a security interest 17 in the Property via a Deed of the Trust (“DOT”). 18 the original trustee on the DOT and Plaintiff was the trustor. 19 /// 20 /// Golden West was 21 22 23 24 25 26 27 28 2 Because oral argument will not be of material assistance, the Court ordered this matter submitted on the briefing. E.D. Cal. Local Rule 230(g). 3 Unless otherwise stated, the following facts are derived from Plaintiff’s Verified Complaint. The Court is aware that Plaintiff also provided Removing Defendants with a copy of an unverified, unsigned First Amended Complaint (“FAC”). The Court has not been presented with any evidence that the FAC was ever filed and thus will proceed on the basis that the original Complaint remains operative. In any event, Removing Defendants admit that any distinction between the pleadings is immaterial. Notice of Removal, 2:16-20. 2 1 Plaintiff apparently defaulted on his loan, and, on July 16, 2 2010, Cal-Western, the substituted trustee, recorded a Notice of 3 Default (“NOD”). 4 recorded a Notice of Trustee’s Sale (“NOTS”). 5 eventually held a Trustee’s Sale on March 21, 2011, at which time 6 Wells Fargo purchased the property. 7 On approximately October 19, 2010, Cal-Western Cal-Western On approximately April 11, 2011, Wells Fargo initiated an 8 unlawful detainer action against Plaintiff in the Sacramento 9 County Superior Court.4 Subsequently, on July 26, 2011, 10 Plaintiff filed the instant action in Sacramento County Superior 11 Court against Defendants alleging causes of action for: 1) fraud; 12 2) intentional misrepresentation; 3) negligent misrepresentation; 13 4) concealment; 5) violation of California Business and 14 Professions Code § 17200; 6) unjust enrichment; 7) quiet title; 15 8) declaratory relief; 9) violation of California Civil Code 16 § 2932.5; 10) breach of fiduciary duty; and 11) breach of the 17 implied covenant of good faith and fair dealing. 18 Complaint, Plaintiff primarily contends that he is a victim of 19 Defendants’ predatory lending practices and that Defendants lack 20 standing to foreclose on the Property. 21 Defendants are not the holders of the underlying Note and thus 22 have no right to initiate foreclosure proceedings of any kind. 23 /// 24 /// 25 /// Pursuant to his According to Plaintiff, 26 4 27 28 On August 15, 2011, Plaintiff removed the unlawful detainer action to this Court and filed a Notice of Related Case seeking to relate that action to this one. That case has since been remanded back to the state court. 3 1 In addition, at various points throughout the Complaint, 2 Plaintiff alleges that, in conducting the nonjudicial foreclosure 3 sale of the subject property, Defendants failed to comply with 4 state statutory requirements. 5 (alleging, among other things, Defendants violated California 6 Civil Code § 2923.5). 7 number of relevant documents, including the NOD and NOTS, were 8 defective or signed by unauthorized parties. 9 among other things: 1) to quiet title to the Property in See, e.g., Complaint, ¶ 159 Plaintiff contends, for example, that a Plaintiff seeks, 10 Plaintiff; and 2) to recover compensatory and punitive damages 11 and fees and costs. 12 On August 1, 2011, Wells Fargo and Golden West removed 13 Plaintiff’s state action to this Court pursuant to 28 U.S.C. 14 § 1332. 15 Plaintiff and each Defendant are citizens of California and that 16 no diversity thus exists. 17 state court unlawful detainer proceedings and to recover 18 attorney’s fees and costs incurred in bringing this Motion. 19 Since Plaintiff filed his Motion, Removing Defendants have filed 20 their own Motion to Dismiss and Motion to Strike. 21 following reasons, Plaintiff’s Motion is granted in part and 22 denied in part, and Removing Defendants’ Motions are denied. Plaintiff subsequently moved to remand, arguing that Plaintiff further seeks to stay the For the 23 24 STANDARD 25 26 A defendant may remove any civil action from state court to 27 federal district court if the district court has “original 28 jurisdiction” over the matter. 28 U.S.C. § 1441(a). 4 1 Generally, district courts have original jurisdiction over civil 2 actions in two instances: (1) where there is complete diversity 3 between the parties and the amount in controversy exceeds 4 $75,000; or (2) where a federal question is presented in an 5 action arising under the Constitution, federal law, or treaty. 6 28 U.S.C. §§ 1331 and 1332. 7 Courts construe the removal statute strictly against 8 removal. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) 9 (citations omitted). Therefore, if there is any doubt as to the 10 right of removal in the first instance, remand must be granted. 11 See id. 12 appears that the district court lacks subject matter 13 jurisdiction, the case shall be remanded” to state court as well. 14 28 U.S.C. § 1447(c). Furthermore, “[i]f at any time before final judgment it 15 ANALYSIS 16 A. 17 Plaintiff’s Motion to Remand. 18 19 Removing Defendants removed the Plaintiff’s case to this 20 Court solely pursuant to the Court’s diversity jurisdiction. 21 There is no dispute as to the amount in controversy. 22 contrary, the parties dispute only whether complete diversity 23 exists among the parties. 24 contends Wells Fargo, Cal-Western, Golden West, World Savings and 25 at least some of the Doe Defendants are California citizens as 26 well. 27 /// 28 /// To the Plaintiff, a California citizen, 5 1 Removing Defendants admit that Cal-Western and Golden West are 2 California citizens, but argue those entities should be 3 disregarded for purposes of diversity because they are either 4 nominal parties or have been fraudulently joined. 5 Defendants further contend that Wells Fargo is not a California 6 citizen and that World Savings no longer exists and thus does not 7 affect the diversity analysis. 8 that the Removing Defendants have failed to meet their burden of 9 showing that Cal-Western is either a nominal party or Removing Because the Court finds below 10 fraudulently joined, the Court declines to address the parties’ 11 remaining arguments. 12 1. 13 Nominal parties. 14 15 “[F]ederal court[s] must disregard nominal or formal parties 16 and rest jurisdiction only upon the citizenship of real parties 17 to the controversy.” 18 (9th Cir. 2004) (quoting Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 19 461, 100 S. Ct. 1779 (1980)). 20 that courts should ‘ignore the citizenship of nominal or formal 21 parties who have no interest in the action, and are merely joined 22 to perform the ministerial act of conveying the title if adjudged 23 to the complainant.’” 24 2437514, *3 (C.D. Cal.) (quoting Prudential Real Estate 25 Affiliates, Inc. v. PPR Realty, Inc., 304 F.3d 867, 873 (9th Cir. 26 2000)). 27 defendant is a nominal party. 28 citations omitted). Kuntz v. Lamar Corp., 385 F.3d 1177, 1183 Indeed, “[c]ircuit law teaches Silva v. v. Wells Fargo Bank, NA, 2011 WL Removing Defendants bear the burden of proving a Id. (internal quotations and 6 1 Removing Defendants contend here that Cal-Western is a 2 nominal defendant because it was simply the trustee on the DOT 3 and thus its role in the underlying proceedings was limited to 4 that of a stakeholder. 5 is not itself sufficient to render Cal-Western a nominal party.”5 6 Couture v. Wells Fargo Bank., N.A., 2011 WL 3489955, *3 (S.D. 7 Cal.). 8 parties, Plaintiff’s Complaint contains substantive allegations 9 against Cal-Western and seeks to recover money damages or However, “Cal-Western’s status as trustee Moreover, while trustees on a DOT are often nominal 10 restitution from all Defendants, including Cal-Western, as well. 11 See Silva, 2011 WL 2437514, *5 (“The Court acknowledges that the 12 trustee on a deed of trust is often a nominal party.”); 13 Complaint, ¶¶ 78-85. 14 believe Plaintiff cannot state a claim against Cal-Western, they 15 have failed to show that Cal-Western has been joined in a merely 16 nominal capacity. 17 WL 2437514, *5; see also Larocque v. BAC Home Loans Servicing, 18 2011 WL 46363, *2 (M.D. Tenn.); Payne v. Bank of America, N.A., 19 2010 WL 546770, *7 (W.D. Va.). Accordingly, while Removing Defendants may See Couture, 2011 WL 3489955, *3; Silva, 2011 20 Removing Defendants also rely on Cal-Western’s statutory 21 immunities as a basis for finding the trustee a nominal party 22 here. 23 of trust, like Cal-Western in this case, is so ministerial that 24 in taking the steps necessary to foreclose the deed of trust its 25 conduct is privileged.”) Opposition, 6:23-25 (“The role of a trustee under a deed 26 27 28 5 Indeed, Removing Defendants point the Court to no authority standing for the proposition that trustees on a DOT are per se nominal parties. 7 1 (citing Cal. Civ. Code §§ 2924(d) and 47(c)); see also Notice of 2 Removal, 5:23-28. 3 no authority standing for the proposition that these immunities 4 are sufficient to render the trustee a nominal party. 5 this Court has found only one case in which another court has 6 even broached this argument, and that court was skeptical as to 7 the argument’s merit on facts such as those here, where the 8 trustee allegedly had no authority to foreclose. 9 WL 2437514, *5 (“It is unclear whether these provisions would Again, however, Removing Defendants point to Moreover, See Silva, 2011 10 also apply where, as here, the plaintiff alleges that the 11 foreclosing trustee was not actually the trustee authorized to 12 initiate non-judicial foreclosure proceedings.”). 13 Defendants have not addressed the Silva court’s concerns 14 regarding the viability of their argument on the instant facts 15 and have thus failed to show that any statutory immunities 16 applicable to a trustee apply in this case to render Cal-Western 17 a nominal party. Removing 18 Regardless, even if California Civil Code §§ 2924(d) and 47 19 apply to Cal-Western, such statutory immunity is not absolute; a 20 finding of malice would permit Plaintiff’s claims to proceed. 21 See Kachlon v. Markowitz, 168 Cal. App. 4th 316, 341 (2008). 22 Malice requires a showing that a party acted with ill will or 23 with reckless disregard for the truth. Id. at 336. 24 Here, Plaintiff alleges, among other things, that Cal- 25 Western caused both the NOD and the DOTS to be recorded, but that 26 both documents were defective and signed by parties who lacked 27 the authority to execute them. 28 /// Complaint, ¶¶ 78-84. 8 1 Likewise, while Cal-Western was allegedly responsible for holding 2 the eventual Trustee’s Sale and for selling the Property to Wells 3 Fargo, Plaintiff contends Cal-Western lacked the authority to do 4 so. 5 Defendant was acting in concert with one another to, among other 6 things, engage in deceptive business practices (e.g., by 7 defrauding homeowners, acting as trustees without the requisite 8 legal authority, and failing to comply with California Civil Code 9 § 2923.5). Id., ¶ 85-86. In addition, Plaintiff alleges that each Id., ¶¶ 16-18, 159. Evidence of these actions may, 10 through the course of the proceedings, show malice. Removing 11 Defendants have nonetheless presumed the statutory immunities 12 apply to Cal-Western in this case and have not addressed whether 13 Plaintiff can state a claim that falls outside the scope of those 14 immunities (i.e., whether Plaintiff can show Cal-Western acted 15 with malice). 16 meet their burden to show that Cal-Western was entitled to 17 immunity for each of Plaintiff’s claims as matter of law. 18 consequence, Removing Defendants have also failed to show that 19 Cal-Western is a nominal party whose citizenship at the time of 20 removal should be disregarded. Accordingly, Removing Defendants have failed to As a 21 22 2. Fraudulent Joinder. 23 24 “Joinder of a non-diverse defendant is deemed fraudulent, 25 and the defendant’s presence in the lawsuit is ignored for 26 purposes of determining diversity, ‘[i]f the plaintiff fails to 27 state a cause of action against a resident defendant, and the 28 failure is obvious according to the settled rules of the state.’” 9 1 Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2 2001) (quoting McCabe v. General Foods Corp., 811 F.2d 1336, 1339 3 (9th Cir. 1987)). 4 presumption against fraudulent joinder,” and defendant’s burden 5 of proof is “heavy.” 6 1046 (9th Cir. 2009). 7 In this circuit, there is a “general Hunter v. Philip Morris USA, 582 F.3d 1039, Alleging Plaintiff has failed to state a claim pursuant to 8 the Federal Rules of Civil Procedure is not enough. 9 v. Gish, 2011 WL 2160924, *3 (N.D. Cal.). See Watson Rather, “[i]n the 10 Ninth Circuit, a non-diverse defendant is deemed to be 11 fraudulently joined if, after all disputed questions of fact and 12 all ambiguities in the controlling state law are resolved in the 13 plaintiff’s favor, the plaintiff could not possibly recover 14 against the party whose joinder is questioned.” 15 American Corp., 2010 WL 454720, *3 (C.D. Cal.) (citing Kruso v. 16 Int’l Tel. & Tel. Corp., 872 F.2d 1416, 1426 (9th Cir. 1989)). 17 “A court may look beyond the pleadings to determine if a 18 defendant is fraudulently joined, but a plaintiff need only have 19 one potentially valid claim against a non-diverse defendant to 20 survive a fraudulent joinder challenge.” 21 and quotations omitted). 22 removal based on an alleged fraudulent joinder must do more than 23 show that the complaint at the time of removal fails to state a 24 claim against the non-diverse defendant.” 25 “[r]emand must be granted unless the defendant shows that the 26 plaintiff would not be afforded leave to amend his complaint to 27 cure [the] purported deficiency.” 28 citations omitted). Sun v. Bank of Id. (internal citations “Accordingly, a defendant seeking 10 Id. To the contrary, Id. (internal quotations and 1 Removing Defendants therefore bear the burden of showing 2 that it is both “well-settled” and “obvious” that Plaintiff 3 cannot possibly state a claim against Cal-Western. 4 Defendants primarily assert that the claims against Cal-Western 5 are defective because Plaintiff relies in large part on the 6 assertion that Wells Fargo did not own the Note and Cal-Western 7 did not have possession of the Note upon foreclosure. 8 Opposition, 8:12-26. 9 things, Plaintiff’s allegations that all Defendants, including On balance, However, Defendants ignore, among other 10 Cal-Western, participated in a massive scheme intended to defraud 11 Plaintiff out of his Property and that Defendants, among other 12 things, failed to adhere to the requirements of California Civil 13 Code § 2923.5 in foreclosing on the Property, thus resulting in a 14 violation of California Business and Professions Code § 17200. 15 See, e.g., Suntrust Mortgage, Inc., 2011 WL 1466153, *3 (N.D. 16 Cal.) (fraudulent joinder not shown when Plaintiff alleged 17 violation of § 2923.5); Cheng v. Wells Fargo Bank, N.A., 2010 WL 18 4923045, *1 (C.D. Cal.) (no fraudulent joinder when plaintiff 19 alleged trustee violated § 2923.5). 20 finds Removing Defendants have failed to meet their burden of 21 showing there is no possibility Plaintiff could establish a cause 22 of action against Cal-Western, and thus, the Court finds no 23 fraudulent joinder. 24 joinder of this non-diverse Defendant is improper, and thus have 25 not shown that this Court has jurisdiction over this action 26 pursuant to 28 U.S.C. § 1332, Plaintiff’s Motion to Remand is 27 granted. 28 /// Accordingly, this Court Because Removing Defendants have not shown 11 B. 1 Plaintiff’s Motion to Stay State Court Proceedings. 2 By way of his instant Motion, Plaintiff seeks to stay the 3 related state court unlawful detainer action pending the Court’s 4 resolution of his Motion to Remand. The Court has previously 5 denied Plaintiff’s requests to hear this Motion on shortened 6 time. See ECF Nos. 11, 17. Given those prior orders and the 7 Court’s above decision that remand is appropriate, Plaintiff’s 8 request is denied. 9 10 C. Plaintiff’s Motion for Attorney’s Fees and Costs. 11 12 Finally, this Court is empowered to award costs and 13 expenses, including attorney fees, incurred due to improper 14 removal. 15 courts may award attorney’s fees under § 1447(c) only where the 16 removing party lacked an objectively reasonable basis for seeking 17 removal.” 18 (2005). 19 exists here. 20 Removing Defendants removed this action “solely for purposes of 21 delay,” no evidence of any such intent is before the Court. 22 Motion, 12:24-25. 23 Plaintiff’s Motion for Attorney’s Fees and Costs is denied. 24 /// 25 /// 26 /// 27 /// 28 /// 28 U.S.C. § 1447(c). “Absent unusual circumstances, Martin v. Franklin Capital Corp., 546 U.S. 132, 141 An objectively reasonable basis for seeking removal Moreover, while Plaintiff attempts to argue that No award of fees is thus justified, and 12 See 1 D. Removing Defendants’ Motion to Dismiss and Motion to Strike. 2 3 Also still pending before the Court are Removing Defendants’ 4 Motion to Dismiss and Motion to Strike Plaintiff’s Complaint. 5 light of the Court’s above decision that remand is proper, 6 In Removing Defendants’ Motions are denied without prejudice. 7 CONCLUSION 8 9 10 For the reasons just stated, Plaintiff’s Motion to Remand is 11 GRANTED, Plaintiff’s Motion to Stay all State Court proceedings 12 is DENIED, and Plaintiff’s Motion for Attorney’s Fees and Costs 13 is DENIED (collectively ECF No. 12). 14 to Dismiss (ECF No. 20) and Motion to Strike (ECF No. 21) are 15 likewise DENIED without prejudice. 16 directed to remand this case to the originating state court, the 17 Superior Court of the State of California in and for the County 18 of Sacramento, for final adjudication. 19 20 Removing Defendants’ Motion The Clerk of the Court is IT IS SO ORDERED. Dated: October 14, 2011 21 22 23 _____________________________ MORRISON C. ENGLAND, JR. UNITED STATES DISTRICT JUDGE 24 25 26 27 28 13