Oraha v. Metrocities Mortgage LLC et al

Filing 20

ORDER that Plaintiff's Motion to Remand (Doc. 12) is DENIED. IT IS FURTHER ORDERED that Plaintiff shall respond to the pending Motions to Dismiss (Docs. 9 and 16) within 14 days of this Order. If Plaintiff does not file a response within 14 days of this Order, then the Clerk of Court is directed to dismiss this action with prejudice, without further order of the Court, for failure to prosecute and failure to comply with the Court's orders. Signed by Judge James A Teilborg on 9/7/2011. (KMG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Metrocities Mortgage, LLC., a California)
limited liability company; U.S. Bank,)
National Association, as Successor Trustee)
to Bank of America, National Association)
(successor) by merger to LaSalle Bank)
National Association, as Trustee for)
Morgan Stanley Mortgage Loan Trust)
2007-1XS; Mortgage Electronic)
Registration System, a corporation;)
America’s Servicing Company, a)
corporation; Wells Fargo Home)
Improvement, a corporation; Wells Fargo)
Home Mortgage, a corporation; Black)
Corporation I-X; John Doe I-X and Jane)
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Doe I-X, their spouses,
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Defendants.
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Andy B. Oraha,

No. CV 11-1113-PHX-JAT
ORDER

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Pending before the Court is Plaintiff Andy B. Oraha’s Objection to Removal and
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Motion to Remand. Doc. 11. Defendants Wells Fargo Bank, N.A. (erroneously sued as
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America’s Servicing Company, Wells Fargo Home Improvement and Wells Fargo Home
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Mortgage) and U.S. Bank National Association as trustee for the Morgan Stanley Loan Trust
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2007-1XS, filed a response in opposition to Plaintiff’s Motion. Doc. 13.
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I.

BACKGROUND

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On June 2, 2011, Mortgage Electronic Registration Systems, Inc. (“MERS”), Wells

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Fargo Bank, N.A., and U.S. Bank National Association (collectively, “Defendants”), filed

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a Notice of Removal of the state court civil action filed by Plaintiff. Doc. 1. Defendants

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assert that their removal was timely under 28 U.S.C. §1446(b), and that this Court is the

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appropriate forum pursuant to 28 U.S.C. § 1441(b). Id. at ¶¶ 3,4. Defendants also contend

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that this Court has original jurisdiction over this action on the basis of diversity jurisdiction.

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Id. at ¶ 5. According to the Notice of Removal, the parties are diverse, and the amount in

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controversy exceeds $75,000, exclusive of interest and costs. Id. In addition to establishing

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grounds for removal, Defendants claim that Plaintiff’s joinder of Metrocities Mortgage LLC

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(now known as Prospect Mortgage LLC) was fraudulent. Id. at ¶ 9. According to

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Defendants, because Prospect Mortgage’s joinder was fraudulent, Prospect Mortgage’s

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“citizenship should therefore be disregarded for purposes of removal.” Id.

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Plaintiff’s objections to the Notice of Removal are as follows: (1) the joinder of

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Prospect Mortgage was not fraudulent; (2) Plaintiff is in the process of serving Prospect

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Mortgage;1 and (3) Plaintiff will also serve Morgan Stanley Mortgage Loan Trust, which will

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destroy diversity of citizenship because “it is highly likely that some of the beneficiaries of

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that trust are residents of Arizona.” Doc. 11 at 3.

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II.

LEGAL STANDARD

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Pursuant to 28 U.S.C. § 1332, “district courts shall have original jurisdiction of all

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civil actions where the matter in controversy exceeds the sum or value of $75,000.00,

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exclusive of interests and costs, and is between . . . citizens of different States[.]”

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28 U.S.C. § 1332(a)(1).

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Diversity jurisdiction is not discretionary. See First State Ins. Co. v. Callan Assoc.,

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Plaintiff claimed he would have served Prospect Mortgage “by the time that the
court reaches this motion for a ruling” (Doc. 12 at 2), however, he has not done so. The
consent of unserved defendants is not needed for removal. Rhoads v. Washington Mut. Bank,
F.A., No. CV-09-08229, 2010 WL 2691560, at *2 (D. Ariz. July 6, 2010).
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Inc., 113 F.3d 161, 162 (9th Cir. 1997) (“[T]he obligation to exercise jurisdiction is ‘virtually

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unflagging.’”) (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800,

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817 (1976)).

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AmerisourceBergen Corp. v. Roden, 495 F.3d 1143, 1148 (9th Cir. 2007) (quoting Green v.

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City of Tucson, 255 F.3d 1086, 1089 (9th Cir. 2001)).

Abstention by federal courts is the “exception rather than the rule.”

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The removal statute, 28 U.S.C. § 1441, provides, in pertinent part, “any civil action

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brought in a State court of which the district courts of the United States have original

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jurisdiction, may be removed by the defendant . . . to the district court of the United States

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for the district and division embracing the place where such action is pending.” 28 U.S.C.

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§ 1441(a).

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III.

ANALYSIS

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The dollar amount of Plaintiff’s action is not in dispute, so the only issue for the

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Court’s consideration is diversity of citizenship. Because Plaintiff is a resident of Arizona

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(Doc. 1 at ¶ 6), all defendants must be from a state other than Arizona for diversity to be

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established. 28 U.S.C. § 1332(a)(1). Plaintiff claims the following entities are defendants

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or will be defendants: Wells Fargo Bank, U.S. Bank, MERS, Prospect Mortgage LLC, and

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Morgan Stanley Mortgage Loan Trust. The Court does not need to address whether Prospect

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Mortgage LLC was fraudulently joined, or whether Morgan Stanley Mortgage Loan Trust

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is a proper defendant, because assuming all of Plaintiff’s procedural actions were proper,

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there is diversity of citizenship. Thus, Defendants were permitted to remove this action, and

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remand would be improper.

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Wells Fargo Bank and U.S. Bank are national banks, which means they are citizens

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only of the states in which their main offices, as set forth in their articles of association, are

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located. Wachovia Bank v. Schmidt, 546 U.S. 303, 307 (2006) (interpreting 28 U.S.C. §

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1348). Wells Fargo’s main office is located in South Dakota, and U.S. Bank’s main office

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is located in Minnesota. Doc. 1 at ¶ 7. Accordingly, Wells Fargo and U.S. Bank are diverse.

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A corporation is a citizen of every state in which it is incorporated and the state

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where it has its principal place of business. 28 U.S.C. § 1332(c). MERS is incorporated in
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Delaware with its principal place of business in Virginia (Doc. 1 at ¶ 8), which means MERS

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is also a diverse party. 28 U.S.C. § 1332(c).

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“[L]imited liability companies are citizens of every state of which any member is a

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citizen.” Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006).

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The General Counsel and Assistant Secretary of Prospect Mortgage LLC declared the

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following:

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Prospect Mortgage, LLC is a limited liability company with two members: (1)
Prospect Mortgage Services Corp. and (2) Prospect Holding Company, LLC.
Prospect Mortgage Services Corp. is a California corporation with its principal
place of business in California. Prospect Holding Company, LLC is a limited
liability company with one member: Sterling PMC Inc. Sterling PMC Inc. is
a Delaware corporation with its principal place of business in Illinois.

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Doc. 15-1, Ex. A ¶¶ 4-7. None of Prospect Mortgage’s members are citizens of Arizona.
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Therefore if properly joined, Prospect Mortgage LLC would be a diverse party.
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The final entity that Plaintiff claims is a defendant is Morgan Stanley Mortgage Loan
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Trust. “A trust has the citizenship of its trustee or trustees.” Johnson, 437 F.3d at 899.
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Contrary to the contention in Plaintiff’s Motion to Remand, it is irrelevant for purposes of
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determining diversity jurisdiction where a trust’s beneficiaries reside. See id. Plaintiff pled
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in the Complaint that U.S Bank is the trustee of the Morgan Stanley Mortgage Loan Trust.
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As already determined, U.S. Bank is a citizen of Minnesota. Therefore if properly joined,
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Morgan Stanley Mortgage Loan Trust would be a diverse party.
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IV.

CONCLUSION

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For the reasons set forth above, this action was properly removed, and the Court will
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exercise diversity jurisdiction over this action. Accordingly,
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IT IS HEREBY ORDERED that Plaintiff’s Motion to Remand (Doc. 12) is
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DENIED.
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IT IS FURTHER ORDERED that Plaintiff shall respond to the pending Motions to

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Dismiss (Docs. 9 and 16) within 14 days of this Order. If Plaintiff does not file a response

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within 14 days of this Order, then the Clerk of Court is directed to dismiss this action with

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prejudice, without further order of the Court, for failure to prosecute and failure to comply

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with the Court’s orders.

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DATED this 7th day of September, 2011.

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