Morin et al v. Peoples Mortgage Company et al

Filing 20

ORDER that the Clerk shall REMAND this case to Maricopa County Superior Court. The Clerk shall terminate this case. Signed by Judge Neil V Wake on 1/25/2012. (Attachments: # 1 Remand Letter)(KMG)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 John Morin; Judy Morin, Plaintiffs, 10 11 ORDER vs. 12 No. CV 11-02482-PHX-NVW Peoples Mortgage Co., IndyMac Bank, IndyMac Home Loan Servicing, Mortgage Electronic Registration Systems, MTC Finance dba Trustee Corps and Does 1 through 100, 13 14 Defendants. 15 16 17 Before the Court is the “Motion to Dismiss Plaintiffs’ Complaint Against 18 Defendant, MTC Financial Inc., dba Trustee Corps for Failure to State Claim Upon 19 Which Relief May Be Granted” (Doc. 7). Plaintiffs were required to respond to this 20 motion by January 9, 2012. Plaintiffs filed no response. However, the Court sua sponte 21 required Trustee Corps to show cause why the case should not be remanded to state court 22 for lack of diversity jurisdiction. (Doc. 13.) Trustee Corps, in its response, did not 23 sustain its burden of establishing jurisdiction. This case will therefore be remanded and 24 Trustee Corps’ motion will be denied as moot. 25 I. FACTS 26 In 2006, Plaintiffs John and Judy Morin purchased a home in Surprise, Arizona. 27 To finance this purchase, “Plaintiff’s [sic] became indebted to Defendant Peoples 28 Mortgage Co[.], later acquired by IndyMac Bank . . . pursuant to a promissory note 1 secured by a deed of trust . . . .” (Doc. 1 at 8 ¶ 6.) Peoples Mortgage is an Arizona 2 corporation. IndyMac Bank is incorporated in Delaware and headquartered in California. 3 The recent economic downturn resulted in reduced income for the Morins, and 4 they experienced difficulty in making their monthly mortgage payments. Eventually they 5 received a notice of trustee’s sale. They twice attempted to reach a loan modification, but 6 have not succeeded. Their home was sold at a trustee’s sale on October 20, 2011. 7 II. LEGAL STANDARD 8 Federal courts may exercise removal jurisdiction over a case only if jurisdiction 9 existed over the suit as originally brought by the plaintiff, 28 U.S.C. § 1441(a), such as 10 where a civil action is between citizens of different states and the amount in controversy 11 exceeds $75,000, 28 U.S.C. § 1332. The removing party bears the burden of establishing 12 federal subject matter jurisdiction. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 13 (9th Cir. 1988). There is a strong presumption against removal jurisdiction. See Gaus v. 14 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). If at any time before final judgment it 15 appears that the district court lacks subject matter jurisdiction over a case removed from 16 state court, the case must be remanded. 28 U.S.C. § 1447(c). 17 III. ANALYSIS 18 The Morins brought this suit in Maricopa County Superior Court on November 14, 19 2011, alleging breach of contract and various tort claims. Defendant “MTC Finance,” 20 whose real name is MTC Financial, Inc., and who does business as Trustee Corps, 21 removed this case to federal court alleging diversity jurisdiction. Trustee Corps’ notice 22 of removal states — and the Morins have not contradicted — that the Morins and Peoples 23 Mortgage are Arizona citizens. 24 defendant would defeat diversity jurisdiction and require remand to state court. 25 However, if a non-diverse defendant has been “fraudulently joined,” no remand is 26 required. Normally, the presence of Peoples Mortgage as a 27 “Fraudulent joinder is a term of art. If the plaintiff fails to state a cause of action 28 against a resident defendant, and the failure is obvious according to the settled rules of -2  1 the state, the joinder of the resident defendant is fraudulent.” McCabe v. Gen. Foods 2 Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). In this case, the failure is not obvious. 3 The complaint’s allegations regarding the relationship between Peoples Mortgage 4 and IndyMac — “Plaintiff’s [sic] became indebted to Defendant Peoples Mortgage Co[.], 5 later acquired by IndyMac Bank” (Doc. 1 at 8 ¶ 6) and “People’s Mortgage Co., 6 (hereinafter referred to as IndyMac and/or its successors)” (id. at 9 ¶ 13) — are 7 ambiguous in light of the generally known fact within this jurisdiction, see Fed. R. Evid. 8 201(b)(1), that Peoples Mortgage remains an operating business entity within Arizona. 9 Thus, it is not clear whether IndyMac acquired all of Peoples Mortgage’s assets, or just 10 the Morins’ loan, or something else. 11 Each of these has distinct jurisdictional consequences. 12 In addition, the complaint alleges that Peoples Mortgage or IndyMac marked up 13 “charges for work that they did not perform” and sought “payment for services which 14 Defendants were not entitled.” (Id. at ¶ 14.) The complaint also alleges “marked-up fees 15 for late charges, escrow, and failing to disclose actual costs . . . .” (Id. at 10 ¶ 15.) 16 The specifics of these allegations are not clear, but they suggest wrongdoing both 17 in the origination and the servicing of the loan. If challenged on a motion to dismiss, 18 they would likely fail but with leave to amend to provide more details and clarity. Thus, 19 the Court cannot conclude on this record that Peoples Mortgage has been fraudulently 20 joined. 21 Trustee Corps received an opportunity to sustain jurisdiction through “exhibits, if 22 necessary” (Doc. 13) but instead rested on the Morins’ ambiguous allegations regarding 23 the relationship between Peoples Mortgage and IndyMac. These allegations do not 24 suffice. Here, it appears that Peoples Mortgage is a non-diverse defendant against whom 25 a non-“fraudulent” claim may have been asserted. Trustee Corps therefore has not 26 sustained its burden to show diversity jurisdiction and the case will be remanded. The 27 “Motion to Dismiss Plaintiffs’ Complaint Against Defendant, MTC Financial Inc., dba 28 Trustee Corps for Failure to State Claim Upon Which Relief May Be Granted” (Doc. 7) -3  1 remains open for decision by the Superior Court to the extent its procedures 2 accommodate unresolved motions filed before remand. 3 4 5 IT IS THEREFORE ORDERED that the Clerk shall REMAND this case to Maricopa County Superior Court. The Clerk shall terminate this case. Dated this 25th day of January, 2012. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4 

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