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)

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