Angelo et al v. Stewart Title & Trust of Phoenix Incorporated

Filing 16

ORDER TO SHOW CAUSE. Show Cause Response due by 4/12/2013. Signed by Judge David G Campbell on 3/29/2013. (NVO)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9
10

Robert Angelo, Trent Cosse, Don Davis,
Hans Epprecht, Lucien Riley, and Does 1–
238, on their own behalf and on behalf of
all others similarly situated,

11
12

No. CV13-8031 PCT DGC
ORDER

Plaintiffs,
v.

13
14

Stewart Title & Trust of Phoenix, Inc.,
Defendant.

15
16

On January 16, 2013, Plaintiffs filed a class action lawsuit in Yavapai County

17

Superior Court against Defendant Stewart Title & Trust of Phoenix, Inc. Doc. 1-2. On

18

February 6, 2013, Defendant timely removed the case to this Court. Doc. 1. Defendant

19

invoked the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), as the basis for

20

the Court’s subject-matter jurisdiction. Id. Defendant has now filed a motion to dismiss

21

for failure to state a claim. Doc. 6. Plaintiffs have responded, and do not mention or

22

contest the Court’s subject-matter jurisdiction. See Doc. 10. The Court nonetheless,

23

acting sua sponte, orders the parties to show cause why the Court should not remand this

24

case pursuant to either the discretionary or mandatory exceptions to CAFA subject-matter

25

jurisdiction. See Fed. R. Civ. P. 12(h)(3) (“If the court determines at any time that it

26

lacks subject-matter jurisdiction, the court must dismiss the action.”).

27

I.

28

Class Action Fairness Act
Congress enacted CAFA, in part, to “‘restore the intent of the framers of the

1

United States Constitution by providing for Federal court consideration of interstate cases

2

of national importance under diversity jurisdiction.’”

3

Loans Servicing LP, 533 F.3d 1031, 1033–34 (9th Cir. 2008) (quoting Pub. L. No. 109–2,

4

§ 2(b)(2), 119 Stat. 4, 5). As explained by the Ninth Circuit,

5

Luther v. Countrywide Home

11

CAFA applies to “class action” lawsuits where the aggregate number of
members of all proposed plaintiff classes is 100 or more persons and where
the primary defendants are not “States, State officials, or other
governmental entities against whom the district court may be foreclosed
from ordering relief.” § 1332(d)(5) . . . . Once the prerequisites of
§ 1332(d)(5) are satisfied, CAFA vests federal courts with “original”
diversity jurisdiction over class actions if: (1) the aggregate amount in
controversy exceeds $5,000,000, and (2) any class member is a citizen of a
state different from any defendant. § 1332(d)(2). Thus, under CAFA,
complete diversity is not required; “minimal diversity” suffices.

12

Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1020–21 (9th Cir. 2007) (footnote omitted).

13

In this case, the prerequisites for subject-matter jurisdiction under CAFA are

14

clearly satisfied. Plaintiffs bring their case on behalf of 238 putative class members.

15

Doc. 1-2, ¶ 1. Defendant is not a State or State official. See Doc. 1-1. The case involves

16

a dispute over membership deposits of $26,804,350. Doc. 1-2, ¶ 1. Finally, minimal

17

diversity exists, as one of the named Plaintiffs is a resident of Texas (Id., ¶ 7), unnamed

18

Plaintiffs may include citizens of other states and countries (Id., ¶ 19), and Defendant is a

19

Delaware corporation with its principal place of business in Arizona (Doc. 1-1).

6
7
8
9
10

20

Although these prerequisites are satisfied, CAFA also has provisions under which

21

this Court either “may” or “shall” decline to exercise jurisdiction.

22

§ 1332(d)(3)–(4). As explained by the Ninth Circuit,

23
24
25
26
27
28

28 U.S.C.

[§ 1332(d)(2)] sets out the contours of original jurisdiction. In contrast,
§ 1332(d)(3) describes situations where district courts may “decline to
exercise jurisdiction” “in the interests of justice and looking at the totality
of the circumstances”; and § 1332(d)(4) sets out two circumstances that
require district courts to decline jurisdiction, the so-called “local
controversy” and “home-state controversy” exceptions. Implicit in both
subsections (d)(3) and (d)(4) is that the court has jurisdiction, but the court
either may or must decline to exercise such jurisdiction.

-2-

1

Serrano, 478 F.3d at 1022 (footnote omitted) (emphasis in original).

Both the

2

discretionary and mandatory exceptions to CAFA jurisdiction depend on the citizenship

3

of the members of the Plaintiff class. For the discretionary exception to apply, “greater

4

than one-third but less than two-thirds of the members of all proposed plaintiffs classes

5

and the primary defendants [must be] citizens of the State in which the action was

6

originally filed.” § 1332(d)(3). For the mandatory exceptions to apply, greater than two-

7

thirds of the members of all proposed plaintiff classes must be citizens of the State in

8

which the action was originally filed. § 1332(d)(4).

9

Having read the pleadings, the Court believes that at least one-third, and perhaps

10

more than two-thirds, of the class may be citizens of Arizona. Four of the five named

11

Plaintiffs are Arizona residents. Doc. 1-2, ¶ 7. The case involves a golf resort located in

12

Arizona. Id., ¶ 1. Finally, Defendant has its principal place of business in Arizona. Doc.

13

1-1. From these facts, it is a reasonable, although not certain, inference that at least one-

14

third and perhaps more than two-thirds of the class are citizens of Arizona. Therefore,

15

the Court may have discretion or be required to decline jurisdiction over this case.

16

III.

Further Briefing

17

The Court concludes that briefing on this issue is required. The parties shall

18

address the six factors this Court must consider under CAFA’s discretionary exception to

19

jurisdiction, as listed in § 1332(d)(3)(A)–(F). The parties shall also address both the

20

“local controversy” exception under § 1332(d)(4)(A), and the “home-state controversy”

21

exception under § 1332(d)(4)(B).

22

material addressing these questions, specifically focusing on the citizenship of the

23

members of the Plaintiff class. In addressing these questions, the parties are reminded

24

that a person’s residence can be prima facie evidence of his or her place of domicile for

25

purposes of subject-matter jurisdiction. See Hollinger v. Home State Mut. Ins. Co., 654

26

F.3d 564, 571 (5th Cir. 2011); State Farm Mut. Auto. Ins. Co. v. Dyer, 19 F.3d 514, 520

27

(10th Cir. 1994).

28

argument, by April 12, 2013. Defendant shall file a response, not to exceed 12 pages, by

The parties shall file memoranda and supporting

Plaintiffs shall file a memorandum, not to exceed 12 pages of

-3-

1

April 19, 2013. No reply will be filed.

2

IT IS ORDERED THAT:

3

1.

Plaintiffs shall respond to this Order to Show Cause by April 12, 2013.

4

2.

Defendant shall respond by April 19, 2013.

5

Dated this 29th day of March, 2013.

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-4-