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)

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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 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-

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