Jose Carlos Morales v. Select Portfolio Servicing, Inc. et al
Filing
28
MINUTES (IN CHAMBERS): Order re: Plaintiff's Motion to Remand [Dkt. 12] by Judge George H. King: We GRANT Plaintiff's Motion, but not Plaintiff's request for attorney's fees. Plaintiff's action is hereby REMANDED to the state court from which it was removed. Case Remanded to NCO59663. MD JS-6. Case Terminated. (See document for further details) (Attachments: # 1 Remand letter) (bp)
E-FILED – JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 14-7982-GHK (PJWx)
Title
Jose Carlos Morales v. Select Portfolio Servicing, Inc., et al.
Presiding: The Honorable
Date
December 2, 2014
GEORGE H. KING, CHIEF U. S. DISTRICT JUDGE
Beatrice Herrera
N/A
N/A
Deputy Clerk
Court Reporter / Recorder
Tape No.
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants:
None
None
Proceedings:
(In Chambers) Order re: Plaintiff’s Motion to Remand [Dkt. 12]
This matter is before us on the above-captioned Motion. We have considered the papers filed in
support of and in opposition to this Motion and deem this matter appropriate for resolution without oral
argument. L.R. 7-15. As the Parties are familiar with the facts, we will repeat them only as necessary.
Accordingly, we rule as follows:
I.
Procedural and Factual Background
On December 8, 2006, Plaintiff Jose Carlos Morales (“Plaintiff”) obtained a $380,000 loan
secured by a Deed of Trust (“DOT”) on real property located at 1810 E. Poinsettia Street, Long Beach,
California 90805 (the “Property”). (Compl. at ¶¶ 9-10; RJN, Exh. A.) Defendant Bank of America,
N.A. (“BANA”) acted as the servicer of Plaintiff’s loan until late 2013, when it transferred its servicing
rights to Select Portfolio Servicing, Inc. (“SPS”). (Id. at ¶ 32.) In January 2013, Plaintiff contacted
BANA to obtain a loan modification due to financial hardship. (Id. at ¶ 12.) BANA informed Plaintiff
it would send the application in the mail, but he did not receive it for several weeks and had to call
several times to inquire about its whereabouts. (Id.)
Plaintiff sought assistance with his application efforts from a non-profit organization and, with
its help, submitted a loan modification application on February 6, 2013. (Id. at ¶ 14.) Over the next
month and a half, Plaintiff submitted all requested documents and information. (Id. at ¶¶ 16-17.) On
March 15, 2013, BANA confirmed his file was under review and no additional documents were needed.
(Id. at ¶ 18.) On March 30, 2013, Plaintiff received a letter from BANA informing him his application
was denied. (Id. at ¶ 19.) The letter provided no reasons for the denial. (Id.) On April 23, 2013,
Plaintiff received another letter from BANA that informed him his application was denied because he
failed to submit all requested documents. (Id. at ¶ 20.)
On April 30, 2013, an agent of the non-profit organization followed-up with BANA, and BANA
informed the agent Plaintiff’s file was closed. (Id. at ¶ 21.) The non-profit agent asked to reopen the
file and that a single point of contact (“SPOC”) be assigned. (Id.) On June 6, 2013, the non-profit agent
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 1 of 6
E-FILED – JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 14-7982-GHK (PJWx)
Date
Title
December 2, 2014
Jose Carlos Morales v. Select Portfolio Servicing, Inc., et al.
called BANA for an update and was informed Plaintiff’s May 18, 2013 application had been denied.
(Id. at ¶ 22.) Plaintiff did not submit an application on that date. (Id.)
On July 5, 2013, Plaintiff received a letter from BANA regarding its intent to foreclose his
property. (Id. at ¶ 23.) Plaintiff faxed BANA a new loan modification application on July 16, 2013.
(Id. at ¶ 24.) On July 26, 2013, an agent of the non-profit organization called BANA to confirm receipt
and a BANA representative stated it had not received his application. (Id.) The agent refaxed the
application. (Id.) BANA confirmed receipt on August 5, 2013, and Plaintiff submitted his 2012 tax
returns and updated paystubs and bank statements. (Id. at ¶¶ 28-30.)
On December 17, 2013, the non-profit organization received a letter from SPS stating that it was
Plaintiff’s new servicer. (Id. at ¶ 32.) BANA never notified Plaintiff that it transferred its servicing
rights to SPS. At SPS’s request, Plaintiff submitted additional financial documents in support of his
loan modification application in January 2014 and again in April 2014. (Id. at ¶¶ 33-34.) On May 19,
2014, Plaintiff received a letter from SPS notifying him that his loan was in default. (Id. at ¶ 35.)
Plaintiff still has not received a determination on this loan modification application. (Id. at ¶ 36.)
On August 29, 2014, Plaintiff filed this action in California Superior Court. [Dkt. 1.] Based on
the foregoing allegations, Plaintiff’s Complaint asserts the following claims: (1) violation of the
California Homeowner Bill of Rights (“HOBR”), which requires loan servicers to provide a SPOC;1 (2)
negligent misrepresentation; (3) violation of California Unfair Competition Law (“UCL”), Cal. Bus. &
Prof. Code §§ 17200, et seq.; and (4) breach of the implied covenant of good faith and fair dealing.
Plaintiff seeks “compensatory, special and general damages in an amount [subject] to proof at trial”;
“civil penalties pursuant to statute and restitution”; and the award of “reasonable attorney’s fees [and]
reasonable costs of suit.” (Compl. at 11.) Although not mentioned in Plaintiff’s prayer for relief,
Plaintiff’s Complaint also states that his claims “present[] a ripe and justiciable controversy for this
court’s immediate equitable adjudication for which money damages would not be appropriate and
without which the Plaintiff will suffer irreparable injury in the loss of his home and his family’s
resultant homelessness.” (Id. at ¶ 47.) Plaintiff’s UCL claim also includes a demand for Defendants’
“illicit profits,” including late fees they charged and costs associated with “instituting wrongful
foreclosure against the subject property.” (Id. at ¶ 64.)
SPS removed this action on October 15, 2014, asserting we have diversity jurisdiction under 28
U.S.C. Section 1332.2 [Dkt. 1.] Plaintiff now moves to remand this case to state court, claiming that the
1
See Cal. Civ. Code § 2923.7(a).
2
BANA, a named Defendant at the time of removal, did not join the Notice of Removal, but did
consent to removal of this action. (See NOR at ¶ 13.)
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 2 of 6
E-FILED – JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 14-7982-GHK (PJWx)
Date
Title
December 2, 2014
Jose Carlos Morales v. Select Portfolio Servicing, Inc., et al.
amount in controversy does not exceed $75,000. SPS opposes this motion.3 [Dkt. 15.]
II.
Legal Standard
The party that seeks to remain in federal court has the burden of proof on a motion to remand to
state court. See Conrad Associates v. Hartford Accident & Indemnity Co., 994 F. Supp. 1196, 1198
(N.D. Cal. 1998). The Ninth Circuit has held that “[t]he strong presumption against removal jurisdiction
means that the defendant always has the burden of establishing that removal is proper.” Emrich v.
Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (citations omitted). In cases in which a
plaintiff’s state court complaint does not specify an exact figure for damages, the defendant must
establish, by a preponderance of the evidence, that the amount in controversy exceeds the statutory
minimum. See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir.1996) (holding that
where amount at stake was not clear from allegations in the complaint, defendant seeking to remain in
federal court has the burden “of actually proving the facts to support jurisdiction, including the
jurisdictional amount”). “In actions seeking declaratory or injunctive relief, it is well established that
the amount in controversy is measured by the value of the object of the litigation.” Hunt v. Wash. State
Apple Adver. Comm’n, 432 U.S. 333, 347 (1977).
III.
Analysis
SPS removed this action pursuant to 28 U.S.C. Section 1332. “Jurisdiction founded on 28
U.S.C. § 1332 requires that parties be in complete diversity and the amount in controversy exceed
$75,000.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). The
Parties agree that they are completely diverse: Plaintiff is a citizen of California, SPS is a citizen of
Utah, and BANA is a citizen of North Carolina. The Parties disagree, however, as to whether or not
Section 1332’s amount in controversy requirement has been met.
A.
Amount in Controversy
SPS argues that the amount in controversy exceeds $75,000 for two reasons. First, SPS claims
that Plaintiff “seeks to enjoin the foreclosure sale of the Property following his default” and thus, has put
the entire loan amount in controversy. (Opp’n at 2.) Second, SPS argues that because Plaintiff “pled
that he was entitled to compensatory damages, general damages, special damages, disgorgement, and
attorneys’ fees and costs . . . it was more likely than not that the amount in controversy exceeded
$75,000.” (Id. at 4.) Neither argument is persuasive.
1.
Injunctive Relief
3
SPS requests that we take judicial notice of five documents relating to the subject Property.
[Dkt. 15-1.] We GRANT SPS’s requests as these documents are public records, which are generally
appropriate for judicial notice, and Plaintiff does not object.
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 3 of 6
E-FILED – JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 14-7982-GHK (PJWx)
Date
Title
December 2, 2014
Jose Carlos Morales v. Select Portfolio Servicing, Inc., et al.
Defendant is correct that if the primary purpose of Plaintiff’s suit was to prevent foreclosure of
his home, the amount in controversy would likely exceed $75,000. See Garfinkle v. Wells Fargo Bank,
483 F.2d 1074, 1076 (9th Cir. 1973) (“The whole purpose of this action is to foreclose the Bank from
selling this property . . . . Based on these facts, this court has no difficulty finding that the matter in
controversy has a value in excess of [the statutory minimum] exclusive of interest and costs.”);
Rodriguez v. Wells Fargo Bank, N.A., 2011 WL 6304152, at *3 (N.D. Cal. Dec. 16, 2011) (“If the
primary purpose of a lawsuit is to enjoin a bank from selling or transferring property, the amount in
controversy may be the original loan amount, the outstanding balance at the time the sale is
contemplated, or the market value of the property.”). But, the cases SPS cites in support of removal
involve explicit requests to enjoin property sales. See Reyes v. Wells Fargo Bank, N.A., 2010 WL
2629785, at *4 (N.D. Cal. June 29, 2010) (“The plaintiffs challenged the lawfulness of the non-judicial
foreclosure procedure and sought an injunction prohibiting the bank from selling the property.”); Zepeda
v. U.S. Bank, N.A., 2011 WL 4351801, at *3 (C.D. Cal. Sept. 16, 2011) (“[B]ecause Plaintiff expressly
seeks to enjoin Defendants from enforcing their power of sale, Plaintiff is effectively precluding
Defendants from recouping any losses incurred as a result of Plaintiff’s failure to keep current on the
mortgage loan.”).
Here, SPS claims that “Plaintiff’s Complaint readily admits that Plaintiff is seeking to enjoin any
potential non-judicial foreclosure sale of the Property.” (Opp’n at 3.) But, careful review of Plaintiff’s
Complaint does not reveal a request for such relief. Plaintiff’s prayer for relief does not mention an
injunction. Only one paragraph in the Complaint mentions an equitable remedy. In it, Plaintiff states
that the instant case “presents a ripe and justiciable controversy for this court’s immediate equitable
adjudication for which money damages would not be appropriate and without which the Plaintiff will
suffer irreparable injury in the loss of his home and his family’s resultant homelessness.” (Compl. at ¶
47.) We are unconvinced, based on this paragraph alone, that the primary purpose of Plaintiff’s suit is
to prevent foreclosure. Instead, the suit’s focus is Defendants’ alleged negligence and violations of law
during the loan modification process. Plaintiff’s mere mention of the possibility that he could lose his
home without a modification is insufficient to control the nature or aim of his suit. Cf. Johnson v. Wells
Fargo Home Mortgage, 2012 WL 1229880, at *4 (C.D. Cal. Apr. 11, 2012) (“[A]lthough Plaintiff
discusses the possibility of foreclosure in the complaint, alleging that as a result of Defendants’ breach
he faces ‘imminent foreclosure because payment default is reasonably foreseeable,’ the complaint does
not actually seek to enjoin an impending foreclosure.”); Soto v. Litton Loan Servicing, 2011 WL
724746, at *4 (N.D. Cal. Feb. 22, 2011) (“[W]hile ¶ 18 mentions that Plaintiffs may face foreclosure as
a result of Defendant’s refusal to grant a loan modification, contrary to Defendant’s characterization,
nothing in ¶ 18 indicates that Plaintiffs are seeking to stop the foreclosure process in this lawsuit.”).
Plaintiff’s submissions make clear that he does “not actually seek to enjoin an impending
foreclosure” with this action. (Mot. at 8.) This is especially true since, as SPS concedes, Defendants
have not recorded any foreclosure notices and it is unclear if either Defendant intends to imminently
pursue foreclosure. (See Opp’n at 2.) Instead, Plaintiff may be entitled to alternative forms of equitable
relief that would not place the entirety of his loan in controversy. See, e.g., Civil Code § 2924.12(a)(1)
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 4 of 6
E-FILED – JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 14-7982-GHK (PJWx)
Date
Title
December 2, 2014
Jose Carlos Morales v. Select Portfolio Servicing, Inc., et al.
(stating that remedy for a SPOC claim pre-trustee’s sale is injunctive relief to prevent further violations
of Section 2923.7); Brown v. Ocwen Loan Servicing, LLC, 798 F. Supp. 2d 1288, 1290-91 (M.D. Ala.
2011) (finding that the monetary value of a foreclosure delay to allow for resolution of the plaintiffs’
claims does not meet jurisdictional amount). Accordingly, SPS has failed to demonstrate that Plaintiff’s
claims for injunctive relief, if any, should be valued at more than $75,000.
2.
Damages
SPS also argues that the damages Plaintiff seeks exceed $75,000, merely because his prayer for
relief includes compensatory damages, general damages, special damages, disgorgement, and attorneys’
fees and costs. But, Plaintiff’s Complaint does not specify any damages amounts. And, beyond
claiming [t]hese amounts all count[] toward the jurisdictional amount,” SPS offers no explanation for,
much less any facts showing, why Plaintiff’s damages would be more than $75,000. (See Opp’n at 4.)
Because Plaintiff alleges he was wrongfully denied a loan modification on several occasions, his
damages would likely amount to the difference between his existing loan and any modified loan to
which he may have been entitled. See Johnson, 2012 WL 1229880, at *4 (“[I]f a plaintiff asserts that he
is entitled to a wrongfully denied loan modification, the amount put into controversy is the difference
between the value of the existing loan and the proposed modified loan.”); Moreno v. Select Portfolio
Servicing, Inc., 2010 WL 2525980, at *9 (E.D. Cal. June 23, 2010) (same). Neither the Complaint nor
SPS’s submissions include any details regarding the value of Plaintiff’s requested loan modification.
Thus, we have no basis upon which to determine that this amount exceeds the jurisdictional minimum.
Cf. Soto, 2011 WL 724746, at *3 (“Defendant has not identified any facts regarding the terms of the
modification or provided any case law holding that a HAMP loan modification satisfies the amount in
controversy requirement. Thus, the loan modification and any damages Plaintiffs sustained stemming
from Defendant’s denial of it do not provide a basis for this Court to conclude that the amount in
controversy requirement has been satisfied.”).
As for disgorgement, Plaintiff seeks only restitution of Defendants’ profits related to his loan
servicing, including late fees and associated costs. SPS has not demonstrated that any disgorged profits
would amount to more than $75,000. And while Plaintiff’s suit also includes a prayer for attorneys’
fees, SPS does not assert what these fees might be or how they would substantiate its removal attempt.
Cf. Brady v. Mercedes-Benz USA, Inc., 243 F. Supp. 2d 1004, 1011 (N.D. Cal. 2002) (counsel submitted
declaration that included his hourly rate, fees expended, and fee awards in similar cases). Accordingly,
SPS has not demonstrated, by a preponderance of the evidence, that the amount in controversy exceeds
$75,000.
B.
Attorneys’ Fees
Plaintiff also requests an award of attorneys’ fees under 28 U.S.C. Section 1447(c), which allows
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 5 of 6
E-FILED – JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 14-7982-GHK (PJWx)
Date
Title
December 2, 2014
Jose Carlos Morales v. Select Portfolio Servicing, Inc., et al.
us to award “just costs and any actual expenses, including attorney fees, incurred as a result of the
[improper] removal.” SPS does not respond to Plaintiff’s request in its Opposition. We have discretion
to award attorneys’ fees and costs upon remand if we find Defendant lacked an “objectively reasonable
basis for seeking removal.” See Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005); Patel v.
Del Taco, Inc., 446 F.3d 996, 999 (9th Cir. 2006) (affirming attorney fee award for “frivolous
removal”); Moore v. Permanente Medical Group, Inc., 981 F.2d 443, 446-47 (9th Cir. 1992) (upholding
fee award for “wholly unnecessary litigation costs” related to remand motion).
Plaintiff does not request a specific fee amount or further substantiate his fee request. Even
though SPS’s removal proved unsuccessful, we have no grounds to find its attempt was objectively
unreasonable in light of Plaintiff’s somewhat confusing allegations. Further, other courts dealing with
very similar removal litigation declined to award requested fees. See, e.g., Johnson, 2012 WL 1229880,
at *5; Moreno, 2010 WL 2525980, at *12. Thus, we DENY Plaintiff’s fee request.
IV.
Conclusion
For the aforementioned reasons, we GRANT Plaintiff’s Motion, but not Plaintiff’s request for
attorney’s fees. Plaintiff’s action is hereby REMANDED to the state court from which it was removed.
IT IS SO ORDERED.
-Initials of Deputy Clerk
CV-90 (06/04)
CIVIL MINUTES - GENERAL
:
--
Bea
Page 6 of 6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?