Carol J. Stone v. Steve Atherton et al

Filing 8

MINUTES IN CHAMBERS-COURT ORDER by Judge Percy Anderson For the foregoing reason, Defendant has failed to meet its burden to demonstrate the Courtsdiversity jurisdiction. Accordingly, the Court remands this action to the Ventura County Superior Court, Case No. 56-2015-00464960-CU-FR-VTA. See 28 U.S.C. Section 1447(c). Case Terminated. Made JS-6 (pj)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-4697 PA (AGRx)

Title

Carol J. Stone v. Steve Atherton, et al.

Present: The
Honorable

Date

June 25, 2015

PERCY ANDERSON, UNITED STATES DISTRICT JUDGE

Stephen Montes Kerr

Not Reported

N/A

Deputy Clerk

Court Reporter

Tape No.

Attorneys Present for Plaintiff:

Attorneys Present for Defendant:

None

None

Proceedings:

IN CHAMBERS - COURT ORDER

Before the Court is a Notice of Removal filed by defendant Wells Fargo Bank, N.A. (“Wells
Fargo”). Wells Fargo asserts that this Court has jurisdiction over the action brought against it by
plaintiff Carol J. Stone (“Plaintiff”) based on the Court’s diversity jurisdiction. See 28 U.S.C. § 1332.
Federal courts are courts of limited jurisdiction, having subject matter jurisdiction only over
matters authorized by the Constitution and Congress. See, e.g., Kokkonen v. Guardian Life Ins. Co.,
511 U.S. 375, 377, 114 S. Ct. 1673, 1675, 128 L. Ed. 2d 391 (1994). A suit filed in state court may be
removed to federal court if the federal court would have had original jurisdiction over the suit. 28
U.S.C. § 1441(a). A removed action must be remanded to state court if the federal court lacks subject
matter jurisdiction. 28 U.S.C. § 1447(c). “The burden of establishing federal jurisdiction is on the party
seeking removal, and the removal statute is strictly construed against removal jurisdiction.” Prize Frize,
Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1265 (9th Cir. 1999). “Federal jurisdiction must be rejected if
there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564,
566 (9th Cir. 1992).
In attempting to invoke this Court’s diversity jurisdiction, Defendant must prove that there is
complete diversity of citizenship between the parties and that the amount in controversy exceeds
$75,000. 28 U.S.C. § 1332. To establish citizenship for diversity purposes, a natural person must be a
citizen of the United States and be domiciled in a particular state. Kantor v. Wellesley Galleries, Ltd.,
704 F.2d 1088, 1090 (9th Cir. 1983). Persons are domiciled in the places they reside with the intent to
remain or to which they intend to return. See Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th
Cir. 2001). “A person residing in a given state is not necessarily domiciled there, and thus is not
necessarily a citizen of that state.” Id.
The Notice of Removal alleges that Plaintiff is a citizen of the state of California because (1)
“she pleads ownership and residency of a home” in Camarillo, California and (2) she filed a Voluntary
Petition for Chapter 7 Bankruptcy Protection in the Northern District of California in which she
indicated that she “has been domiciled or has had a residence, principal place of business, or principal
assets in this District for 180 days immediately preceding the date” of the petition. Although the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-4697 PA (AGRx)

Date

Title

June 25, 2015

Carol J. Stone v. Steve Atherton, et al.

location of Plaintiff’s real property is one factor to consider in determining domicile, and therefore
citizenship,1/ Wells Fargo elsewhere takes the position that “title to the subject party was fully and
finally litigated” against Plaintiff. Second, the bankruptcy petition, in which Plaintiff provides a
different address, includes a disjunctive list that may be satisfied by mere residence (as opposed to
domicile). Because an individual is not necessarily domiciled where he or she resides, Wells Fargo’s
allegations of Plaintiff’s citizenship, based on allegations of residence, are insufficient to establish
Plaintiff’s citizenship. See Kanter, 265 F.3d at 857. “Absent unusual circumstances, a party seeking to
invoke diversity jurisdiction should be able to allege affirmatively the actual citizenship of the relevant
parties.” Id.; Bradford v. Mitchell Bros. Truck Lines, 217 F. Supp. 525, 527 (N.D. Cal. 1963). As a
result, Defendant’s allegations are insufficient to invoke this Court’s diversity jurisdiction.2/

1/

See Heinz v. Havelock, 757 F. Supp. 1076, 1079 (C.D. Cal. 1991) (“The determination of
domicile involves a number of factors including: ‘current residence, voting registration and voting
practices, location of personal and real property, location of spouse and family, membership in unions
and other organizations, place of employment or business, driver's license and automobile registration,
and payment of taxes.’”) (internal citations omitted).
2/

Even if Defendant had affirmatively alleged Plaintiff’s California citizenship, Defendant has not
demonstrated that defendants Steve Atherton and Atherton Enterprises, Inc., both of whom “appear to be
California citizens,” are fraudulently joined. First, although Wells Fargo claims that “the only allegation
against [Steve Atherton] is that he is the registered agent for service of process for [Atherton]
Enterprises,” Plaintiff’s Complaint actually identifies him as both president and agent of service of
process. Second, Defendant’s citation to Vella v. Hudgins, 20 Cal. 3d 251, 256 (1977) for the
proposition that “[t]he general rule of res judicata applies to post-eviction claims, and ‘subsequent fraud
or quiet title suits founded upon allegations of irregularity in a trustee’s sale are barred by the prior
unlawful detainer judgment’” does not establish that Plaintiff’s quiet title and ejectment causes of action
against Steve Atherton and Atherton Enterprises should be ignored for purposes of diversity. The court
in Vella noted that while “the courts have held that subsequent fraud or quiet title suits founded upon
allegations of irregularity in a trustee’s sale are barred by the prior unlawful detainer judgment,”
applicability of this rule is “much less clear” where “the claim sought to be asserted in the second action
encompasses activities not directly connected with the conduct of the sale.” Id. The court ultimately
held that “[i]n the absence of a record establishing that the claim was asserted and that the legal and
factual issues therein were fully litigated, we conclude that the question of fraudulent acquisition of title
was not foreclosed by the adverse judgment in the earlier summary proceeding.” Id. at 258. Here,
Plaintiff’s causes of action are not limited to activities directly connected with the conduct of the sale,
and the record of the unlawful detainer action is extremely thin. Although Plaintiff’s Answer in that
action raised an affirmative defense based on a “fraudulent instrument,” the Judgment, which does not
include a statement of decision, does not establish that the issues raised in the instant action were fully
litigated in the unlawful detainer action.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-4697 PA (AGRx)

Date

Title

June 25, 2015

Carol J. Stone v. Steve Atherton, et al.

For the foregoing reason, Defendant has failed to meet its burden to demonstrate the Court’s
diversity jurisdiction. Accordingly, the Court remands this action to the Ventura County Superior
Court, Case No. 56-2015-00464960-CU-FR-VTA. See 28 U.S.C. § 1447(c).
IT IS SO ORDERED.

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