Susan Calimpusan et al v. Wells Fargo Bank, N.A. et al
Filing
31
MINUTES (IN CHAMBERS) Order Denying Plaintiffs' Motion to Remand by Judge Andre Birotte Jr.: Plaintiffs' Motion to Remand 11 is DENIED. Plaintiffs' request for attorneys' fees and costs is also DENIED. Court Reporter: N/A. (gk)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.: CV 15-08452-AB (KLSx)
Title:
Date:
December 28, 2015
Susan Calimpusan; Martin Calimpusan v. Wells Fargo Bank, N.A. et al.
Present: The Honorable
ANDRÉ BIROTTE JR.
Carla Badirian
Deputy Clerk
N/A
Court Reporter
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants:
None Appearing
None Appearing
Proceedings:
[In Chambers] Order Denying Plaintiff’s Motion to Remand
(Dkt. No. 11)
On September 21, 2015, Plaintiffs Susan Calimpusan and Martin Calimpusan
(collectively “Plaintiffs) commenced an action in the Superior Court. (Dkt. No. 1, Ex.
A (“Compl.”).) On October 29, 2015, Defendants Wells Fargo Bank, N.A. (“Wells
Fargo”), NBS Default Services LLC’s (“NBS Default”), and The Bank Of New York
Mellon (“BNYM”) (collectively “Defendants”) removed this action on diversity
jurisdiction grounds under 28 U.S.C. § 1332. (Dkt. No. 1, Notice of Removal (“NOR”).)
Before this Court is Plaintiffs’s Motion to Remand on the grounds that this Court
lacks subject matter jurisdiction because Defendants have failed to establish complete
diversity among the parties. (Dkt. No. 11.) Defendants filed an Opposition. (Dkt.
No. 20, Opposition (“Opp.”).) Plaintiffs filed a Reply. (Dkt. No. 28 (“Reply”).)
Having considered the materials submitted by the parties, and for the reasons indicated
below, the Court hereby DENIES Plaintiffs’s Motion to Remand.
The Court finds the Motion appropriate for determination without oral argument
and hereby VACATES the hearing date of January 4, 2016. See Fed. R. Civ. P. 78;
Local Rule 7-15.
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I.
FACTUAL AND PROCEDURAL BACKGROUND
This action concern Plaintiffs’s mortgage loan secured under their residential
property located at 10504 Tremont Lane, Bellflower, Los Angeles County, California
90706. (Compl., ¶ 1.) Plaintiffs’s Complaint asserts claims under California state law
for declaratory relief, quiet title, negligence, for violation of California Civil Code
Sections 2923.55(a) and (b)(1), and for violation of the California Business & Professions
Code Section 17200 et seq. (See Compl.)
On October 9, 2015, while this action was pending in Superior Court, NBS Default
Services, LLC, the foreclosing trustee, filed a Declaration of Non-monetary Status
(“DNMS”) as a “nominal” party pursuant to California Civil Code section 2924l on
October 9, 2015. (NOR, p. 2, Ex. B.) Shortly thereafter, Defendants removed the
action removed the action to federal court on the basis of diversity jurisdiction. (See
NOR.)1
In their notice of removal, Wells Fargo maintains that complete diversity
jurisdiction exists here because the amount in controversy exceeds $75,000.00, and
Plaintiffs are California citizens, Wells Fargo is a South Dakota citizen, BNYM is a
citizen of New York, and NBS Default is a citizen of Delaware and Texas. (NOR, pp.
2-10.) As an alternative basis to citizenship of BNYM and NBS Default, the Notice of
Removal also recognizes that BNYM and NBS Default are fraudulently joined parties
that should be disregarded for the purpose of diversity. (Id. at pp. 5-7.) Particularly,
Wells Fargo argues that BNYM is fraudulently joined because “Plaintiffs have not and
cannot plead any facts that show a connection between BNYM and the alleged wrongful
conduct in this action.” (Id. at pp. 5-6.) As it pertains to NBS Default, Wells Fargo
notes that this Defendant “is a nominal party and should not be considered for purposes
of diversity. (Id. at p. 7.)
In response to the Notice of Removal, Plaintiff filed the instant motion challenging
Defendants’ removal grounds. (See Mot.) The Court addresses Plaintiffs’s and Wells
Fargo’s subject matter jurisdiction contentions below.
II.
LEGAL STANDARD
Under 28 U.S.C. § 1441(a), a civil action may be removed to the district court
where the action is pending if the district court has original jurisdiction over the action.
Under 28 U.S.C. § 1332, a district court has original jurisdiction of a civil action where
the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and
1
Following their removal, Defendants have since moved to dismiss this action under Federal Rule of
Civil Procedure (“Rule”) 12(b)(6). (Dkt. No. 7.)
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costs, and the dispute is between “citizens of different states.” Section 1332 requires
complete diversity, i.e., that “the citizenship of each plaintiff is diverse from the
citizenship of each defendant.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 67–68 (1996).
Section 1441 limits removal to cases where no defendant “properly joined and served . . .
is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(a)(b)(2).
Removal statutes are “strictly construe[d] against removal.” Gaus v. Miles, Inc., 980
F.2d 564, 566 (9th Cir. 1992). Federal jurisdiction must be rejected if there is any doubt
as to the right of removal in the first instance. Id. Accordingly, the removing party
bears a heavy burden of establishing original jurisdiction in the district court. Id.
A.
Fraudulent Joinder
A non-diverse party may be disregarded for purposes of determining whether
jurisdiction exists if the court determines that the party’s joinder was “fraudulent” or a
“sham.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001); Ritchey
v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998); McCabe v. General Foods
Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). The term “fraudulent joinder” is a term of
art and does not connote any intent to deceive on the part of plaintiffs or their counsel.
Lewis v. Time Inc., 83 F.R.D. 455, 460 (E.D. Cal. 1979), aff’d., 710 F.2d 549 (9th Cir.
1983). The relevant inquiry is whether plaintiff has failed to state a cause of action
against the non-diverse defendant, and the failure is obvious under settled state law.
Morris, 236 F.3d at 1067; McCabe, 811 F.2d at 1339.
The burden of proving fraudulent joinder is a heavy one. The removing party
must prove that there is “no possibility that plaintiff will be able to establish a cause of
action in State court against the alleged sham defendant.” Good v. Prudential Ins. Co.
of America, 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998). In this regard, “[r]emand must be
granted unless the defendant shows that the plaintiff ‘would not be afforded leave to
amend his complaint to cure [the] purported deficiency.’” Padilla v. AT & T Corp., 697
F. Supp. 2d 1156, 1159 (C.D. Cal. 2009); Macey v. Allstate Prop. & Cas. Ins. Co., 220 F.
Supp. 2d 1116, 1117 (N.D. Cal. 2002) (“If there is a non-fanciful possibility that plaintiff
can state a claim under California law against the non-diverse defendants the court must
remand.”).
III.
DISCUSSION
Plaintiffs argue that the action must be remanded because there is not complete
diversity of citizenship between the parties. (Mot., pp. 6-7.) Defendants contend that
that this Court has diversity jurisdiction because Plaintiffs are citizens of California, Wells
Fargo is a citizen of South Dakota, BNYM is a citizen of New York, and NBS Default is a
citizen of Delaware and Texas.
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To establish diversity jurisdiction, and thus defeat Plaintiffs’s Motion to Remand,
Defendants must show that there is complete diversity of citizenship between Plaintiffs and
Defendants, and that the amount in controversy equals or exceeds $75,000. Cf. Kanter v.
Warner–Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001) (for purposes of establishing
diversity jurisdiction, a “natural person's state citizenship is ... determined by her state of
domicile, . . . where she resides with the intention to remain or to which she intends to
return.”). Therefore, diversity of citizenship will not exist if any of the Defendants is also
a citizen of California.
Of the three Defendants, two, Wells Fargo and BNYM, are national banks. (NOR,
pp. 4-6.) “[T]he citizenship of nationally chartered banks is governed by 28 U.S.C. §
1348, which provides in pertinent part: ‘All national banking associations shall, for the
purposes of all other actions by or against them, be deemed citizens of the States in which
they are respectively located.’” Rouse v. Wachovia Mortg., FSB, 747 F.3d 707, 709 (9th
Cir. 2014) (quoting 28 U.S.C. § 1348). According to the Ninth Circuit, pursuant
to Section 1348, a national bank is therefore “only a citizen of the state designated in its
articles of association as its main office.” Id. at 711; see also Wachovia Bank v. Schmidt,
546 U.S. 303, 307 (2006) (“[A] national bank, for § 1348 purposes, is a citizen of the State
in which its main office, as set forth in its articles of association, is located.”). Wells
Fargo states it is a citizen of South Dakota because its main office is located in South
Dakota, and BNYM is a citizen of New York because its main office is located in New
York. (NOR, pp. 4-6.) Plaintiffs do not challenge these statements. (See generally
Mot.) Accordingly, there is complete diversity of citizenship between Plaintiffs on the
one hand (as citizens of California), and Wells Fargo and BONYM on the other (as citizens
of South Dakota and New York).
This leaves NBS Default, the remaining Defendant. NBS Default is a limited
liability company (“LLC”). (NOR, pp. 6-7; Opp., pp. 2-4; Dkt. No. 20, Ex. A,
Declarations of James B. Cloud, Luke Madole, Lawrence J. Buckley.) A corporation is a
citizen of any state where it is incorporated or has its principal place of business, Hertz
Corp. v. Friend, 130 U.S. 1181, 1884 (2010), and, an LLC is a citizen of every state in
which its owners or members are citizens. See Johnson v. Columbia Props. Anchorage,
LP, 437 F.3d 894, 899 (9th Cir. 2006) (“We therefore join our sister circuits and hold that,
like a partnership, an LLC is a citizen of every state of which its owners/members are
citizens.”). In its Opposition, Wells Fargo included three declarations from officers of
NBSC Group Holdings, Inc. (“NBSC”) which each declare that NBSC is the sole member
of NBS Default. (Dkt. No. 20, Ex. A, Cloud Decl., ¶ 1, Madole Decl. ¶ 1, Buckley Decl.
¶ 1.) In identifying itself as the sole member of NBS Default, each officer also declares
their respective states of citizenship, i.e., Texas. (Dkt. No. 20, Ex. A, Cloud Decl., ¶ 2,
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Madole Decl. ¶ 2, Buckley Decl. ¶ 2.) Neither NBS Default nor NBSC is a citizen of
California. Plaintiff points out that these declarations were not attached to Wells Fargo’s
Notice of Removal nor were they attached to NBS Default’s Consent to Removal. (NOR;
Dkt. No. 4.) Plaintiff also contends that a certificate of formation from Texas is also not
attached to the Notice of Removal. (Mot., p. 7.) While Plaintiff is correct that these
documents were not attached to Wells Fargo’s Notice of Removal, Wells Fargo’s error still
does not change the overall analysis as to NBS Default citizenship. Plaintiff does not
contend that NBS Default is a citizen of California. (See generally Mot.) Rather,
Plaintiff simply requests that Defendants provide more evidence, to which Wells Fargo
has. Indeed, attached to the Opposition is not only the officer declarations but also entity
details from Delaware’s and California’s Secretary of State websites that recognize NBS
Default as being registered in Delaware and Texas. (Dkt. No. 20, Exs. B, C.) Without
evidence that contravenes NBS Default’s citizenship evinced in Wells Fargo’s Notice of
Removal, the Court concludes that NBS Default is a citizen of Delaware and Texas.
Complete diversity of citizenship therefore exists between Plaintiffs (citizens of
California) and NBS Default (citizen of Delaware and Texas).
Rather than challenge Defendants’ respective states of citizenship, Plaintiffs attack
Wells Fargo’s alternative basis—disregarding BNYM and NBS Default as fraudulently
joined defendants—for establishing diversity. (Mot., pp. 7-11.) For example, Plaintiffs
focus heavily on Wells Fargo’s categorization of NBS Default as a “nominal party.”
(NOR, p. 6.) Plaintiffs argue that they opposed affording NBS Default nominal status in
state court and therefore nominal status should not be granted here in federal court. (Mot.,
pp. 7-8.) It is correct that the citizenship of “nominal defendants” may be disregarded for
purposes of determining diversity under section 1441. As one court explained, in
assessing diversity, “[a] federal court must disregard nominal or formal parties and rest
jurisdiction only upon the citizenship of real parties to the controversy.” Kuntz v. Lamar
Corp., 385 F.3d 1177, 1183 (9th Cir. 2004). A nominal party is one “who has no interest
in the action” and is merely joined to “perform a ministerial act.” Prudential Real Estate
Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir. 2000). “The paradigmatic
nominal defendant is a trustee, agent, or depository who is joined merely as a means of
facilitating collection.” S.E.C. v. Colello, 139 F.3d 674, 676 (9th Cir. 1998) (internal
quotations omitted). However, Plaintiffs’s argument misses the point. Even if the Court
were to ignore Wells Fargo’s alternative basis for diversity, complete diversity would still
exist because Plaintiffs are citizens of California, Wells Fargo is a citizen of South Dakota,
BNYM is a citizen of New York, and NBS Default is a citizen of Delaware and Texas.
Even if the Court were to agree with Plaintiffs’s arguments regarding non-monetary status,
nominal, and fraudulently joined parties, the ultimate determination that complete
diversity of citizenship exists between Plaintiffs and Defendants would not change.
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Having established that complete diversity of citizenship exists, Defendants need
only show that the amount in controversy exceeds $75,000. In the Notice of Removal, it
states that “[s]hould plaintiffs prevail in this action, they would void the loan, retain title
to the Property without any encumbrances, and permanently enjoin Wells Fargo from
taking any action under its secured interest in the Property – placing the entire
$700,000.00 loan at risk, and certainly, at a minimum, the $126,504.25 owing as of July
21, 2015.” (NOR, p. 10.) Nowhere in their Motion to Remand or Reply do Plaintiffs
dispute Defendants’ contention that this amount in controversy exceeds $75,000.00. (See
generally Mot., Reply.) The Court therefore concludes that the amount in controversy
requirement is also met and that diversity jurisdiction exists.
Thus, Plaintiffs’s Motion to Remand is DENIED.
IV.
CONCLUSION
Accordingly, this Motion to Remand is DENIED. (Dkt. No. 11.) Plaintiffs’s
request for attorneys’ fees and costs, (Mot., p. 11), is also DENIED.
IT IS SO ORDERED.
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