Dave Evans v. Wells Fargo Bank, N.A. et al

Filing 9

MINUTE ORDER IN CHAMBERS - COURT ORDER by Judge Percy Anderson. Case remanded to Los Angeles County Superior Court, Case number NC061007, Case Terminated. Made JS-6. (mrgo)

JS-6

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

CV 17-1210 PA (KSx)

Title

Dave Evans v. Wells Fargo Bank, N.A., et al.

Present: The Honorable

Date

February 17, 2017

PERCY ANDERSON, UNITED STATES DISTRICT JUDGE

V.R. Vallery

Not Reported

N/A

Deputy Clerk

Court Reporter

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

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’s co-defendant, Barrett Daffin Frappier Treder & Weiss, LLP (“Barrett”) has filed
a Consent to Notice of Removal. In its Notice of Removal, Wells Fargo asserts that this Court has
jurisdiction over the action brought against it by plaintiff Dave Evans (“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, Wells Fargo 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. For the purposes of diversity jurisdiction, a national bank is “a
citizen of the State in which its main office, as set forth in its articles of association, is located.”
Wachovia Bank v. Schmidt, 546 U.S. 303, 307, 126 S. Ct. 941, 945, 163 L. Ed. 2d 797 (2006)
(construing 28 U.S.C. § 1348). The citizenship of an LLC is the citizenship of its members. See
Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[L]ike a partnership, an
LLC is a citizen of every state of which its owners/members are citizens.”); Marseilles Hydro Power,
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JS-6

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

CV 17-1210 PA (KSx)

Date

Title

February 17, 2017

Dave Evans v. Wells Fargo Bank, N.A., et al.

LLC v. Marseilles Land & Water Co., 299 F.3d 643, 652 (7th Cir. 2002) (“the relevant citizenship [of an
LLC] for diversity purposes is that of the members, not of the company”); Handelsman v. Bedford
Village Assocs., Ltd. P’ship, 213 F.3d 48, 51-52 (2d Cir. 2000) (“a limited liability company has the
citizenship of its membership”); Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998); TPS
Utilicom Servs., Inc. v. AT & T Corp., 223 F. Supp. 2d 1089, 1101 (C.D. Cal. 2002) (“A limited liability
company . . . is treated like a partnership for the purpose of establishing citizenship under diversity
jurisdiction.”).
One exception to the complete diversity requirement is “nominal party” status. “Defendants who
are nominal parties with nothing at stake may be disregarded in determining diversity, despite the
propriety of their technical joinder.” Strotek Corp. v. Air Transport Ass’n of America, 300 F.3d 1129,
1133 (9th Cir. 2002) (citing Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 873
(9th Cir. 2000)). “Removing Defendants bear the burden of proving a defendant is a nominal party.”
Latino v. Wells Fargo Bank, N.A., 2011 WL 4928880, at *2 (E.D. Cal. Oct.17, 2011).
The Ninth Circuit has also recognized an exception to the complete diversity requirement where
a non-diverse defendant has been “fraudulently joined.” Morris v. Princess Cruises, Inc., 236 F.3d 1061,
1067 (9th Cir. 2001). If a plaintiff “fails to state a cause of action against a resident defendant, and the
failure is obvious according to the settled rules of the state, the joinder of the resident defendant is
fraudulent.” McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). If the Court finds that
the joinder of a non-diverse defendant is fraudulent, that defendant’s presence in the lawsuit is ignored
for the purposes of determining diversity. See, e.g., Morris, 236 F.3d at 1067.
“There is a presumption against finding fraudulent joinder, and defendants who assert that
plaintiff has fraudulently joined a party carry a heavy burden of persuasion.” Plute v. Roadway Package
Sys., Inc., 141 F. Supp. 2d 1005, 1008 (N.D. Cal. 2001). A claim of fraudulent joinder should be denied
if there is any possibility that the plaintiff may prevail on the cause of action against the in-state
defendant. See id. at 1008, 1012. “The standard is not whether plaintiffs will actually or even probably
prevail on the merits, but whether there is a possibility that they may do so.” Lieberman v. Meshkin,
Mazandarani, No. C-96-3344 SI, 1996 WL 732506, at *3 (N.D. Cal. Dec. 11, 1996); see also Good v.
Prudential Ins. Co. of Am., 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998) (“[T]he defendant must demonstrate
that there is no possibility that the plaintiff will be able to establish a cause of action in State court
against the alleged sham defendant.”). “In determining whether a defendant was joined fraudulently, the
court must resolve ‘all disputed questions of fact and all ambiguities in the controlling state law in favor
of the non-removing party.’” Plute, 141 F. Supp. 2d at 1008 (quoting Dodson v. Spiliada, 951 F.2d 40,
42-43 (5th Cir. 1992)). A court should remand a case “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) (quoting Burris v. AT&T Wireless, Inc., No.
C 06-02904 JSW, 2006 WL 2038040, at *2 (N.D. Cal. July 19, 2006)).

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JS-6

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

CV 17-1210 PA (KSx)

Date

Title

February 17, 2017

Dave Evans v. Wells Fargo Bank, N.A., et al.

According to the Notice of Removal, Barrett, like Plaintiff, is a California citizen. Wells Fargo
asserts, however, that “Barrett is to be ignored for purposes of diversity jurisdiction analysis, as it is a
fraudulently joined, nominal party, mere stakeholder, and current trustee under the subject Deed of
Trust, with absolutely no financial interest in the Property and against which no affirmative relief is
being sought. Barrett’s status as a nominal party is confirmed through its filing of a [Declaration of
Non-Monetary Status.” (Notice of Removal 4:24-5:2.) Here, the time for Plaintiff to oppose Barrett’s
Declaration of Non-Monetary Status has not expired. See Cal. Civ. Code § 2924l(c). Moreover, “the
State statute allowing for declarations of nonmonetary status does not render a defendant a sham
defendant or a purely nominal party. A defendant’s declaration of nonmonetary status, which excuses a
party from active participation in the case, is not conclusive.” Sublett v. NDEX West, LLC, No.
11cv185-L(WMC), 2011 WL 663745 at *2 (S.D. Cal. Feb. 14, 2011).
Nor do the allegations in the Complaint establish that Barrett is either a nominal party or
fraudulently joined. See Perkins v. JPMorgan Chase Bank, N.A., No. CV 16-445- PSG(SSx), 2016 WL
3844205, at *23 (C.D. Cal. July 15, 2016) (“In sum, the Court finds that MTC is not a nominal party at
this time. As a result, MTC’s citizenship is relevant to the diversity analysis. Because Plaintiff and
MTC are citizens of California, complete diversity does not exist and Chase has failed to satisfy its
‘burden of establishing that removal is proper.’”) (citing Gaus, 980 F.2d at 566); Gomez v. Wells Fargo
Bank, N.A., No. C 15-2996 SBA, 2015 WL 4592060, at *2 (N.D. Cal. July 28, 2015) (“In sum, the
Court concludes that Wells Fargo has failed to carry its burden of demonstrating that Cal-Western is
either fraudulently-joined or a nominal party whose citizenship may be disregarded for purposes of
diversity jurisdiction.”); Nance v. Cal-W. Reconveyance Corp., No. LA CV14-07950 JAK, 2015 WL
452747, at *3 (C.D. Cal. Jan. 29, 2015) (citing Latino v. Wells Fargo Bank, N.A., No.
2:11-CV-02037-MCE, 2011 WL 4928880, at *3 (E.D. Cal. Oct. 17, 2011)); Silva v. Wells Fargo Bank
NA, 2011 WL 2437514, at *5 (C.D. Cal. June 16, 2011) (acknowledging “the trustee on a deed of trust
is often a nominal party” but finding the complaint on its face adequately pleaded claims against CalWestern as trustee).
If there is “a non-fanciful possibility that plaintiff can state a claim under [state] law against the
non-diverse defendants[,] the court must remand.” Mireles v. Wells Fargo Bank, N.A., 845 F. Supp. 2d
1034, 1062 (C.D. Cal. 2012) (quoting Macey v. Allstate Property & Cas. Ins. Co., 220 F. Supp. 2d 1116,
1117 (N.D. Cal. 2002)) (brackets in original). The Court finds Wells Fargo has not met the “heavy
burden of persuasion” that there is no possibility that Plaintiff may prevail on the claims against Barrett.
See Plute, 141 F. Supp. 2d at 1008. Nor can the Court conclude, on this record, that Plaintiff would not
be afforded leave to amend his Complaint to state a viable claim against Barrett. See Padilla, 697 F.
Supp. 2d at 1159. As a result, the Court finds that Barrett has not been fraudulently joined and this Court
cannot ignore its citizenship for purposes of assessing the propriety of Wells Fargo’s Notice of Removal.

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JS-6

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

CV 17-1210 PA (KSx)

Date

Title

February 17, 2017

Dave Evans v. Wells Fargo Bank, N.A., et al.

For all of the foregoing reasons, Wells Fargo has failed to meet its burden to demonstrate the
Court’s diversity jurisdiction. Accordingly, the Court remands this action to Los Angeles Superior
Court, Case No. NC061007, for lack for subject matter jurisdiction. See 28 U.S.C. § 1447(c).
IT IS SO ORDERED

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