Pia del Puerto v. Thompson House Group, LLC et al

Filing 40

MINUTES (IN CHAMBERS) ORDER GRANTING MOTION TO REMAND THIS CASE TO SUPERIOR COURT STATE OF CALIFORNIA, COUNTY OF LOS ANGELES [filed 3/21/18; Docket No. 22 ]; ORDER DENYING WITHOUT PREJUDICE DEFENDANT VISUALHOUSE USA, LLC'S MOTION TO DISMISS UNDE R FRCP 12(b)(2) & 12(b)(6) [filed 3/22/18; Docket No. 23 ]; ORDER DENYING WITHOUT PREJUDICE DEFENDANT THOMPSON HOUSE GROUP, LLC AND VISUALHOUSE LOS ANGELES, CORP.'S MOTION TO DISMISS PLAINTIFFS SECOND AMENDED COMPLAINT PURSUANT TO FRCP 12(b)(6) [filed 3/22/18; Docket No. 24 ]; and ORDER DENYING WITHOUT PREJUDICE DEFENDANTS' UNOPPOSED MOTION FOR PERMISSION TO DESIGNATE RICHARD W. EPSTEIN,ESQ. AS CO-LEAD COUNSEL [filed 3/26/18; Docket No. 25 ] by Judge John F. Walter. Plaintiff 9;s Motion for Remand is GRANTED. This action is hereby REMANDED to Los Angeles County Superior Court. Plaintiff's request for attorneys' fees and costs is DENIED. In light of the remand of this action to Los Angeles County Superior Court , the Court DENIES without prejudice Defendant Visualhouse USA, LLC's Motion to Dismiss under FRCP 12(b)(2) & 12(b)(6), Defendant Thompson House Group, LLC and Visualhouse Los Angeles, Corp.'s Motion to Dismiss Plaintiff's Second Amended Complaint Pursuant to FRCP 12(b)(6), and Defendants' Unopposed Motion for Permission to Designate Richard W. Epstein, Esq. As Co-lead Counsel. ( MD JS-6. Case Terminated ) (iv)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

JS-6

CIVIL MINUTES -- GENERAL
Case No.

CV 18-1567-JFW(AFMx)

Title:

Pia del Puerto -v- Thompson House Group, LLC, et al.

Date: April 18, 2018

PRESENT:
HONORABLE JOHN F. WALTER, UNITED STATES DISTRICT JUDGE
Shannon Reilly
Courtroom Deputy

None Present
Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS:
None
PROCEEDINGS (IN CHAMBERS):

ATTORNEYS PRESENT FOR DEFENDANTS:
None

ORDER GRANTING MOTION TO REMAND THIS CASE
TO SUPERIOR COURT STATE OF CALIFORNIA,
COUNTY OF LOS ANGELES [filed 3/21/18; Docket No.
22];
ORDER DENYING WITHOUT PREJUDICE DEFENDANT
VISUALHOUSE USA, LLC’S MOTION TO DISMISS
UNDER FRCP 12(b)(2) & 12(b)(6) [filed 3/22/18; Docket
No. 23];
ORDER DENYING WITHOUT PREJUDICE DEFENDANT
THOMPSON HOUSE GROUP, LLC AND
VISUALHOUSE LOS ANGELES, CORP.’S MOTION TO
DISMISS PLAINTIFF’S SECOND AMENDED
COMPLAINT PURSUANT TO FRCP 12(b)(6) [filed
3/22/18; Docket No. 24]; and
ORDER DENYING WITHOUT PREJUDICE
DEFENDANTS’ UNOPPOSED MOTION FOR
PERMISSION TO DESIGNATE RICHARD W. EPSTEIN,
ESQ. AS CO-LEAD COUNSEL [filed 3/26/18; Docket
No. 25]

On March 21, 2018, Plaintiff Pia del Puerto (“Plaintiff”) filed a Motion to Remand This Case
to Superior Court State of California, County of Los Angeles (“Motion”). On April 2, 2018,
Defendants Thompson House Group, LLC (“Thompson House”), Visualhouse Los Angeles, Corp.
(“Visualhouse Los Angeles”), and Visualhouse USA, LLC (“Visualhouse USA”) (collectively,
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“Defendants”) filed their Opposition. Plaintiff did not file a Reply. Pursuant to Rule 78 of the
Federal Rules of Civil Procedure and Local Rule 7-15, the Court finds that this matter is
appropriate for decision without oral argument. The hearing calendared for April 23, 2018 is
hereby vacated and the matter taken off calendar. After considering the moving and opposing
papers, and the arguments therein, the Court rules as follows:
I.

Factual and Procedural Background

On April 14, 2017, Plaintiff filed a Complaint against Thompson House, Visualhouse Group,
Inc., and Robert Michael Herrick (“Herrick”) in Los Angeles Superior Court. On May 2, 2017,
Plaintiff filed an Amendment to the Complaint to correct the name of defendant Visualhouse
Group, Inc. to Visualhouse Los Angeles. On August 18, 2017, Plaintiff filed a First Amended
Complaint against the same defendants. On October 16, 2017, Plaintiff dismissed Herrick from
this action. On November 7, 2017, Los Angeles Superior Court Judge Ernest M. Hiroshige
sustained Visualhouse Los Angeles’s demurrer with leave to amend and sustained in part and
overruled in part Thompson House’s demurrer. On November 16, 2017, Plaintiff filed her Second
Amended Complaint against Thompson House, Visualhouse Los Angeles, and Visualhouse USA,
alleging state law claims for: (1) violation of Labor Code § 970(b); (2) Labor Code violations – nonreimbursed expenses, late-paid wages, non-paid wages; (3) violation of Business & Professions
Code § 17200, et seq.; (4) breach of contract; (5) declaratory relief; and (6) accounting.
On February 26, 2018, Visualhouse USA filed a Notice of Removal, alleging that this Court
has diversity jurisdiction over this action pursuant to 28 U.S.C. § 1332(a).
In her Motion, Plaintiff moves to remand this action to Los Angeles County Superior Court,
arguing that this Court does not have diversity jurisdiction because Plaintiff and Visualhouse Los
Angeles are both citizens of California. In their Opposition, Defendants argue that Visualhouse Los
Angeles has been fraudulently joined.
II.

Legal Standard

A motion to remand is the proper procedure for challenging removal. See N. Cal. Dist.
Council of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1038 (9th Cir.1995). The
removal statute is strictly construed, and any doubt about the right of removal is resolved in favor of
remand. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992); see also Prize Frize, Inc. v.
Matrix, Inc., 167 F.3d 1261, 1265 (9th Cir.1999). Consequently, if a plaintiff challenges the
defendant’s removal of a case, the defendant bears the burden of establishing the propriety of the
removal. See Gaus, 980 F.2d at 566; see also Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th
Cir.1996) (citations and quotations omitted) (“Because of the Congressional purpose to restrict the
jurisdiction of the federal courts on removal, the statute is strictly construed, and federal jurisdiction
must be rejected if there is any doubt as to the right of removal in the first instance.”).
III.

Discussion

Diversity jurisdiction founded under 28 U.S.C. § 1332(a) requires that (1) all plaintiffs be of
different citizenship than all defendants, and (2) the amount in controversy exceed $75,000. See 28
U.S.C. § 1332. Because Defendants have not met their burden of demonstrating that the parties

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are completely diverse, this action must be remanded.
Although Plaintiff and Visualhouse Los Angeles are both citizens of California, Defendants
contend that Visualhouse Los Angeles has been fraudulently joined, and, thus, its presence in this
action should be ignored. “Although an action may be removed to federal court only where there is
complete diversity of citizenship, . . . one exception to the requirement for complete diversity is
where a non-diverse defendant has been ‘fraudulently joined.’” Hunter v. Philip Morris USA, 582
F.3d 1039, 1043 (9th Cir. 2009) (quotations and citations omitted). “Fraudulent joinder is a term of
art and does not implicate a plaintiff's subjective intent.” Health Pro Dental Corp. v. Travelers Prop.
Cas. Co. of Am., 2017 WL 1033970, at *3 (C.D. Cal. Mar. 17, 2017). If the 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) (emphasis added). If the Court finds that the joinder of a nondiverse defendant is fraudulent, that defendant’s presence in the lawsuit is ignored for the purposes
of determining diversity. See, e.g., Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.
2001).
“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). Indeed, “[f]raudulent joinder must
be proven by clear and convincing evidence.” Hamilton Materials, Inc. v. Dow Chemical Corp., 494
F.3d 1203, 1206 (9th Cir. 2007). A claim of fraudulent joinder should be denied if there is any
possibility that the plaintiffs may prevail on the cause of action against the non-diverse defendant.
See Plute, 141 F. Supp. 2d at 1008. “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, 1996 WL 732506, at *3 (N.D. Cal. Dec. 11, 1996) (emphasis added). “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 Maritime Corp., 951 F.2d 40, 42-43 (5th
Cir. 1992)). Moreover, any doubts concerning the sufficiency of a cause of action due to inartful,
ambiguous, or technically defective pleading must be resolved in favor of remand. See id. “[A]
removing defendant alleging fraudulent joinder must do more than show that the complaint at the
time of removal fails to state a claim against the non-diverse defendant. Rather, the defendant must
establish that plaintiff could not amend his complaint to add additional allegations correcting any
deficiencies.” Martinez v. Michaels, 2015 WL 4337059, at *5 (C.D. Cal. July 15, 2015) (quotations
and citations omitted).
The Court concludes that Defendants have failed to meet their heavy burden of
demonstrating fraudulent joinder. In her Second Amended Complaint, Plaintiff alleges that there
was a pattern of “alter ego” behavior on the part of Visualhouse Los Angeles and Visualhouse USA
in regards to Thompson House. Although Defendants argues that Plaintiff cannot possibly prevail
on her alter ego claims against Visualhouse Los Angeles, the Court cannot conclude that Plaintiff
has no possibility of prevailing on her alter ego claims against Visualhouse Los Angeles based on
the arguments of counsel in Plaintiff’s Motion and Defendants’ Opposition. See Vincent v. First
Republic Bank Inc., 2010 WL 1980223, at *5 (N.D. Cal. May 17, 2010) (“While plaintiff’s allegations
may fall short of proving outrageous conduct, this order cannot conclude that plaintiff has absolutely
no possibility of stating a claim, if afforded an opportunity to amend”); First Western Bank & Trust
Co. v. Bookasta, 267 Cal. App. 2d 910 (1968) (holding that “courts have followed a liberal policy of

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applying the alter ego doctrine where the equalities and justice of the situation appear to call for it”);
Associated Vendors Inc. v. Oakland Meat Packing Co., 210 Cal. App. 2d 829 (1962) (discussing
factors for determining alter ego liability).
IV.

Conclusion

For the foregoing reasons, Plaintiff’s Motion for Remand is GRANTED. This action is hereby
REMANDED to Los Angeles County Superior Court. Plaintiff’s request for attorneys’ fees and costs
is DENIED. In light of the remand of this action to Los Angeles County Superior Court, the Court
DENIES without prejudice Defendant Visualhouse USA, LLC's Motion to Dismiss under FRCP
12(b)(2) & 12(b)(6), Defendant Thompson House Group, LLC and Visualhouse Los Angeles,
Corp.'s Motion to Dismiss Plaintiff's Second Amended Complaint Pursuant to FRCP 12(b)(6), and
Defendants' Unopposed Motion for Permission to Designate Richard W. Epstein, Esq. As Co-lead
Counsel.

IT IS SO ORDERED.

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