Terri Ann Kapanoske et al v. Wells Fargo Bank, N.A. et al

Filing 34

(IN CHAMBERS) ORDER RE PLAINTIFFS' MOTION TO REMAND 14 by Judge Beverly Reid O'Connell: The Court concludes that Defendants properly removed this matter pursuant to 28 U.S.C. § 1332. Accordingly, the Court DENIES Plaintiffs' Motion to Remand. The hearing set for September 12, 2016, is hereby VACATED. (ah)

LINK: [14]
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

Present: The Honorable

BEVERLY REID O’CONNELL, United States District Judge

Anel Huerta

Not Present

N/A

Relief Deputy Clerk

Court Reporter

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS)

ORDER RE PLAINTIFFS’ MOTION TO REMAND
I.

INTRODUCTION

Pending before the Court is Plaintiffs Terri Ann Kapanoske and Gerald E.
Kapanoske’s (“Plaintiffs”) Motion to Remand. (Dkt. No. 14 (hereinafter, “Mot.”).) After
considering the papers filed in support and in opposition to the instant Motion, the Court
deems this matter appropriate for resolution without oral argument of counsel. See Fed.
R. Civ. P. 78; C.D. Cal. L.R. 7-15. For the following reasons, the Court DENIES
Plaintiffs’ Motion.
II.

BACKGROUND
A.

Factual Background

Plaintiffs claim that they are owners of property located 2950 Glenwood Circle,
Corona, California in the County of Riverside (the “Property”). (Dkt. No. 13 (hereinafter
“FAC”) ¶ 3.) Defendant Wells Fargo Bank (“Wells Fargo”) is a national banking
association (“NBA”). (Removal at 3; see also FAC ¶ 4.) Defendant NBS Default
Services, LLC (“Defendant NBS”), is a limited liability company.1 (Removal at 4; FAC
¶ 5.)
On March 4, 2003, Plaintiffs purchased the Property for $407,000. (FAC ¶ 10.)
Plaintiffs executed a promissory note and a deed of trust in the amount of $300,000 with
World Savings Bank, FSB (“WSB”). (Id.) Plaintiffs’ loan with WSB was a conventional

1

The Court will refer to Wells Fargo and Defendant NBS collectively as “Defendants.”

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

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

thirty-year mortgage with a fixed interest rate of 6.5% and a monthly payment of
$1,896.21. (Id.) On or about December 20, 2005, Plaintiffs, based on the advice of
WSB, refinanced their mortgage by executing a promissory note and deed of trust in the
amount of $500,000. (FAC ¶ 12.) The new loan was an adjustable rate mortgage that
allowed Plaintiffs to “Pick-A-Payment.” (Id.) On or about October 2006, Wachovia
Corporation acquired WSB, and in 2008, Wells Fargo acquired Wachovia Corporation.
(FAC ¶ 14.)
On or about June 1, 2010, Plaintiffs received a “step-rate modification” from Wells
Fargo. (FAC ¶ 15.) After continuing to make payments for three years, Plaintiffs
suspected their payments were misapplied because their loan balance had not decreased
while their monthly payment had continued to increase. (FAC ¶ 16.) In the fall of 2014,
Plaintiffs contacted to Wells Fargo to resolve these discrepancies and prevent loan
default. (FAC ¶ 17.) Wells Fargo instructed Plaintiffs to cease making payments and
remain in default so that Wells Fargo could review their account and provide a loan
modification; Plaintiffs complied. (Id.) However, according to Plaintiffs, in early 2015,
Wells Fargo denied their request for a loan modification because Wells Fargo claimed
that Plaintiffs’ income was too low to afford their home. (FAC ¶ 18.) At the time,
Plaintiffs were approximately $27,000 in arrears on their payments, and, according to
Plaintiffs, Wells Fargo demanded full payment to make their loan current. (Id.)
On or around March 2015, Plaintiffs applied for foreclosure prevention assistance
from Keep Your Home California (“KYHC”). (FAC ¶ 19.) Plaintiffs allege that Wells
Fargo was aware that KYHC was assisting Plaintiffs with loan reinstatement. (FAC
¶ 20.) Further, Plaintiffs claim that Wells Fargo knew that that KYHC is only allowed to
pay up to $50,000 to assist in reinstating a loan, and purposely increased Plaintiffs’ loan
reinstatement amount to over $50,000. (FAC ¶ 20.) On or about October 28, 2015,
Plaintiffs received notification from Wells Fargo that it had begun foreclosure
proceedings. (FAC ¶ 21.) On or about November 2015, KYHC informed Plaintiffs that
they were eligible for assistance. (FAC ¶ 22.) However, on or about December 23, 2015,
a Wells Fargo representative told Plaintiffs that KYHC denied them assistance because
their past due balance of $55,737.86 was over $50,000. (FAC ¶¶ 23–24.) On January 8,
2016, after Plaintiffs offered to pay the $5,737.86 difference, a Wells Fargo
representative notified Plaintiffs that Wells Fargo does not collect overages when the
total amount to reinstate is more than $54,000.00. (FAC ¶ 25.)
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

On or about February 16, 2016, Defendant NBS recorded a Notice of Default on
behalf of Wells Fargo. (FAC ¶ 30.) On or about May 23, 2016, Plaintiffs received a
Notice of Trustee’s Sale from Defendant NBS indicating a foreclosure sale date of June
15, 2016. (FAC ¶ 33.)
B.

Procedural History

Plaintiffs initiated this action in the Superior Court of California, County of
Riverside, on May, 27, 2016. (See generally Dkt. No. 1, Ex. A (hereinafter, “Compl.”).)
Defendant Wells Fargo removed the action to this Court on July 11, 2016, invoking
diversity jurisdiction. (See Removal.) On July 18, 2016, Defendants filed a Motion to
Dismiss. (See Dkt. No. 10.) Rather than respond to the Motion to Dismiss, Plaintiffs
filed a First Amended Complaint on August 8, 2016. (See FAC.) Plaintiffs then filed the
instant Motion on August 10, 2016. (See Mot.) On August 22, 2016, Wells Fargo timely
filed its Opposition. (See Dkt. No. 17 (hereinafter, “Opp’n”).) On August 29, 2016,
Plaintiffs timely replied. (Dkt. No. 32 (hereinafter “Reply”).)
III.

LEGAL STANDARD

Federal courts are of limited jurisdiction and possess only that jurisdiction which is
authorized by either the Constitution or federal statute. Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 377 (1994). Pursuant to § 1332(a)(1), a federal district court
has jurisdiction over “all civil actions where the matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and costs,” and the dispute is between citizens of
different states. The Supreme Court has interpreted § 1332 to require “complete diversity
of citizenship,” meaning each plaintiff must be diverse from each defendant. Caterpillar
Inc. v. Lewis, 519 U.S. 61, 67–68 (1996).
Under 28 U.S.C. § 1441(a), a civil action may be removed to federal court only if
the action could have been brought there originally. This means that removal is proper
only if the district court has original jurisdiction over the issues alleged in the state court
complaint. The Ninth Circuit “strictly construe[s] the removal statute against removal
jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted).
If a district court finds, at any time, that it lacks original jurisdiction, the court must
remand the action. See 28 U.S.C. § 1447(c). Moreover, “[f]ederal jurisdiction must be
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

rejected if there is any doubt as to the right of removal in the first instance.” Gaus, 980
F.2d at 566 (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir.
1988)). This presumption against removal “means that the defendant always has the
burden of establishing that removal is proper.” Id. (citations omitted). “[T]he court
resolves all ambiguity in favor of remand to state court.” Hunter v. Philip Morris USA,
582 F.3d 1039, 1042 (9th Cir. 2009) (citing Gaus, 980 F.2d at 566).
IV.

DISCUSSION

Plaintiffs contend that removal was improper in this case for two reasons:
(1) Defendants have failed to show complete diversity between Plaintiffs and
Defendants,2 (Mot. at 5–10; Reply at 3–4); and, (2) Defendants have failed to show the
amount in controversy exceeds $75,000, (Mot. at 10; Reply at 5). For the following
reasons, the Court disagrees with Plaintiffs.
A.

Whether There is Complete Diversity Between Plaintiffs and
Defendants

First, Plaintiffs argue that Defendants have not met their burden of establishing that
Plaintiffs’ citizenship is diverse from Defendants’. (See Mot. at 5–8.) The Court
disagrees.
For diversity jurisdiction purposes, an individual is a citizen of his or her state of
domicile, and an individual is domiciled where he or she resides with the intention to
remain. Kanter v. Warner–Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). Thus, here it
appears that Plaintiffs are citizens of California as they live in California and have not
indicated that they plan to leave the state. (See FAC ¶ 9.)

2

Plaintiffs also include arguments suggesting that Bank of New York Mellon is a defendant in this
action. (See Mot. at 2, 5.) However, as Defendants note, Plaintiffs did not name Bank of New York
Mellon as a defendant here. (See Opp’n at 2; see also Compl.) Defendants admit that erroneously titled
their Notice of Removal as “Notice of Removal by Defendants Wells Fargo Bank, N.A. and the Bank of
New York Mellon,” but an examination of Plaintiffs’ Complaint (and FAC) reveals that, in fact, Bank of
New York Mellon is not a named party. (Opp’n at 2; see also Removal; Compl.) Thus, the Court will
not address any argument relating to Bank of New York Mellon.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

Wells Fargo is an national banking association (“NBA”) with its main office
located in Sioux Falls, South Dakota.3 (Removal at 3 & Ex. G.) The Ninth Circuit has
recently clarified that, pursuant to 28 U.S.C. § 1348, an NBA is deemed a citizen “of the
state in which its main office is located.” Rouse v. Wachovia Mortg., FSB, 747 F.3d 707,
715 (9th Cir. 2014); see also 28 U.S.C. § 1348. Thus, Wells Fargo is a citizen of South
Dakota and is diverse from Plaintiffs.
Next, Defendant NBS is a limited liability company (“LLC”). (Mot. at 8; Opp’n at
3.) To determine an LLC’s citizenship, the Court looks at the citizenship of each of its
members or partners. See Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894,
899 (9th Cir. 2006). Defendants provide evidence that Defendant NBS has a single
member, a corporation with the name NBSC Group Holdings, Inc.4 (Opp’n at 3–4 (citing
Removal at 4); see also Declaration of James B. Cloud (hereinafter, “Cloud Decl.”) ¶ 1;
Declaration of Luke Madole (hereinafter, “Madole Decl.”) ¶ 1; Declaration of Lawrence
J. Buckley (hereinafter, “Buckley Decl.”) ¶ 1.) Under 28 U.S.C. § 1332(c)(1), a
corporation is a citizen of the state in which it has been incorporated and the state where
it has its principal place of business. See 28 U.S.C. § 1332(c)(1). According to
Defendants, NBSC Group Holdings is incorporated in Delaware and has its principal
place of business in Texas. (Removal at 4–5; see also Cloud Decl. ¶ 1; Madole Decl. ¶ 1;

3

Plaintiffs argue that Wells Fargo is actually being sued in its capacity as a trust, and thus, the
citizenship of the trust beneficiaries must be considered. (Mot. at 5.) However, Plaintiffs provide no
support for the proposition that a party’s citizenship should not be determined based on the business
form under which it is organized. Instead, Plaintiffs rely on Americold Realty Trust v. Conagra Foods,
Inc., 136 S. Ct. 1012, 1015–16 (2016), in which the Supreme Court held that for the purposes of
diversity jurisdiction, a trust’s members include its shareholders. (Reply at 3–4.) However, in
Americold, the plaintiffs had clearly named a trust as a defendant. See Americold, 136 S. Ct. at 1015–
16. Here, Plaintiffs have named Wells Fargo, who, as addressed above, is an NBA, not a trust. (See
Compl.; see also Removal at 3 & Ex. G). Thus, Americold is inapposite. Plaintiffs also cite Carden v.
Arkoma Associates, 494 U.S. 185, 195 (1990), in which the Supreme Court held that citizenship of an
artificial entity should be determined by the citizenship of its members. However, Arkoma was
addressing the citizenship of a limited partnership. See id. at 1016. But here, again, Wells Fargo is an
NBA, not a limited partnership; thus, § 1348 applies and its citizenship is determined by where its main
office is located. See Rouse, 747 F.3d at 715.
4

Plaintiffs claim that both NBS and NBSC Holdings have other members who are California citizens,
but they provide no evidence in support of this allegation. (See Mot. at 9.)
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

Buckley Decl. ¶ 1.) Therefore, NBSC Group Holdings, and thus Defendant NBS, is a
citizen of Delaware and Texas and is also diverse from Plaintiffs.
Because Plaintiffs are citizens of a different state than both Defendants, the
complete diversity requirement is satisfied here.
B.

Whether the Amount in Controversy is Sufficient

Second, Plaintiffs argue that Defendants have failed to establish that the amount in
controversy exceeds the $75,000 jurisdictional minimum. (See Mot. at 10–12.) The
Court disagrees and finds that the amount in controversy requirement is satisfied here
under either of two different approaches.
First, Plaintiffs’ Original Complaint indicates that they are seeking damages in an
amount “not less than $1,000,000.”5 (Compl. ¶ 68.) Under Ninth Circuit law, where “a
complaint filed in state court alleges on its face an amount in controversy sufficient to
meet the federal jurisdiction threshold, such requirement is presumptively satisfied unless
it appears to a ‘legal certainty’ that the plaintiff cannot actually recover that amount.”
See Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). Plaintiffs
claim that their requested damages do not satisfy the jurisdictional minimum as they are
seeking only the amount in excess of $50,000 required to reinstate the loan (and that the
amount required to reinstate the loan is currently around $70,000), and that any of
Defendants’ alleged violations of California’s Homeowners’ Bill of Rights have statutory
monetary remedies of only “a couple thousand dollars per incident.” (Reply at 5–6.)
Plaintiffs offer no further indication of the damages associated with each of their causes
of action and provide no evidence that it is legally impossible that their damages will not
exceed $75,000. Accordingly, the Court finds that Plaintiffs’ claims are too vague and

5

In their FAC, Plaintiffs have removed any reference to an amount of damages sought; instead, they
claim that their Complaint explicitly limits their damages request in order to avoid federal jurisdiction.
(See Mot. at 10–11; Reply at 5.) It is unclear whether Plaintiffs are referring to their Original Complaint
or their FAC. Regardless, the Court finds no reference to a limitation of damages in either Complaint.
Further, amending a pleading to avoid jurisdiction is not sufficient to prevent removal. See St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 296 (1938) (“On the face of the pleadings petitioner
was entitled to invoke the jurisdiction of the federal court and a reduction of the amount claimed after
removal, did not take away that privilege.”).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

inconclusive to establish that it is a legal certainty that the jurisdictional minimum is not
met. Thus, the amount in controversy requirement is met under this approach.
Second, when, as here, a plaintiff is seeking injunctive or declaratory relief, “the
amount in controversy is measured by the value of the object of the litigation.” Chapman
v. Deutsche Bank Nat’l Trust Co., 651 F.3d 1039, 1045 n.2 (9th Cir. 2011) (internal
quotation marks omitted). “If the primary purpose of a lawsuit is to enjoin a bank from
selling or transferring property, then that property is the object of the litigation.”
Liwanag v. Bank of Am., N.A., No. EDCV 14-02605-VAP (KKx), 2015 WL 1884319, at
*2 (C.D. Cal. Apr. 24, 2015). Here, Plaintiffs seek to enjoin the foreclosure sale from
occurring and cancel all foreclosure documents or instruments issued against the
Property. (See Compl. ¶¶ 2, 12, 99; see also Compl. at 24 (Prayer for Relief).) Thus, the
Court finds that the primary purpose of their lawsuit is to prevent the sale of the Property,
which makes the Property the object of the litigation.6 See Liwanag, 2015 WL 1884319,
at *2 (“The ownership of the property is at issue, and thus the property is the object of
this litigation.”). In this case, the amount in controversy is determined by the value of the
property. See id. Defendants present evidence that the value of the Property here is
between $486,000 and $605,000. (See Opp’n at 6; see also Compl., Ex. I; Declaration of
Lynette Gridiron Winston, Ex. B.) Because Plaintiffs present no contradictory evidence,
the Court considers Defendants’ proffered values to be the accurate value of the Property7
and the amount in controversy is met under this approach as well.

6

When determining the primary purpose of a lawsuit, some courts have distinguished between situations
in which a plaintiff is seeking only temporary injunctive relief and is, primarily, pursuing a claim for
damages, from those where a plaintiff is seeking a permanent injunction and the primary purpose of the
action is to prevent the sale of the property. See Roman v. Bank of Am., N.A., No. 15-4344 FMO
(JEMx), 2015 WL 4537468, at *2 (C.D. Cal. July 27, 2015) (finding that the plaintiffs were seeking
only temporary injunctive relief and thus, injunctive relief was not the primary purpose of the litigation);
see also McNeely v. Wells Fargo Bank, N.A., No. SACV 11-01370 DOC (MLGx), 2011 WL 5320997, at
*4 (C.D. Cal. Nov. 1, 2011) (finding that because plaintiff was seeking permanent injunctive relief, the
property and the mortgage were the subject of the lawsuit). Here, it appears that the primary purpose of
Plaintiffs’ action is to permanently enjoin the sale of their home; their claims for damages are only
secondary. (See Compl. ¶¶ 2, 12, 99; see also Dkt. No. 26 (Motion for Preliminary Injunction).)
7

When a plaintiff challenges a defendant’s allegation as to the amount in controversy, “both sides
submit proof and the court decides, by a preponderance of the evidence, whether the amount-inCV-90 (06/04)

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

CV 16-01512-BRO (KKx)

Title

TERI ANN KAPANOSKE ET AL. V. WELLS FARGO BANK, N.A. ET AL.

Date

September 9, 2016

Therefore, the amount in controversy requirement is met here.
V.

CONCLUSION

For the foregoing reasons, the Court concludes that Defendants properly removed
this matter pursuant to 28 U.S.C. § 1332. Accordingly, the Court DENIES Plaintiffs’
Motion to Remand. The hearing set for September 12, 2016, is hereby VACATED.
:

IT IS SO ORDERED.
Initials of Preparer

ah

controversy requirement has been satisfied.” Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct.
547, 554 (2014).
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