Donald Karn v. Bayview Loan Servicing, LLC et al

Filing 15

MINUTES (IN CHAMBERS) by Judge David O. Carter: granting 8 MOTION to Remand Case to State Court Case Remanded to Superior Court of California, County of Orange. MD JS-6. Case Terminated. (twdb)

JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL

Case No. SA CV 18-0623-DOC (JDEx)

Date: June 20, 2018

Title: DONALD KARN V. BAYVIEW LOAN SERVICING, LLC ET AL
PRESENT:
THE HONORABLE DAVID O. CARTER, JUDGE
Deborah Lewman
Courtroom Clerk
ATTORNEYS PRESENT FOR
PLAINTIFF:
None Present

Not Present
Court Reporter
ATTORNEYS PRESENT FOR
DEFENDANT:
None Present

PROCEEDINGS (IN CHAMBERS): ORDER GRANTING PLAINTIFF’S
MOTION TO REMAND [8]
Before the Court is Plaintiff Donald Karn’s (“Karn” or “Plaintiff”) Motion to
Remand (“Mot.”) (Dkt. 8). The Court finds this matter suitable for resolution without oral
argument. Fed. R. Civ. P. 78; L.R. 7-15. Having reviewed the papers and considered the
parties’ arguments, the Court GRANTS Plaintiff’s Motion.
I.

Background
A.

Facts

The Court draws the facts as set out in Plaintiff’s Complaint. See Notice of
Removal (“Not. Rem.”) (Dkt. 1) Ex. 1 (Complaint (“Compl.”)).
Plaintiff Karn is an individual who resides in Orange County, California and is the
owner of property at 33801 Glocamora Ln., San Juan Capistrano, California, 92675
(“Home”). Compl. ¶ 1. Defendant Bayview Loan Servicing, LLC (“BLS” or
“Defendant”) is a Delaware limited liability company and was conducting business in
Orange County, California. Id. ¶ 2. Plaintiff is ignorant of the true names and capacities
of the defendants sued as DOES 1 to 20 inclusive, and therefore, sues these defendants by
such fictitious names. Id. ¶ 3. Plaintiff alleges that each defendants designated as DOE

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 18-0623-DOC (JDEx)

Date: June 20, 2018
Page 2

was and is responsible, liable, and/or obligated to Plaintiffs in some manner for the
events, occurrences, happenings, and transactions alleged, and that Plaintiffs’ damages as
alleged were proximately caused by these defendants. Id. ¶ 4.
Plaintiff alleges that in 2016, “Plaintiff’s loan was service released,” or
transferred, from Select Portfolio Servicing Inc. to BLS. Id. ¶ 6. In January 2017,
Plaintiff contacted BLS about modifying his Home mortgage loan. Id. BLS’s
representative told Plaintiff that they would consider him for a loan modification if he
sent in an application. Id. The representative stated that as long as Plaintiff was diligent in
providing the documents or during pending review of changing financial circumstances,
BLS would not foreclose on his home. Id. ¶ 7. Plaintiff and the representative discussed
the loan modification process, at the end of which Plaintiff was informed that he
prequalified for an internal program. Id. Therefore, on February 9, 2017, Plaintiff faxed
to BLS his completed loan modification application, and also called BLS to discuss the
application. Id. ¶ 8.
Despite Plaintiff having sent in an initial loan modification, being prequalified,
sending a completed loan modification application, and being under review, BLS
continued with its foreclosure efforts and refused to work with Plaintiff to help him save
his home. Id. ¶ 9. Throughout this process, Plaintiff alleges he has been in good faith
negotiations for loss mitigation. Id. ¶ 11. BLS assigned Plaintiff a single point of contact
(“SPOC”) who would not respond to Plaintiff’s inquiries. Id. ¶ 11–12. Plaintiff alleges
Defendant failed to act in good faith and that Plaintiff was never given a decision on his
application. Id. ¶ 13.
Plaintiff further alleges that during the review of the completed application,
Defendant was dual tracking (the lenders’ practice of negotiating with homeowners in
default on their loans for a loan modification, while simultaneously advancing the
foreclosure process). Id. ¶ 14.
BLS continued to schedule foreclosure sale dates, despite Plaintiff having
submitted a completed loan modification application. Id. ¶¶ 18–19. In February 2018,
Plaintiff received a Notice of Trustee’s Sale (“NOTS”) scheduled for March 5, 2018. Id.
¶ 19.
B.

Procedural History

On February 26, 2018, Plaintiff filed his Complaint in the Superior Court of
California, County of Orange. See Compl. On April 16, 2018, Defendant removed the
case to this Court based on diversity jurisdiction. See Not. Rem. Plaintiff brings claims

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 18-0623-DOC (JDEx)

Date: June 20, 2018
Page 3

for: (1) violation of homeowner’s bill of rights, California Civil Code § 2923.6(c); (2)
negligence; (3) violation of California Business & Professional Code § 17200; (4)
intentional misrepresentation; (5) negligent misrepresentation; and (6) promissory
estoppel. Compl. ¶¶ 15–61.
On May 16, 2018, Plaintiff filed the instant Motion. On May 25, 2018, Defendant
opposed (“Opp’n”) (Dkt. 10), accompanied by the Declaration of Neil Cooper (“Cooper
Decl.”) (Dkt. 11), Declaration of Bayview Loan Servicing (“BLS Decl.”) (Dkt. 12), and a
Request for Judicial Notice (“RJN”) (Dkt. 13). Plaintiff did not file a Reply.
II.

Request for Judicial Notice

Defendant requests that the Court take judicial notice of the following document,
attached as Exhibit B to the RJN, pursuant to Federal Rule of Evidence 201:
 Schedule D in In re Donald Karn, C.D. Cal. Bankr. Case No. 8:18-bk-10749
RJN. Plaintiff did not oppose this request.
The Court may take judicial notice of court filings and other matters of public
record. Fed. R. Evid. 201(b); Burbank-Glendale-Pasadena Airport Auth. v. City of
Burbank, 136 F.3d 1360, 1364 (9th Cir. 1998). It is improper, however, for a court to take
judicial notice of the veracity of a public document’s contents when the parties dispute
the meaning and truth of the contents. Lee v. City of L.A., 250 F.3d 668, 689–90 (9th Cir.
2001) (reversing a district court’s granting of a motion to dismiss where the court not
only took judicial notice of undisputed matters of public record but also took judicial
notice of “disputed facts stated in public records” and relied on the validity of those facts
in deciding the motion to dismiss).
Since this document is a court filing of public record, the Court takes judicial
notice of this document. See City of Burbank, 136 F.3d at 1634.
III.

Legal Standard

“If at any time before final judgment it appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). Removal of a case
from state court to federal court is governed by 28 U.S.C. § 1441, which provides in
pertinent part that “any civil action brought in a State court of which the district courts of
the United States have original jurisdiction, may be removed . . . to the district court of
the United States for the district and division embracing the place where such action is

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 18-0623-DOC (JDEx)

Date: June 20, 2018
Page 4

pending.” 28 U.S.C. § 1441. A federal court may order remand for lack of subject matter
jurisdiction or any defect in the removal procedure. 28 U.S.C. § 1447(c).
A federal court has diversity jurisdiction if: (1) the controversy is between
“citizens of different States,” and (2) the amount in controversy exceeds the sum or value
of $75,000. 28 U.S.C. § 1332(a). Diversity jurisdiction requires complete diversity,
meaning that no plaintiff can be from the same state as a defendant. Abrego Abrego v.
The Dow Chem. Co., 443 F.3d 676, 679 (9th Cir. 2006).
In determining the amount in controversy, courts first look to the complaint.
Generally, “the sum claimed by the plaintiff controls if the claim is apparently made in
good faith.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289
(1938) (footnote omitted). In cases in which the existence of diversity jurisdiction
depends on the amount in controversy, “[t]he district court may consider whether it is
‘facially apparent’ from the complaint that the jurisdictional amount is in
controversy.” Singer v. State Farm Mutual Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir.
1997) (citing Allen v. R & H Oil & Gas Co., 63 F.3d 1326 (5th Cir. 1995)). A speculative
argument regarding the potential value of the award is insufficient. Id. at 376; Gaus v.
Miles, 980 F.2d 564, 567 (9th Cir.1992). The amount in controversy includes claims for
general and special damages (excluding costs and interests), including attorney’s fees, if
recoverable by statute or contract, and punitive damages, if recoverable as a matter of
law. See Richmond v. Allstate Ins. Co., 897 F.Supp. 447 (S.D. Cal. 1995); Miller v.
Michigan Millers Ins. Co., 1997 WL 136242 (N.D.Cal.1997).
IV.

Discussion

Defendant removed this action on the basis of diversity jurisdiction. See Not. of
Rem. Plaintiff does not contest the diversity of the parties. See Mot. Rather, Plaintiff
argues that Defendant has not established that the amount in controversy exceeds
$75,000. Id. at 6. Plaintiff argues that his complaint did not specify any particular amount
of damages beyond $25,000, and that Defendant cannot prove by a preponderance of the
evidence that the amount in controversy exceeds $75,000. Id. at 6–7. Plaintiff argues that
the Complaint does not seek to rescind the loan, but instead seeks unspecified damages
under state law claims, and that neither the value of the loan nor the property provides the
value of the “object of litigation,” and that thus Defendant has not proved that the amount
in controversy requirement is satisfied. Id.
Under recent Supreme Court precedent, the allegations in a defendant’s notice of
removal that the amount in controversy exceeds the jurisdictional threshold need only be
“plausible.” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 554

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 18-0623-DOC (JDEx)

Date: June 20, 2018
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(2014). If the plaintiff has not clearly or unambiguously alleged $75,000 in its complaint
or has affirmatively alleged an amount less than $75,000 in its complaint, once the
plaintiff challenges removal the burden lies with the defendant to show by a
preponderance of the evidence that the jurisdictional minimum is satisfied. Id.; see also
Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106–07
(9th Cir. 2010); Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2008).
While the defendant must “set forth the underlying facts supporting its assertion
that the amount in controversy exceeds the statutory minimum,” the standard is not so
taxing as to require the defendant to “research, state, and prove the plaintiff’s claims for
damages.” Coleman v. Estes Express Lines, Inc., 730 F. Supp. 2d 1141, 1148 (C.D. Cal.
2010) (emphasis added). In short, the defendant must show that it is “more likely than
not” that the amount in controversy exceeds the statutory minimum. Id. Summary
judgment-type evidence may be used to substantiate this showing. Matheson v.
Progressive Specialty Ins. Co., 319 F.3d 1089, 1090–91 (9th Cir. 2003); Singer v. State
Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). For example, defendants
may make mathematical calculations using reasonable averages of hourly, monthly, and
annual incomes of comparable employees when assessing the amount in controversy in a
wrongful termination suit. Coleman, 730 F. Supp. 2d. at 1148–49.
Here, Defendant claims that the amount in controversy includes claims for
exemplary and punitive damages, economic and non-economic damages, attorney’s fees
and experts’ fees, and an order prohibiting the foreclosure of the subject property,
including “for Defendant to rescind all Notices of Default.” Opp’n at 3; See Compl.
Prayer. Defendant contends that the action concerns a “$968,000 loan that is hundreds of
thousands of dollars in default and secured by property that is in the range of $1.5 million
and the amount in controversy exceeds $75,000.” Opp’n at 3. Plaintiff is correct,
however, that “when a plaintiff does not seek to rescind the loan at issue, but instead
seeks damages in an unspecified amount under claims such as breach of fiduciary duty,
negligence . . . and intentional infliction of emotional distress, the amount of controversy
is not properly gauged by the loan amount.” See Vonderscher v. Green Tree Servicing,
LLC, No. 2:13-CV-00490-MCE, 2013 WL 1858431, at *3 (E.D. Cal. May 2, 2013);
Quiroga v. Bank of America, N.A., No. EDCV151163MWFKKX, 2015 WL 4747978, at
*3 (C.D. Cal. Aug. 10, 2015); Mot. at 7. Plaintiff does not seek to rescind the loan but
seeks damages in an unspecified amount under state law claims, such as intentional
misrepresentation, negligent misrepresentation, and promissory estoppel. Mot. at 7. Thus,
“the test for determining the amount in controversy is the pecuniary result to either party
which the judgment would directly produce.” In re Ford Motor Co./Citibank (South

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 18-0623-DOC (JDEx)

Date: June 20, 2018
Page 6

Dakota), N.A., 264 F.3d 952, 958 (9th Cir. 2001) (citing Ridder Bros. Inc., v.
Blethen, 142 F.2d 395, 399 (9th Cir. 1944)).
Even without taking into account the loan amount, Defendant assert that damages
should be calculated as follows. First, Defendant takes the value of Plaintiff’s equity for
his Home, estimated to be approximately $26,000. Opp’n at 3. Then, Defendant claims
that Plaintiff’s prayer for equitable relief, “including an order to rescind all Notices of
Default” is “calculated by either the benefit to the borrower or the cost to the defendant.”
Compl. at 15; see also Opp’n at 4. Defendant calculates the value of an injunction against
foreclosure as the amount of Plaintiff’s regular monthly payment of $8,291.16. See BLS
Decl. ¶ 4, Ex. C, D; Opp’n at 4. Defendant contends that if Plaintiff succeeds in having
the Notices of Default rescinded, any foreclosure could not occur for at least five months,
likely longer, and could potentially last indefinitely. See Opp’n at 4–5; Cal. Civ. Code §§
2924(a)(2)–(3) (three months must elapse between the filing of notice of default and
notice of sale); 2924f(b)(1) (no less than 20 days between posting of notice of sale and
sale). Id. Thus, Defendant calculates that the very minimum value of equitable relief
exceeds $41,000 ($8,29.16 x 5 (months) = $41,455.80). Id. Therefore, Defendant
contends, the economic damages from the loss in equity of $26,000 and the $41,000
minimum for equitable relief is only $8,000 shy from reaching the federal limit of
$75,000. Thus, Defendant claims that, based on these calculations, the absolute minimum
of the amount in controversy is $67,000. Id. Defendant claims that a 5-month timeline is
“unrealistically abbreviated” and “were Plaintiff to succeed, it could be years before
foreclosure.” Id. at 4. Thus, Defendant argues that another month of delay in the
foreclosure would push this amount to beyond $75,000. See id.
In addition, Defendant contends that Plaintiff’s prayer for other economic and
non-economic damages from damaged credit, punitive damages, and attorney’s fees for
both incurred and future litigation will easily exceed the additional $8,000 remaining to
meet the jurisdictional limit for the amount in controversy. Opp’n at 5; see Bank of
America Nat. Ass’n v. Twin Harbors Lumber Co., 465 F.2d 489, 491 (9th Cir. 1972) (in
an action by a single plaintiff against a single defendant, the value of all claims are
aggregated to calculate the amount in controversy). The amount in controversy may
include punitive damages if recoverable under state law. Davenport v. Mutual Ben.
Health & Acc. Ass’n, 325 F.2d 785, 787 (9th Cir. 1963); see Brady v. Mercedes-Benz
USA, Inc., 243 F.Supp.2d 1004, 1009 (N.D. Cal. 2002). Under California Civil Code §
3294, punitive damages are an available remedy for intentional misrepresentation.
Defendant does not provide evidence of the amount of punitive damages that juries award
in cases analogous to this one. Rather, Defendant contends these damages are available
and could, in theory, be substantial. This is not enough, however, because “conclusory

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 18-0623-DOC (JDEx)

Date: June 20, 2018
Page 7

allegations as to the amount in controversy are insufficient.” Matheson, 319 F.3d at
1090–91 (citing Gaus, 980 F.2d at 567). Moreover, allowing defendants to claim that the
amount in controversy includes a significant calculation of punitive damages, simply
because such punitive damages might be available by law, could erode the jurisdiction of
state courts. As a result, the Court rejects this argument.
As for attorney’s fees, district courts in the Ninth Circuit “are split as to whether a
court should consider only attorneys’ fees incurred as of the time of removal or fees
reasonably likely to be incurred after the date of removal.” Bigby v. DS Waters of Am.
Inc., 2013 WL 394876, at *7 (C.D. Cal. Jan. 30, 2013); (citations omitted); compare
Reames v. AB Car Rental Servs., Inc., 899 F. Supp. 2d 1012, 1016 (D. Or. 2012)
(measuring attorney’s fees incurred as of the time of removal), with Brady, 243 F. Supp.
2d at 1010–11 (“A reasonable estimate of fees likely to be recovered may be used in
calculating the amount in controversy.”). The Court finds the reasoning in Reames to be
persuasive, because diversity jurisdiction is a limited grant of jurisdiction, although the
Ninth Circuit has not clarified this issue to date.
In sum, even assuming that Defendant has established that the equitable relief is
worth $41,000—because of uncertainty in the amount of punitive damages, uncertainty in
the amount of damages from damaged credit, and the limited attorney’s fees incurred at
the time of removal—Defendant has failed to establish through a preponderance of
evidence that the amount in controversy will be greater than $75,000.
Accordingly, the Court GRANTS Plaintiff’s Motion to Remand.
V.

Disposition

For the foregoing reasons, the Court REMANDS this action to the Superior Court
of California, County of Orange.
The Clerk shall serve this minute order on the parties.
MINUTES FORM 11
CIVIL-GEN

Initials of Deputy Clerk: djl