Teresa Vargas v. Wells Fargo Bank, N.A. et al

Filing 14

MINUTES (IN CHAMBERS) ORDER TO SHOW CAUSE REGARDING SUBJECT MATTER JURISDICTION by Judge Andrew J. Guilford. As such, the Court ORDERS Wells Fargo to show cause in writing--by no later than June 25, 2018--why thisaction should not be remanded for lack of subject matter jurisdiction. (see document for details). (dro)

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

SACV 18-00875

Title

TERESA VARGAS v. WELLS FARGO BANK, N.A.

Present: The Honorable

June 11, 2018

ANDREW J. GUILFORD

Lisa Bredahl
Deputy Clerk
Attorneys Present for Plaintiffs:
Proceedings:

Date

Not Present
Court Reporter / Recorder

Tape No.

Attorneys Present for Defendants:

[IN CHAMBERS] ORDER TO SHOW CAUSE REGARDING
SUBJECT MATTER JURISDICTION

“Federal courts are courts of limited jurisdiction,” and they possess “only that power
authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S.
375, 377 (1994). Wells Fargo Bank invoked that limited jurisdiction when it filed a notice of
removal in this Court. See id. (“It is to be presumed that a cause lies outside of [a federal
court’s] limited jurisdiction,” and “the burden of establishing the contrary rests upon the
party asserting jurisdiction.”). Wells Fargo says that this Court has “diversity jurisdiction.” See
U.S. Const. art. III, § 2 (“The judicial Power shall extend to all Cases . . . between Citizens of
different States.”); 28 U.S.C. § 1332(a) (“The district courts shall have original jurisdiction of
all civil actions where the matter in controversy exceeds the sum or value of $75,000,
exclusive of interests and costs, and is between . . . citizens of different States.”).
Plaintiff is a citizen of California and Wells Fargo, true enough, is a citizen of North Dakota.
(Notice of Removal, Dkt. No. 1, at 2–4.) Those representations are correct, even if subject to
some puzzlement about this major bank in California being from North Dakota. But what
about the amount in controversy in this foreclosure case? Case law has stated, “In actions
seeking declaratory or injunctive relief, it is well established that the amount in controversy is
measured by the value of the object of the litigation.” Hunt v. Wash. State Apple Adver.
Comm’n, 432 U.S. 333, 347 (1977). But as this Court has previously stated, it’s too simplistic
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 18-00875

Date

Title

June 11, 2018

TERESA VARGAS v. WELLS FARGO BANK, N.A.

to argue that the “object of the litigation” is the value of the underlying loan. See Olmos v.
Residential Credit Sols., Inc., 92 F. Supp. 3d 954, 956 (C.D. Cal. 2015). Under California’s
anti-deficiency law, the amount available to a lender is pegged and “often limited to the value
of the real property.” Perez v. Wells Fargo Home Mortg., Inc., No. SACV 13-00315 AG (JPRx),
2013 WL 6876445, at *2 (C.D. Cal. Apr. 5, 2013); see also Cal. Civ. Proc. §§ 580b, 580d.
Further, when a case involves merely a “temporary delay in foreclosure,” the amount in
controversy is measured by “benefit to [the plaintiff] of the delay.” Corral v. Select Portfolio
Servicing, Inc., 878 F.3d 770, 775 (9th Cir. 2017) (emphasis added). The amount in controversy
may also be measured by “the cost to [the lender] from the delay,” including “the
transactional costs . . . of delaying foreclosure or a fair rental value of the property during”
the delay. Id. at 775–76; see also Perez, 2013 WL 6876445 at *2 (reasoning that for temporary
delays in foreclosure “the amount involved might more accurately be the present value of the
future rental stream”). On the other hand, when a plaintiff “seeks to quiet title to a property
or permanently enjoin foreclosure,” then “the value of the property or the amount of
indebtedness on the property is a proper measure of the amount in controversy.” Id. at 776
(emphasis added).
Wells Fargo’s notice of removal says that the amount in controversy is either “the amount of
the loan balance as stated in [the] Deed of Trust ($315,000), the Notice of Trustee’s Sale
($424,466.12), or the assessed value of the Property ($434,100.00).” (Notice of Removal,
Dkt. No. 1 at 6.) But it’s unclear from the notice of removal that these amounts accurately
reflect what’s at stake in this case, since it isn’t clear that the remedies Plaintiff seeks would
permanently deprive Wells Fargo of its rights to the property, if any. Plaintiff’s complaint
seeks a declaration concerning the validity of a foreclosure sale and cancellation of a notice
of default, among other things. (Complaint, Dkt. No. 1-1 at 11–12.) If Wells Fargo will
simply have to refile a notice of default and redo the foreclosure sale if Plaintiff wins this
case, then there may be more accurate measures of the amount in controversy other than
property value or amount of indebtedness. See Corral, 878 F.3d at 776. Simply put, Wells
Fargo needs to do more to justify its amount in controversy calculations, even if that means
distinguishing this case from a “temporary delay” in foreclosure (if appropriate).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 18-00875

Date

Title

June 11, 2018

TERESA VARGAS v. WELLS FARGO BANK, N.A.

“Nothing is to be more jealously guarded by a court than its jurisdiction.” See United States v.
Ceja-Prado, 333 F.3d 1046, 1051 (9th Cir. 2003) (internal quotation marks omitted). Here, that
high bar tends to keep state cases in state courts applying state law to properly determine
issues concerning California’s very complex real property security law. As such, the Court
ORDERS Wells Fargo to show cause in writing—by no later than June 25, 2018—why this
action should not be remanded for lack of subject matter jurisdiction.

:
Initials of
Preparer

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