Wadhwa v. Aurora Loan Services, LLC et al

Filing 41

ORDER signed by Judge William B. Shubb on 6/16/11, ORDERING that within seven days of the date of this order, plaintiffs shall file a brief on the issue of whether the court has subject matter jurisdiction.(Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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NO. CIV. 2:10-3361 WBS DAD

SUNIL WADHWA and LYNN LORI
WADHWA,

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REQUEST FOR BRIEFING

Plaintiffs,
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v.
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AURORA LOAN SERVICES, LLC, a
subsidiary of AURORA BANK,
FSB; GREENPOINT MORTGAGE
FUNDING, INC.; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC.; and DOES 1-10,
inclusive,

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Defendants.
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/

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Plaintiffs Sunil Wadhwa and Lynn Lori Wadhwa brought

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this action against defendants Aurora Loan Services, LLC, a

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subsidiary of Aurora Bank, FSB (“Aurora”), Greenpoint Mortgage

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Funding, Inc. (“Greenpoint”), and Mortgage Electronic

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Registration Systems, Inc. (“MERS”), arising out of defendants’

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allegedly wrongful conduct relating to a loan transaction and
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subsequent foreclosure on plaintiffs’ home.

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require plaintiffs to file a brief on the issue of whether the

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court has subject matter jurisdiction.

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I.

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The court will

Procedural Background
On February 9, 2011, the court dismissed plaintiffs’

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original Complaint.

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April 26, 2011, the court dismissed the federal claims in the

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First Amended Complaint (“FAC” (Docket No. 23)) without leave to

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amend and declined to exercise supplemental jurisdiction over the

(Feb. 9, 2011, Order (Docket No. 20).)

On

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state law claims.

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that Order, the court held that plaintiffs had failed to

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sufficiently allege diversity jurisdiction, as the FAC did not

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allege the citizenship of each party.

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re Mexico City Aircrash of Oct. 31, 1979, 708 F.2d 400, 404 n.4

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(9th Cir. 1983) (“The essential elements of diversity

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jurisdiction, including the diverse residence of all parties,

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must be affirmatively alleged in the pleadings.”)).)

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afforded plaintiffs leave to amend their state law claims to

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allege diversity jurisdiction.

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(Apr. 26, 2011, Order (Docket No. 30).)

In

(Id. at 11 n.3 (citing In

The court

(Id. at 12:18-20.)

Plaintiffs then filed the Second Amended Complaint

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(“SAC” (Docket No. 32)), attempting to allege diversity

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jurisdiction.

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II.

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Discussion
“The federal courts are under an independent obligation

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to examine their own jurisdiction . . . .”

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of Dallas, 493 U.S. 215, 231 (1990).

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original subject matter jurisdiction over actions “where the

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matter in controversy exceeds the sum or value of $75,000” and
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FW/PBS, Inc. v. City

Federal courts have

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the parties are completely diverse.

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purposes of diversity jurisdiction, a corporation is “deemed to

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be a citizen of any State by which it has been incorporated and

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of the State where it has its principal place of business.”

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U.S.C. § 1332(c)(1).

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involving a subsidiary corporation, the court looks to the state

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of incorporation and principal place of business of the

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subsidiary, and not its parent.’”

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Communic’ns Corp., 979 F.2d 772, 775 (9th Cir. 1992) (quoting 1

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James W. Moore et al., Moore’s Federal Practice ¶ 0.77[2.-5] (2d

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ed. 1992)).

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corporation defendant is wholly owned by the non-party parent

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corporation.

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F.2d 279, 283 (6th Cir. 1990).

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28 U.S.C. § 1332.

For

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“The general rule . . . is that ‘in a suit

Danjaq, S.A. v. Pathe

This general rule applies even if the subsidiary

See, e.g., Schwartz v. Elec. Data Sys., Inc., 913

“The only recognized exception to this rule is where

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the subsidiary is the alter ego of the parent corporation.

Under

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these circumstances, courts view the formal separateness between

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the two corporations as merely a legal fiction.”

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979 F.2d at 775.

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ego of the parent corporation, a number of courts have narrowed

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the exception, allowing it only to increase, rather than

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decrease, the number of states in which the subsidiary

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corporation is a citizen.

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GmBh v. Geosource, Inc., 764 F.2d 352, 354 (5th Cir. 1985)

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(“[T]he alter ego doctrine cannot be used to preserve diversity

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jurisdiction by ignoring the place of incorporation of the

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subsidiary and treating the subsidiary as if it were only a

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citizen of the state of incorporation of the dominant

Danjaq, S.A.,

Even if a subsidiary corporation is an alter

See, e.g., Panalpina Welttransport

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corporation.”); see also 15 James W. Moore et al., Moore’s

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Federal Practice § 102.56[7][b] (3d ed. 2010) (“The attribution

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of the parent’s citizenship to the subsidiary may expand, rather

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than supplant, the citizenship of the subsidiary.”).

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Here, in the SAC, plaintiffs allege that defendants

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Aurora and MERS are citizens of states other than California1

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and that the subject property in California is plaintiffs’

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“home.”

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state of incorporation or principal place of business of

(SAC ¶¶ 1-3, 17.)

However, plaintiffs do not allege the

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defendant Greenpoint, the original lender.2

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allege that Greenpoint’s parent, Capital One Financial

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Corporation, which is not a party to this action, is a Delaware

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corporation with its principal place of business in Virginia.

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(Id. ¶ 4.)

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subsidiary actually being sued, not the parent, for purposes of

Plaintiffs only

However, the court looks to the citizenship of the

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The Second Amended Complaint (“SAC”) alleges that
defendant Mortgage Electronic Registration Systems, Inc., is a
Delaware corporation with its principal place of business in
Virginia. (SAC ¶ 3 (Docket No. 32).) The SAC alleges that
defendant Aurora Loan Services, LLC, is a subsidiary of Aurora
Bank, FSB, which is a Delaware corporation with its principal
place of business in Colorado. (Id. ¶ 2.); see Morgan v. Makin,
No. 2:11–cv–00018, 2011 WL 1322565, at *1 (D. Nev. Apr. 4, 2011)
(“An unincorporated association such as a partnership or limited
liability company has the citizenship of all of its members.”).
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The court suspects that plaintiffs omitted the
citizenship of Greenpoint because they could not allege that
Greenpoint is diverse. See Willis v. Greenpoint Mortg. Funding,
Inc., Civil No. 09-593, 2009 WL 4730957, at *1 (S.D. Ill. Dec. 8,
2009) (“Greenpoint Mortgage Funding, Inc., is a corporation
incorporated under New York law with its principal place of
business in California and thus is a citizen of New York and
California for diversity purposes.”) (emphasis added); Naulty v.
GreenPoint Mortg. Funding, Nos. C 09-1542, C 09-1545, 2009 WL
2870620, at *1 (N.D. Cal. Sept. 3, 2009) (“Defendant GreenPoint
is organized under the laws of the State of California and has
its principal place of business in Novato, California.”) (citing
complaint) (emphases added).
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diversity jurisdiction.

See Danjaq, S.A., 979 F.2d at 775.

Based on plaintiffs’ failure to allege the state of

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incorporation and principal place of business of Greenpoint, the

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court doubts that it has subject matter jurisdiction.

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IT IS THEREFORE ORDERED that, within seven days of the

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date of this Order, plaintiffs shall file a brief on the issue of

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whether the court has subject matter jurisdiction.

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DATED: June 16, 2011

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