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)

Download PDF
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 NO. CIV. 2:10-3361 WBS DAD SUNIL WADHWA and LYNN LORI WADHWA, 13 REQUEST FOR BRIEFING Plaintiffs, 14 v. 15 16 17 18 AURORA LOAN SERVICES, LLC, a subsidiary of AURORA BANK, FSB; GREENPOINT MORTGAGE FUNDING, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and DOES 1-10, inclusive, 19 Defendants. 20 / 21 ----oo0oo---22 23 Plaintiffs Sunil Wadhwa and Lynn Lori Wadhwa brought 24 this action against defendants Aurora Loan Services, LLC, a 25 subsidiary of Aurora Bank, FSB (“Aurora”), Greenpoint Mortgage 26 Funding, Inc. (“Greenpoint”), and Mortgage Electronic 27 Registration Systems, Inc. (“MERS”), arising out of defendants’ 28 allegedly wrongful conduct relating to a loan transaction and 1 1 subsequent foreclosure on plaintiffs’ home. 2 require plaintiffs to file a brief on the issue of whether the 3 court has subject matter jurisdiction. 4 I. 5 The court will Procedural Background On February 9, 2011, the court dismissed plaintiffs’ 6 original Complaint. 7 April 26, 2011, the court dismissed the federal claims in the 8 First Amended Complaint (“FAC” (Docket No. 23)) without leave to 9 amend and declined to exercise supplemental jurisdiction over the (Feb. 9, 2011, Order (Docket No. 20).) On 10 state law claims. 11 that Order, the court held that plaintiffs had failed to 12 sufficiently allege diversity jurisdiction, as the FAC did not 13 allege the citizenship of each party. 14 re Mexico City Aircrash of Oct. 31, 1979, 708 F.2d 400, 404 n.4 15 (9th Cir. 1983) (“The essential elements of diversity 16 jurisdiction, including the diverse residence of all parties, 17 must be affirmatively alleged in the pleadings.”)).) 18 afforded plaintiffs leave to amend their state law claims to 19 allege diversity jurisdiction. 20 (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 21 (“SAC” (Docket No. 32)), attempting to allege diversity 22 jurisdiction. 23 II. 24 Discussion “The federal courts are under an independent obligation 25 to examine their own jurisdiction . . . .” 26 of Dallas, 493 U.S. 215, 231 (1990). 27 original subject matter jurisdiction over actions “where the 28 matter in controversy exceeds the sum or value of $75,000” and 2 FW/PBS, Inc. v. City Federal courts have 1 the parties are completely diverse. 2 purposes of diversity jurisdiction, a corporation is “deemed to 3 be a citizen of any State by which it has been incorporated and 4 of the State where it has its principal place of business.” 5 U.S.C. § 1332(c)(1). 6 involving a subsidiary corporation, the court looks to the state 7 of incorporation and principal place of business of the 8 subsidiary, and not its parent.’” 9 Communic’ns Corp., 979 F.2d 772, 775 (9th Cir. 1992) (quoting 1 10 James W. Moore et al., Moore’s Federal Practice ¶ 0.77[2.-5] (2d 11 ed. 1992)). 12 corporation defendant is wholly owned by the non-party parent 13 corporation. 14 F.2d 279, 283 (6th Cir. 1990). 15 28 U.S.C. § 1332. For 28 “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 16 the subsidiary is the alter ego of the parent corporation. Under 17 these circumstances, courts view the formal separateness between 18 the two corporations as merely a legal fiction.” 19 979 F.2d at 775. 20 ego of the parent corporation, a number of courts have narrowed 21 the exception, allowing it only to increase, rather than 22 decrease, the number of states in which the subsidiary 23 corporation is a citizen. 24 GmBh v. Geosource, Inc., 764 F.2d 352, 354 (5th Cir. 1985) 25 (“[T]he alter ego doctrine cannot be used to preserve diversity 26 jurisdiction by ignoring the place of incorporation of the 27 subsidiary and treating the subsidiary as if it were only a 28 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 3 1 corporation.”); see also 15 James W. Moore et al., Moore’s 2 Federal Practice § 102.56[7][b] (3d ed. 2010) (“The attribution 3 of the parent’s citizenship to the subsidiary may expand, rather 4 than supplant, the citizenship of the subsidiary.”). 5 Here, in the SAC, plaintiffs allege that defendants 6 Aurora and MERS are citizens of states other than California1 7 and that the subject property in California is plaintiffs’ 8 “home.” 9 state of incorporation or principal place of business of (SAC ¶¶ 1-3, 17.) However, plaintiffs do not allege the 10 defendant Greenpoint, the original lender.2 11 allege that Greenpoint’s parent, Capital One Financial 12 Corporation, which is not a party to this action, is a Delaware 13 corporation with its principal place of business in Virginia. 14 (Id. ¶ 4.) 15 subsidiary actually being sued, not the parent, for purposes of Plaintiffs only However, the court looks to the citizenship of the 16 1 17 18 19 20 21 22 23 24 25 26 27 28 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.”). 2 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). 4 1 2 diversity jurisdiction. See Danjaq, S.A., 979 F.2d at 775. Based on plaintiffs’ failure to allege the state of 3 incorporation and principal place of business of Greenpoint, the 4 court doubts that it has subject matter jurisdiction. 5 IT IS THEREFORE ORDERED that, within seven days of the 6 date of this Order, plaintiffs shall file a brief on the issue of 7 whether the court has subject matter jurisdiction. 8 DATED: June 16, 2011 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?