Wadhwa v. Aurora Loan Services, LLC et al

Filing 46

ORDER signed by Judge William B. Shubb on 6/28/2011 ORDERING that this action be, and the same hereby is, DISMISSED for lack of subject matter jurisdiction. CASE CLOSED. (Duong, D)

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
ORDER RE: DISMISSAL FOR LACK
OF SUBJECT MATTER JURISDICTION

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, Greenpoint Mortgage Funding, Inc.

26

(“Greenpoint”), and Mortgage Electronic Registration Systems,

27

Inc., arising out of defendants’ allegedly wrongful conduct

28

relating to a loan transaction and subsequent foreclosure on
1

1

plaintiffs’ home.

The court required plaintiffs to file a brief

2

on the issue of diversity jurisdiction when plaintiffs’ Second

3

Amended Complaint (“SAC”) failed to allege the citizenship of the

4

lender, Greenpoint, despite the court having afforded plaintiffs

5

leave to amend specifically to allege the citizenship of each

6

party.

(See Docket Nos. 30, 32, 41.)

7

In their brief, plaintiffs concede that the court lacks

8

diversity jurisdiction: “Greenpoint’s principal place of business

9

is in California, which is the same state that Plaintiffs reside.

10

This in and of itself defeats subject matter jurisdiction for

11

this court, as complete diversity is lacking.”

12

2:9-11 (Docket No. 44).)

13

(Pls.’ Br. at

Then, without citation to any authority, plaintiffs go

14

on to request that the court allow plaintiffs to dismiss

15

Greenpoint from this action and add its parent corporation,

16

Capital One Financial Corporation (“Capital One”) as a defendant.

17

(Id. at 3:1-6.)

18

assertion that Greenpoint “is no longer in existence.”

19

2:24.)

20

because Greenpoint “appears to no longer be in business,” (id.

21

2:12-13), as the California Secretary of State’s web page

22

describes Greenpoint’s status as suspended, (id. Ex. B), and an

23

August of 2007 article on the web site

24

http://www.thetruthaboutmortgage.com/greenpoint-mortgage-closed/

25

indicates that Greenpoint was “shut down today by parent Capital

26

One Financial Corp.”

27

state that Greenpoint is no longer incorporated or is incapable

28

of being sued.

The stated basis for this request is plaintiffs’
(Id. at

Plaintiffs conclude that Greenpoint no longer exists

(Id. Ex. C.)

2

Notably, plaintiffs do not

1

While not required by the court, defendants Aurora Loan

2

Services, LLC, a subsidiary of Aurora Bank, FSB, and Mortgage

3

Electronic Registration Systems, Inc. filed a brief stating that

4

Greenpoint “remains a going concern and proper defendant.”

5

(Defs.’ Br. at 2:6-7 (Docket No. 45).)

6

Greenpoint has been headquartered and incorporated in New York as

7

of March of 2011 and that defendants “believe that none of the

8

defendants is either headquartered or incorporated in the State

9

of California.”

(Id. at 2:7-9.)

Defendants state that

Defendants do not address

10

Greenpoint’s principal place of business or state of

11

incorporation as of December of 2010, when this action was filed.

12

“The federal courts are under an independent obligation

13

to examine their own jurisdiction . . . .”

14

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

15

original subject matter jurisdiction over actions “where the

16

matter in controversy exceeds the sum or value of $75,000” and

17

the parties are completely diverse.

18

purposes of diversity jurisdiction, a corporation is “deemed to

19

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

20

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

21

U.S.C. § 1332(c)(1).

22

FW/PBS, Inc. v. City

Federal courts have

28 U.S.C. § 1332.

For

28

Here, plaintiffs concede that diversity jurisdiction is

23

lacking because Greenpoint is a citizen of California.

(Pls.’

24

Brief at 2:9-11).

25

statement in their brief about the citizenship of Greenpoint as

26

of March of 2011, (see Defs.’ Br. at 2:7-8), defendants do not

27

address the principal place of business or state of incorporation

28

as of December of 2010, when this action was initiated.

Even if the court were to consider defendants’

3

See

1

Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 575

2

(2004) (holding that a post-filing change in citizenship cannot

3

cure absence of diversity that existed at the time the suit was

4

filed).

5

plaintiffs’ request to dismiss Greenpoint because Greenpoint “is

6

no longer in existence.”1 (Id. at 2:24-25).

Thus, the remaining issue to consider is the effect of

First, plaintiffs do not point to authority suggesting

7
8

that a party no longer existing allows a court to dismiss the

9

party and preserve diversity jurisdiction.

Federal Rule of Civil

10

Procedure 25 does allow substitution of parties under certain

11

circumstances.

12

plaintiffs have not filed a motion pursuant to Rule 25 or

13

represented that Greenpoint transferred its interests to its

14

parent Capital One Financial Corporation, the court does not have

15

occasion to substitute Greenpoint pursuant to Rule 25 or to

16

consider the effect of such a substitution on diversity

17

jurisdiction.

18

transferred, the action may be continued by or against the

19

original party unless the court, on motion, orders the transferee

20

to be substituted in the action or joined with the original

21

party.

22

25(a)(3).”).

See Fed. R. of Civ. P. 25.

However, since

See id. Rule 25(c) (“If an interest is

The motion must be served as provided in Rule

Second, even if the court were to entertain plaintiff’s

23
24

suggestion, plaintiffs have only informed the court that

25

Greenpoint no longer conducts business and from this plaintiffs

26
27
28

1

It is not clear whether plaintiffs mean that Greenpoint
no longer existed when they sued Greenpoint or ceased to exist
following the initiation of this action.
4

1

conclude that Greenpoint no longer exists; plaintiffs do not

2

state that Greenpoint is no longer incorporated or is incapable

3

of being sued.

4

it may have to preserve diversity jurisdiction under these

5

circumstances.

6

The court declines to exercise whatever authority

Plaintiffs had the opportunity to allege diversity

7

jurisdiction in the original complaint and two amended complaints

8

and still failed to allege sufficient facts to establish

9

jurisdiction.

The court also requested briefing from plaintiffs

10

following plaintiffs’ complete failure to allege the citizenship

11

of Greenpoint in the most recent complaint, at which point

12

plaintiffs conceded that the court lacked diversity jurisdiction

13

and, without citation to any authority, requested dismissal of

14

Greenpoint and the addition of the parent corporation, Capital

15

One.

16

Capital One is a separate action, they are of course free to do

17

so, but after multiple unsuccessful attempts to allege diversity

18

of citizenship of the parties to this action, it is clear that

19

the court lacks subject matter jurisdiction in this action.

If plaintiffs believe they can state a viable claim against

20

IT IS THEREFORE ORDERED that this action be, and the

21

same hereby is, DISMISSED for lack of subject matter

22

jurisdiction.

23

DATED:

June 28, 2011

24
25
26
27
28
5