Latino v. Wells Fargo Bank, N.A. et al

Filing 27

MEMORANDUM AND ORDER signed by Judge Morrison C. England, Jr on 10/14/11 REMANDING CASE to Sacramento County Superior Court: Plaintiff's 12 Motion to Stay all State Court proceedings is DENIED, and Plaintiff's Motion for Attorney's Fees and Costs is DENIED. 20 Motion to Dismiss and 21 Motion to Strike are DENIED without prejudice. Copy of remand order sent to Superior Court. CASE CLOSED. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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SAM LOUIS LATINO,

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No. 2:11-cv-02037-MCE-DAD

Plaintiff,
v.

MEMORANDUM AND ORDER

WELLS FARGO BANK, N.A., also
known as WACHOVIA MORTGAGE, a
division of WELLS FARGO BANK,
N.A., formerly known as
WACHOVIA MORTGAGE, FSB,
formerly known as WORLD
SAVINGS BANK, FSB; et al.,

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Defendants.

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----oo0oo----

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Plaintiff Sam Latino (“Plaintiff”) originally brought this

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action in the Superior Court of the State of California, County

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of Sacramento, against Defendants Wells Fargo Bank, N.A. (“Wells

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Fargo”),1 Cal-Western Reconveyance Corporation (“Cal-Western”),

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Golden West Savings Association Service Company (“Golden West”)

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and Does 1-20 (collectively “Defendants”).

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Wells Fargo is officially named as “Wells Fargo Bank,
N.A., also known as Wachovia Mortgage, a division of Wells Fargo
Bank, N.A., and formerly known as Wachovia Mortgage, FSB,
formerly known as World Savings Bank, FSB.”
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Defendants Wells Fargo and Golden West (“Removing Defendants”)

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timely removed the case to this Court.

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Court are Plaintiff’s Motion to Remand, Motion for Stay of all

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State Court Proceedings and Motion for Fees and Costs

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(“Plaintiff’s Motion”) and Removing Defendants’ Motion to Dismiss

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and Motion to Strike (“Removing Defendants’ Motions”).

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following reasons, Plaintiff’s Motion is granted in part and

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denied in part, and Removing Defendants’ Motions are denied.2

Presently before the

For the

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BACKGROUND3

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On March 22, 2007, Plaintiff entered into a loan transaction

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with World Savings Bank (“World Savings”), now Wells Fargo, to

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purchase a residence in Sacramento, California (the “Property”).

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Plaintiff executed a promissory note (the “Note”)in connection

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with the transaction, and World Savings took a security interest

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in the Property via a Deed of the Trust (“DOT”).

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the original trustee on the DOT and Plaintiff was the trustor.

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Golden West was

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Because oral argument will not be of material assistance,
the Court ordered this matter submitted on the briefing. E.D.
Cal. Local Rule 230(g).
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Unless otherwise stated, the following facts are derived
from Plaintiff’s Verified Complaint. The Court is aware that
Plaintiff also provided Removing Defendants with a copy of an
unverified, unsigned First Amended Complaint (“FAC”). The Court
has not been presented with any evidence that the FAC was ever
filed and thus will proceed on the basis that the original
Complaint remains operative. In any event, Removing Defendants
admit that any distinction between the pleadings is immaterial.
Notice of Removal, 2:16-20.
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Plaintiff apparently defaulted on his loan, and, on July 16,

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2010, Cal-Western, the substituted trustee, recorded a Notice of

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Default (“NOD”).

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recorded a Notice of Trustee’s Sale (“NOTS”).

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eventually held a Trustee’s Sale on March 21, 2011, at which time

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Wells Fargo purchased the property.

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On approximately October 19, 2010, Cal-Western
Cal-Western

On approximately April 11, 2011, Wells Fargo initiated an

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unlawful detainer action against Plaintiff in the Sacramento

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County Superior Court.4

Subsequently, on July 26, 2011,

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Plaintiff filed the instant action in Sacramento County Superior

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Court against Defendants alleging causes of action for: 1) fraud;

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2) intentional misrepresentation; 3) negligent misrepresentation;

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4) concealment; 5) violation of California Business and

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Professions Code § 17200; 6) unjust enrichment; 7) quiet title;

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8) declaratory relief; 9) violation of California Civil Code

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§ 2932.5; 10) breach of fiduciary duty; and 11) breach of the

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implied covenant of good faith and fair dealing.

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Complaint, Plaintiff primarily contends that he is a victim of

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Defendants’ predatory lending practices and that Defendants lack

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standing to foreclose on the Property.

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Defendants are not the holders of the underlying Note and thus

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have no right to initiate foreclosure proceedings of any kind.

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Pursuant to his

According to Plaintiff,

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On August 15, 2011, Plaintiff removed the unlawful
detainer action to this Court and filed a Notice of Related Case
seeking to relate that action to this one. That case has since
been remanded back to the state court.
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In addition, at various points throughout the Complaint,

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Plaintiff alleges that, in conducting the nonjudicial foreclosure

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sale of the subject property, Defendants failed to comply with

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state statutory requirements.

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(alleging, among other things, Defendants violated California

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Civil Code § 2923.5).

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number of relevant documents, including the NOD and NOTS, were

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defective or signed by unauthorized parties.

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among other things: 1) to quiet title to the Property in

See, e.g., Complaint, ¶ 159

Plaintiff contends, for example, that a

Plaintiff seeks,

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Plaintiff; and 2) to recover compensatory and punitive damages

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and fees and costs.

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On August 1, 2011, Wells Fargo and Golden West removed

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Plaintiff’s state action to this Court pursuant to 28 U.S.C.

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§ 1332.

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Plaintiff and each Defendant are citizens of California and that

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no diversity thus exists.

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state court unlawful detainer proceedings and to recover

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attorney’s fees and costs incurred in bringing this Motion.

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Since Plaintiff filed his Motion, Removing Defendants have filed

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their own Motion to Dismiss and Motion to Strike.

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following reasons, Plaintiff’s Motion is granted in part and

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denied in part, and Removing Defendants’ Motions are denied.

Plaintiff subsequently moved to remand, arguing that

Plaintiff further seeks to stay the

For the

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STANDARD

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A defendant may remove any civil action from state court to

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federal district court if the district court has “original

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jurisdiction” over the matter.

28 U.S.C. § 1441(a).
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Generally, district courts have original jurisdiction over civil

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actions in two instances: (1) where there is complete diversity

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between the parties and the amount in controversy exceeds

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$75,000; or (2) where a federal question is presented in an

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action arising under the Constitution, federal law, or treaty.

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28 U.S.C. §§ 1331 and 1332.

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Courts construe the removal statute strictly against

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removal.

Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)

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(citations omitted).

Therefore, if there is any doubt as to the

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right of removal in the first instance, remand must be granted.

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See id.

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appears that the district court lacks subject matter

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jurisdiction, the case shall be remanded” to state court as well.

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28 U.S.C. § 1447(c).

Furthermore, “[i]f at any time before final judgment it

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ANALYSIS

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A.

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Plaintiff’s Motion to Remand.

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Removing Defendants removed the Plaintiff’s case to this

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Court solely pursuant to the Court’s diversity jurisdiction.

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There is no dispute as to the amount in controversy.

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contrary, the parties dispute only whether complete diversity

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exists among the parties.

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contends Wells Fargo, Cal-Western, Golden West, World Savings and

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at least some of the Doe Defendants are California citizens as

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well.

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To the

Plaintiff, a California citizen,

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Removing Defendants admit that Cal-Western and Golden West are

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California citizens, but argue those entities should be

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disregarded for purposes of diversity because they are either

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nominal parties or have been fraudulently joined.

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Defendants further contend that Wells Fargo is not a California

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citizen and that World Savings no longer exists and thus does not

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affect the diversity analysis.

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that the Removing Defendants have failed to meet their burden of

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showing that Cal-Western is either a nominal party or

Removing

Because the Court finds below

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fraudulently joined, the Court declines to address the parties’

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remaining arguments.

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Nominal parties.

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“[F]ederal court[s] must disregard nominal or formal parties

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and rest jurisdiction only upon the citizenship of real parties

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to the controversy.”

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(9th Cir. 2004) (quoting Navarro Sav. Ass'n v. Lee, 446 U.S. 458,

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461, 100 S. Ct. 1779 (1980)).

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that courts should ‘ignore the citizenship of nominal or formal

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parties who have no interest in the action, and are merely joined

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to perform the ministerial act of conveying the title if adjudged

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to the complainant.’”

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2437514, *3 (C.D. Cal.) (quoting Prudential Real Estate

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Affiliates, Inc. v. PPR Realty, Inc., 304 F.3d 867, 873 (9th Cir.

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2000)).

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defendant is a nominal party.

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citations omitted).

Kuntz v. Lamar Corp., 385 F.3d 1177, 1183

Indeed, “[c]ircuit law teaches

Silva v. v. Wells Fargo Bank, NA, 2011 WL

Removing Defendants bear the burden of proving a
Id. (internal quotations and

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Removing Defendants contend here that Cal-Western is a

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nominal defendant because it was simply the trustee on the DOT

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and thus its role in the underlying proceedings was limited to

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that of a stakeholder.

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is not itself sufficient to render Cal-Western a nominal party.”5

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Couture v. Wells Fargo Bank., N.A., 2011 WL 3489955, *3 (S.D.

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Cal.).

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parties, Plaintiff’s Complaint contains substantive allegations

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against Cal-Western and seeks to recover money damages or

However, “Cal-Western’s status as trustee

Moreover, while trustees on a DOT are often nominal

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restitution from all Defendants, including Cal-Western, as well.

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See Silva, 2011 WL 2437514, *5 (“The Court acknowledges that the

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trustee on a deed of trust is often a nominal party.”);

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Complaint, ¶¶ 78-85.

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believe Plaintiff cannot state a claim against Cal-Western, they

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have failed to show that Cal-Western has been joined in a merely

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nominal capacity.

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WL 2437514, *5; see also Larocque v. BAC Home Loans Servicing,

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2011 WL 46363, *2 (M.D. Tenn.); Payne v. Bank of America, N.A.,

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2010 WL 546770, *7 (W.D. Va.).

Accordingly, while Removing Defendants may

See Couture, 2011 WL 3489955, *3; Silva, 2011

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Removing Defendants also rely on Cal-Western’s statutory

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immunities as a basis for finding the trustee a nominal party

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here.

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of trust, like Cal-Western in this case, is so ministerial that

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in taking the steps necessary to foreclose the deed of trust its

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conduct is privileged.”)

Opposition, 6:23-25 (“The role of a trustee under a deed

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Indeed, Removing Defendants point the Court to no
authority standing for the proposition that trustees on a DOT are
per se nominal parties.
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(citing Cal. Civ. Code §§ 2924(d) and 47(c)); see also Notice of

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Removal, 5:23-28.

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no authority standing for the proposition that these immunities

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are sufficient to render the trustee a nominal party.

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this Court has found only one case in which another court has

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even broached this argument, and that court was skeptical as to

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the argument’s merit on facts such as those here, where the

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trustee allegedly had no authority to foreclose.

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WL 2437514, *5 (“It is unclear whether these provisions would

Again, however, Removing Defendants point to

Moreover,

See Silva, 2011

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also apply where, as here, the plaintiff alleges that the

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foreclosing trustee was not actually the trustee authorized to

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initiate non-judicial foreclosure proceedings.”).

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Defendants have not addressed the Silva court’s concerns

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regarding the viability of their argument on the instant facts

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and have thus failed to show that any statutory immunities

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applicable to a trustee apply in this case to render Cal-Western

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a nominal party.

Removing

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Regardless, even if California Civil Code §§ 2924(d) and 47

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apply to Cal-Western, such statutory immunity is not absolute; a

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finding of malice would permit Plaintiff’s claims to proceed.

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See Kachlon v. Markowitz, 168 Cal. App. 4th 316, 341 (2008).

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Malice requires a showing that a party acted with ill will or

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with reckless disregard for the truth.

Id. at 336.

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Here, Plaintiff alleges, among other things, that Cal-

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Western caused both the NOD and the DOTS to be recorded, but that

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both documents were defective and signed by parties who lacked

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the authority to execute them.

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Complaint, ¶¶ 78-84.

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Likewise, while Cal-Western was allegedly responsible for holding

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the eventual Trustee’s Sale and for selling the Property to Wells

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Fargo, Plaintiff contends Cal-Western lacked the authority to do

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so.

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Defendant was acting in concert with one another to, among other

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things, engage in deceptive business practices (e.g., by

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defrauding homeowners, acting as trustees without the requisite

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legal authority, and failing to comply with California Civil Code

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§ 2923.5).

Id., ¶ 85-86.

In addition, Plaintiff alleges that each

Id., ¶¶ 16-18, 159.

Evidence of these actions may,

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through the course of the proceedings, show malice.

Removing

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Defendants have nonetheless presumed the statutory immunities

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apply to Cal-Western in this case and have not addressed whether

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Plaintiff can state a claim that falls outside the scope of those

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immunities (i.e., whether Plaintiff can show Cal-Western acted

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with malice).

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meet their burden to show that Cal-Western was entitled to

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immunity for each of Plaintiff’s claims as matter of law.

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consequence, Removing Defendants have also failed to show that

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Cal-Western is a nominal party whose citizenship at the time of

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removal should be disregarded.

Accordingly, Removing Defendants have failed to

As a

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2.

Fraudulent Joinder.

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“Joinder of a non-diverse defendant is deemed fraudulent,

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and the defendant’s presence in the lawsuit is ignored for

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purposes of determining diversity, ‘[i]f the plaintiff fails to

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state a cause of action against a resident defendant, and the

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failure is obvious according to the settled rules of the state.’”
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Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.

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2001) (quoting McCabe v. General Foods Corp., 811 F.2d 1336, 1339

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(9th Cir. 1987)).

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presumption against fraudulent joinder,” and defendant’s burden

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of proof is “heavy.”

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1046 (9th Cir. 2009).

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In this circuit, there is a “general

Hunter v. Philip Morris USA, 582 F.3d 1039,

Alleging Plaintiff has failed to state a claim pursuant to

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the Federal Rules of Civil Procedure is not enough.

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v. Gish, 2011 WL 2160924, *3 (N.D. Cal.).

See Watson

Rather, “[i]n the

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Ninth Circuit, a non-diverse defendant is deemed to be

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fraudulently joined if, after all disputed questions of fact and

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all ambiguities in the controlling state law are resolved in the

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plaintiff’s favor, the plaintiff could not possibly recover

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against the party whose joinder is questioned.”

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American Corp., 2010 WL 454720, *3 (C.D. Cal.) (citing Kruso v.

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Int’l Tel. & Tel. Corp., 872 F.2d 1416, 1426 (9th Cir. 1989)).

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“A court may look beyond the pleadings to determine if a

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defendant is fraudulently joined, but a plaintiff need only have

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one potentially valid claim against a non-diverse defendant to

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survive a fraudulent joinder challenge.”

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and quotations omitted).

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removal based on an alleged fraudulent joinder must do more than

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show that the complaint at the time of removal fails to state a

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claim against the non-diverse defendant.”

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“[r]emand must be granted unless the defendant shows that the

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plaintiff would not be afforded leave to amend his complaint to

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cure [the] purported deficiency.”

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citations omitted).

Sun v. Bank of

Id. (internal citations

“Accordingly, a defendant seeking

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Id.

To the contrary,

Id. (internal quotations and

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Removing Defendants therefore bear the burden of showing

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that it is both “well-settled” and “obvious” that Plaintiff

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cannot possibly state a claim against Cal-Western.

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Defendants primarily assert that the claims against Cal-Western

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are defective because Plaintiff relies in large part on the

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assertion that Wells Fargo did not own the Note and Cal-Western

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did not have possession of the Note upon foreclosure.

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Opposition, 8:12-26.

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things, Plaintiff’s allegations that all Defendants, including

On balance,

However, Defendants ignore, among other

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Cal-Western, participated in a massive scheme intended to defraud

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Plaintiff out of his Property and that Defendants, among other

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things, failed to adhere to the requirements of California Civil

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Code § 2923.5 in foreclosing on the Property, thus resulting in a

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violation of California Business and Professions Code § 17200.

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See, e.g., Suntrust Mortgage, Inc., 2011 WL 1466153, *3 (N.D.

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Cal.) (fraudulent joinder not shown when Plaintiff alleged

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violation of § 2923.5); Cheng v. Wells Fargo Bank, N.A., 2010 WL

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4923045, *1 (C.D. Cal.) (no fraudulent joinder when plaintiff

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alleged trustee violated § 2923.5).

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finds Removing Defendants have failed to meet their burden of

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showing there is no possibility Plaintiff could establish a cause

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of action against Cal-Western, and thus, the Court finds no

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fraudulent joinder.

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joinder of this non-diverse Defendant is improper, and thus have

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not shown that this Court has jurisdiction over this action

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pursuant to 28 U.S.C. § 1332, Plaintiff’s Motion to Remand is

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granted.

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Accordingly, this Court

Because Removing Defendants have not shown

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B.

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Plaintiff’s Motion to Stay State Court Proceedings.

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By way of his instant Motion, Plaintiff seeks to stay the
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related state court unlawful detainer action pending the Court’s
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resolution of his Motion to Remand.

The Court has previously

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denied Plaintiff’s requests to hear this Motion on shortened
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time.

See ECF Nos. 11, 17.

Given those prior orders and the

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Court’s above decision that remand is appropriate, Plaintiff’s
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request is denied.
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C.

Plaintiff’s Motion for Attorney’s Fees and Costs.

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Finally, this Court is empowered to award costs and

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expenses, including attorney fees, incurred due to improper

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removal.

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courts may award attorney’s fees under § 1447(c) only where the

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removing party lacked an objectively reasonable basis for seeking

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removal.”

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(2005).

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exists here.

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Removing Defendants removed this action “solely for purposes of

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delay,” no evidence of any such intent is before the Court.

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Motion, 12:24-25.

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Plaintiff’s Motion for Attorney’s Fees and Costs is denied.

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28 U.S.C. § 1447(c).

“Absent unusual circumstances,

Martin v. Franklin Capital Corp., 546 U.S. 132, 141
An objectively reasonable basis for seeking removal
Moreover, while Plaintiff attempts to argue that

No award of fees is thus justified, and

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See

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D.

Removing Defendants’ Motion to Dismiss and Motion to
Strike.

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Also still pending before the Court are Removing Defendants’

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Motion to Dismiss and Motion to Strike Plaintiff’s Complaint.

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light of the Court’s above decision that remand is proper,

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In

Removing Defendants’ Motions are denied without prejudice.

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CONCLUSION

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For the reasons just stated, Plaintiff’s Motion to Remand is

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GRANTED, Plaintiff’s Motion to Stay all State Court proceedings

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is DENIED, and Plaintiff’s Motion for Attorney’s Fees and Costs

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is DENIED (collectively ECF No. 12).

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to Dismiss (ECF No. 20) and Motion to Strike (ECF No. 21) are

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likewise DENIED without prejudice.

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directed to remand this case to the originating state court, the

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Superior Court of the State of California in and for the County

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of Sacramento, for final adjudication.

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Removing Defendants’ Motion

The Clerk of the Court is

IT IS SO ORDERED.
Dated: October 14, 2011

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_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE

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