Citibank, N.A. as Trustee v. Francisco et al

Filing 11

ORDER signed by Judge Kimberly J. Mueller on 8/1/2013 ORDERING 5 Motion to Remand is GRANTED; REMANDING CASE to Solano County Superior Court; within 14 days of the date of this order, counsel Voss is directed to SHOW CAUSE why she should not be sa nctioned in the amount of $1,500 for misrepresenting the timeliness of the removal; Counsel is CAUTIONED that a failure to respond to this order will result in the imposition of monetary sanctions and the non-compliance may be reported to the State Bar of California; Copy of remand order sent to other court. CASE CLOSED.(Waggoner, D)

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IN THE UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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CITIBANK, N.A., as Trustee,
Plaintiff,

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No. 2:13-CV-1268 KJM AC

v.
ORDER

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ARNEL FRANCISCO, et al.,

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Defendants.
______________________________/

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On July 2, 2013, plaintiff Citibank N.A. (“Citibank”) filed a motion to remand

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this action to Solano County Superior Court, setting the hearing for August 2, 2013. Under the

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Local Rule 230(d), defendants’ opposition or statement of non-opposition was due by July 19,

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2013, but they have filed no response to the motion. The court ordered the motion submitted

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without argument and now GRANTS the motion to remand and ORDERS defendants’ counsel to

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show cause why she should not be sanctioned for violating Rule 11 of the Federal Rules of Civil

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Procedure.

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I. BACKGROUND

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On or about January 27, 2012, Citibank filed a complaint for unlawful detainer in

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Solano County Superior Court, alleging that Citibank had purchased 128 Southport Court,

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Vallejo, California at a trustee’s sale on July 21, 2011; and that Citibank had served a notice to
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quit on defendants Arnel and Janeth Francisco, but that defendants have refused to deliver

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possession of the property to Citibank. Notice of Removal, ECF No. 1- at 4-6.

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On January 29, 2012, a process server left copies of the summons and complaint

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at 128 Southport Court with Judith Geronimo, a member of the household, and thereafter mailed

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copies of the documents to defendants. Declaration of Ellie N. Berneman (Berneman Decl.), Ex.

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C, ECF No. 5-5 at 2-9.

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On February 3, 2012, defendant Arnel Francisco filed an answer. Berneman
Decl., Ex. D.

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On May 23, 2012, defendant Arnel Francisco filed bankruptcy and on July 26,
2012, the court dismissed the case. Berneman Decl., Ex. E.

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On February 4, 2013, defendant Arnel Francisco again filed bankruptcy.

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Berneman Decl., Ex. F. This action also was dismissed on March 19, 2013. Id. While this

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second bankruptcy action was pending, on February 22, 2013, counsel removed the underlying

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unlawful detainer action by filing it as an adversarial complaint in the second bankruptcy.

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Berneman Decl., Ex. G. On May 20, 2013, the bankruptcy court remanded the case to Solano

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County Superior Court. Id.

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In the Notice of Removal filed in the instant case, counsel Voss asserts that the

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removal is timely because defendants have not been properly served but accept service as of the

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date the notice of removal was filed. Notice of Removal, ECF No. 2 at 2. She alleges that this

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court has diversity jurisdiction because plaintiff and defendants are citizens of different states

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and the amount in controversy exceeds $75,000 and because the case raises federal questions

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“surrounding the construction of the Pooling and Service Agreement of the Structured Asset

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Mortgage Investments II Trust 2007-AR5 . . ., ” and about due process and foreclosure. ECF

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No. 2 at 2-4.1 These federal questions appear in a proposed answer to the unlawful detainer

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She also alleges that this is a core proceeding under 28 U.S.C. § 157(b), which gives
bankruptcy judges the authority to hear proceedings.
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complaint, as the face of the complaint includes no such questions. ECF No. 2-8 at 2-18.

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Counsel does not include a copy of Arnel Francisco’s pro se answer.

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II. ANALYSIS

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An action filed in state court may be removed to the district court where the state

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court is located if the district court has original jurisdiction over the action. 28 U.S.C. § 1441(a).

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District courts have original jurisdiction in two situations: 1) federal question jurisdiction over

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“civil actions arising under the Constitution, laws, or treaties of the United States;” and 2)

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diversity jurisdiction where “the matter in controversy exceeds the sum or value of $75,000,

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exclusive of interest and costs” and there is complete diversity between the parties. 28 U.S.C.

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§§ 1331, 1332(a). The notice of removal “shall be filed within 30 days after the receipt by the

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defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim

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for relief upon which such action or proceeding is based . . . .” 28 U.S.C. § 1446(a); Destfino v.

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Reiswig, 630 F.3d 952, 955 (9th Cir. 2011). Although the time limit for removal petitions is not

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jurisdictional, “a timely objection to a late petition will defeat removal.” Fristoe v. Reynolds

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Metals Co., 615 F.2d 1209, 1212 (9th Cir. 1980); see also Kuxhausen v. BMW Fin. Serv. NA

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LLC, 707 F.3d 1136, 1142 n.4 (9th Cir. 2013). To be timely, a motion for remand must be filed

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within thirty days after notice of removal is filed. 28 U.S.C. § 1447(c).

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Plaintiff’s motion to remand is timely: the notice of removal was filed on June 24,

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2013 and plaintiff’s motion to remand was filed on July 2, 2013. Defendants’ notice of removal,

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however, is certainly not timely: defendants were served by substituted service on January 29,

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2012, when the process server left copies of the summons and complaint with Judith Geronimo

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at 128 Southport Court, which is defendants’ address, and mailed copies of the summons and

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complaint to defendants on January 30, 2012. CAL. CODE CIV. PRO. § 415.20(b) (authorizing

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service at a party’s “dwelling house, usual place of abode . . . in the presence of a competent

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member of the household or a person apparently in charge of his or her . . . usual mailing address

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. . . at least 18 years of age, who shall be informed of the contents thereof, and by thereafter
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mailing a copy of the summons and of the complaint by first-class mail . . . to the person to be

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served at the place where a copy of the summons and complaint were left”); Doe v. Rafael

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Saravia, 348 F. Supp. 2d 1112, 1143 (E.D. Cal. 2004). This substituted service became effective

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on February 10, 2012, ten days after the documents were mailed to defendants. CAL. CODE CIV.

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PRO. § 415.20(b). Defendants’ notice of removal, filed five hundred days after service became

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effective, is not timely. Plaintiff’s motion to remand the case to Solano County Superior Court is

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granted.

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III. ORDER TO SHOW CAUSE

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In the notice of removal counsel states that removal is timely, based on a claim

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that defendants had not been served. She does not even address the proofs of service filed in

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Solano County Superior Court or the fact that at least one of her clients filed an answer in

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Superior Court.

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Under Rule 11, by signing a document, an attorney certifies that (1) she has read

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the pleadings or motions she filed and (2) the pleading or motion is “well-grounded in fact,” has

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a colorable basis in law, and is not filed for an improper purpose. FED. R. CIV. P. 11; Cooter &

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Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990); Smith v. Ricks, 31 F.3d 1478, 1488 (9th Cir.

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1994). The Rule requires that the lawyer undertake “an inquiry reasonable under the

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circumstances” to determine whether her legal contentions are “warranted by existing law” and

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that her factual claims either “have evidentiary support or, if specifically so identified, will likely

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have evidentiary support after a reasonable opportunity for further investigation.” FED. R. CIV

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.P. 11(b). When considering apparent Rule 11 violations, the court utilizes an objective standard

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of reasonable inquiry, which does not require a finding of bad faith. Chambers v. NASCO, Inc.,

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501 U.S. 32, 47 (1991); Zaldivar v. City of Los Angeles, 780 F.2d 823, 829 (9th Cir. 1986)

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(concluding that subjective bad faith is not an element under Rule 11), overruled on other

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grounds, Cooter & Gell, 496 U.S. at 399. Accordingly, a “subjective intent . . . to file a

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meritorious document is of no moment.” Zaldivar, 780 F.2d at 830. It appears that defendants’
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counsel Voss failed to undertake a reasonable inquiry to determine whether her claim was

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warranted by existing law.

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IT IS THEREFORE ORDERED that:

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1. Plaintiff’s motion to remand, ECF No. 5, is granted and this case is remanded

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to Solano County Superior Court.

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2. Within fourteen days of the date of this order, counsel Voss is directed to show

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cause why she should not be sanctioned in the amount of $1500 for misrepresenting the

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timeliness of the removal. Counsel is cautioned that a failure to respond to this order will result

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in the imposition of monetary sanctions and the non-compliance may be reported to the State Bar

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of California.

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DATED: August 1, 2013.

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UNITED STATES DISTRICT JUDGE

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