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

Filing 12

ORDER signed by District Judge Kimberly J. Mueller on 9/25/2017 ORDERING 4 Plaintiff's Motion to Remand is DENIED. (Reader, L)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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URSULA OGAMBA,

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Plaintiff,

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No. 2:17-cv-01754-KJM-AC

v.

ORDER

WELLS FARGO BANK, N.A.; a business
entity; CLEAR RECON CORP., a business
entity; RS GROUP, INC. and Does 1-50,
inclusive,
Defendants.

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Two months ago, plaintiff’s property was sold at a foreclosure sale. She now

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brings a wrongful foreclosure action against the purchaser, the foreclosure sale’s trustee, and her

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loan servicer. The loan servicer, defendant Wells Fargo, removed the case based on diversity

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jurisdiction, arguing the purchaser and trustee were fraudulently named to obscure the court’s

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diversity jurisdiction. Plaintiff now moves to remand or, alternatively, requests shortened time on

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hearing of the remand motion. ECF No. 4. The court finds diversity jurisdiction a proper basis

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for the case to proceed in this court and DENIES plaintiff’s remand motion.

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I.

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BACKGROUND
A.

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Factual Background
This case stems from a foreclosure on plaintiff’s real property in Tracy, California.

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Compl. ¶ 11, Ex. A to ECF No. 1. At all relevant times, Wells Fargo serviced plaintiff’s

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mortgage loan secured by the property. Id. ¶ 5. In 2017, plaintiff was told her property would

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not be foreclosed on if she submitted a complete loan modification application by July 18, 2017.

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Id. ¶ 21. Plaintiff alleges she did so and was told the foreclosure would be postponed, yet the

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property was sold at a foreclosure sale the next day. Id. ¶¶ 21-24. Defendant RS Group bought

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the property and the foreclosure trustee, defendant Clear Recon, recorded the sale. Id. ¶¶ 6, 26,

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B.

Procedural Background

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On August 7, 2017, plaintiff filed this wrongful foreclosure action against Wells

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Fargo Bank, Clear Recon and RS Group in state court. Id. at 1. The gist of plaintiff’s six-claim

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complaint is that Wells Fargo negligently misrepresented that it would postpone foreclosure, and

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then both Wells Fargo and Clear Recon wrongfully foreclosed anyway, which violated the

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California Homeowner Bill of Rights and amounted to an unfair business practice. See id.

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¶¶ 29-96. Though the complaint references RS generally, not one claim names RS Group.

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Defendant Wells Fargo removed this case based on diversity jurisdiction. Removal, Aug. 22,

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2017, ECF No. 1. Defendants also have moved to dismiss, with a hearing set for October 20,

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2017. ECF No. 8. Plaintiff now moves to remand, contending the parties are not completely

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diverse. ECF No. 4.

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II.

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LEGAL STANDARD
When a case “of which the district courts of the United States have original

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jurisdiction” is initially brought in state court, a defendant may remove it to federal court. 28

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U.S.C. § 1441(a). One basis for original federal jurisdiction is “diversity jurisdiction,” where the

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amount in controversy exceeds $75,000 and the parties’ citizenships are completely diverse. 28

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U.S.C. § 1332. A defendant may still remove based on diversity jurisdiction when certain

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defendants are non-diverse by persuading the district court those defendants were fraudulently
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joined. McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). If a plaintiff

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“fails to state a cause of action against a resident defendant, and the failure is obvious according

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to the settled rules of the state, the joinder of the resident defendant is fraudulent.” Id. (citation

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omitted).

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III.

REMAND MOTION

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Here, plaintiff argues remand is proper because the parties are not completely

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diverse, so the court lacks diversity jurisdiction. ECF No. 4 at 2. But, as explained below,

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complete diversity exists: Plaintiff is a California citizen and Wells Fargo is a South Dakota

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citizen. Defendants Clear Recon and RS Group were “fraudulently joined” such that their

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California citizenship does not destroy subject matter jurisdiction.
A.

Wells Fargo
Wells Fargo’s primary office is in South Dakota; its principal place of business is

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in California. The Supreme Court, while interpreting federal courts’ original jurisdiction as to

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banking associations, has determined that “a national bank, for § 1348, is a citizen of the State of

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its main office, as set forth in its articles of association.” Wachovia Bank v. Schmidt, 546 U.S.

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303, 307 (2006). Then in 2014, by interpreting Schmidt to restrict national banking associations’

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citizenship to “only” the main office listed in their articles of incorporation, the Ninth Circuit

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quelled an intra-circuit debate as to whether such banks could acquire dual citizenship. Rouse v.

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Wachovia Mortg., FSB, 747 F.3d 707, 715 (9th Cir. 2014). So, although this court’s pre-Rouse

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decisions assigned Wells Fargo dual citizenship, the court’s post-Rouse decisions have confirmed

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to the controlling authority restricting Wells Fargo’s citizenship to South Dakota. Compare

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Ramos v. Wells Fargo Bank, N.A., No. 2:13-CV-00571- KJM, 2013 WL 2303243, at *1 (E.D.

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Cal. May 24, 2013) (noting the intra-circuit split and deeming Wells Fargo a dual citizen), with

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Pacray v. Wells Fargo Home Mortg., Inc., No. 2:16-cv-01111-KJM-EFB, 2016 WL 4474605, at

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*2 (E.D. Cal. Aug. 25, 2016) (noting Rouse’s clarification and deeming Wells Fargo a South

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Dakota citizen only). Wells Fargo is solely a South Dakota citizen.

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B.

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RS Group
The court finds RS Group, a California citizen, was fraudulently joined, so its

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citizenship does not destroy diversity jurisdiction. Although the complaint mentions RS Group

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generally, not one of plaintiff’s six claims is pled against RS Group. See generally Compl. RS

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Group’s sole involvement was that of a bona fide purchaser at the foreclosure sale. See id. ¶ 28.

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RS Group’s bona fide status insulates it from liability for the wrongdoing plaintiff asserts. See,

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e.g., Cal. Civ. Code § 2924.12(e) (“No violation of this article shall affect the validity of a sale in

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favor of a bona fide purchaser and any of its encumbrancers for value without notice.”).

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Although the complaint states, without detail or explanation, that “[d]efendant RS Group is not a

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bona fide purchaser,” id. ¶ 26, it includes no allegation to support that conclusion. Cf. id. ¶¶ 23-

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25 (never alleging RS Group knew about any purported violations before the sale). And in her

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remand motion, plaintiff neither disputes RS Group’s bona fide status nor attests that there is a

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viable claim against RS Group. The court does not consider this unsupported legal conclusion in

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assessing jurisdiction. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (emphasizing “sufficient

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factual matter” must make plaintiff’s allegations seem at least plausible; conclusory or formulaic

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recitations of elements do not alone suffice) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

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(2007)).

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Instead, plaintiff’s argument on remand is merely that RS Group’s joinder is

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authentic because, if plaintiff prevails, RS Group will have to relinquish the property. ECF No. 4

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at 5-6; see also Compl. ¶ 28 (“RS Group is a necessary party [] because it claims to be the true

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and lawful titleholder to Plaintiffs property, following an unnoticed and unlawful foreclosure

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sale” and therefore “dispos[ing] this action in its absence would, as a practical matter, impair or

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impede its ability to protect its interest.”). Plaintiff cites no authority suggesting the court should

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consider the citizenship of an entity facing no possible liability merely because the entity has a

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contingent future interest in the suit’s outcome. Given that no viable claims are alleged or argued

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against RS Group, the court discounts its citizenship when assessing diversity jurisdiction.

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C.

Clear Recon
Clear Recon is likewise a fraudulently joined defendant whose California

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citizenship does not destroy diversity jurisdiction. Clear Recon’s role here was only that of a

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foreclosure sale’s trustee with limited statutory duties: namely, to foreclose on a defaulted

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mortgage loan and to re-convey the deed of trust once the secured debt was satisfied. Swanson v.

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EMC Mortg. Corp., No. CV F 09-1507-LJO-DLB, 2009 WL 4884245, at *3-4 (E.D. Cal.

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Dec. 10, 2009). Not one of plaintiff’s claims alleges Clear Recon violated any statutory duties it

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owed to plaintiff.

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Plaintiff relies solely on its claim that Clear Recon violated the Homeowner’s Bill

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of Rights, which provides “express liability against foreclosure trustees that violate Civil Code

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§ 2923.6.” See ECF No. 4 at 5 (citing Cal. Civ. Code § 2923.6(c)). Yet the same statute provides

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that “[n]othing in this section shall be construed to alter, limit, or negate any other rights,

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remedies, or procedures provided by law.” Cal. Civil Code § 2924.12(h). One such preexisting

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right is the qualified privilege barring a trustee’s liability, absent “actual malice,” for performing

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statutorily required, non-judicial foreclosure duties, including mailing, publicizing and delivering

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notices. See id. § 2924(d) (listing privileged communications and incorporating Cal. Civ. Code

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§ 47(c)); see also Kachlon v. Markowitz, 168 Cal. App. 4th 316, 333 (2008) (“We conclude that

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. . . [trustee’s] recording of the notice of default was privileged, that the evidence failed to

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demonstrate [trustee] acted with malice, and that therefore [trustee] was immune” from liability

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based on that conduct). Here, the only acts attributable to Clear Recon are those it was statutorily

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required to perform, and the complaint alleges no facts suggesting actual malice. Clear Recon’s

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acts, therefore, are insulated from liability.

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That Clear Recon is sued only in its capacity as Wells Fargo’s agent bolsters the

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conclusion that it faces no individual liability. Only if a trustee in its agency capacity acts as a

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“dual agent” or acts on its own behalf can it be individually liable. See Mercado v. Allstate Ins.

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Co., 340 F.3d 824, 826 (9th Cir. 2003) (“It is well established that, unless an agent or employee

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acts as a dual agent . . . [it] cannot be held individually liable as a defendant unless [it] acts for

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[its] own personal advantage.”). Here, the complaint does not allege Clear Recon acted beyond
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its role as Wells Fargo’s agent, acted as a dual agent or acted for its personal advantage. Federal

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courts, including this court, have routinely deemed foreclosure trustees with similarly limited

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involvement to be fraudulently joined defendants. See, e.g., Sherman v. Wells Fargo Bank, N.A.,

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No. CIV S-11-0054-KJM-EFB, 2011 WL 1833090, at *3 (E.D. Cal. May 12, 2011) (“In light of a

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trustee’s limited contractual duties under state law and the trustee’s limited involvement as

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alleged in the complaint, the court finds [trustee] was fraudulently joined for diversity

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purposes.”); Moreno v. Wells Fargo, No. C-11-05189 EDL, 2011 WL 6372637, at *8 (N.D. Cal.

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Dec. 20, 2011) (same).

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Given Clear Recon’s limited state-law duties and its limited involvement as
alleged in the complaint, the court finds it was fraudulently joined for diversity purposes.

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D.

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Doe Defendants
The court disregards the unidentified Doe defendants in assessing subject matter

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jurisdiction because plaintiff includes no information as to who they are, where they live or their

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relationship to the action. Bryant v. Ford Motor Co., 794 F.2d 450, 453 (9th Cir. 1986);

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Othman v. Globe Indem. Co., 759 F.2d 1458, 1642 (9th Cir. 1985).

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IV.

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CONCLUSION
Complete diversity exists, so subject matter jurisdiction is proper. The court

DENIES plaintiff’s motion to remand.

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IT IS SO ORDERED.

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This resolves ECF No. 4.

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DATED: September 25, 2017.

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UNITED STATES DISTRICT JUDGE
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