Iniguez et al v. Vantium Capital Inc et al

Filing 49

ORDER DENYING MOTION TO REMAND WITH INSTRUCTIONS TO AMEND, AND DENYING REQUEST FOR ATTORNEY'S FEES AND COSTS [re 23 MOTION to Remand filed by Sherrill Iniguez, Stewart Iniguez]. Signed by Judge William Alsup on 3/25/2013. (whasec, COURT STAFF) (Filed on 3/25/2013)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 STEWART INIGUEZ and SHERRILL INIGUEZ, 12 Plaintiffs, 13 14 15 16 17 18 19 No. C 13-00037 WHA v. Defendants. / 20 21 22 23 24 25 26 ORDER DENYING MOTION TO REMAND WITH INSTRUCTIONS TO AMEND, AND DENYING REQUEST FOR ATTORNEY’S FEES AND COSTS VANTIUM CAPITAL, INC. a/k/a ACQURA LOAN SERVICES, ALSO AS ATTORNEY-INFACT FOR CASTLE PEAK 2010-1 LOAN TRUST; CITIMORTGAGE INC.; MORTGAGE MASTER, INC. d/b/a MORTGAGE MASTER PACIFIC; FIRST AMERICAN TITLE COMPANY; QUALITY LOAN SERVICE CORPORATION; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and DOES 1–100 INCLUSIVE, INTRODUCTION In this foreclosure action, plaintiffs have filed a motion to remand this action to state court. For the reasons stated below, plaintiffs’ motion to remand is DENIED WITH INSTRUCTIONS TO AMEND. Plaintiffs’ request for attorney’s fees and costs is DENIED. STATEMENT In February 2007, plaintiffs Stewart and Sherrill Iniguez obtained a loan from Mortgage 27 Master, Inc. secured by their California residential property. Plaintiffs executed a promissory 28 note and a deed of trust identifying Mortgage Master as the lender, First American Title 1 Company as the trustee, and Mortgage Electronic Registration Systems, Inc. (MERS) as the 2 beneficiary and nominee for the lender. 3 Four years later, in April and May 2011, two assignments of deed of trust were signed 4 and recorded in Sonoma County in which MERS granted, assigned, and transferred all beneficial 5 interest and rights accrued under the deed of trust from Mortgage Master to Castle Peak 2010-1 6 Loan Trust. After the assignments were executed, a substitution of trustee was also signed and 7 recorded in which Castle Peak transferred trustee rights from First American Title to Quality 8 Loan Service Corporation. default on plaintiffs’ property. Quality Loan foreclosed on the property and sold it to Castle 11 For the Northern District of California After plaintiffs failed to make mortgage payments, Quality Loan recorded a notice of 10 United States District Court 9 Peak. Then, Castle Peak instituted an unlawful detainer action against plaintiffs in the Sonoma 12 County Superior Court. 13 While the unlawful detainer action was underway, plaintiffs proceeded pro se and 14 commenced the present action in Sonoma County Superior Court against defendants. In the 15 unlawful detainer action, the parties entered a stipulated judgment against plaintiffs. 16 Herein, plaintiffs allege: (1) violation of California Civil Code Section 2923.5, 17 (2) wrongful foreclosure, (3) declaratory relief, (4) quiet title, (5) breach of contract, (6) 18 violation of Business and Professions Code Section 17200, and (7) injunctive relief. In January 19 2013, defendants removed the present action to federal court. Shortly after, Acqura Loan 20 Services/MERS, CitiMortgage, Inc., and First American Title filed motions to dismiss. 21 Plaintiffs then retained counsel and filed a motion to remand this action back to state court. 22 On the day before the March 21 hearing, defendant CitiMortgage revealed that plaintiffs 23 have a concurrent state action against CitiMortgage alleging the same claims and stemming from 24 the same transaction (Dkt. No. 47). 25 ANALYSIS MOTION TO REMAND. 26 1. 27 A defendant may remove a civil action from state court to federal court if original 28 jurisdiction would have existed at the time the complaint was filed. 28 U.S.C. 1441(a). 2 1 “The strong presumption against removal jurisdiction means that the defendant always has the 2 burden of establishing that removal is proper, and that the court resolves all ambiguity in favor 3 of remand to state court.” Hunter v. Phillip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) 4 (internal quotations and citations omitted). 5 A. 6 Diversity Jurisdiction. (1) Section 2924l Declarations of Non-Monetary Status. 7 Defendants Quality Loan and First American Title are the only non-diverse parties in the 8 present action. Each filed a declaration of non-monetary status pursuant to California Civil Code 9 Section 2924l, contending that they are nominal defendants and should thus be excluded when 10 declaration has any effect in federal court. The undersigned Judge, however, has previously For the Northern District of California United States District Court determining diversity jurisdiction. Our court of appeals has not ruled on whether a Section 2924l 11 12 held that although Section 2924l declarations are generally not valid in federal court 13 proceedings, a defendant can be treated as a nominal defendant where the parties have stipulated 14 to non-monetary status. Perez v. Am. Home Mortgage Servicing, No. C-12-00932 WHA, Dkt. 15 No. 34 at 2 (Sept. 4, 2012). See Kennedy v. PLM Lender Servs., Inc., 2012 WL 1038632 at *2 16 (N.D. Cal. Mar. 27, 2012); Avila v. Wells Fargo Bank, No. C-12-01237 WHA, Dkt. No. 22 at 2 17 (May 21, 2012). 18 Here, plaintiffs have objected to defendants’ Section 2924l declarations, arguing that it is 19 a state procedural issue not granted in federal court. Without a stipulation, this order agrees. 20 The requests for non-monetary status, therefore, cannot be deemed to reduce the diverse parties 21 to non-entities. 22 (2) Fraudulent Joinder. 23 If defendants establish fraudulent joinder, the citizenship of fraudulently joined parties 24 will not defeat diversity. To prove fraudulent joinder, a defendant must show that “the plaintiff 25 fail[ed] to state a cause of action against a resident defendant, and the failure is obvious 26 according to settled rules of the state.” McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 27 (9th Cir. 1987). The removing party bears the burden of establishing fraudulent joinder and “is 28 entitled to present the facts showing the joinder to be fraudulent.” Ibid. There is a general 3 1 presumption against fraudulent joinder, such that the removing party must negate every possible 2 scenario within the ambit of a well-pled claim. Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 3 1319–20 (9th Cir. 1998). 4 First American Title alternatively argues that it was fraudulently joined into the present 5 action, and thus its citizenship should not be considered when determining diversity jurisdiction. 6 It argues that it did nothing relevant to plaintiffs’ claims and that its involvement is due solely to 7 its former status as trustee (Dkt. No. 37 at 1–2). In its brief, First American Title conducted a 8 fraudulent joinder analysis as it related only to First American Title. 9 First American Title also stated in its brief that Quality Loan “conducted the foreclosure at issue” and then concluded that Quality Loan was also fraudulently joined (id. at 1, 5). 11 For the Northern District of California United States District Court 10 Quality Loan has made no assertions of fraudulent joinder neither in its briefs nor at the 12 March 21 hearing, in which counsel failed to appear. No defendant has shown that Quality 13 Loan has been fraudulently joined, and thus the burden by the removing party has not been met. 14 Quality Loan, therefore, will not be considered for fraudulent joinder. 15 As to First American Title, even if it were true that it was fraudulently joined, Quality 16 Loan remains a non-diverse party. With at least one defendant remaining a non-diverse party, 17 there is no diversity jurisdiction. 18 B. 19 Federal-Question Jurisdiction. Removal is permitted for actions involving a federal question over which the district 20 court would have had original jurisdiction pursuant to 28 U.S.C. 1331. The “well-pleaded 21 complaint rule provides that federal jurisdiction exists only when a federal question is presented 22 on the fact of the plaintiff’s properly pleaded complaint.” Hunter, 582 F.3d at 1042. 23 “[T]he mere presence of a federal issue in a state cause of action does not automatically confer 24 federal-question jurisdiction.” Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d 1033, 1040 25 (9th Cir. 2003) (internal quotations and citations omitted). 26 The two sides disagree over whether the pleading seeks relief based on federal claims. 27 The undersigned has read the pleading himself. In paragraph 17 of the complaint, plaintiffs 28 “allege that [d]efendant Acqura has violated the [federal] Fair Credit Debt Collections Practices 4 1 Act . . . Defendant Acqura does not have a right to possession of the property as a result of the 2 fraudulently executed Assignments of Deed of Trust, thus causing [d]efendant to be in violation 3 of the Fair Credit Debt Collections Practices Act.” In addition, the complaint makes reference to 4 other federal law: R.E.M.I.C., 26 U.S.C. 850–852; the SEC; various federal agencies and agency 5 cease and desist orders (Compl. ¶¶ 33, 35, 47). So, these snippets seem to assert federal claims 6 for relief. 7 On the other hand, the complaint is organized around state causes of action, none of Practices Act under general allegations, which extend over 12 pages, until finally the first claim 10 for relief is stated, which is a claim under California Civil Code Section 2923.5. In like manner, 11 For the Northern District of California which is federal. For example, the complaint references the Fair Credit Debt Collections 9 United States District Court 8 the subsequent claims for relief are wrongful foreclosure, declaratory relief, quiet title (of which 12 the page is missing in the complaint), breach of contract, violation of Business and Professions 13 Code Section 17200, and injunctive relief. 14 The aforementioned federal statutes are not referenced again under state claims. 15 However, under the last claim for injunctive relief, further federal statutes are invoked. 16 Specifically, paragraph 104 states that plaintiffs are entitled to injunctive relief because 17 “Mortgage Master violated the Truth in Lending Act [and] the Real Estate Settlement and 18 Procedures Act.” In other words, the pleading is a masterpiece of trying to have it both ways. 19 For purposes of defeating removal, the pleader purported to allege only state law claims focusing 20 on overall organization for claim for relief. For purposes of adding federal strings to a state bow, 21 however, the pleader embedded alleged federal violations throughout the document. 22 The proper analysis is that the complaint must be deemed to allege federal claims for 23 relief and thus satisfies federal removal jurisdiction. If, however, plaintiffs dismiss all federal 24 claims with prejudice in an unambiguous pleading and limit the relief sought to state law claims, 25 then the Court will remand the case. The motion to remand is, therefore, DENIED WITH LEAVE 26 TO SO CLARIFY. 27 28 5 1 2. REQUEST FOR ATTORNEY’S FEES AND COSTS. 2 Pursuant to 28 U.S.C. 1447, plaintiffs request an award of “just costs and any actual 3 expenses, including attorney fees, incurred as a result of the removal,” in the amount of $2,100 4 (Br. 17). This request is ridiculous given the federal question woven into the pleading. 5 Plaintiffs’ request is DENIED. 6 7 CONCLUSION Based on the foregoing analysis, plaintiffs’ motion to remand this action is DENIED WITH 8 INSTRUCTIONS TO AMEND. 9 federal claims with prejudice by APRIL 1 AT NOON. Plaintiffs’ request for attorney’s fees and costs is DENIED. 11 For the Northern District of California United States District Court 10 Plaintiffs have leave to file an unambiguous pleading dismissing all 12 IT IS SO ORDERED. 13 14 Dated: March 25, 2013. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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