Verma v. Homerward Residential, Inc.

Filing 12

ORDER TO SHOW CAUSE WHY CASE SHOULD NOT BE REMANDED Show Cause Response due by 4/18/2013. Signed by Magistrate Judge Jacqueline Scott Corley on 4/8/2013. (ahm, COURT STAFF) (Filed on 4/8/2013)

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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 10 Northern District of California United States District Court 11 12 BALAK VERMA, et al., Plaintiffs, vs. Case No.: C13-0327 JSC ORDER TO SHOW CAUSE WHY CASE SHOULD NOT BE REMANDED 13 14 15 HOMEWARD RESIDENTIAL, INC., et al., Defendants. 16 17 18 Plaintiffs filed this action in the San Mateo County Superior Court on December 19 21, 2012. (Dkt. No. 1-1.) Defendants subsequently timely removed this case to federal 20 court on the ground of diversity jurisdiction. (Dkt. No. 1.) The parties appeared before 21 the Court on April 4, 2013, on Defendants’ motion to dismiss; however, upon 22 consideration of the motion, the Court has determined that it may not have subject matter 23 jurisdiction over this case. 24 Although Plaintiffs do not object to Defendants’ removal, the Court has an 25 independent obligation to satisfy itself that it has federal subject matter jurisdiction 26 whenever a case is removed to federal court. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 27 1116 (9th Cir. 2004). “Federal jurisdiction must be rejected if there is any doubt as to the 28 right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1 1992). Given the “strong presumption” against removal jurisdiction, the defendant 2 always bears the burden of establishing that removal is proper. Id. 3 Defendants removed this action on the basis of diversity jurisdiction. Federal 4 diversity jurisdiction “is determined (and must exist) as of the time the complaint is filed 5 and removal is effected.” Strotek Corp. v. Air Transp. Ass'n. of Am., 300 F.3d 1129, 6 1131 (9th Cir. 2002); see also Newcombe v. Adolf Coors Co., 157 F.3d 686, 690 (9th Cir. 7 1998) (diversity must exist when action is removed). As the record indicates, however, 8 complete diversity between the parties was lacking at the time of removal as Defendant 9 T. D. Service Company (“TDSC”) is incorporated in California. 10 Defendants nonetheless contend that “TDSC’s citizenship is irrelevant to the Northern District of California United States District Court 11 diversity inquiry because it filed a declaration of non-monetary status pursuant to 12 California Civ Code § 2924l in the State Court Action on January 23, 2013. As such, 13 under the Civil Code § 2924l(d), TDSC has transformed itself into a non-party to this 14 action.” (Id. at ¶ 6.B.iv.) Defendants are correct that Cal. Civ. Code § 2924l allows 15 16 17 18 a trustee under a deed of trust[,] named in an action or proceeding in which that deed of trust is the subject, and in the event that the trustee maintains a reasonable belief that it has been named in the action or proceeding solely in its capacity as trustee, and not arising out of any wrongful acts or omissions on its part in the performance of its duties as trustee,…[to] file a declaration of nonmonetary status. 19 Cal. Civ. Code § 2924l(a). Defendants are further correct that some “[f]ederal courts 20 have acknowledged that a party that invokes non-monetary status under Civil Code § 21 2924l…is not to be treated as a defendant to the action, thus, its ‘citizenship is 22 disregarded for purposes of assessing diversity jurisdiction.’” (Dkt. No. 1 ¶ 6.B.iv 23 (quoting Cabriales v. Aurora Loan Servs., 2010 WL 761081 (N. D. Cal. March 2, 2010).) 24 However, California Civil Code § 2924l(c)-(e) also provides a 15-day window in 25 which other parties to the action may object to such a declaration and that “[i]n the event 26 of a timely objection to the declaration of nonmonetary status, the trustee shall thereafter 27 be required to participate in the action or proceeding.” Id. at (d). Courts in this District 28 and others have held that where that 15-day window is not fully observed, that is, where 2 considered “nominal” such as to be excluded from the diversity analysis. See Wise v. 3 Suntrust Mortg., Inc., 2011 WL 1466153 at *4 (N. D. Cal. Apr. 18, 2011) (finding that 4 where an action was removed only four days after trustee-defendant filed its declaration 5 of non-monetary status, the 15-day window had not run and “[a]ccordingly, at the time of 6 removal, [Trustee-Defendant] had not yet attained non-monetary status and was not yet a 7 nominal party for purposes of diversity jurisdiction.”); Boggs v. Wells Fargo Bank NA, 8 2012 WL 2357428 at *3 (N.D. Cal. June 14, 2012) (remanding action where removal 9 occurred 14 days after the trustee-defendant filed its declaration of non-monetary status 10 because “the Court cannot disregard Golden West's citizenship for purposes determining 11 Northern District of California an action is removed before the 15 days have expired, the declaring-trustee is not 2 United States District Court 1 whether Plaintiffs and Defendants are completely diverse”); Hernandez v. First Horizon 12 Loan Corp., 2011 WL 2531959 at *2 (N.D. Cal. June 24, 2011) (“Because Removing 13 Defendants removed the action less than fifteen days after Quality filed its declaration of 14 non-monetary status, Quality had not yet been transmuted into a nominal party at the 15 time of removal. Therefore, the Court cannot disregard Quality's citizenship for purposes 16 of removal.”); see also Sun v. Bank of Am. Corp., 2010 WL 454720 at *2 (C.D. Cal. Feb. 17 8, 2010) (remanding action to state court because defendants removed the action to 18 federal court “only 13 days after [Trustee-Defendant] filed its Declaration of Non- 19 monetary Status…. Thus, at the time of removal [Trustee-Defendant] did not have 20 nominal status.”) (internal quotation marks and citations omitted). 21 Here, Defendants removed the action on January 23, 2012, the same day TDSC 22 filed its declaration of non-monetary status. (Dkt. Nos. 1, 1-2.) Hence, the requisite 15 23 days had not passed and TDSC was not yet a “nominal party” at the time of removal. As 24 a result, the Court is not convinced that it may exercise diversity jurisdiction in this case. 25 Accordingly, Defendants are ordered to show cause why this case should not be 26 remanded to the San Mateo County Superior Court. In particular, Defendants shall file a 27 response in writing by April 18, 2013 that demonstrates how this Court has federal 28 jurisdiction. Plaintiff’s response, if any, shall be filed by April 25, 2013. The Court will 3 1 take the issue under submission at that time. The Court will defer a ruling on the motion 2 to dismiss and a referral to the Court’s ADR project until it determines that it has subject 3 matter jurisdiction. 4 5 IT IS SO ORDERED. 6 7 8 Dated: April 8, 2013 _________________________________ JACQUELINE SCOTT CORLEY UNITED STATES MAGISTRATE JUDGE 9 10 Northern District of California United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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