Franken v. JP Morgan Chase, N.A. et al

Filing 14

ORDER REMANDING CASE. Signed by Judge James Donato on 1/27/2016. (jdlc1S, COURT STAFF) (Filed on 1/27/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JEAN FRANKEN,

Case No. 15-cv-04955-JD

Plaintiff,
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v.

ORDER REMANDING CASE

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JP MORGAN CHASE, N.A., et al.,

Re: Dkt. No. 1

Defendants.

United States District Court
Northern District of California

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Plaintiff Jean Franken originally filed this foreclosure case in Marin County Superior

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Court in September 2015. Franken alleges that defendants JP Morgan Chase Bank, National

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Association (“Chase”), and MTC Financial, dba Trustee Corps (“MTC”) mishandled foreclosure

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on a residential property loan in violation of California Civil Code Section 2923.5. She seeks an

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injunction, actual damages, treble damages, a statutory penalty, attorney fees, “rescission of the

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NOD filed, and postponement of the non-judicial foreclosure.” Dkt. No. 1-1, Exh. A at 6-7.

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On October 28, 2015, Chase removed the case to this Court on diversity jurisdiction. Dkt.

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No. 1. Because MTC appeared to be a citizen of California, which would destroy diversity, the

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Court ordered Chase to show cause why this case should not be remanded, specifically requiring

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Chase to address “(1) defendant MTC’s citizenship for diversity purposes and (2) JPMorgan

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Chase’s burden to establish that MTC is a nominal defendant in this case.” Dkt. No. 9. Chase

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responded to the Order to Show Cause on November 24, 2015. Dkt. No. 10. The Court now

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remands the case to the Superior Court of California for the County of Marin.

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DISCUSSION

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A defendant may remove a civil action from state court to federal court if original

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jurisdiction would have existed at the time the complaint was filed. 28 U.S.C. § 1441(a). “The

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‘strong presumption against removal jurisdiction means that the defendant always has the burden

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of establishing that removal is proper,’ and that the court resolves all ambiguity in favor of remand

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to state court.” Hunter v. Phillip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (quoting Gaus

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v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam)); Iniguez v. Vantium Capital, Inc.,

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No. C 13-00037 WHA, 2013 WL 1208750, at *1 (N.D. Cal. Mar. 25, 2013).
Chase admits that MTC is a California corporation. See Dkt. No. 10 at 1. Still, Chase

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argues that MTC’s citizenship should be ignored because, as a trustee with “no interest” in the

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object of the litigation, it is a “paradigmatic nominal defendant[].” Dkt. No. 1 at ¶ 10; Dkt. No. 10

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at 2. But a trustee is not generally considered a nominal party when the “complaint contains

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substantive allegations against” or “seeks to recover money damages from the trustee.” See

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United States District Court
Northern District of California

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Osorio v. Wells Fargo Bank, No. C 12-02645 RS, 2012 WL 2054997, at *2 (N.D. Cal. June 5,

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2012). And Chase acknowledges that Franken has made at least one “substantive allegation”

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against MTC. Dkt. No. 10 at 3. Given that California Civil Code § 2923.5 specifically describes

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duties of a “trustee” and Franken’s complaint specifically alleges that MTC committed a number

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of errors in violation of this section, the Court sees no support for Chase’s contention that “no

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substantive wrongdoing” has been alleged against MTC. See Dkt. No. 10 at 3; Dkt. No. 1-1, Exh.

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A at 3-6. Furthermore, the complaint’s request for money damages is not explicitly directed only

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at Chase. Dkt. No 1-1, Exh. A at 6. Because it does not adequately address these issues, Chase

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has not met its burden of establishing that MTC is a “paradigmatic nominal party.”

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Chase also mistakes the effect of MTC’s state court “Declaration of Nonmonetary Status.”

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See Dkt. No. 10 at 3; Dkt. No. 10-1, Exh. 1 (MTC declaration under Cal. Civ. Code § 2924l).

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Although the Ninth Circuit has not spoken to the validity of such declarations, a number of courts

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of this district have declined to accord them any weight. See Iniguez, 2013 WL 1208750, at *2

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(declining to view party as nominal, despite Cal. Civ. Code § 2924l declaration, unless “the parties

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have stipulated to non-monetary status”); Kennedy v. PLM Lender Servs. Inc., No. C 10-04942

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WHA, 2012 WL 1038632, at *6 (N.D. Cal. Mar. 27, 2012) (citing other cases taking this view);

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Osorio, 2012 WL 2054997, at *2 n.2 (“a declaration of non-monetary status does not render Cal–

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Western a nominal party if it acted improperly as a trustee”). The Court also notes that even in the
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state court, a Section 2924l declaration is not an irrevocable bar to litigation against a trustee, and

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can be rescinded as litigation proceeds. Cal. Civ. Code § 2924l(d). Consequently, MTC’s Section

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2924l declaration does not clearly render it a nominal defendant.

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Chase also fails to overcome the strong presumption against fraudulent joinder because it

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is not obvious that plaintiff could not possibly recover against MTC on its California Civil Code

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Section 2923.5 claim. See Iniguez, 2013 WL 1208750, at *2 (emphasizing the heavy burden on

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defendant to prove plaintiff failed to state a cause of action, to show that plaintiff’s “failure is

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obvious according to settled rules of the state,” and to “negate every possible scenario within the

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ambit of a well-pled claim”) (internal quotation omitted). Section 2923.5 requires “a mortgagee,
trustee, beneficiary, or authorized agent” to comply with certain procedures during the foreclosure

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United States District Court
Northern District of California

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process. Cal. Civ. Code § 2923.5. Franken alleges that MTC, as trustee, failed to follow these

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procedures prior to filing the Notice of Default. See Dkt. No 1-1, Exh. A. Specifically, MTC

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allegedly did not diligently attempt to contact plaintiff or attempt to meet with her to discuss

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alternatives to foreclosure. See, e.g., id. ¶¶ 32-34. While Chase asserts these claims turn on “facts

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unique to Chase” and that MTC played no role with respect to the loan, Dkt. No. 10 at 5, it does

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not contest that MTC had an independent duty to comply with the notice provisions of Section

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2923.5. Consequently, the Court does not find that MTC was fraudulently joined.

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This matter is remanded to the Superior Court of California for Marin County.

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IT IS SO ORDERED.

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Dated: January 27, 2016

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________________________
JAMES DONATO
United States District Judge

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