Ross v. Stranger et al

Filing 42

ORDER by Judge Wilken granting 33 Motion to Remand (cwlc3, COURT STAFF) (Filed on 4/14/2011)

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IN THE UNITED STATES DISTRICT COURT

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United States District Court
For the Northern District of California

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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ELIZABETH B. ROSS,

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Plaintiff,
v.
GREGORY A. STRANGER; CORALIE K.
STRANGER; THE STRANGER FAMILY
2003 TRUST; STRANGER PROPERTY
HLDGS LLC, A FLORIDA LIMITED
LIABILITY COMPANY; and DOES 1100, inclusive,
Defendants.
________________________________/

No. C 11-00094 CW
ORDER GRANTING
PLAINTIFF'S MOTION
FOR REMAND
(Docket No. 33)

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On December 9, 2010, Plaintiff filed suit against Defendants

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in Marin County Superior Court, seeking to set aside purportedly

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fraudulent transfers of real property by Defendants.

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alleges a conspiracy to delay and hinder her ability to collect on

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a judgment against Gregory Stranger rendered in her favor in an

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earlier action.

Plaintiff

Among other things, Plaintiff seeks a preliminary

injunction and appointment of a receiver to collect rents on

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Defendants' properties.

United States District Court
For the Northern District of California

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Defendant Gregory Stranger, formerly represented by counsel,

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is proceeding pro se and, on January 7, 2011, removed this action

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to federal court.

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court.

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wife, Coralie Stranger, also proceeding pro se, has submitted a

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Plaintiff moves to remand the case to state

Docket No. 33.

Mr. Stranger opposes the motion.

His

declaration in opposition to Plaintiff's motion for remand.

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Defendants Stranger Family 2003 Trust and Stranger Property
Holdings LLC are represented by counsel, but have not taken a

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position in support of or in opposition to the motion to remand.

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Having considered all of the parties' submissions, the Court

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GRANTS Plaintiff's motion.

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BACKGROUND
Plaintiff previously filed suit against Defendants Gregory
Stranger, Coralie Stranger, the Stranger Trust, the Capital

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Defeasance Group, LLC and Successor Borrower Services in a dispute

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arising from Plaintiff's failed joint business venture with Mr.

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Stranger.

Elizabeth B. Ross v. Gregory Stranger, et al., Marin
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County Superior Court, CV 083069 (original action).

On August 20,

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2010, a jury rendered a verdict in favor of Plaintiff against

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Gregory Stranger for breach of contract, breach of the covenant of

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good faith and fair dealing, fraud by intentional

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misrepresentation, negligent misrepresentation, fraud by failure

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to disclose and breach of fiduciary duty.

The jury awarded

Plaintiff $969,849.73 in damages against Mr. Stranger, as well as

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United States District Court
For the Northern District of California

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$1,500,000 in punitive damages, based on Mr. Stranger's malicious,
fraudulent and oppressive conduct.
Prior to July 30, 2010, the Stranger Trust was title holder

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and equitable owner of five pieces of real property in California.

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Mr. and Mrs. Stranger are the sole trustees of the Stranger Trust.

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Plaintiff alleges that the properties were fraudulently

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transferred to Stranger Holdings in early August, 2010 in

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anticipation of a possible verdict for Plaintiff in the original
action.

The evidence indicates that Mr. and Mrs. Stranger were

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once domiciled in California, but are currently residing in

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Florida.

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LEGAL STANDARD
A defendant may remove a civil action filed in state court to
federal district court so long as the district court could have
exercised original jurisdiction over the matter.

28 U.S.C.

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§ 1441(a).

Title 28 U.S.C. § 1447(c) provides that if at any time

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before judgment it appears that the district court lacks subject

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matter jurisdiction over a case previously removed from state
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court, the case must be remanded.

On a motion to remand, the

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scope of the removal statute must be strictly construed.

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Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

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presumption‟ against removal jurisdiction means that the defendant

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always has the burden of establishing that removal is proper.”

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Id.

Gaus v.

“The „strong

Courts should resolve doubts as to removability in favor of

remanding the case to state court.

Id.

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District courts have original jurisdiction over all civil

United States District Court
For the Northern District of California

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actions “where the matter in controversy exceeds the sum or value

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of $75,000, exclusive of interest and costs, and is between . . .

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citizens of different States.”

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subject matter jurisdiction is predicated on diversity of

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citizenship, complete diversity must exist between the opposing

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parties.

28 U.S.C. § 1332(a).

When federal

Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-

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74 (1978).

In determining federal removal jurisdiction, diversity

is must exist as of the time the complaint is filed and removal is

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effected.

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F.3d 1129, 1131 (9th Cir. 2002).

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Strotek Corp. v. Air Transport Ass‟n of America, 300

The existence of diversity of citizenship jurisdiction is
based on an examination of the citizenship of the real parties in
interest.

Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 460-61 (1980).

The party asserting diversity jurisdiction bears the burden of

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proving diversity of citizenship.

Lew v. Moss, 797 F.2d 747, 749

(9th Cir. 1986).

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DISCUSSION

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I. Amount in Controversy
At the outset, Plaintiff asserts that Defendants have failed

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to establish that the amount in controversy exceeds $75,000.

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Defendants respond by pointing out that the complaint makes clear

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that Plaintiff intends to collect on a judgment in the amount of
$2,469,849.73 issued in the original action.

Compl. ¶ 8-9.

The

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complaint alleges the fraudulent transfer of real property valued

United States District Court
For the Northern District of California

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in excess of $3,000,000.

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and conspiracy, Plaintiff seeks to set aside the transfers and

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attach the properties.

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the annual rents for the contested properties exceed $100,000.

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These allegations, however, fail to satisfy the requisite

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Compl. ¶ 15.

Based on the alleged fraud

According to Mr. Stranger's declaration,

amount in controversy because they reflect the collateral effect

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of the judgment Plaintiff seeks in this action.

Plaintiff seeks a

judgment finding that Defendants engaged in unlawful fraud and

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conspiracy and setting aside the transfer of real property.

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is well settled that the amount in controversy requirement cannot

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be met by taking into account any collateral effect which may

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follow adjudication, whether by way of estoppel of the parties or

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otherwise."

"It

Rapoport v. Rapoport, 416 F.2d 41, 43 (9th Cir.

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1969).

In Rapoport the court held that it lacked subject matter

jurisdiction to consider an action to set aside a divorce decree,

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because the action only affected the parties' interests in certain

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real property collaterally and not directly and, thus, the value
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of the property could not be considered as part of the amount in
controversy.

Id. at 43.

Plaintiff also seeks exemplary damages for Defendants'

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alleged fraudulent, oppressive and malicious conduct.

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¶¶ 19 & 25.

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Compl.

"If made in good faith, punitive damages may be

included in computing the amount necessary for federal
jurisdiction."

Davenport v. Mutual Ben. Health & Acc. Ass‟n, 325

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F.2d 785, 787 (9th Cir. 1963).

However, "in cases where a

United States District Court
For the Northern District of California

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plaintiff's state court complaint does not specify a particular

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amount of damages, the removing defendant bears the burden of

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establishing, by a preponderance of the evidence, that the amount

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in controversy exceeds [the requisite amount]."

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Sanchez v.

Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996)

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(including punitive damages under Cal. Civ. Code § 3345 in
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determining whether the defendant satisfied its burden to show

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that the amount in controversy exceeded the requisite amount); see

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also, Guglielmino v. McKee Foods Corp., 506 F.3d 696 (9th Cir.

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2007) (affirming application of the preponderance of the evidence

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standard where a complaint did not seek a specified amount of

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damages, but sought damages under statutory and common law, as

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well as punitive damages based on its fraud claim).

"Under this

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burden, the defendant must provide evidence establishing that it
is 'more likely than not' that the amount in controversy exceeds

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that amount."

Sanchez, 102 F.3d at 404.

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established the rule in Sanchez on the grounds that it is
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The Ninth Circuit

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consistent with Congress's intent to limit diversity jurisdiction.

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Id. at 401-04.

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damages that she seeks to recover.

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showing, by a preponderance of the evidence, that Plaintiff is

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more likely than not to recover in excess of $75,000 in punitive

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Plaintiff has not alleged an amount of punitive
Because Defendants make no

damages, this claim does not satisfy the amount in controversy
requirement.

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Therefore, Defendants have failed to meet the requirements of

United States District Court
For the Northern District of California

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28 U.S.C. § 1332(a) with respect to the amount in controversy.

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II. Complete Diversity

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Plaintiff argues that the Stranger Trust is a citizen of

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California and therefore its inclusion defeats diversity in this

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case.

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Gregory Stranger disputes that the Stranger Trust is a

citizen of this state and further argues that the Trust's

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citizenship is irrelevant, because the trustees are the true
parties in interest.
As noted earlier, 28 U.S.C. § 1332(a) provides for federal

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court jurisdiction in civil actions between "citizens of different

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States."

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purposes of diversity "must be real and substantial parties to the

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The Supreme Court has explained that "citizens" for

controversy."

Navarro Sav. Ass'n. v. Lee, 446 U.S. 458, 460

(1980) (citing McNutt v. Bland, 2 How. 9, 15 (1844)).

Navarro

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stated that early cases held that only persons could be real

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parties to an action, and, while corporations suing in diversity

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have long been deemed citizens, unincorporated associations remain
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mere collections of individuals.

Id. at 461.

Therefore, a "trust

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has the citizenship of its trustee or trustees."

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Columbia Prop. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006).

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"[A] trustee is a real party to the controversy for purposes of

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diversity jurisdiction when he possesses certain customary powers

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Johnson v.

to hold, manage, and dispose of assets for the benefit of others."
Id. at 464.

The Certificate of Trust for the Stranger Trust

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indicates that Gregory Stranger and Coralie Stranger have the

United States District Court
For the Northern District of California

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customary powers of a trustee to administer, manage, protect and

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invest the trust estate.

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To be a citizen of a state for purposes of diversity

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jurisdiction "a natural person must both be a citizen of the

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United States and be domiciled within the State."

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Newman-Green,

Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828 (1989) (emphasis in

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original).

"A person residing in a given state is not necessarily

domiciled there, and thus is not necessarily a citizen of that

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state."

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2001).

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resides with the intention to remain or to which she intends to

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return."

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Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir.
"A person's domicile is her permanent home, where she

Id.

A person's old domicile is not lost until a new one

is acquired, and a "change in domicile requires the confluence of
(a) physical presence at the new location with (b) an intention to

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remain there indefinitely."

Lew, 797 F.2d at 750.

Lew recognized

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various factors relevant to the determination of an individual's

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domicile, including current residence, voting registration and
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voting practices, location of personal and real property, location

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of brokerage and bank accounts, location of spouse and family,

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membership in organizations, place of employment or business,

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driver's license and automobile registration, and payment of

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taxes.

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Id.

Domicile is evaluated based on "objective facts,"

with no single factor controlling, and "statements of intent are
entitled to little weight when in conflict with facts."

Id.

The

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United States District Court
For the Northern District of California

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existence of domicile for purposes of diversity is determined as
of the time the lawsuit is filed.

Id.

Coralie Stranger executed a declaration on March 10, 2011, in

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which she testified to the following.

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resides there year around.

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conducts her personal and business-related banking and attends

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church in Florida.

She lives in Florida, and

Her children attend school, and she

She has cars and a boat registered in her name

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in Florida.

She has had an active Florida real estate license

since 2003, and began working for John R. Wood Realtors in Florida

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in 2009.

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real estate license since 2004.

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[California] license as active with Frank Howard Allen Realtors,"

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though she is not an employee with the company.

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In addition, Mrs. Stranger has had an active California
She stated, "I maintain my

She has not had

an office "in California with Frank Howard Allen Realtors" since
2008.

Mrs. Stranger did not testify as to when she relocated to

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Florida, but stated that she intends to remain there indefinitely.
She did not testify to owning real property in Florida, nor did

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she deny owning real estate or other personal property in
California.
A printout from the Frank Howard Allen Realtors webpage,1

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dated January 25, 2011, includes Mrs. Stranger's name, image, and

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contact information.

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In addition, the webpage provides

biographical information about Mrs. Stranger.

It states that she

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"lived in Mill Valley for a number of years and now resides in
Novato with her husband and sons."

Mrs. Stranger's biography

United States District Court
For the Northern District of California

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indicates an award from the company in 2007 and includes a list of

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memberships in various Bay Area and Marin County organizations.

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Counsel for Plaintiff also testified that he called the company's

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Gregory Stranger objects to the webpage printout as
inadmissible hearsay. The Court finds that the webpage is not
hearsay to the extent that it is offered to prove Mrs. Stranger's
past and continued association with the Frank Howard Allen real
estate agency. The Court also finds that the content of the
website, including biographical information about Mrs. Stranger,
constitutes non-hearsay admissions pursuant to Federal Rule of
Evidence 801(d)(2). Rule 801(d)(2) provides that a statement is
not hearsay if it "is offered against a party and is (A) the
party's own statement, in either an individual or a representative
capacity or (B) a statement of which the party has manifested an
adoption or belief in its truth, or (C) a statement by a person
authorized by the party to make a statement concerning the
subject, or (D) a statement by the party's agent or servant
concerning a matter within the scope of the agency or employment,
made during the existence of the relationship . . ." Mrs.
Stranger testified that she currently maintains an active real
estate license through the company. She has an active phone line
and voicemail box at the company's San Rafael office.
Furthermore, the Court can reasonably infer from Mrs. Stranger's
testimony that she had an office with the company prior to 2008.
Together this evidence is sufficient to establish that she adopted
the biographical statements included on the company website,
authorized the statements, or that the statements were made in the
course of her association with the company.
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San Rafael Office on January 26, 2011, and reached Mrs. Stranger's
voicemail.2
Gregory Stranger executed a declaration on March 10, 2011,

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testifying to the following.

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say when he moved there.

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He lives in Florida, but he does not

He is registered to vote in Florida and

has voted in recent elections in the state.

He conducts his

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personal banking in Florida, and any cars or boats registered in
his name are registered in Florida.

He further testified to

United States District Court
For the Northern District of California

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attending church in Florida, and participating in various

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"community activities" in the state.

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he owns real property in Florida.

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owns real property or other personal property in California,

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There is no indication that

He did not indicate whether

though he admits that the Stranger Trust did own property in

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California, and Stranger Holdings currently owns certain property
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in California.

Mr. and Mrs. Stranger are the only members of

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Stranger Holdings.

Some of the Stranger Holdings properties are

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leased, and, as noted earlier, the total annual rents for the

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leased properties exceed $100,000.

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Stranger Trust had its principal place of business in California,

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before it relocated in early 2009 to Florida.

From 2006 to 2008, the

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Plaintiff's counsel's testimony that he reached Mrs.
Stranger's voicemail box through the real estate agency's San
Rafael office is not inadmissible hearsay to the extent that he
testified to hearing a voicemail greeting, and Mrs. Stranger's
statement that the caller had reached her is a non-hearsay
admission. Testimony as to Mr. Stranger's voicemail greeting at
IGX is similarly admissible.
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As to his employment, Mr. Stranger testified that he is

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currently unemployed, and does not work for IGX, Inc. in San

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Francisco.

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declaration, stating that Mr. Stranger did not work for IGX in

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December, 2010, nor in January, 2011, and he is not currently

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J. Michael Koonce, President of IGX, executed a

employed with the company.

Counsel for Plaintiff testified that

he called the IGX San Francisco office on January 26, 2011, and

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reached a voicemail box in which the greeting stated, "Hi, you

United States District Court
For the Northern District of California

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have reached the desk of Greg Stranger.

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Please leave me a message."

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for IGX in the past.

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I am away from my desk.

Mr. Stranger has not denied working

It is apparent that Mr. and Mrs. Stranger were domiciled in
California in the past, but have changed their residence to
Florida.

At the time this action was filed and removed to federal

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court, Mrs. Stranger continued to conduct real estate business in
California.

Mr. Stranger appears to have conducted business

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through the IGX office in San Francisco at the time the action was

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filed and removed to federal court.

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employment in Florida.

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own real property in Florida or that they have relinquished all

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He does not testify to any

The Strangers have not stated that they

real property in California.

Both are the sole owners of Stranger

Holdings, a limited liability company, with significant real

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estate in California.

Based on their declarations, it is not

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clear how long the family has resided in Florida.

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evidence as to when the Strangers became involved with their
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There is no

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church, enrolled their child in Florida schools, or registered

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their cars and boats with the state.

They have not indicated that

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they have Florida drivers' licenses.

Because residence and mere

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statements of intent are not controlling, the Court finds that

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under the totality of the circumstances the Strangers have not

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satisfied their burden to show that they changed their domicile to
Florida before this action was filed and removed to federal court.

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Lew, 797 F.2d at 751 (stating that there is a presumption in favor

United States District Court
For the Northern District of California

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of a party's established domicile as against a newly acquired

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one).

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The Court lacks subject matter jurisdiction for this reason as

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well, and remand is appropriate.

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to removal are to be resolved in favor of remand).

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Accordingly, complete diversity in this action is lacking.

Gaus, 980 F.2d at 566 (doubts as

Plaintiff also argues that inclusion of Defendant Stranger

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Holdings, a Florida limited liability company, destroys complete
diversity for purposes of removal.

In the Ninth Circuit, a

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limited liability company is a citizen of every state of which its

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"owners/members" are citizens.

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Mrs. Stranger are the only owners/members of Stranger Holdings.

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Because the Strangers have failed to satisfy their burden to show

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Johnson, 437 F.3d at 899.

Mr. and

that they changed their domicile to Florida before this suit was
filed and removed, the Court finds that Stranger Holdings is a

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citizen of California.

For this reason as well, the diversity

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requirement is unsatisfied, and remand to state court is

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appropriate.
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CONCLUSION

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The Court finds that Defendants have failed to establish the

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required minimum amount in controversy and complete diversity of

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citizenship, and therefore the Court lacks jurisdiction and remand

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of the action to state court is warranted.

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Plaintiff's motion for remand.

The Court GRANTS

Docket No. 33.

The clerk is

directed to remand the file to the Marin County Superior Court.

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United States District Court
For the Northern District of California

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Defendants' motions to dismiss, Docket Numbers 5-8, are
terminated.
IT IS SO ORDERED.

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Dated:4/14/2011

CLAUDIA WILKEN
United States District Judge

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