Lee v. American Home Mortgage Servicing, Inc. et al
Filing
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ORDER GRANTING PLAINTIFFS 17 MOTION TO REMAND, DENYING PLAINTIFFS REQUEST FOR ATTORNEYS FEES AND DENYING AS MOOT DEFENDANTS 15 MOTION TO DISMISS. Signed by Judge Claudia Wilken on 7/20/2012. (ndr, COURT STAFF) (Filed on 7/20/2012)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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SHEK Y. LEE,
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Plaintiff,
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United States District Court
For the Northern District of California
ORDER GRANTING
PLAINTIFF’S MOTION
TO REMAND, DENYING
PLAINTIFF’S
REQUEST FOR
ATTORNEYS’ FEES
AND DENYING AS
MOOT DEFENDANTS’
MOTION TO DISMISS
(Docket Nos. 5 and
17)
v.
AMERICAN HOME MORTGAGE SERVICING,
INC.; FIDELITY NATIONAL TITLE
COMPANY; POWER DEFAULT SERVICES,
INC.; and DOES 1-20. ,
Defendants.
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No. C 12-2287 CW
________________________________/
Plaintiff Shek Y. Lee moves to remand this case to state
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court and seeks attorneys’ fees.
Defendants American Home
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Mortgage Servicing, Inc. (AHMSI) and Power Default Services, Inc.
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oppose Plaintiff’s motion, and move to dismiss all claims against
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them.
Plaintiff opposes Defendants’ motion to dismiss.
The Court
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takes the parties’ motions under submission on the papers.
For
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the reasons set forth below, the Court GRANTS Plaintiff’s motion
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to remand and DENIES AS MOOT Defendants’ motion to dismiss.
The
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Court also DENIES Plaintiff’s request for attorneys’ fees.
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BACKGROUND
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Plaintiff, a California resident, filed his complaint in San
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Mateo County Superior Court, asserting various claims related to
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the servicing of his residential mortgage loan and the pending
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foreclosure of his property located at 366 Serra Drive in South
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San Francisco, California.
His claims are brought against various
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Defendants, including Fidelity National Title Company, which is
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allegedly a California citizen.
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Plaintiff brings claims against all Defendants for (1) fraud
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and deceit; (2) negligent misrepresentation; (3) constructive
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fraud; (4) intentional infliction of emotional distress;
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(5) negligent infliction of emotional distress; (6) unjust
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enrichment; (7) promissory estoppel; (8) violation of California
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Civil Code section 2923.5; (9) violation of California Business
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Code section 17500; and (10) violation of California Business Code
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section 17200.
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among other things, Defendants did not comply with California
United States District Court
For the Northern District of California
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Plaintiff intends to seek a declaration that,
Civil Code 2923.5.
Defendants AHMSI and Power Default removed this action on May
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7, 2012 pursuant to the Court’s diversity jurisdiction, 28 U.S.C.
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§ 1332.
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LEGAL STANDARD
A defendant may remove a civil action filed in state court to
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federal district court so long as the district court could have
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exercised original jurisdiction over the matter.
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§ 1441(a).
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means that the defendant always has the burden of establishing
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that removal is proper.”
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(9th Cir. 1992).
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is any doubt as to the right of removal in the first instance.”
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Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (citations
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omitted).
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28 U.S.C.
“The ‘strong presumption’ against removal jurisdiction
Gaus v. Miles, Inc., 980 F.2d 564, 566
Federal jurisdiction “must be rejected if there
District courts have original jurisdiction over all civil
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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.”
28 U.S.C. § 1332(a).
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When federal
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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.
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74 (1978).
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Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373–
A non-diverse party named in a complaint can be disregarded
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for purposes of determining whether diversity jurisdiction exists
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if a district court determines that the party’s inclusion in the
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action is a “sham” or “fraudulent.”
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Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).
McCabe v. General Foods
“If the plaintiff
United States District Court
For the Northern District of California
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fails to state a cause of action against a resident defendant, and
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the failure is obvious according to the settled rules of the
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state, the joinder of the resident defendant is fraudulent.”
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The defendant need not show that the joinder of the non-diverse
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party was for the purpose of preventing removal.
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need only demonstrate that there is no possibility that the
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plaintiff will be able to establish a cause of action in state
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court against the alleged sham defendant.
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Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998).
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a presumption against finding fraudulent joinder and defendants
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who assert it have a heavy burden of persuasion.
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Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988).
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Id.
The defendant
Id.; Ritchey v. Upjohn
However, there is
Emrich v. Touche
DISCUSSION
I.
Motion for Remand
Plaintiff argues that, because he and Fidelity are citizens
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of California, complete diversity does not exist and thus this
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Court lacks diversity jurisdiction over this action.
Defendants
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do not dispute that Fidelity is a California citizen.
Instead,
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they contend that removal was proper because Fidelity was
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fraudulently joined in this action.1
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Defendants have failed to demonstrate that there is no
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possibility that Plaintiff will be able to establish a cause of
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action for violation of section 2923.5 against Fidelity in state
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court.
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first step in the foreclosure process: The recording of a notice
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of default as required by section 2924.”
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185 Cal. App. 4th 208, 221 (2010).
California Civil Code section 2923.5 “concerns the crucial
Mabry v. Superior Court,
Under section 2923.5, a lender
United States District Court
For the Northern District of California
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may not file a notice of default until thirty days after it has
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contacted “the borrower by phone or in person to ‘assess the
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borrower’s financial situation and explore options for the
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borrower to avoid foreclosure.’”
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§ 2923.5(a)(2)).2
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advise the borrower that the borrower may request additional
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meetings, which the lender must schedule within fourteen days, and
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the lender must provide the borrower with the toll-free telephone
Id. (quoting Cal. Civ. Code
During this conversation, the lender must
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The Court notes that Defendants failed to file an
opposition within the time period permitted by Civil Local Rule
7-3(a), and that it could properly strike Defendants’ opposition
for failure to comply with the local rules. Defendants maintain
that this failure should be excused, because it is less
“egregious” than Plaintiff’s purported “jurisdictional
gamesmanship,” which consisted of filing the instant motion to
remand, and then participating in the Court’s Alternative Dispute
Resolution (ADR) telephone conference several days later.
Defendants have not offered any evidence of improper conduct by
Plaintiff; the Court mandated the parties’ participation in the
ADR telephone conference. Docket No. 14. Nonetheless, the Court
exercises its discretion to consider the merits of Defendants’
opposition.
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Alternatively, a lender may comply with section 2923.5 by
completing the due diligence requirements of subdivision (g) of
the statute. Mabry, 185 Cal. App. 4th at 221.
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number for the United States Department of Housing and Urban
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Development (HUD) to find a HUD-certified housing counseling
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agency.
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complied with, then there is no valid notice of default, and
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without a valid notice of default, a foreclosure sale cannot
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proceed.”
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section 2923.5 is “to postpone the sale until there has been
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compliance with” the statute.
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§ 2924g(c)(1)(A)).
United States District Court
For the Northern District of California
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Cal. Civ. Code § 2923.5(a)(2).
Id. at 223.
“If section 2923.5 is not
The remedy for a failure to comply with
Id. (citing Cal. Civ. Code
Plaintiff alleges that, before Fidelity recorded the Notice
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of Default on December 8, 2011, he was not contacted by any
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Defendant to assess his financial situation or explore any options
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to avoid foreclosure, and that he was not offered a subsequent
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meeting or offered HUD counseling.
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Request for Judicial Notice (RJN), Ex. 3, 2.
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that this claim must fail, because Plaintiff also “alleges that he
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spoke with AHMSI on or about August 2011, regarding a foreclosure
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alternative, specifically, a loan modification.”
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However, this allegation does not establish that Defendants
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complied with the requirements of section 2923.5(a)(2).
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Specifically, it does not show that Defendants initiated the
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requisite telephone calls or in-person meetings.
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support that during this conversations Defendants informed
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Plaintiff of his right to request a further meeting in person or
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over the phone, to take place within fourteen days, or of the HUD
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toll-free telephone number.
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Compl. ¶¶ 75-77; Defs.’
Defendants contend
Opp. at 4.
It also does not
Defendants also claim that any prejudice is vitiated by the
parties’ subsequent participation in the Court’s initial ADR
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telephone conference and engaged in preliminary loan modification
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discussions.
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there be contact prior to the notice of default,” and “[t]he
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timing requirement expressly imposed by the statute cannot be
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ignored.”
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LEXIS 72202, at *10 (citing Mabry, 185 Cal. App. 4th at 225).
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“The right conferred by section 2923.5 is a right to be contacted
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to ‘assess’ and ‘explore’ alternatives to foreclosure prior to a
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notice of default.”
United States District Court
For the Northern District of California
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This argument fails, because Ҥ 2923.5 requires that
Tamburri v. Suntrust Mortg., Inc., 2011 U.S. Dist.
Mabry, 185 Cal. App. 4th at 225 (emphasis in
original).
Further, to the extent that Defendants argue that the
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purposes of section 2923.5 were fulfilled because Plaintiff
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contacted them to discuss a possible loan modification,
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Plaintiff’s complaint alleges that, while he tried to contact
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AHMSI to find out about his options, he did not receive
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information that he requested and that, to the extent that he was
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able to speak with AHMSI, it made false representations to him
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about the process and availability of such a modification.
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Defendants have not established that section 2923.5’s “obvious
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goal of forcing parties to communicate . . . about a borrower’s
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situation and the options to avoid foreclosure” was fulfilled.
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Id. at 224 (emphasis in original).
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Thus,
Because the Court concludes that Defendants have not met
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their burden to establish that Plaintiff cannot succeed on its
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section 2923.5 claim against Fidelity, it need not consider
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whether Defendants have met this burden for Plaintiff’s remaining
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claims.
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II.
Attorneys’ Fees and Costs
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Plaintiff seeks an order compelling Defendants to reimburse
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him for attorneys’ fees and costs he incurred in connection with
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the improper removal.
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to “require payment of just costs and any actual expenses,
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including attorney fees, incurred as a result of the removal.”
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Under § 1447(c), “absent unusual circumstances, attorney’s fees
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should not be awarded when the removing party has an objectively
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reasonable basis for removal.”
United States District Court
For the Northern District of California
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Title 28 U.S.C. § 1447(c) allows the Court
Martin v. Franklin Capital Corp.,
546 U.S. 132, 136 (2005).
Although the Court was not persuaded by Defendants’
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arguments, they had an objectively reasonable basis for removal.
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Therefore, the Court declines to award Plaintiff his attorneys’
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fees and costs under § 1447(c).
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CONCLUSION
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For the foregoing reasons, Plaintiff’s motion to remand is
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GRANTED and his request for attorneys’ fees and costs is DENIED
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(Docket No. 17).
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(Docket No. 5).
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Defendants’ motion to dismiss is DENIED as moot
The Clerk shall remand this action to San Mateo County
Superior Court and close the file.
IT IS SO ORDERED.
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Dated:
7/20/2012
CLAUDIA WILKEN
United States District Judge
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