Gomez et al v. Wells Fargo Bank, N.A. et al

Filing 11

ORDER REMANDING ACTION. Signed by Judge Saundra Brown Armstrong on 7/27/2015. (mklS, COURT STAFF) (Filed on 7/28/2015)

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UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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OAKLAND DIVISION
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11 SERVIO T. GOMEZ, et al.,

Plaintiffs,

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Case No: C 15-2996 SBA
ORDER REMANDING ACTION

vs.

14 WELLS FARGO BANK, N.A., et al.,
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Defendants.

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On May 21, 2015, Plaintiffs Servio and Martha Gomez, through counsel, filed the

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instant wrongful foreclosure action against Wells Fargo Bank N.A. (“Wells Fargo”) and

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Cal-Western Reconveyance Corporation (“Cal-Western”) in the Contra Costa County

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Superior Court. See Gomez, et al. v. Wells Fargo Bank, N.A., et al., Contra Costa Cnty.

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Super. Ct. No. C15-00923. According to Plaintiffs, Cal-Western, in its capacity as the

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agent for Wells Fargo and as the substitute trustee under the Deed of Trust, conspired with

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Wells Fargo to illegally foreclose on their property in 2011. The Complaint alleges causes

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of action for: (1) wrongful foreclosure; (2) violation of California Civil Code

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§ 2934a(a)(1)(A); (3) violation of California Business and Professions Code § 17200;

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(4) fraud; and (5) unjust enrichment.

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On June 26, 2015, Wells Fargo removed the action to this Court on the basis of

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diversity of citizenship, see 28 U.S.C. § 1332, and recently filed a motion to dismiss,

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pursuant to Federal Rule of Civil Procedure 12(b)(6).1 Dkt. 1, 5. Before considering the

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motion to dismiss, the Court must first assess whether it has subject matter jurisdiction over

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the action. See United Investors Life Ins. Co. v. Waddell & Reed, Inc., 360 F.3d 960, 967

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(9th Cir. 2004) (noting that a district court has “a duty to establish subject matter

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jurisdiction over the removed action sua sponte, whether the parties raised the issue or

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not.”).

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Under the federal removal statute, 28 U.S.C. § 1441(a), a defendant may remove to

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federal court any matter over which a federal court has original jurisdiction. Caterpillar

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Inc. v. Williams, 482 U.S. 386, 392 (1987). “The basic statutory grants of federal-court

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subject-matter jurisdiction are contained in 28 U.S.C. §§ 1331 and 1332.” Arbaugh v.

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Y&H Corp., 546 U.S. 500, 513 (2006). Section 1331 provides for “federal-question”

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jurisdiction, while § 1332 provides for “diversity of citizenship” jurisdiction. Id. Pertinent

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here is the diversity jurisdiction statute, which confers federal subject matter jurisdiction in

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cases where the parties are citizens of different states and where the amount in controversy

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exceeds the sum of $75,000. 28 U.S.C. § 1332. Both the diversity and removal statutes are

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strictly construed and any doubts are resolved against finding jurisdiction. Luther v.

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Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th Cir. 2008); Kantor v.

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Wellesley Galleries, Ltd., 704 F.2d 1088, 1092 (9th Cir. 1983).

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In its Notice of Removal, Wells Fargo acknowledges that Cal-Western is not diverse

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from Plaintiffs, but avers that Cal-Western is a “fraudulently-joined, nominal party” whose

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citizenship need not be considered for purposes of diversity jurisdiction. Dkt. 1 at 3.

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“[O]ne exception to the requirement of complete diversity is where a non-diverse defendant

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has been ‘fraudulently joined.’” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th

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Cir. 2001). “Fraudulent joinder is a term of art. If the plaintiff fails to state a cause of

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The motion is noticed for hearing on August 12, 2015.
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action against a resident defendant, and the failure is obvious according to the settled rules

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of the state, the joinder of the resident defendant is fraudulent.” Mercado v. Allstate Ins.

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Co., 340 F.3d 824, 826 (9th Cir. 2003) (quoting McCabe v. General Foods Corp., 811 F.2d

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1336, 1339 (9th Cir. 1987)). “In such a case, the district court may ignore the presence of

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that defendant for the purpose of establishing diversity.” Hunter v. Philip Morris USA, 582

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F.3d 1039, 1043 (9th Cir. 2009). There is a “general presumption against fraudulent

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joinder” and the defendant’s burden of demonstrating that a joinder is fraudulent is a

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“heavy” one. Id. at 1046.

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Wells Fargo contends that Plaintiffs cannot state any viable claims against Cal-

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Western, “which merely conducted the ministerial duties of a foreclosure trustee.” Notice

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of Removal at 4, Dkt. 1. However, the pleadings in this case do not predicate Cal-

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Western’s potential liability solely on its role a substitute trustee. To the contrary, Plaintiffs

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allege that Cal-Western conspired with Wells Fargo by, inter alia, knowingly issuing

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invalid and fraudulent foreclosure documents and illegally appointing itself as the substitute

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trustee under the Deed of Trust in order to effectuate the foreclosure. See, e.g., Compl.

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¶¶ 30, 35, 38, 47, 48, 49, 60, 62, 70, 80, 95, 96. These and other allegations of the

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Complaint clearly demonstrate that Plaintiffs’ claims against Cal-Western are not merely

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predicated on its ministerial role as a substitute trustee. E.g., Alabastro v. Wells Fargo

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Bank, N.A., No. 5:14-cv-03469 EJD, 2015 WL 138235, *3 (N.D. Cal. Jan. 5, 2015)

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(finding that while “most of the current allegations against Cal-Western focus on activity

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common to that of a foreclosure trustee,” plaintiffs’ allegations implied that “Cal-Western

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may have conspired with other defendants to improperly or fraudulently initiate foreclosure

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proceedings against [their] . . . property,” which, in turn, precluded defendants’ showing of

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fraudulent joinder).

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Wells Fargo also contends that, pursuant to California Civil Code § 2924(d), Cal-

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Western is immune from liability for executing and recording foreclosure notices. Dkt. 1 at

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5. Federal courts have questioned whether this provision protects a foreclosing trustee

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which allegedly was not authorized to pursue foreclosure proceedings in the first instance.
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Knott v. Caliber Home Loans Inc., No. CV 15-4752 PA (JPRx), 2015 WL 3932668, *4

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(C.D. Cal. June 26, 2015); e.g., Nance v. Cal-Western Reconveyance Corp., No. LA CV

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14-07950 JAK (PLAx), 2015 WL 452747, *4 (C.D. Cal. Jan. 29, 2015) (finding allegations

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that “that Cal-Western did not have the legal authority to initiate the foreclosure

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proceedings because it was not the actual trustee” could support a showing of malice,

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thereby vitiating any immunity afforded under § 2924(d)); Silva v. Wells Fargo Bank N.A.,

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No. CV 11-3200 GAF (JCGx), 2011 WL 2437514, at *5 (C.D. Cal. June 16, 2011) (finding

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that it is “unclear whether these provisions [i.e., Cal. Civ. Code § 2924] would also apply

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where, as here, the plaintiff alleges that the foreclosing trustee was not actually the trustee

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authorized to initiate non-judicial foreclosure proceedings.”).
Alternatively, Wells Fargo alleges that Cal-Western is a nominal party. Dkt. 1 at 3-

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4. When evaluating whether diversity jurisdiction is present, “a federal court must

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disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real

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parties to the controversy.” Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461 (1980).

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Nominal parties are those “with nothing at stake . . . despite the propriety of their technical

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joinder.” Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d 1129, 1133 (9th Cir. 2002).

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Here, Wells Fargo claims that Cal-Western has no financial interest in the property, and

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was nothing more than the substitute trustee in the foreclosure process. “However, other

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courts have held that ‘Cal-Western’s status as trustee is not itself sufficient to render Cal-

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Western a nominal party.’” Nance, 2015 WL 452747, at *3 (citing cases). Moreover, as

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discussed above, Plaintiffs’ claims against Cal-Western are based on its alleged course of

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collusive conduct with Wells Fargo, and not simply Cal-Western’s status as a substitute

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trustee. Alabastro, 2015 WL 138235, *3 n.1 (allegations that Cal-Western conspired with

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other defendants to improperly or fraudulently initiate foreclosure, which included the

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fabrication of documents, were “sufficient to preclude a finding that Cal-Western should be

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disregarded from the jurisdictional analysis as a nominal party.”).

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In sum, the Court concludes that Wells Fargo has failed to carry its burden of

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demonstrating that Cal-Western is either a fraudulently-joined or nominal party whose

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citizenship may be disregarded for purposes of diversity jurisdiction. Accordingly,

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IT IS HEREBY ORDERED THAT the instant action is REMANDED to the

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Superior Court of California, County of Contra Costa. Because removal jurisdiction is

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lacking, the Court does not reach the merits of Wells Fargo’s pending motion to dismiss,

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which is DENIED without prejudice.

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IT IS SO ORDERED.

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Dated: 7/27/15

______________________________
SAUNDRA BROWN ARMSTRONG
United States District Judge

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