Lima et al v. Deutsche Bank National Trust Company et al

Filing 67

ORDER ADOPTING THE MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATION TO DENY PLAINTIFFS' MOTION FOR AN ORDER OF REMAND for 57 , 56 . Signed by JUDGE SUSAN OKI MOLLWAY on 03/29/2013. (eps) -- The court adopts the F&Rs except with regard to the "similar class actions" issue and the "fraudulent joinder" issue. The F&Rs may well be correct with respect to those issues, but they are unnecessary to the present ruling. Plaintiffs' motions to rem and are denied on the other bases set forth in the F&Rs. The Clerk of Court is directed to docket this Order in both the Lima (CIV NO 12-00509 SOM-RLP) and Gibo (CIV 12-00514 SOM-RLP) cases CERTIFICATE OF SERVIC EParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
LIONEL LIMA, JR., and
BARBARA-ANN DELIZO-LIMA; and
CALVIN JOHN KIRBY,
individually and on behalf of
all others similarly
situated,
Plaintiffs,
vs.
DEUTSCHE BANK NATIONAL TRUST
COMPANY; THE LAW OFFICE OF
DAVID B. ROSEN, a Hawaii
professional corporation;
DAVID B. ROSEN, individually;
et al.,
Defendants.
_____________________________
EVELYN JANE GIBO,
individually and on behalf of
all others similarly
situated,
Plaintiffs,
vs.
U.S. NATIONAL BANK
ASSOCIATION, also known as
U.S. BANK N.A., a national
banking association; THE LAW
OFFICE OF DAVID B. ROSEN, a
Hawaii professional
corporation; DAVID B. ROSEN,
individually; et al.,
Defendants.
_____________________________

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CIVIL. NO. 12-00509 SOM/RLP
ORDER ADOPTING IN PART THE
MAGISTRATE JUDGE’S FINDINGS
AND ADOPTING RECOMMENDATIONS
TO DENY PLAINTIFFS’ MOTIONS
FOR AN ORDER OF REMAND

CIVIL NO. 12-00514 SOM/RLP

ORDER ADOPTING THE MAGISTRATE JUDGE’S FINDINGS AND
RECOMMENDATION TO DENY PLAINTIFFS’ MOTION FOR AN ORDER OF REMAND
I.

INTRODUCTION.
Before this court are appeals in two cases that, while

not consolidated, raise nearly identical issues.

This court

therefore considers the appeals together, in the interest of
efficiency.
The first of the two cases involves a lawsuit against
Defendants Deutsche Bank, The Law Office of David B. Rosen, and
David B. Rosen by Plaintiffs Lionel Lima, Jr., Barbara-Ann
Delizo-Lima, and Calvin Jon Kirby II, individually and on behalf
of all others similarly situated.
The second of the two cases involves a lawsuit against
Defendants U.S. Bank, The Law Office of David B. Rosen, and David
B. Rosen by Plaintiff Evelyn Jane Gibo, individually and on
behalf of all others similarly situated.
In each case, the Magistrate Judge was presented with a
remand motion.

In each case, the Magistrate Judge issued his

Findings and Recommendation to Deny Plaintiffs’ Motion for an
Order of Remand (“F&R”).

The F&Rs are nearly identical.

The

Limas and Gibo (collectively, “Plaintiffs”) object to the F&Rs.
See Lima Obj., ECF No. 57; Gibo Obj., ECF No. 74.

After

reviewing Plaintiffs’ Objections, the court adopts the Magistrate
Judge’s recommendations that Plaintiffs’ remand motions be
denied.
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II.

STANDARD OF REVIEW.
The court reviews de novo those portions of an F&R to

which an objection is made.

28 U.S.C. § 636(b)(1); Fed. R.

Civ.P. 72(b); Local Rule 74.2.

The district court may accept

those portions of the F&R that are not objected to if it is
satisfied there is no clear error on the face of the record.
Stow v. Murashige, 288 F. Supp. 2d 1122, 1127 (D. Haw. 2003).
III.

ADOPTION OF “BACKGROUND” SECTION AND SUMMARY OF CAFA
PROVISIONS.
Plaintiffs state no objection to the “Background”

section of the F&Rs (pages 2 to 5 of the F&R in the Lima case and
pages 2 to 5 in the Gibo case), which summarizes facts pertinent
to this remand issue.

Similarly, while Plaintiffs object to the

manner in which the F&Rs analyze and apply the Class Action
Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d), to the
present cases, Plaintiffs raise no objection to the summary of
CAFA provisions in the F&Rs (pages 6 to 11 of the F&R in the Lima
case and pages 6 to 12 in the Gibo case).

This court, having

reviewed these sections to which no objection has been made,
adopts the two sections.
IV.

ANALYSIS.
A.

This Court Has Diversity Jurisdiction.

Plaintiffs argue that remand is required because this
court does not have subject matter jurisdiction over these

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actions.

The F&Rs disagree.

The F&Rs conclude that Plaintiffs

have failed to prove that the “local controversy” exception
applies.

Lima F&R at 6-16; Gibo F&R at 6-16.
CAFA applies to a class action in which the aggregate

number of members in the proposed plaintiff class is 100 or more
persons, provided the primary defendants are not states, state
officials, or other governmental entities against which a federal
court cannot order relief.

28 U.S.C. § 1332(d)(5).

Under CAFA,

only “minimal diversity” is required to vest a federal court with
diversity jurisdiction.

See Serrano v. 180 Connect, Inc., 478 F.

3d 1018, 1024 (9th Cir. 2007).

That is, a court may exercise

diversity jurisdiction in a CAFA case even if every plaintiff’s
citizenship is not different from every defendant’s citizenship.
Instead of requiring complete diversity, CAFA requires only that
the aggregate amount in controversy exceed $5 million and that
any class member have citizenship different from any defendant.
28 U.S. C. § 1332(d)(2).
Even if a removing party in a CAFA case establishes
minimal diversity, a plaintiff is entitled to remand by showing
that an exception to federal jurisdiction applies.

The only

exception Plaintiffs rely on is the “local controversy”
exception.

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Plaintiffs seeking to establish that a class action is
a “local controversy” must satisfy the criteria set forth in
either subsection (A) or subsection (B) of 28 U.S.C.
§ 1332(d)(4).

Plaintiffs argue that they satisfy subsection (A).

The F&Rs take the position that Plaintiffs fail to
satisfy three provisions in subsection (A).1
1.

The “Significant Relief” Provision.

Under 28 U.S.C. 1332(d)(4)(A)(i)(II), Plaintiffs must
show that at least one defendant satisfies three provisions.

One

of those provisions, found at § 1332(d)(4)(A)(i)(II)(cc),
requires that at least one defendant be “a citizen of the State

1

A fourth provision in subsection (A) was in contention in
proceedings before the Magistrate Judge. That was the
requirement in subsection (A)(i)(I) that “greater than two-thirds
of the members of all proposed plaintiff classes in the aggregate
are citizens of the State in which the action was originally
filed.” Although Plaintiffs submitted declarations relating to
the citizenship of some class members to the Magistrate Judge,
and Defendants challenged the adequacy and admissibility of
Plaintiffs’ submissions in that regard, the F&Rs did not address
the issue of whether Plaintiffs satisfied the “greater than twothirds” requirement, perhaps because the determinations in the
F&Rs that Plaintiffs failed to satisfy three other requirements
were more than sufficient to preclude application of the “local
controversy” exception. Defendants did not object to the F&Rs on
any ground, including its silence as to the “greater than twothirds requirement.” Defendants nevertheless urge this court to
address that requirement, noting that, on de novo review, this
court may base a ruling adopting the F&Rs on any ground.
Although the court agrees with Defendants that it is not limited
to the grounds relied on by the Magistrate Judge, the court sees
no need to address a ground not covered by the F&Rs when there is
more than one ground that is indeed discussed in the F&Rs
pursuant to which, without more, the “local controversy”
exception is inapplicable.
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in which the action was originally filed.”

The only Defendants

that Plaintiffs identify as citizens of Hawaii are The Law Office
of David B. Rosen and David B. Rosen himself (collectively,
“Rosen Defendants”).

There is no dispute that the Rosen

Defendants are citizens of Hawaii.
However, § 1332(d)(4)(A)(i)(II)(aa) requires that
Plaintiffs also show that at least one defendant who is a citizen
of Hawaii is a defendant “from whom significant relief is sought
by members of the plaintiff class.”

This is a requirement that

Plaintiffs do not satisfy.
In the Lima case, Plaintiffs estimate that there are
550 members of the putative class, of which about 50 were
involved in foreclosures handled by the Rosen Defendants.

This

is less than 10 percent of the members of the plaintiff class.
Plaintiffs allege that the Rosen Defendants caused other law
firms or lawyers not sued by Plaintiffs in Lima to damage other
class members.

Even if this court recognizes claims by those

class members against the Rosen Defendants, the number of class
members seeking relief from the Rosen Defendants appears to be in
the neighborhood of 150.
The numbers in the Gibo case are similar.

Plaintiffs

contend that the class contains over 550 members, more than 50 of
whom were involved in foreclosures handled by the Rosen
Defendants.

Adding other class members involved in foreclosures

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handled by other lawyers who were allegedly influenced by the
Rosen Defendants brings the number of class members seeking
relief from the Rosen Defendants to more than 140.
The “significant relief” requirement is met if relief
is sought from the Rosen Defendants “for most, if not all, of the
proposed plaintiff class.”

Coleman v. Estes Express Lines, Inc.,

730 F. Supp. 2d 1141, 1157 (C.D. Cal. 2010)(citations omitted),
aff’d, 631 F. 3d 1010 (9th Cir. 2011).

Plaintiffs do not even

argue that most of the members of the putative classes in
Lima and Gibo seek relief from the Rosen Defendants.
Plaintiffs confusingly argue that the Magistrate Judge
erred in referring to class members seeking relief from the Rosen
Defendants as a “subset” of the class, instead of a “subclass.”
Lima Obj. at 34; Gibo Obj. at 33.

For purposes of analyzing the

“significant relief” provision, the distinction is lost on this
court.
Noting that the “significant relief” provision refers
to “members of the plaintiff class,” Plaintiffs suggest that the
reference to “members” somehow allows a court to focus on less
than the entire class.

Lima Obj. at 34; Gima Obj. at 33.

This

suggestion reads the reference to “the plaintiff class” right out
of the statute.

It is not clear to this court exactly how

Plaintiffs think the word “members” reduces the showing required

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by the “significant relief” provision.

In any event, Plaintiffs

cite no authority for their suggestion.
In objecting to the F&Rs, Plaintiffs make no other
attempt to grapple with the authorities cited in the F&Rs.

All

of those authorities indicate that too few of the members of the
class seek relief from the Rosen Defendants for that relief to
qualify as “significant relief . . . sought by members of the
plaintiff class.”

Without repeating the analysis in the F&Rs

concerning the “significant relief” requirement, this court
adopts that careful and detailed analysis.
2.

The “Significant Basis” Requirement.

A separate requirement for establishing that a class
action is a “local controversy” is found in subsection
(A)(i)(II)(bb) of § 1332(d)(4).

That provision requires that at

least one Hawaii defendant be a defendant “whose alleged conduct
forms a significant basis for the claims asserted by the proposed
plaintiff class.”
Plaintiffs concede that this provision looks to the
class as a whole.

Lima Obj. at 34; Gibo Obj. at 34.

Plaintiffs then argue that the Rosen Defendants must be
“significant defendants” because they were performing acts
required by statute to be performed by lawyers.
36; Gima Obj. at 35.

This is a non sequitur.

Lima Obj. at 35-

Plaintiffs were

required to show that the Rosen Defendants’ conduct forms a

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“significant basis” for the claims asserted, not that the Rosen
Defendants are “significant defendants.”

Again, Plaintiffs do

not even attempt to address the analysis or authorities relied on
by the F&Rs.
This court adopts without repeating the analysis
in the F&Rs of the “significant basis” requirement.
3.

The Prohibition on Similar Class Actions.

Section 1332(d)(4)(a)(ii) states that a federal court
shall not exercise jurisdiction over a class action in which,
“during the 3-year period preceding the filing of that class
action, no other class action has been filed asserting the same
or similar factual allegations against any of the defendants on
behalf or the same or similar persons.”
The F&Rs considered the Lima and Gibo actions to be
class actions “asserting the same or similar factual allegations
against any of the defendants on behalf of the same or similar
persons.”

The F&Rs also noted that Lima was filed shortly after,

but on the same day, as Gibo, so that, in the Lima case,
Plaintiffs cannot claim that “during the 3-year period preceding
the filing” of Lima, no other class action has been filed
asserting similar allegations against any defendant on behalf of
similar persons.

With respect to Gibo, the F&Rs concluded that

it would violate the spirit of the “local controversy” exception

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to ignore the Lima action, even if the filing of the Lima case
did not technically “precede” the filing of the Gibo case.
Having reviewed the F&Rs and the parties’ submissions,
this court, while viewing the F&Rs as clearly having the better
of the argument, determines that it need not rely on this
provision for purposes of addressing Plaintiffs’ Objections.
Having run afoul of the “significant relief” and “significant
basis” requirements, Plaintiffs do not show that their actions
constitute “local controversies.”
B.

Plaintiffs Do Not Show Removal by Nonparties or
Lack of a Case or Controversy.

Plaintiffs alternatively argue that the banks removed
the Lima and Gibo actions to this court in their trustee
capacities, but no trustee is named as a party to these actions.
Plaintiffs contend that there is really no dispute between
Plaintiffs and the banks as trustees, which Plaintiffs
characterize as nonparties.
As noted in the F&Rs, the removal notices filed in this
court identified the removing entities as trustees for other
entities, but also noted that, if Plaintiffs were proceeding
against the banks in the banks’ other capacities, then the
removal notices applied with equal force to those other
capacities.

Lima Notice of Removal, ECF No. 1; Gibo Notice of

Removal, ECF No. 1.

This court agrees with the Magistrate Judge

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that the language of the removal notices is fatal to Plaintiffs’
argument about removal by nonparties.
Plaintiffs appear to be arguing that the banks had no
right to foreclose in any capacity at all, meaning that
Plaintiffs are suing the banks in connection with foreclosures
that were wrongful without regard to violations of the procedural
requirements for foreclosures.

In response to Plaintiffs’

arguments about removal by nonparties and about case or
controversy requirements, the banks go to great lengths to
establish that they had a right to foreclose.

The court cannot

help concluding that the parties have wasted an inordinate amount
of time on matters that this court need not determine in
connection with any remand issue.

As the F&Rs recognize, whether

the banks had a right to foreclose is simply immaterial to the
motions to remand.
Plaintiffs are clearly suing the banks in the actions
at issue.

The banks have removed in whatever capacities they are

being sued in.

Whether the banks should or should not have

foreclosed, the banks are parties with the right to remove!
Having sued the banks, Plaintiff can hardly argue that there is
no controversy between Plaintiffs and the banks.
C.

This Court Need Not Address the “Fraudulent
Joinder” Argument.

Recognizing that it did not need to address Defendants’
argument that the Rosen Defendants had been “fraudulently joined”
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to defeat diversity jurisdiction, the F&Rs nonetheless, for the
purpose of completeness (and doubtless to assist this court on
review), included a detailed discussion of that alternative
argument.
issue.

At this point, this court sees no need to address this

Whether the Rosen Defendants are properly in this case or

not does not affect diversity jurisdiction and therefore need not
be addressed here.

See Serrano, 478 F. 3d at 1024 (explaining

that “minimal diversity” suffices under CAFA).
V.

CONCLUSION.
The court adopts the F&Rs except with regard to the

“similar class actions” issue and the “fraudulent joinder” issue.
The F&Rs may well be correct with respect to those issues, but
they are unnecessary to the present ruling.

Plaintiffs’ motions

to remand are denied on the other bases set forth in the F&Rs.
The Clerk of Court is directed to docket this Order in
both the Lima and Gibo cases.

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IT IS SO ORDERED.
DATED: Honolulu, Hawaii, March 29, 2013.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

LIONEL LIMA, ET AL. v. DEUTSCHE BANK, ET AL., Civ. No. 12-00509
SOM/RLP AND EVELYN JANE GIBO, ET AL. v. U.S. NATIONAL BANK
ASSOCIATION, ET AL., Civ. No. 12-00514 SOM/RLP; ORDER ADOPTING IN
PART THE MAGISTRATE JUDGE’S FINDINGS AND ADOPTING RECOMMENDATIONS
TO DENY PLAINTIFFS’ MOTIONS FOR AN ORDER OF REMAND

13