Pascua v. Option One Mortgage Corporation et al

Filing 34

ORDER DISMISSING COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION re 14 , 17 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 2/28/2014. "Pascua's Complaint is dismissed for lack of subject matter jurisdiction. The Clerk of Court is directed to enter judgment and to close this case." (emt, )CERTIFICATE OF SERVICEParticipants 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
ARSENIO AGUILAR PASCUA,

)
)
Plaintiff,
)
)
vs.
)
)
OPTION ONE MORTGAGE
)
CORPORATION et al,
)
)
Defendants.
)
_____________________________ )

CIVIL NO. 13-00406 SOM/KSC
ORDER DISMISSING COMPLAINT
FOR LACK OF SUBJECT MATTER
JURISDICTION

ORDER DISMISSING COMPLAINT
FOR LACK OF SUBJECT MATTER JURISDICTION
I.

INTRODUCTION.
This case is brought by a property owner who says he is

unable to discern which entity he should be sending mortgage
payments to.

Defendant Option One Mortgage Corporation brings a

motion to dismiss all claims brought against it by Plaintiff
Arsenio Aguilar Pascua.

Defendants Homeward Residential, Wells

Fargo Bank and Ocwen Loan Servicing (who collectively refer to
themselves as the “Ocwen Defendants”) “substantively” join Option
One’s motion with respect to Count III of the Complaint, which
seeks to bring a quiet title action against all Defendants.1
Concerned that it may lack subject matter jurisdiction over this

1

While a simple joinder would simply ask for the remedy a
movant seeks, which may be relief only for the movant itself,
this court’s rules also contemplate “substantive” joinders, in
which parties file supplemental memoranda detailing their
positions and may seek for themselves the same relief the movant
seeks. See Local Rule 7.9.

action, the court asked for supplemental briefing on the
jurisdictional question.

At the hearing on the present motion,

Pascua’s counsel agreed to voluntarily dismiss Counts I and II of
the Complaint, which alleged violations of the Fair Debt
Collection Practices Act and Hawaii’s Unfair Competition and
Practices Act, respectively.
III before the court.

ECF No. 33.

This leaves only Count

Pascua asserts that the court has

diversity jurisdiction over Count III.
Although Count III is styled as an action to “quiet
title,” Pascua is seeking only a determination by this court as
to the identity of the entity to which his debt is owed.

With

his only injury being the uncertainty he feels regarding that
identity, Pascua fails to show that this uncertainty equates with
a controversy involving in excess of $75,000.

He points only to

a debt exceeding $75,000, but that debt is not in controversy.
The court therefore concludes that it lacks subject matter
jurisdiction over the only remaining claim and dismisses the
case.
II.

BACKGROUND.
Pascua obtained a home mortgage loan from Option One in

July 2007.

Complaint ¶ 2.

At some point in 2008, Option One

apparently sold the loan to Wells Fargo Bank, which then appears
to have enlisted Homeward as its loan servicer.

Pascua alleges

that the sale of the loan and assignment of the mortgage to Wells

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Fargo was improper.

He affixes to his Complaint an “Assignment

of Mortgage,” signed by a representative of Option One, in which
the space for the name of the assignee is blank.
Exhibit K, ECF No. 1-13.

Plaintiff’s

It is this document that Pascua argues

demonstrates the impropriety of the assignment.
At some point in 2012, Pascua began corresponding with
Homeward regarding his loan, apparently asking for proof that
Homeward was in fact the servicer.

On May 29, 2012, Homeward

sent Pascua a letter stating that it had acquired the servicing
rights to Pascua’s debt from Option One on April 30, 2008.
Plaintiff’s Exhibit F, ECF No. 1-8.

Homeward stressed that it

was unable to provide Pascua with the original promissory note
but intimated that the mortgage had been recorded with Hawaii’s
Bureau of Conveyances.

Id.

On July 27, 2012, Wells Fargo, through its attorneys
Pite Duncan LLP, sent Pascua a letter purporting to “provid[e]
formal notice of default under the terms and conditions of the
Note and Security Instrument . . . for failure to pay the
required installments when due, as of August 1, 2011.”
Plaintiff’s Exhibit H, ECF No. 1-10.

The letter further stated

that, to avoid foreclosure, Pascua had to pay $41,139.92 within
thirty-three days of the date of the letter.

Id.

The letter

specifically stated that the check for $41,139.92 should be
“payable to and mailed to Homeward Residential, Inc.”

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Id.

Pascua continued his correspondence with Homeward, and
on August 29, 2012, Homeward sent Pasuca another letter stating
that Homeward had “acquired the servicing rights to [Pascua’s]
account from Option One Mortgage Corporation” on July 1, 2008,
about two months later than previously indicated.
Exhibit I, ECF No. 1-11.

Plaintiff’s

The letter referred to an attached copy

of “the Adjustable Rate Note and Mortgage” and noted that the
mortgage document specifically said that the note and mortgage
“can be sold one or more times without prior notice to [Pascua]”
and that “a sale might result in a change in entity (known as the
‘Loan Servicer’) that collects monthly payments due.”

Id.

While

the letter did not identify the owner of Pascua’s debt, nothing
in the letter suggested that Homeward itself purported to be the
owner of the loan.

Instead, the letter clearly stated that

“Homeward acquired the servicing rights” to the loan and was the
“entity that collects [the] monthly payments” due from Pascua.
Id. (emphasis added).
Unsatisfied with this response, Pascua continued his
correspondence.

On February 7, 2013, Homeward sent Pascua

another letter, stating that “the owner and holder for [Pascua’s]
account is Wells Fargo Bank, N.A., as Trustee for Soundview Home
Loan Trust” and that “Homeward is the current servicer of the
account and collects payments on behalf of the owner.”
Plaintiff’s Exhibit G, ECF No. 1-9 (emphasis added).

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The letter

further stated that “if the Note Holder (Homeward) has not
received the full amount of any monthly payment by the end of 15
calender days after it is due, a late charge will be assessed for
the overdue payment.”

Id.

Pascua suggests that the description

of Homeward as “Note Holder” creates confusion as to who is
actually the owner of Pascua’s debt.

See Complaint ¶ 22.

However, the parenthetical reference to Homeward appears to be a
reference to the lender’s agent, who was to be the recipient of
the payment.

Nothing in the rest of the letter or in any of the

other letters from Homeward affixed to Pascua’s Complaint
suggests that Homeward is anything but a loan servicer acting on
behalf of Wells Fargo.
On February 13, 2013, Pascua received a letter from
Homeward stating that, effective March 01, 2013, it was
transferring the servicing of Pascua’s account to Ocwen Loan
Servicing.

Plaintiff’s Exhibit L, ECF No. 1-14.

The letter

noted that the “transfer of servicing . . . [did] not affect any
term or condition of [Pascua’s] financing agreement.”

Id.

Ocwen

appears to be the current loan servicer for Pascua’s account.
III.

LEGAL STANDARD.
“[A] court may raise the question of subject matter

jurisdiction, sua sponte, at any time during the pendency of [an]
action”
2002).

Snell v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir.
A federal district court has subject matter jurisdiction

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over a nonfederal claim if “the matter in controversy exceeds the
sum or value of $75,000, exclusive of interests and costs, and is
between . . . citizens of different States[.]”

28 U.S.C.

§ 1332(a)(1).
“Where the plaintiff originally files in federal court,
the amount in controversy is determined from the face of the
pleadings.”

Geographic Expeditions, Inc. v. Estate of Lhotka,

599 F.3d 1102, 1106 (9th Cir. 2010) (internal quotation omitted).
“The amount in controversy alleged by the proponent of federal
jurisdiction . . . controls so long as the claim is made in good
faith.”

Id.

A court may dismiss a complaint for lack of

diversity jurisdiction only if it “appear[s] to a legal certainty
that the claim is really for less than the jurisdictional
amount.”

Id.

However, it is “the party asserting diversity

jurisdiction [that] bears the burden of proof.”

Lew v. Moss, 797

F.2d 747, 749 (9th Cir. 1986).
IV.

ANALYSIS.
Pasuca asks this court to “declare which of the

[defendants, if any,] is the owner of the Mortgage.”
¶ 1.

Complaint

Pascua “does not dispute that he owes a debt under the Note

and Mortgage,” but says he is concerned that he does not “know to
which party to make his future mortgage payments.”

Id. ¶ 88.

His asserted injury is apparently the possibility that he “will
be liable for double payments” if he “makes payments to the wrong

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party.”

Id.

Pasuca styles his claim as one to “quiet title”

under section 669-l(a) of Hawaii Revised Statutes, and asks this
court for a declaratory judgment “pursuant to its powers under 28
U.S.C. § 2201 and Fed. R. Civ. P. 57, declaring . . . the
interest (if any) of the Defendants and the Plaintiff in the
Subject Property and in the Mortgage.”

Complaint ¶ 89.

“[T]he Declaratory Judgment Act does not expand the
jurisdiction of the federal courts, [but] where jurisdiction
exists, the Act is intended to allow earlier access to federal
courts in order to spare potential defendants from the threat of
impending litigation.”

Seattle Audubon Soc. v. Moseley, 80 F.3d

1401, 1405 (9th Cir. 1996) (emphasis added).

Pascua asserts that

jurisdiction exists here under the federal diversity statute, 28
U.S.C. § 1332.
Jurisdiction founded on diversity “requires that the
parties be in complete diversity and the amount in controversy
exceed $75,000.”

Matheson v. Progressive Specialty Ins. Co., 319

F.3d 1089, 1090 (9th Cir.2003).

Complete diversity means that

“each of the plaintiffs must be a citizen of a different state
than each of the defendants.”
F.3d 1089, 1095 (9th Cir.2004).

Allstate Ins. Co. v. Hughes, 358
“[A] complaint must include

allegations of both the state of incorporation and the principal
place of business of corporate parties.”
F.3d 846, 850 (9th Cir. 2012).

Harris v. Rand, 682

The Ocwen Defendants correctly

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note that the Complaint does not mention any of their states of
incorporation.

Instead, the Complaint simply notes that the

Ocwen Defendants are corporations, and alleges their various
principal places of business.

Complaint ¶¶ 12-14.

That is

insufficient to establish that the parties in this case are
diverse.
Even if Pascua had correctly alleged the Ocwen
Defendants’ states of incorporation, his Complaint suffers from a
more fundamental jurisdictional defect–-the amount in controversy
does not exceed $75,000.

As an initial matter, the court is

skeptical that anything is in controversy at all, or that Pascua
has suffered an injury-in-fact.

Pascua accepts that he owes

payment under the mortgage agreement and accepts that his loan is
in default.

While what may be a prospective foreclosure may

constitute an injury, Pascua appears to be suggesting that he is
able to make the required payment to avert foreclosure but is
choosing not to for fear of paying the wrong party.

The argument

that a party has “standing because they incurred certain costs as
a reasonable reaction to a risk of harm is unavailing” unless
that harm is “certainly impending.”
USA, 133 S. Ct. 1138, 1151 (2013).

Clapper v. Amnesty Int'l
It is well settled that

Pascua “cannot manufacture standing merely by inflicting harm on
[himself] based on [his] fears of hypothetical future harm that
is not certainly impending.”

Id.

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Given that only one party

claims to be the owner of Pascua’s debt, the possibility of
double payment is not “certainly impending.”

The proposed

foreclosure itself, therefore, cannot be the injury that gives
Pascua standing to bring his claim.
At most, the injury-in-fact that Pascua suffers is the
“uncertainty” he says he has regarding what entity he is supposed
to pay.

It is not clear that this subjective feeling of

uncertainty is sufficiently concrete and particularized to
constitute an injury-in-fact.
461 U.S. 95, 107 n.8 (1983).

See City of Los Angeles v. Lyons,
(“It is the reality of the threat

of [objective] injury that is relevant to the standing inquiry,
not the plaintiff's subjective apprehensions.”).

It is also not

clear that Pascua’s purported injury, such as it is, is caused by
Defendants’ conduct rather than by Pascua’s own apparent
inability to discern the nature of his obligations.2

2

See, e.g.,

Pascua claims to be confused as to which party to pay,
despite Defendants’ apparent agreement that Wells Fargo is the
true owner of the debt, as trustee for Soundview Home Loan Trust,
and has authorized a loan servicer to collect amounts owed by
Pascua. At the hearing on the present motion, the court asked
Pascua’s counsel whether Pascua’s claim would be moot if all
Defendants signed a joint declaration stating that payment was
owed to Wells Fargo, that Option One no longer had any rights to
Pascua’s loan, and that Ocwen (previously Homeward) was simply a
loan servicer acting on behalf of Wells Fargo. Pascua’s counsel
responded that such a declaration would be insufficient because
Pascua could not “trust” what Defendants said. It is clear,
therefore, that the relief Pascua truly desires is not a
declaration from this court that any Defendant is the “true
owner” of the debt. Such a court order would have the same
effect as a joint declaration by Defendants. If Pascua’s fear is
that two Defendants will seek to collect the same debt, then a
9

Grocery Mfrs. Ass'n v. E.P.A., 693 F.3d 169, 178 (D.C. Cir. 2012)
(noting that there is no standing when the asserted injury is “so
completely due to the complainants' own fault as to break the
causal chain”)(internal quotation omitted)).
Even if Pascua has standing to bring his claim based on
the asserted injury of “uncertainty,” the value of the relief
Pascua requests cannot plausibly exceed $75,000.

Pascua argues

that the amount in controversy is the amount of the debt, which
is more than $75,000.

“In actions seeking declaratory or

injunctive relief, it is well established that the amount in
controversy is measured by the value of the object of the
litigation.”

Hunt v. Washington State Apple Adver. Comm'n, 432

U.S. 333, 347 (1977).

Pascua’s full debt, like his property, is

an object in this litigation, but it is not the object of the
litigation.

The object of the litigation is “the particular and

limited thing sought to be accomplished by the action.”

Ridder

Bros., Inc. v. Blethen, 142 F.2d 395, 399 (9th Cir. 1944).
also

See

Jackson v. Am. Bar Ass'n, 538 F.2d 829, 831 (9th Cir. 1976)

joint declaration precludes that possibility. If Pascua’s fear
is that a third party not before the court will attempt to
collect after he has paid one Defendant, then a court order
cannot prevent that possibility. At most, a declaration by the
court can assign rights among parties; it cannot bind third
parties not before the court. The only relief the court can
order that is not achieved by a joint declaration is a
declaratory judgment that no Defendant owns the debt. Neither
the Complaint, nor any statement by Pascua’s counsel at the
hearing, suggests that Pascua has a good faith basis for
believing that no Defendant owns his debt.
10

(“Where the complaint seeks injunctive or declaratory relief . .
. the amount in controversy is . . . the value of the right to be
protected or the extent of the injury to be prevented.”);
Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250, 253 (6th
Cir. 2011) ("Where a party seeks a declaratory judgment, the
amount in controversy is . . . the value of the consequences
which may result from the litigation.”) (internal quotation
omitted).
Here, the matter Pascua says he wants to accomplish
does not implicate the entire debt or the value of the property.
Although he styles his claim as one to “quiet title,” Pascua does
not allege that he holds title to the property free and clear of
any debt obligation.
(9th Cir.1899).

See, e.g., Woodside v. Ciceroni, 93 F. 1, 4

Nor does Pascua seek to enjoin a foreclosure.

See, e.g., Garfinkle v. Wells Fargo Bank, 483 F.2d 1074, 1076
(9th Cir. 1973).

In either such situation, the full debt or the

property itself would be the object of the litigation, because
the claimant would be trying to prevent paying the debt or losing
the property.

Pascua, by contrast, asks for a declaration to

prevent him from feeling uncertainty as to whom to pay.

He is

not actually being asked to pay his acknowledged debt more than
once.

The amount in controversy is therefore the subjective

value to Pascua of freeing him from that risk.

Courts are often

disinclined to speculate as to the monetary value of something so

11

vague and amorphous as a feeling of uncertainty.

Jackson, 538

F.2d at 831 (noting the difficulty of adjudicating rights that
“appear to be intangible, speculative, and lack the capability of
being translated into monetary value”).
In any event, it is implausible to suggest that the
subjective value to Pascua of such a declaration is greater than
$75,000.

Pascua’s primary fear appears to be that he will

accidentally pay the wrong party $41,139.92, which is the amount
Wells Fargo is currently requesting he pay to avert foreclosure.
The harm to Pascua of his fear that he might lose a second
payment of $41,139.92 cannot plausibly be worth in excess of
$75,000.
Of course, one collateral consequence of a favorable
court order in this action is that Wells Fargo may be unable to
foreclose upon him.

However, “jurisdiction depends upon the

matter directly in dispute in the particular cause, and the court
is not permitted, for the purpose of determining its sum or
value, to estimate its collateral effect.”

Quinault Tribe of

Indians of Quinault Reservation in Wash. v. Gallagher, 368 F.2d
648, 655 (9th Cir. 1966).

The matter directly in dispute is not

whether Pascua owes payment, but to whom. Pascua does not dispute
that the owner of his debt is entitled to foreclose on the
property.

Whatever the result of this action, Pascua must

ultimately pay the money he owes, or face foreclosure.

12

Any delay

in foreclosure that may result from this court action is a
collateral consequence of Pascua’s central claim, and therefore
does not affect the amount in controversy calculation.
Because the allegations in the Complaint neither
establish complete diversity nor an amount in controversy in
excess of $75,000, the case is dismissed for lack of subject
matter jurisdiction.
When a Complaint is dismissed, “leave to amend should
be granted unless the court determines that the allegation of
other facts consistent with the challenged pleading could not
possibly cure the deficiency.”

Schreiber Distrib. Co. v.

Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1401 (9th Cir.
1986) (emphasis added).

There is no way that Pascua, while

remaining consistent with his original Complaint, can establish
diversity jurisdiction in this court.

Pascua affirmatively

states that he owes payments on his debt and requests only a
declaration as to whom to pay.

The injury asserted is his

uncertainty regarding this payment, and there is no way in which
that alleged injury or its possible consequence can plausibly be
worth in excess of $75,000 to Pascua.

The only way in which

Pascua can establish that the amount in controversy is worth in
excess of $75,000 is to contradict his original Complaint.
Of course, dismissal for lack of subject matter
jurisdiction in this court does not preclude Pascua from pursuing

13

his remedies in state court.

See In re Jenson, 980 F.2d 1254,

1257 (9th Cir. 1992) (“To be given preclusive effect, a judgment
must be a final adjudication of the rights of the parties and
must dispose of the litigation on the merits.”).

Nor does

dismissal here preclude Pascua from alleging that Wells Fargo is
not the true holder of the debt as a defense in any judicial
foreclosure action initiated by Wells Fargo.

The court holds

only that it lacks jurisdiction to adjudicate the specific
declaratory relief sought in Pascua’s Complaint.
V.

CONCLUSION.
Pascua’s Complaint is dismissed for lack of subject

matter jurisdiction.

The Clerk of Court is directed to enter

judgment and to close this case.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, February 28, 2014.

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

Pascua v. Option One et al; Civil No. 13-00406 SOM/KSC; ORDER DISMISSING
COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION

14