Security National Life Insurance Company v. Wegesend et al

Filing 26

ORDER GRANTING PLAINTIFFS MOTION TO REMAND CASE TO CIRCUIT COURT OF THE FIRST CIRCUIT, STATE OF HAWAII re 16 Motion to Remand to State Court. Signed by JUDGE LESLIE E. KOBAYASHI on 11/25/2014. The Court DIRECTS Pl aintiff to file documentation supporting its request for attorneys' fees and costs with the magistrate judge by December 26, 2014. Any opposition shall be filed by January 9, 2015. This Court HEREBY REMANDS this action to the First Circuit C ourt. This Court DIRECTS the Clerks Office to transmit a certified copy of this order to the clerk of the First Circuit Court. This district court retains jurisdiction solely for the purposes of determining the amount of the award of removal related expenses. (eps)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
SECURITY NATIONAL LIFE
INSURANCE COMPANY,

)
)
)
Plaintiff,
)
)
vs.
)
)
WILLIAM PAUL KULANI WEGESEND, )
ET AL.,
)
)
Defendants.
)
_____________________________ )

CIVIL 14-00417 LEK-RLP

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND CASE TO
CIRCUIT COURT OF THE FIRST CIRCUIT, STATE OF HAWAII
Before the Court is Plaintiff Security National Life
Insurance Company’s (“Plaintiff”) Motion to Remand Case to
Circuit Court of the First Circuit, State of Hawaii (“Motion”),
filed on October 13, 2014.

[Dkt. no. 16.]

Defendants William

Paul Kulani Wegesend and Barbara Jean Wegesend (“the Wegesends”)
– who are represented by counsel – did not file a memorandum in
opposition.1
1

The Court finds this matter suitable for

On October 14, 2014, the Court issued an entering order
(“EO”), setting the hearing on the Motion for November 17, 2014.
[Dkt. no. 18.] Pursuant to the Local Rules of Practice of the
United States District Court for the District of Hawai`i (“Local
Rules”), the Wegesends had until October 27, 2014 to file their
memorandum in opposition to the Motion. See Local Rule LR7.4
(“An opposition to a motion set for hearing shall be served and
filed not less than twenty-one (21) days prior to the date of
hearing.”). The Wegesends did not file an opposition by that
date. On October 31, 2014, the Court issued an EO vacating the
hearing and taking the matter under advisement. [Dkt. no. 20.]
On November 1, 2014, the Wegesends filed their Motion for
(continued...)

disposition without a hearing pursuant to Local Rule 7.2(d).
After careful consideration of the Motion, Plaintiff’s
memorandum, and the relevant legal authority, Plaintiff’s Motion
is HEREBY GRANTED for the reasons set forth below.
BACKGROUND
On August 21, 2014, Plaintiff filed this lawsuit in the
Circuit Court of the First Circuit, State of Hawai`i (“First
Circuit Court”) against: the Wegesends; Castle & Cooke Homes
Hawaii, Inc.; Mortgage Electronic Registration Systems, Inc.,
solely as nominee for Envision Lending Group, Inc. (“Envision”);
Department of Taxation, State of Hawaii; Envision; EMC Mortgage
Corporation, formerly known as EMC Mortgage Corporation; JPMorgan
Chase Bank, National Association; and various Doe Defendants.
[Dkt. no. 1 (Notice of Removal), Exh. A (First Circuit Court
complaint (“Complaint”).2]

In the Complaint, Plaintiff seeks a

declaratory judgment ordering foreclosure of a mortgaged property
(“the Property”) that allegedly secures debt owed by the
Wegesends, who are in default on the note (“Note”) and mortgage
(“Mortgage”).

Plaintiff joined all of the parties other than the

1

(...continued)
Extension of Time to File Response to Plaintiff’s Motion to
Remand (“Motion for Extension”) and, on November 3, 2014, this
Court denied the Motion for Extension. [Dkt. nos. 21, 22.]
2

Plaintiff filed an Amended Notice of Removal on September
22, 2014 (“Amended Notice of Removal”) with the Complaint
attached as Exhibit A. [Dkt. no. 9.]
2

Wegesends because they could conceivably claim an interest in the
Property.

[Complaint at ¶¶ 9-11, 18-23.]
Plaintiff seeks the following relief: declaratory

judgment that Plaintiff’s lien has priority; appointment of a
commissioner to sell the Property; declaratory judgment that the
commissioner apply the proceeds of the sale to amounts due on the
Note and Mortgage, that Plaintiff be allowed to purchase the
Property without a down payment, and that the sale extinguish all
rights to title of the Property; issuance of a deficiency
judgment against the Wegesends if the proceeds do not cover the
debt due; issuance of a writ of possession, at a reasonable time,
requiring the Wegesends to leave the Property; and all other
appropriate relief.

[Id. at pgs. 6-8.]

On September 15, 2014, the Wegesends filed their notice
of removal, pursuant to 28 U.S.C. §§ 1332, 1441, 1446.
of Removal at 1.]

The sole basis that the Wegesends provided for

federal jurisdiction was diversity of citizenship.
Notice at 3.]

[Notice

[Amended

The Wegesends cited § 1332 and stated: “This

action is removable on the basis of diversity jurisdiction.”
[Id.]
Motion.

On October 13, 2014, Plaintiff timely filed the instant
See 28 U.S.C. § 1447(c) (requiring filing of a motion

for remand within thirty days of the notice of removal).

3

STANDARD
The primary removal statute, 28 U.S.C. § 1441,
provides, in pertinent part:3
(a) Generally. – Except as otherwise expressly
provided by Act of Congress, any civil action
brought in a State court of which the district
courts of the United States have original
jurisdiction, may be removed by the defendant or
the defendants, to the district court of the
United States for the district and division
embracing the place where such action is pending.
(b) Removal based on diversity of citizenship. (1) In determining whether a civil action is
removable on the basis of the jurisdiction
under section 1332(a) of this title, the
citizenship of defendants sued under
fictitious names shall be disregarded.
(2) A civil action otherwise removable solely
on the basis of the jurisdiction under
section 1332(a) of this title may not be
removed if any of the parties in interest
properly joined and served as defendants is a
citizen of the State in which such action is
brought.
(Emphases added.)

Regarding remand, 28 U.S.C. § 1447(c)

provides:
A motion to remand the case on the basis of any
defect other than lack of subject matter
jurisdiction must be made within 30 days after the
filing of the notice of removal under section
1446(a). If at any time before final judgment it
appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.
An order remanding the case may require payment of

3

28 U.S.C. § 1446 provides for the logistical requirements
for removal.
4

just costs and any actual expenses, including
attorney fees, incurred as a result of the
removal. A certified copy of the order of remand
shall be mailed by the clerk to the clerk of the
State court. The State court may thereupon
proceed with such case.
(Emphasis added.)
DISCUSSION
Plaintiff argues that removal was improper because the
Wegesends are, and were at the time of removal, citizens of
Hawai`i, and an award of attorneys’ fees and costs is appropriate
since removal was objectively unreasonable.

The Court agrees on

both points.

I.

Remand
First, Plaintiffs expressly rely on § 1441 and cite it

four times in their Amended Notice.
6.]

[Amended Notice at 2, 3, 5,

Although they rely on subsection (a) of that statute,

subsection (b) clearly prohibits removal “if any of the parties
in interest properly joined and served as defendants is a citizen
of the State in which such action is brought.”

Subsection (b)

describes a “statutory, non-jurisdictional requirement” known as
the “forum defendant rule.”

See Infuturia Global Ltd. v. Sequus

Pharm., Inc., 631 F.3d 1133, 1137 (9th Cir. 2011) (citation
omitted).

5

The Wegesends admit that they are residents of Hawai`i:
the Amended Notice states that, “Mr. and Mrs. Wegesend are, and
were at the time of the filing of this Complaint residents of the
City and County of Honolulu, State of Hawai`i.”
at 4.]

[Amended Notice

Residence and citizenship are not necessarily the same.

See, e.g., Kyung Park v. Holder, 572 F.3d 619, 624 (9th Cir.
2009) (“The natural person’s state citizenship is then determined
by her state of domicile, not her state of residence.

A person’s

domicile is her permanent home, where she resides with the
intention to remain or to which she intends to return.” (citation
and internal quotation marks omitted)).

However, since the

Wegesends invoke this Court’s diversity jurisdiction and they
rely on their statement that they are residents of Hawai`i to
obtain that jurisdiction, Plaintiffs have, in essence, conceded
that they are citizens of Hawai`i.

Since the Wegesends are

citizens of Hawai`i, their Notice of Removal violates the forum
defendant rule.

Thus, the Court GRANTS the Motion insofar as

Plaintiff moves to remand the action.4

4

Plaintiff also argues that this Court lacks jurisdiction
because there is not complete diversity since Plaintiff and
Defendant Envision are both Utah corporations. [Mem. in Supp. of
Motion at 7-8.] However, to determine diversity, the Court must
“align for jurisdictional purposes those parties whose interests
coincide respecting the primary matter in dispute.” Scotts Co.
LLC v. Seeds, Inc., 688 F.3d 1154, 1157 (9th Cir. 2012) (citation
and internal quotation marks omitted). It is not clear from the
Complaint and Amended Notice, whether the purported dispute
between Plaintiff and Envision is ancillary to the dispute
(continued...)
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II.

Attorneys’ Fees and Costs
Regarding fees and costs, the United States Supreme

Court has held that: “Absent unusual circumstances, courts may
award attorney’s fees under § 1447(c) only where the removing
party lacked an objectively reasonable basis for seeking
removal.”
(2005).

Martin v. Franklin Capital Corp., 546 U.S. 132, 141
The Court FINDS that under the facts of the case, there

was no objectively reasonable basis for removal since “the forum
defendant rule expressed in 28 U.S.C. § 1441(b) clearly applied
to this action.”

See Piper Jaffray & Co. v. Severini, 443 F.

Supp. 2d 1016, 1023 (W.D. Wis. 2006) (granting remand and
awarding attorneys’ fees); see also, e.g., TCF Nat’l Bank v. W &
A Bldg., LLC, No. 10-CV-3096, 2010 WL 4791454, at *2 (N.D. Ill.
Nov. 17, 2010) (discussing Wolf v. Kennelly, 574 F.3d 406, 411
(7th Cir. 2009), and explaining that the Seventh Circuit has
“held that removal in the face of a forum defendant rule problem
warrants fees under § 1447(c)”); Vasquez v. Pease, Civil Action
No. SA-14-CV-609-XR, 2014 WL 4072084, at *2 (W.D. Tex. Aug. 15,
2014) (remanding based on the forum defendant rule and denying
attorneys’ fees solely because the plaintiff did not raise the

4

(...continued)
between Plaintiff and the Wegesend.
does not, reach that issue here.
7

But, the Court need not, and

issue in her motion to remand).5
The Court therefore GRANTS the Motion as to Plaintiff’s
request for its attorneys’ fees and costs incurred as a result of
the removal.

The Court refers this matter to the magistrate

judge to prepare findings and recommendations regarding the
amount of the award.
CONCLUSION
On the basis of the foregoing, Plaintiff’s Motion to
Remand Case to Circuit Court of the First Circuit, State of
Hawaii, filed October 13, 2014, is HEREBY GRANTED, including
Plaintiff’s request for attorneys’ fees and costs pursuant to
28 U.S.C. § 1447(c).
The Court DIRECTS Plaintiff to file documentation
supporting its request for attorneys’ fees and costs with the
magistrate judge by December 26, 2014.

Any opposition shall be

filed by January 9, 2015.
This Court HEREBY REMANDS this action to the First
5

Plaintiff also argues that the Court should grant
attorneys’ fees because there is evidence of bad faith insofar as
this district court has found that the court lacks subject matter
jurisdiction in multiple lawsuits brought by the Wegesends’
counsel, on behalf of borrowers who are in or near default on
their loans. [Mem. in Supp. of Motion at 2-3, 9 (citing Decl. of
Counsel, Exh. 3 (Wegesend v. Envision Lending Grp., et al., Civil
No. 13-00493 DKW-KSC, Order Dismissing Complaint for Lack of
Subject Matter Jurisdiction, filed 4/30/14)).] While the Court
questions the Wegesends’ motives in removing this case, there is
insufficient evidence, in the present record, to support a
finding of bad faith. In any event, this issue is not
determinative of whether an award of attorneys’ fees is proper.
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Circuit Court.

This Court DIRECTS the Clerk’s Office to transmit

a certified copy of this order to the clerk of the First Circuit
Court.

This district court retains jurisdiction solely for the

purposes of determining the amount of the award of removalrelated expenses.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, November 25, 2014.

/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge

SECURITY NATIONAL LIFE INSURANCE COMPANY VS. WILLIAM PAUL KULANI
WEGESEND, ET AL; CIVIL 14-00416 LEK; ORDER GRANTING PLAINTIFF’S
MOTION TO REMAND CASE TO CIRCUIT COURT OF THE FIRST CIRCUIT,
STATE OF HAWAII

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