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

Filing 39

ORDER denying 25 Motion to Remand to State Court. See order for specifics. Signed by Judge Larry R. Hicks on 5/17/2012. (Copies have been distributed pursuant to the NEF - EM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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HIPOLITO FRAUSTO,

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Plaintiff,

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v.

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WELLS FARGO BANK, N.A.; et al.,

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Defendants.

3:11-cv-0791-LRH-VPC
ORDER

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Before the court is plaintiff Hipolito Frausto’s (“Frausto”) motion to remand. Doc. #25.1

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Defendants filed oppositions to the motion (Doc. ##26, 34) to which Frausto replied (Doc. #36).

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I.

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Facts and Procedural History
In September, 2006, Frausto refinanced real property through a mortgage note and deed of

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trust originated by defendant Wells Fargo Bank, N.A. (“Wells Fargo”). Eventually, Frausto

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defaulted on the mortgage note and defendants initiated non-judicial foreclosure proceedings.

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Subsequently, Frausto filed a complaint in state court against defendants alleging three

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causes of action: (1) fraudulent foreclosure; (2) declaratory relief; and (3) injunctive relief. Doc. #1,

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Exhibit A. Defendants removed the action to federal court based upon diversity jurisdiction.

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Doc. #1. Thereafter, Frausto filed the present motion to remand. Doc. #25.

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Refers to the court’s docket entry number.

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II.

Legal Standard

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Under 28 U.S.C. § 1441, “any civil action brought in a State court of which the district

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courts of the United States have original jurisdiction, may be removed by the defendant or the

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defendants, to the district court of the United States for the district and division embracing the

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place where such action is pending." 28 U.S.C. § 1441(a).

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Removal of a case to a United States district court may be challenged by motion. 28 U.S.C.

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§ 1441(c). A federal court must remand a matter if there is a lack of jurisdiction. Id. Removal

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statutes are construed restrictively and in favor of remanding a case to state court. See Shamrock

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Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gaus v. Miles, Inc., 980 F.2d 564, 566

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(9th Cir. 1992). On a motion to remand, the removing defendant faces a strong presumption against

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removal, and bears the burden of establishing that removal is proper. Gaus, 980 F.2d at 566-67;

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Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996).

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III.

Discussion

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A district court has original jurisdiction over civil actions where the suit is between citizens

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of different states and the amount in controversy, exclusive of interest and costs, exceeds $75,000.

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28 U.S.C. § 1332(a). Further, an action based on diversity jurisdiction is “removable only if none of

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the parties in interest properly joined and served as defendants is a citizen of the state in which such

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action is brought.” 28 U.S.C. § 1441(b). Here, defendants argue that there is complete diversity

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between the parties because non-diverse defendant United Title of Nevada, Inc. (“United”) is a

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fraudulently joined defendant whose Nevada citizenship cannot be used to defeat the exercise of

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diversity jurisdiction.

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A fraudulently joined defendant does not “defeat removal on diversity grounds.” Ritchey v.

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Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). Fraudulent joinder “occurs when a plaintiff

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fails to state a cause of action against a resident defendant, and the failure is obvious according to

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the settled rules of the state.” Ritchey, 139 F.3d at 1318; see also McCabe v. General Foods Corp.,

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811 F.2d 1336, 1339 (9th Cir. 1987); Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416,

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1426-27 (9th Cir. 1989); Gasnik v. State Farm Ins. Co., 825 F.Supp. 245, 247 (E.D. Cal. 1992). In

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determining whether a cause of action is stated against a non-diverse defendant, courts look only to

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a plaintiff’s pleadings. Gardner v. UICI, 508 F.3d 559, 561 n.3 (9th Cir. 2007).

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Nevada is a notice-pleading jurisdiction which liberally construes pleadings. Chavez v.

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Robberson Steel Co., 584 P.2d 159, 160 (Nev. 1978). The allegations of a complaint are sufficient

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to assert a claim for relief when the allegations “give fair notice of the nature and basis” for a claim.

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Vacation Village, Inc. v. Hitachi Am., Ltd., 874 P.2d 744, 746 (Nev. 1994).

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In his complaint, Frausto’s only allegation against United is that it was the original trustee

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on the deed of trust. However, United was substituted out as the trustee prior to Frausto’s default

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and Frausto has failed to allege that United took any action in furthering the allegedly wrongful

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foreclosure on the underlying property. Based on the allegations in the complaint, the court finds

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that non-diverse defendant United is a fraudulently joined defendant whose citizenship does not

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defeat the exercise of diversity jurisdiction. Accordingly, the court finds that there is complete

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diversity between the parties and that the exercise of diversity jurisdiction is appropriate.

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IT IS THEREFORE ORDERED that plaintiff’s motion to remand (Doc. #25) is DENIED.

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IT IS SO ORDERED.

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DATED this 17th day of May, 2012.

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__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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