Barrus et al v. Recontrust Company, N.A. et al

Filing 12

ORDER denying 7 Plaintiffs' Motion to Remand and Motion for Restraint of Sale. RE-Noting Date 6/17/2011, re 5 Defendants MOTION to Dismiss by Judge Ricardo S Martinez.(MD)

Download PDF
1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 TREVOR AND RUBY BARRUS, Plaintiffs, 11 12 13 14 15 CASE NO. C11-618-RSM ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE v. RECONTRUST COMPANY, N.A. AND BAC HOME LOANS SERVICING, LP, AND JOHN DOE HOLDER, Defendants. 16 17 18 I. INTRODUCTION This matter comes before the Court upon Plaintiffs’ Motion to Remand, Delay Response 19 to Motion to Dismiss, and Restrain the June 24th Foreclosure Sale (Dkt. #7). On May 9, 2011, 20 the parties stipulated to re-note Defendants’ currently pending Motion to Dismiss (Dkt. #5) for 21 the second Friday following the Court’s rule on Plaintiffs’ Motion to Remand. Dkt. #9. 22 Accordingly, before the Court are Plaintiffs’ motions for remand and for restraint of the 23 foreclosure sale. For the reasons set forth below, both motions are DENIED. 24 ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE - 1 1 II. BACKGROUND 2 On or about December 15, 2007, Plaintiffs obtained a $286,750 loan secured by real 3 property located at 7120 77th Drive Northeast, Marysville, Washington (the “ Property”). In 4 2009, Plaintiffs sought a loan modification from Defendant BAC Home Loans (“BAC”), the 5 assignee of beneficial interest in the Deed of Trust and servicer of Plaintiffs’ home loan. 6 Plaintiffs were allegedly told that a modification was not possible until they had defaulted for 90 7 days. Accordingly, Plaintiffs ceased payments and ultimately obtained a purported loan 8 modification. Plaintiffs were told that if they were successful in making payments during the 9 trial modification they would be approved for a final modification. However, Plaintiffs never 10 received a final modification agreement. Instead, in October 2010, Defendant ReconTrust 11 Company, N.A. (“ReconTrust”), as successor trustee, served Plaintiffs with a default notice. A 12 trustee’s sale was scheduled for March 25, 2011. The sale has since been continued to June 24, 13 2011. 14 Plaintiffs filed suit in Snohomish County Superior Court on March 16, 2011, asserting 15 claims for rescission under the Truth in Lending Act (“TILA”), wrongful foreclosure, civil 16 conspiracy, and breach of contract. Dkt. #2, Ex. 4. On April 11, 2011, Defendants removed the 17 action to federal court based on 28 U.S.C. § 1331 (federal question jurisdiction), 28 U.S.C. § 18 1332 (diversity jurisdiction), and 28 U.S.C. § 1367 (supplemental jurisdiction) and under the 19 authority of 28 U.S.C.§§ 1441 and 1446. Plaintiffs now seek an order of remand, arguing (a) 20 that state law issues predominate, so this Court should decline to exercise supplemental 21 jurisdiction; (b) ReconTrust is not a proper trustee under the Deed of Trusts Act, RCW 22 61.24.030(6) and therefore lacks standing to foreclose or bring motions; and (c) the amount in 23 controversy is less than $75,000, defeating diversity jurisdiction. 24 ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE - 2 1 2 III. DISCUSSION 3 A. Standard for Removal 4 “Any civil action brought in a State court of which the district courts of the United States 5 have original jurisdiction, may be removed by the defendant or the defendants, to the district 6 court of the United States for the district … where such action is pending.” 28 U.S.C. § 1441(a). 7 The Court may remand a case to state court, on motion by either party and at any time before 8 final judgment, when the court finds it lacks subject matter jurisdiction over the claims. 28 9 U.S.C. § 1447(c). Subject matter jurisdiction will be established when there is diversity of 10 citizenship or if the claim arises under federal law. 28 U.S.C. § 1441(c). 11 The removing party bears the burden to prove that removal is proper. Gaus v. Miles, Inc., 12 980 F.2d 564, 566 (9th Cir. 1992.) Removal based on diversity of citizenship jurisdiction 13 requires establishing the parties’ diverse citizenship and an amount in controversy exceeding 14 $75,000. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). Removal 15 based on federal question jurisdiction requires a showing that federal law “creates the cause of 16 action or that the plaintiff's right to relief necessarily depends on resolution of a substantial 17 question of federal law.” Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust 18 for S. Cal. 463 U.S. 1, 27-28 (1983). 19 B. Diversity Jurisdiction 20 A district court shall have original jurisdiction over all civil actions wherein the matter in 21 controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between 22 citizens of different States. 28 U.S.C. § 1332. Complete diversity is present because Plaintiffs are 23 24 ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE - 3 1 citizens of Marysville, Washington; Defendant ReconTrust is a citizen of California; and 2 Defendant BAC is a citizen of North Carolina. 3 Plaintiffs argue that if ReconTrust had an office and phone number in Washington, as 4 required under the Washington Deed of Trust Act, RCW 61.24.030(6), it would be a citizen of 5 Washington and complete diversity would not exist. This argument fails. First, a corporation’s 6 citizenship is determined by its state of incorporation and principal place of business. 28 U.S.C. 7 § 1332(c)(1). Therefore, a mere physical presence likely would not alter ReconTrust’s 8 citizenship for jurisdictional purposes. Second, in determining whether complete diversity 9 exists, a court looks to the actual citizenship of a corporation, not its presumed citizenship had it 10 complied with laws that go to the merits of the action. Id. See also Toumajian v. Frailey, 135 11 F.3d 648, 658 (9th Cir. 1998) (“Challenges to the court's power to rule must, of necessity, be 12 determined before the court may rule on the merits.”). Whether ReconTrust fulfilled the 13 requirements of the Deed of Trust Act, and whether its compliance would have destroyed 14 complete diversity, is therefore inapposite to the motion presently before the Court. 15 Plaintiffs also contend that complete diversity is destroyed because the Court cannot 16 ascertain the citizenship of John Doe. Dkt. #10, p. 2. However, because “John Doe” is being 17 sued under a fictitious name, his or her citizenship as it pertains to diversity is disregarded. See 18 28 U.S.C. § 1441(a) (“For purposes of removal under this chapter, the citizenship of defendants 19 sued under fictitious names shall be disregarded.”). Similarly, the related argument that removal 20 was improper because John Doe did not join in the removal is without merit. A party cannot 21 defeat removal jurisdiction merely by suing an unknown party under a fictitious name. If and 22 when the parties ascertain the identity of “John Doe Holder,” and if Doe’s citizenship destroys 23 24 ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE - 4 1 complete diversity, Plaintiffs may file a motion for remand at that time. For the present purposes 2 of this removal, complete diversity exists. 3 With respect to the second prong of federal diversity jurisdiction, Plaintiffs contend that 4 the amount in controversy does not exceed $75,000. “In actions seeking declaratory or injunctive 5 relief, it is well established that the amount in controversy is measured by the value of the object 6 of the litigation.” Cohn v. Petsmart, Inc ., 281 F.3d 837, 839 (9th Cir.2002) (quoting Hunt v. 7 Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977)). Here, Plaintiffs seek a declaration 8 “canceling” the Deed of Trust that secures their home loan and an injunction of the upcoming 9 foreclosure sale of their home. Dkt. #2-4, ¶3.4. The loan amount – the object of the litigation –is 10 $286,750. See Cohn, 281 F.3d at 840. Accordingly, the amount in controversy is well over the 11 $75,000 threshold. 12 Having found that there is complete diversity and the amount in controversy exceeds 13 $75,000, the Court is satisfied that it has original jurisdiction over this action. Defendants’ 14 removal is proper. 28 U.S.C. § 1441. 15 C. Subject Matter Jurisdiction This Court also has subject matter jurisdiction over the action because Plaintiffs have 16 17 pled claims for relief under the Truth in Lending Act, Reg. Z § 226, a “law… of the United 18 Staes.” See 28 U.S.C. § 1332. The Court cannot decline to exercise supplemental jurisdiction 19 over Plaintiffs’ state law claims where, as here, diversity exists as an independent basis for 20 jurisdiction. 28 U.S.C. 1441. See also BNSF Railway Co. v. O’Dea, 572 F.3d 785, 793 n.2 (9th 21 Cir. 2009) (Fisher, J., concurring) (“[T]he diversity statute, unlike the supplemental jurisdiction 22 statute, does not afford district courts the discretion to decline jurisdiction over state law 23 claims.”). 24   ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE - 5 1 D. Injunction 2 Plaintiffs seek a preliminary injunction of the pending foreclosure sale to preserve the 3 status quo pending resolution of its action on the merits. Dkt. #7, p. 8. The Deed of Trust Act 4 provides that any person who has an interest in property subject to a non-judicial foreclosure 5 may seek to restrain, “on any proper legal or equitable ground, a trustee's sale.” RCW 6 61.24.130(1). In federal court, “a plaintiff seeking a preliminary injunction must establish that 7 he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of 8 preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the 9 public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S.Ct. 365, 376, 172 10 L.Ed.2d 249 (2008); accord Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir.2009). In 11 addition, “serious questions going to the merits and a hardship balance that tips sharply towards 12 the plaintiff can support issuance of an injunction, so long as the plaintiff also shows a likelihood 13 of irreparable injury and that the injunction is in the public interest.” Alliance for the Wild 14 Rockies v. Cottrell, 622 F.3d 1045, 1053 (9th Cir.2010) (internal quotation marks omitted). 15 Here, Plaintiffs do not provide any evidence or argument as to their likelihood of success 16 on the merits, or any of the factors that the Court is required to consider in determining whether 17 Plaintiffs are entitled to an injunction. Rather, Plaintiffs argue that “an injunction should be 18 issued to preserve the status quo pending resolution of the merits.” One party’s desire to 19 preserve the status quo is not a “proper legal or equitable ground” to restrain the trustee’s sale. 20 RCW 61.24.130(1). Plaintiff’s motion to enjoin the sale is DENIED. 21 E. Attorney’s Fees 22 28 U.S.C. § 1447(c) permits “payment of just costs and any actual expenses, including 23 attorney fees, incurred as a result of the removal” when the court grants a motion for remand. 24 Because the Court has denied Plaintiffs’ motion for remand, attorney fees will not be awarded. ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE - 6 1 2 IV. CONCLUSION Having reviewed the relevant pleadings, the declarations and exhibits attached thereto, 3 and the remainder of the record, the Court hereby finds and ORDERS: 4 5 6 7 8 (1) Plaintiffs’ Motion for Remand and Motion for Restraint of Sale (Dkt. #7) are DENIED. (2) Defendants’ Motion to Dismiss is hereby re-noted for Friday, June 17, 2011, in accordance with the parties’ stipulation (Dkt. #9). (3) The Clerk is directed to forward a copy of this order to all counsel of record. 9 10 Dated this 9th day of June 2011. 11 12 13 14 A RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE 15 16 17 18   19 20 21 22 23 24 ORDER DENYING MOTION TO REMAND AND RESTRAIN FORECLOSURE SALE - 7

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?