Leem et al v. Bank of America Home Loans et al

Filing 45

ORDER OF DISMISSAL FOR LACK OF JURISDICTION; denying as moot BANA's 16 Motion to Dismiss; denying BWMW's 21 Motion for Summary Judgment by Judge Robert S. Lasnik.(RS) cc pro se parties

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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KYUNG LEEM, et al.,

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Plaintiffs,

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Case No. C13-1517RSL
v.
BANK OF AMERICA HOME LOANS,
et al.,
Defendants.

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I. INTRODUCTION
This matter comes before the Court on Defendant Bank of America, N.A.’s
(“BANA”) “Motion to Dismiss Plaintiffs’ Complaint” (Dkt. # 16), and Defendant Bishop,
White, Marshall & Weibel, P.S.’s (“BWMW”) “Motion for Summary Judgment” (Dkt. #
21). Defendant IH2 Property Washington LP (“IH2”) joins BANA’s motion to dismiss
(Dkt. # 24). Plaintiffs filed this action against BANA, BWMW, IH2, Invitation Homes,
and unknown “Doe Defendants,” identified as “Black Corporations,” (collectively
“Defendants”) in August 2013. Dkt. # 1. Plaintiffs assert several state law causes of
action against Defendants related to the nonjudicial foreclosure of their home. Dkt. # 1.
On August 29, 2013, the Court issued an Order to Show Cause why the case
should not be dismissed for lack of subject matter jurisdiction. Dkt. # 7. Although

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ORDER OF DISMISSAL FOR
LACK OF JURISDICTION

ORDER OF DISMISSAL - 1

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Plaintiffs asserted jurisdiction based on diversity, they failed to allege the citizenship of

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BWMW or Invitation Homes. In their response to the Court’s Order, Plaintiffs allege that

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Invitation Homes is a citizen of Delaware. Dkt. # 13 at 2. With respect to BWMW,

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Plaintiffs acknowledge that BWMW is a Washington corporation, but argue nonetheless

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that there is complete diversity in this case because BWMW is a “nominal defendant.”

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Id. at 13. After the Court vacated the Order to Show Cause, BANA moved to dismiss

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Plaintiffs’ complaint pursuant to Fed. R. Civ. P. 12(b)(6) and BWMW filed a motion for

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summary judgment. Upon further review, the Court finds that it lacks subject matter

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jurisdiction and therefore, DISMISSES Plaintiffs’ complaint and DENIES as moot

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BANA’s motion to dismiss (Dkt. # 16) and BWMW’s motion for summary judgment

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(Dkt. # 21).

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II. DISCUSSION
“Federal courts are courts of limited jurisdiction [that] possess only that power

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authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511

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U.S. 375, 377 (1994). Jurisdiction is a threshold matter that must be determined before a

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district court may consider the merits of case, or any motion raised by the parties. Steel

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Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998). Thus, this Court has an

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ongoing obligation to ensure that it has jurisdiction over Plaintiffs’ claims and may raise

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the issue sua sponte. Watkins v. Vital Pharm., Inc., 720 F.3d 1179, 1181 (9th Cir. 2013);

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see also Fed. R. Civ. P. 12(h)(3). If, at any time the Court determines that it lacks subject

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matter jurisdiction, the Court must dismiss the action. Fed. R. Civ. P. 12(h)(3).

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A federal district court has subject matter jurisdiction over a case only if the

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complaint asserts a federal cause of action, or if the parties are citizens of different states

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and the amount in controversy exceeds $75,000. 28 U.S. C. §§ 1331, 1332(a). For

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diversity jurisdiction to exist under 28 U.S.C. § 1332, there must be complete diversity of

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ORDER OF DISMISSAL - 2

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citizenship. In a case involving multiple plaintiffs and defendants, each plaintiff must be

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a citizen of a different state than each defendant. Morris v. Princess Cruises, Inc., 236

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F.3d 1061, 1067 (9th Cir. 2001).

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In their complaint, Plaintiffs do not allege any federal causes of action. Instead,

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they contend that diversity jurisdiction exists because they are Washington residents and

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“Defendants are a national corporation engaged in interstate commerce through multiple

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states.” Dkt. # 1 ¶ 2. In response to the Court’s Order to Show Cause, Plaintiffs

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acknowledge that BWMW is a Washington corporation whose principle place of business

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is in Washington, but they contend, nonetheless, that there is complete diversity because

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BWMW is a “nominal defendant” whose citizenship is ignored for purposes of

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determining whether there is diversity jurisdiction. Id. ¶¶ 14-15.

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The Ninth Circuit has held that “[a] nominal defendant is a person who holds the

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subject matter of the litigation in a subordinate or possessory capacity as to which there is

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no dispute.” S.E.C. v. Colello, 139 F.3d 674, 676 (9th Cir. 1998) (quoting S.E.C. v.

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Cherif, 933 F.2d 403, 414 (7th Cir. 1991)). “The paradigmatic nominal defendant is a

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trustee, agent, or depositary . . . [who is ] joined purely as a means of facilitating

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collection.” Id. (internal quotation marks and citation omitted). Because there are no

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claims against a nominal defendant and he has no real interest in the outcome of the

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litigation, “it is unnecessary [for a court] to obtain subject matter jurisdiction over him

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once jurisdiction of the defendant is established.” Id.

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Contrary to Plaintiffs’ contention, BWMW is not a nominal defendant. Plaintiffs

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are correct that a trustee under a deed of trust may be a nominal party in certain

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circumstances. E.g., Prasad v. Wells Fargo Bank, N.A., No. C11-894-RSM, 2011 WL

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4074300, at *3 (W.D. Wash. Sept. 13, 2011). However, the cases cited by Plaintiffs in

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support of their argument that BWMW is a nominal defendant are distinguishable on their

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ORDER OF DISMISSAL - 3

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facts. In each district court case on which Plaintiffs rely, there were no substantive

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factual allegations or causes of action asserted against the trustee. Gogert v. Reg’l Tr.

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Servs., Inc., No. C11-1578JLR, 2012 WL 289205, at * 4 (W.D. Wash. Jan. 31, 2012);

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Prasad, 2011 WL 4074300, at *3; Sherman v. Wells Fargo Bank, N.A., No. CIV S-11-

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0054 KJM EFB, 2011 WL 1833090, at *2-3 (E.D. Cal. May 12, 2011); Dempsey v.

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Transouth Mort. Corp., 88 F.Supp.2d 482, 484 (W.D.N.C. 1999); see also Andersen v.

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Homecomings Fin., LLC, No. 2:11-CV-332-TS, 2011 WL 2470509, at * 5 (D. Utah June

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20, 2011) (finding trustee was nominal party fraudulently joined to defeat diversity

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jurisdiction because plaintiffs’ only claim against the trustee failed as a matter of law).

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Notably, in Prasad, the court explained that “in Washington, as in other states, unless a

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plaintiff has made substantive allegations against the trustee, the trustee under a deed of

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trust is neutral with respect to the plaintiff and defendant and has no interest in the

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outcome of a lawsuit such as the one at bar.” 2011 WL 4074300, at *3.

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Here, Plaintiffs have made substantive allegations that BWMW failed to follow the

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statutory requirements of a nonjudicial foreclosure. Dkt. # 1 ¶¶ 16-18, 36. Under the

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Washington Deed of Trust Act (“DTA”) a trustee has specific obligations and duties, the

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violation of which may give rise to a claim under the DTA. RCW 61.24.030. In addition

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to their DTA claim, Plaintiffs assert claims of negligent and intentional infliction of

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emotional distress against BWMW. Id. ¶¶ 48-57. Because Plaintiffs have asserted

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specific causes of action against BWMW and they seek to recover damages for the harm

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they allegedly suffered as a result of BWMW’s wrongful conduct, BWMW is not a

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nominal defendant. Couture v. Wells Fargo Bank, NA, No. 11-CV-1096-IEG (CAB),

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2011 WL 3489955, at *3 (S.D. Cal. Aug. 9, 2011) (finding trustee was not a nominal

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defendant where plaintiff made substantive allegations and asserted claims for money

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damages against defendant); Silva v. Wells Fargo Bank NA, No. CV 11-3200-GAF

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(JCGx), 2011 WL 2437514, at *5-6 (C.D. Cal. June 16, 2011) (same). Because BWMW

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is not a nominal defendant, the Court must consider its citizenship for purposes of

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determining diversity jurisdiction. As Plaintiffs acknowledge, BWMW and Plaintiffs are

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both citizens of Washington. Thus, complete diversity is lacking and this Court lacks

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subject matter jurisdiction. The Court, therefore, must dismiss Plaintiffs’ complaint. Fed.

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R. Civ. P. 12(h)(3).

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III. CONCLUSION
For all of the foregoing reasons, Plaintiffs’ complaint is DISMISSED for lack of
subject matter jurisdiction. The Court DENIES as moot BANA’s motion to dismiss (Dkt.

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# 16) and BWMW’s motion for summary judgment (Dkt. # 21). The Clerk of Court is

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directed to close this case.

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DATED this 6th day of March, 2014.

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A

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Robert S. Lasnik
United States District Judge

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ORDER OF DISMISSAL - 5