Beiermann et al v. JPMorgan Chase Bank National Association et al

Filing 22

ORDER granting 12 Motion to Remand to Pierce County Superior Court; finding as moot 20 Motion to Dismiss, signed by Judge Ronald B. Leighton.(DN)

The Honorable Ronald B. Leighton

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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MICHAEL BEIERMANN AND TAMMY
BEIERMANN, a marital community,

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Plaintiffs,

No. 3:11-cv-05952 RBL
ORDER GRANTING
PLAINTIFFS’ MOTION TO
REMAND [Dkt. #12]

v.

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JP MORGAN CHASE BANK NATIONAL
ASSOCIATION, a New York corporation, and
QUALITY LOAN SERVICE CORPORATION OF
WASHINGTON, a Washington Corporation,

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Defendants.
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This matter is before the Court on Plaintiffs’ Motion to Remand [Dkt. #12]. Defendant

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JP Morgan Chase Bank National Association asserts that there is complete diversity because

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even though Defendant Quality Loan Services is a citizen of Washington State, Quality is a

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nominal defendant whose citizenship is ignored for the purposes of diversity. Def. Chase Resp.

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to Pls.’ Mot. to Remand [Dkt. #13]. The Plaintiffs move for remand, arguing that Quality is not
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a nominal defendant, that its citizenship should be considered, and that doing so defeats complete

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diversity.

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For the reasons set forth below, the Court GRANTS Plaintiffs’ Motion to Remand.

Order - 1

I.

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BACKGROUND

In September 1996, Plaintiffs obtained a loan from Fleet Mortgage Corporation. The

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loan was secured by a Deed of Trust on real property. Fleet subsequently merged with and into

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Washington Mutual Bank, which acquired Plaintiffs’ loan and became the beneficiary of the

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Deed of Trust.
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In May 2008, Plaintiffs defaulted on their loan. Consequently, on August 6, 2008,

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WaMu, through its agent Quality Loan Service Corporation, provided Plaintiffs with the required

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Notice of Default. On August 15, 2008, Quality was appointed successor Trustee. In August

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2009, Quality mailed Plaintiffs a Notice of Trustee’s Sale, and the property was ultimately sold

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in November 2009.
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On October 17, 2011, Plaintiffs filed this action in Pierce County Superior Court.

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Plaintiffs assert several claims against both Defendant Chase1 and Defendant Quality. Those

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claims include misrepresentations of fact, misrepresentation of contractual rights, duties, and

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obligations, and misrepresentation of authority.
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In November 2011, Chase filed a Notice of Removal to this Court, claiming diversity of

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citizenship jurisdiction. Plaintiffs move to remand, arguing that removal was improper because

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there is not complete diversity among all parties. Plaintiffs argue that Quality, a Washington

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State citizen, is not a nominal defendant because Plaintiffs have asserted substantive allegations

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and claims for money damages against Quality. Chase argues that removal was proper because
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complete diversity exists among the parties as a result of Quality’s nominal status.

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In September 2008, WaMu failed, and Defendant Chase acquired its assets from the FDIC. Included in those
assets was WaMu’s interest in Plaintiffs’ loan and Deed of Trust.
Order - 2

II.

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AUTHORITY

Defendants may remove any action filed in state court over which federal district courts

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have original jurisdiction. 28 U.S.C. § 1441(a). The Court may remand a case to state court, on

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motion by either party and at any time before final judgment, when the Court finds it lacks

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subject matter jurisdiction over the claims asserted. 28 U.S.C. § 1447(c). Subject matter
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jurisdiction is established: (1) when there is diversity of citizenship under 28 U.S.C. § 1332; or

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(2) where a claim arises under federal law. 28 U.S.C. § 1441(c).

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Removal based on diversity of citizenship requires establishing the parties’ diverse
citizenship, and an amount in controversy exceeding $75,000. 28 U.S.C. § 1332(c). Diversity

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jurisdiction under 28 U.S.C. § 1332 requires complete diversity. Teledyne v. Kone Corp., 892
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F.2d 1404, 1408 (9th Cir. 1990). There is complete diversity where each plaintiff is diverse from

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each defendant. Id.

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The removing party bears the burden to prove that removal is proper. Gaus v. Miles, Inc.,

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980 F.2d 564, 566 (9th Cir. 1992). The removal statute is strictly construed against removal
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jurisdiction. Id. The strong presumption against removal jurisdiction means that the defendant

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always has the burden of establishing removal is proper. Id. The defendant is obligated to do so

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by a preponderance of the evidence. Id. at 567. Federal jurisdiction must be rejected if there is

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any doubt as to the right of removal in the first instance. Id. at 566.

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III.

DISCUSSION

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A. Motion to Remand
If Quality is a nominal party, its Washington State citizenship is ignored for the purposes
of diversity. Plaintiffs argue that Quality, as trustee under the Deed of Trust, is not a nominal
defendant because Plaintiffs have made substantive allegations and claims for damages against

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Order - 3

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Quality. Chase argues that even though Quality is a Washington State citizen, Quality is merely

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a nominal defendant that was fraudulently joined because (1) Quality has no stake in the

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outcome of the litigation; (2) Quality is the foreclosure trustee; and (3) there are no substantive

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allegations against Quality.

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A nominal defendant is “a [party] who ‘holds the subject matter of the litigation in a
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subordinate or possessory capacity and to which there is not dispute.’” S.E.C. v. Colello, 139

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F.3d 674, 676 (9th Cir. 1998) (quoting S.E.C. v. Cherif, 933 F.2d 403, 414 (7th Cir. 1991)). The

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Court should “ignore the citizenship of nominal or formal parties who have no interest in the

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action, and are merely joined to perform the ministerial act of conveying the title if adjudged to

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the complainant.” Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 873
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(9th Cir. 2000). A typical nominal defendant is a trustee, agent, or depositary who is joined

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merely as a means of facilitating collection. Colello, 139 F.3d at 676 (quoting Cherif, 933 F.2d

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at 414). The removing party has the burden of proving that a defendant is a nominal defendant.

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Silva v. Wells Fargo Bank NA, 2011 WL 2437514, at *3 (C.D.Cal. June 16, 2011).
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A trustee under a deed of trust is often a nominal party. Id. at 5. However, a party’s

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status as a trustee does not dispositively render it a nominal party. Id. A trustee has been found

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to be a real party when a plaintiff’s complaint asserts claims against a trustee, including money

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for damages to their credit rating and home value, emotional damages and physical distress, and

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allegations that the trustee made false statements in a defective Notice of Default and was not the
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trustee authorized to initiate non-judicial foreclosure proceedings. Id. A trustee has also not

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been considered a nominal party when the complaint makes substantive allegations and asserts

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claims for money damages. Couture v. Wells Fargo Bank NA, 2011 WL 3489955, at *3

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(S.D.Cal. Aug. 9, 2011). On the other hand, if a plaintiff has not made substantive allegations

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Order - 4

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against the trustee, the trustee under the deed of trust is neutral, and has no interest in the

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outcome. Prasad v. Wells Fargo Bank NA, 2011 WL 4074300, *3 (W.D. Wash. Sept. 13, 2011).

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In this case, Quality’s status as a trustee is not sufficient to render it a nominal party. The

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Plaintiff has made substantive allegations against Quality and has asserted claims for damages

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against Quality. Plaintiffs have not avoided removal by lumping multiple parties together, and
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making blanket allegations against the Defendants to defeat nominal status. Rather, Plaintiffs

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have made specific factual allegations against Quality that give rise to Quality’s potential

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liability. For example, Plaintiffs make specific allegations that Quality misrepresented the

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reinstatement amount in the Notice of Default, and misrepresented the amount of days Plaintiffs

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had to cure before the sale. Although Chase claims that Quality was acting as its agent when
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Quality delivered the Notice of Default and thus, the claims are against Chase and not Quality,

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an agent may be directly and severally liable for all damages suffered by a plaintiff who has been

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injured as a result of its actions. Finney v. Farmers Ins. Co., 92 Wn.2d 748, 754 (1979).

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In addition, Chase has not demonstrated that Quality was fraudulently joined. Joinder of
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a non-diverse defendant is fraudulent, and the defendant’s presence in the lawsuit is ignored for

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the purposes of determining diversity when: (1) the plaintiff fails to state a cause of action

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against a resident defendant; and (2) the failure is obvious according to the settled rules of the

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state. Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). As stated above,

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Plaintiffs have made specific factual allegations against Quality and thus, they have not failed to
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state a cause of action against a resident defendant.
Accordingly, Quality is not a nominal defendant. As such, its citizenship is considered
for the purpose of establishing diversity jurisdiction. Because Plaintiffs and Quality are citizens

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Order - 5

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of Washington State, there is not complete diversity. Therefore, Plaintiffs’ Motion to Remand is

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granted.

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B. Attorney Fees

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Plaintiffs also seek attorneys’ fees and costs incurred in filing this motion. Plaintiffs

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claim that Chase lacked any objectively reasonable basis for removing this action because Chase
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knew that Quality was a Washington State citizen, and the Complaint makes specific allegations

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against Quality. Chase argues that the Court should not award attorneys fees because there is a

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reasonable basis in both law and fact that Quality is a nominal defendant.

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An order of remand may require the payment of attorney fees as a result of the removal.

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28 U.S.C. § 1447(c). The Court may award attorney’s fees under § 1447(c) only where the
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removing party lacked an objectively reasonable basis for seeking removal. Martin v. Franklin

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Capital Corp., 546 U.S. 132, 141 (2005). If an objectively reasonable basis exists, the Court will

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deny the request for fees. Id.

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Chase did not lack an objectively reasonable basis for seeking removal. Although the
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Court disagrees with Chase’s arguments that Quality’s citizenship should be disregarded, their

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arguments are not objectively unreasonable. Often trustees are treated as nominal defendants,

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and Chase was not objectively unreasonable in seeking to rely on case law that treated trustees as

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such. The request for fees is therefore denied.

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IV.

CONCLUSION

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Quality Loan is not a nominal defendant and was not fraudulently joined to defeat

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diversity. Therefore, the Court lacks subject matter jurisdiction, and Plaintiffs’ Motion to

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Remand to the Pierce County Superior Court [Dkt. #12] is GRANTED. In addition, Plaintiffs’

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request for attorney fees is DENIED. The Clerk is directed to forward a copy of this Order to all

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Order - 6

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counsel of record. The Clerk is further directed to send certified copies of this order to the Clerk
of the Court for Pierce County Superior Court.

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IT IS SO ORDERED.

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DATED this 19th day of April, 2012.

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A
RONALD B. LEIGHTON
UNITED STATES DISTRICT JUDGE

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Order - 7