Scott et al v. US Bank, NA et al

Filing 22

ORDER signed by Judge Benjamin H. Settle granting 19 Motion to Remand; finding as moot 11 Motion to Dismiss for Failure to State a Claim; finding as moot 15 Motion for Joinder. Per LCR 3(h), case will be remanded 14 days from date of this Order, on 8/23/2017. (TG)

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1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 6 7 8 FLOYD SCOTT, et al., CASE NO. C17-5405 BHS Plaintiffs, 9 10 v. U.S. BANK, NA, et al., 11 ORDER GRANTING PLAINTIFFS’ MOTION TO REMAND AND DENYING DEFENDANTS’ MOTIONS TO DISMISS AS MOOT Defendants. 12 13 This matter comes before the Court on Defendants’ motions to dismiss (Dkts. 11, 14 15) and Plaintiffs’ motion to remand (Dkt. 19). The Court has considered the pleadings 15 filed in support of and in opposition to the motions and the remainder of the file and, for 16 the reasons stated below, hereby (1) grants the motion to remand and (2) denies the 17 motions to dismiss as moot. 18 19 I. BACKGROUND On April 20, 2017, Plaintiffs filed a complaint against Defendants in Clark County 20 Superior Court. Dkt. 1 at 2. On May 26, 2017, Defendants removed the action based on 21 diversity jurisdiction under 28 U.S.C. § 1332. Dkt. 1. 22 ORDER - 1 1 On June 2, 2017, Defendants Federal Home Loan Mortgage Corporation, 2 Mortgage Electronic Registration Systems Inc., and U.S. Bank, N.A. moved to dismiss. 3 Dkt. 11. On June 8, 2017, Defendant North Cascade Trustee Services Inc. (“NTCS”) filed 4 a motion joining in its codefendants’ motion to dismiss. Dkt. 15. 5 On June 6, 2017, Plaintiffs moved to remand the case to Clark County Superior 6 Court. Dkt. 19. On July 10, 2017, Defendants responded in opposition to Plaintiffs’ 7 motion for remand. Dkt. 20. 8 9 II. DISCUSSION Plaintiffs move to remand the proceedings to state court on the basis that the 10 presence of MTC Financial Inc. (“MTC”) and NTCS in this case destroys the diversity 11 necessary for federal jurisdiction under 28 U.S.C. § 1332. The Court agrees. Plaintiffs 12 have shown that MTC and NTCS are non-diverse parties and Defendants do not contend 13 otherwise. Instead, Defendants argue that diversity jurisdiction exists because either: (1) 14 MTC and NTCS are nominal defendants, or (2) MTC and NTCS were fraudulently 15 joined. The Court rejects both of these arguments. 16 “[A] federal court must disregard nominal or formal parties and rest jurisdiction 17 only upon the citizenship of real parties to the controversy.” Petheram v. Wells Fargo 18 Bank, C13-1016JLR, 2013 WL 4761049, at *2 (W.D. Wash. Sept. 3, 2013) (quoting 19 Navarro Sav. Ass’ n v. Lee, 446 U.S. 458, 461 (1980)). While trustees are often treated as 20 nominal parties, “[a] trustee has been found to be a real party when a plaintiff’s complaint 21 asserts claims against a trustee, including . . . allegations that the trustee . . . was not the 22 trustee authorized to initiate non judicial foreclosure proceedings.” Beiermann v. JP ORDER - 2 1 Morgan Chase Bank Nat. Ass’n, 3:11-CV-05952 RBL, 2012 WL 1377094, at *2 (W.D. 2 Wash. Apr. 19, 2012). Such is the case here, where Plaintiffs assert Washington 3 Consumer Protection Act claims against MTC and NTCS on the bases that they accepted 4 appointments as successor trustees that they knew were unlawful and subsequently 5 initiated non-judicial foreclosure proceedings despite knowing that they were not 6 properly authorized trustees. See Dkt. 1-2 at 9, 14–15. 7 Further, Plaintiff fraudulently joined MTC or NTCS. Joinder of a resident 8 defendant is fraudulent for the purpose of defeating diversity jurisdiction only when: (1) 9 the plaintiff fails to state a cause of action against a resident defendant and (2) the failure 10 is obvious according to the settled rules of the state. Ritchey v. Upjohn Drug Co., 139 11 F.3d 1313, 1318 (9th Cir. 1998). In this case, it very well may be that Plaintiffs have 12 failed to state a claim against MTC and NTCS. Indeed, as argued in Defendants’ motion 13 to dismiss and accompanying request for judicial notice, it appears likely that U.S. Bank 14 appointed successor trustees under its lawful authority as the holder of the subject note. 15 See Dkts. 11, 11-1. However, the second prong of the fraudulent joinder test states that 16 “the non-diverse claim must not only be unsuccessful, it must be untenable ab initio.” 17 Davis v. Prentiss Properties Ltd., Inc., 66 F. Supp. 2d 1112, 1115 (C.D. Cal. 1999). This 18 reflects the fact that the Court’s jurisdiction is a threshold issue: the Court cannot decide 19 the type of arguments advanced in Defendants’ motions to dismiss, which require 20 examining the merits of the claims in detail by taking judicial notice of applicable loan 21 documents, without jurisdictional authority. 22 ORDER - 3 1 Reviewing nothing but the allegations in the complaint that MTC and NTCS 2 accepted unlawful appointments as successor trustees and subsequently proceeded to act 3 on claims of default, Plaintiffs have alleged a tenable claim against non-diverse 4 defendants under the CPA. See Knecht v. Fid. Nat. Title Ins. Co., C12-1575RAJ, 2014 5 WL 4057148, at *8 (W.D. Wash. Aug. 14, 2014). Whether Plaintiffs’ allegations are 6 contradicted or unsupported by the very loan documents that they necessarily incorporate, 7 and therefore fail to state a claim, is a question to be resolved by a court with jurisdiction 8 to hear the parties’ dispute. That is not this Court. 9 III. 10 ORDER Therefore, it is hereby ORDERED that Plaintiffs’ motion to remand (Dkt. 19) is 11 GRANTED. Plaintiffs’ motions to dismiss (Dkts. 11, 15) are DENIED without 12 prejudice as moot. The Clerk shall REMAND this matter to Clark County Superior 13 Court. 14 Dated this 9th day of August, 2017. A 15 16 BENJAMIN H. SETTLE United States District Judge 17 18 19 20 21 22 ORDER - 4

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