Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

The Charles Schwab Corporation v. Banc of America Securities LLC

March 11, 2011


The opinion of the court was delivered by: Lucy H. Koh United States District Judge


Plaintiff in this action has moved to remand the case to state court, where it was initially filed. For the reasons discussed below, the Court GRANTS Plaintiff's motion and remands the 20 case. In light of this, the Case Management Conference set for March 18, 2011 at 11 a.m. is hereby VACATED.

I. Background

On June 29, 2010, Plaintiff Charles Schwab Corporation (Schwab) filed a complaint in the San Francisco County Superior Court, case number GCG-10-501151. See Notice of Removal (UBS Removal), Dkt. No. 1 at Ex. A (Compl.). The Complaint alleged that Schwab invested $130 million in three securitization trusts backed by residential mortgage loans. Compl. ¶ 1.

Schwab claimed that defendants made misleading statements about the mortgages in those trusts, 28 and that defendants omitted necessary material facts relating to the investments. Id. On the basis of these allegations, the Complaint asserted the following causes of action: violations of the California Corporate Securities Act §§ 25401 and 25501; violations of the Securities Act of 1933, §§ 11, 12(a)(2), and 15; violations of the California civil code §§ 1572 and 1710; and a right to 4 contract rescission under California civil code § 1689 et seq. In addition to the defendants named 5 in the caption above, a number of other defendants were named. Bank of America Securities LLC 6 and Bank of America Funding Corporation (together, BofA) were not named as defendants.

Schwab served defendants UBS Securities LLC (UBS) and defendants Wells Fargo Asset Securities Corporation and Wells Fargo Bank, N.A. (together, Wells Fargo) with the Complaint on 9 or near July 9, 2010. UBS Removal at ¶ 3; Wells Fargo Joinder in Notice of Removal (Wells in state court, dropping a number of defendants and adding BofA. In the FAC, Schwab alleges that it purchased two $50 M certificates from two separate securitizations, one issued by Wells Fargo Trust"), the other by BofA (the Banc of America Funding Trust, Mortgage Pass-Through On August 9, 2010, UBS removed the action from state court. In the Notice of Removal, UBS identified two bases for removability. First, UBS claimed that the case was removable 18 because Schwab's claims are "related to" bankruptcy actions involving American Home Mortgage 19 and First Magnus Financial, pursuant to 28 U.S.C. § 1334(b). UBS Removal at 4-5. Second, UBS 20 claimed that the matter was removable based on diversity jurisdiction. UBS Removal at 5. Wells Fargo joined in UBS's Removal, asserting the same bases for removal (except that Wells Fargo did not rely on the First Magnus Financial bankruptcy as a source of "related to" bankruptcy removability). See Wells Fargo Removal. (Dkt. No. 26). In addition to joining in the removal bases cited by UBS, BofA asserted that BofA did not raise a separate legal basis for removal.

Fargo Removal), Dkt. No. 7, at ¶ 3. On July 27, 2010, Schwab filed an amended Complaint (FAC)

(the Wells Fargo Mortgage Backed Securities Trust, Series 2007-10, or "Wells Fargo 2007-10 Certificates, Series 2006-D, or "BofA 2006D Trust").

On August 17, 2010, after removal by UBS and Wells Fargo, Schwab served BofA with the FAC. On September 16, 2010, BofA joined in the original UBS Removal. See BofA Removal "related-to" bankruptcy jurisdiction arises based on the bankruptcy of IndyMac Bancorp, Inc. Id. 28


Before BofA's joinder in the UBS Removal, on September 8, 2010, Schwab filed its Motion to Remand. See Mot. (Dkt. No. 18). Pursuant to party stipulation, the briefing schedule on 3 this motion was extended, such that the Motion was set for hearing on February 3, 2011.

The first-filed of these cases, Schwab v. BNP Paribas et al., 10-cv-04030, was recently remanded 7 to the San Francisco Superior Court on the basis of equitable remand. See Feb. 23, 2011 Order.

Related cases Schwab v. J.P. Morgan Secs. Inc., 10-cv-04522 and Schwab v. J.P. Morgan Secs.

In addition to this case, Schwab has brought three other cases in San Francisco Superior Court asserting similar claims based on its investments in Mortgage Backed Securities (MBS).

Inc., 10-cv-04523 are pending before Judge White in this District, and motions to remand are 10 pending. outside this limited jurisdiction until the party asserting jurisdiction establishes otherwise.

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A defendant may remove 15 an action from state court if it could have originally been brought in federal court. 28 U.S.C. 980 F.2d 564, 566 (9th Cir. 1992).

a. Removal based on Diversity Jurisdiction

Defendants argue that the Court should find jurisdiction based on diversity in this matter.

Defendants concede that the parties in this case are not diverse.*fn1 See UBS/Wells Fargo Opp'n at 1.

However, defendants urge the Court to look behind what they call a "collusive assignment" of 23 claims from Charles Schwab Bank, N.A. (Schwab Bank, a Schwab affiliate) to Schwab, and to 24 consider the citizenship of Schwab Bank rather than Schwab to determine whether diversity 25 jurisdiction is proper. Schwab Bank is a citizen of California, while none of the defendants are California citizens. Schwab Bank is the entity that actually invested in the MBS trusts at issue in 27 this case, but it assigned its claims relating to these investments to plaintiff Schwab. Thus, if

II. Legal Standard

Federal courts are courts of limited jurisdiction, and a cause of action is presumed to lieĀ§ 1441. The defendant has the burden of establishing that ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.