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Francisco A. Vasquez and Maria R. Vasquez v. Wells Fargo Home Mortgage

March 22, 2012

FRANCISCO A. VASQUEZ AND MARIA R. VASQUEZ,
PLAINTIFFS,
v.
WELLS FARGO HOME MORTGAGE,
DEFENDANTS.



The opinion of the court was delivered by: M. James Lorenz United States District Court Judge

ORDER DENYING MOTION FOR REMAND [doc. #10] and GRANTING WITH PREJUDICE MOTION TO DISMISS [doc. #4]

Defendant Wachovia Mortgage moves to dismiss the complaint and plaintiffs move to remand. The motions are fully briefed and are considered without oral argument pursuant to Civil Local Rule 7.1(d)(1).

BACKGROUND

Plaintiffs allege that they obtained a home loan in 2008 from Wachovia Mortgage, FSB, now known as Wachovia Mortgage, a division of Wells Fargo Bank, N.A. The $384,000.00 loan was secured by a Deed of Trust in favor of the lender. Plaintiffs failed to make payments on the loan and failed to qualify for a loan modification. The property was sold at a non-judicial foreclosure sale on December 1, 2010.

This action was filed in the Superior Court of the State of California, in and for the County of San Diego on February 1, 2011. In their verified complaint, plaintiffs seek to have the foreclosure sale set aside and to be awarded damages. Plaintiffs allege state-law claims for breach of contract, unfair business practices, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, negligent infliction of emotional distress, and fraud, that are all based upon purported violations of The Home Affordable Modification Program, HAMP, a federal loan modification program.

MOTION TO REMAND

Plaintiffs name Wells Fargo Home Mortgage and Wachovia Mortgage FSB as defendants in this action but not Wells Fargo Bank, N.A. Accordingly, plaintiffs contend that Wells Fargo Bank, N.A. is a nonparty to this action and may not remove the action on the basis of the Court's diversity jurisdiction. Plaintiffs therefore move to remand this action based on lack of subject matter jurisdiction.

1. Legal Standard

An action is removable to federal court only if it might have been brought there originally. See 28 U.S.C. § 1441(a). A federal court can assert subject matter jurisdiction over cases that (1) involve questions arising under federal law or (2) are between diverse parties and involve an amount in controversy that exceeds $75,000. 28 U.S.C. §§ 1331, 1332.

The removal statute is "strictly construe[d] . . . against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal." Id. "The 'strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).

2. Discussion

Wells Fargo Bank, N.A., a citizen of South Dakota, with its main office in South Dakota, contends it is the real party in interest in this action and is the properly named defendant because Wachovia Mortgage, and Wells Fargo Home Mortgage, Inc., are divisions of Wells Fargo Bank, N.A. and neither exists as a separate entity.*fn1 Federal Rule of Civil Procedure 17(a)(1) provides that "an action must be prosecuted in the name of the real party in interest."

Plaintiffs contend that they named Wachovia Mortgage, and Wells Fargo Home Mortgage in their complaint, not Wells Fargo Bank. Thus, Wells Fargo Bank is not a party to this action and may not act to remove the action to federal court on the basis of diversity jurisdiction because it is not the real party in interest. They further argue that Wells Fargo Home Mortgage is a California corporation that was incorporated in California, thereby defeating diversity jurisdiction. But as plaintiffs must acknowledge, Wells Fargo Home Mortgage was "merged out" according to documents on file with the California Secretary of State and ceased to exist as a separate entity. Nevertheless, plaintiffs contend that "merger is not the appropriate term since the corporation continued to use the name Wells Fargo Home Mortgage." Motion to Remand at 3. Accordingly, "it is plaintiff's choice which entity to sue, the surviving entity or the corporation which is winding up here, plaintiffs have chosen to sue Wells Fargo Home Mortgage, Inc. -- the California Corporation." Id.

Plaintiffs' contention is without factual or legal basis. Wells Fargo Home Mortgage, Inc. merged into Wells Fargo Bank, N.A. on May 8, 2004, and ceased to exist as a separate entity. Similarly Wachovia Mortgage ceased to exist as a separate entity and became a division of Wells Fargo Bank on November 1, 2009. Plaintiffs should have recognized, based on the documents they submitted for judicial notice, that Wells Fargo Home Mortgage, Inc. is a division of Wells Fargo Bank and Wells Fargo Bank is the real party in interest. Further, in their Complaint, plaintiffs set forth ...


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