United States District Court, S.D. California
ORDER DENYING MOTION TO REMAND AND GRANTING MOTION TO DISMISS
LARRY ALAN BURNS, District Judge.
This action arises out of the Majors' default on their mortgage and the subsequent initiation of foreclosure proceedings by Wells Fargo. It was originally filed in state court, and Wells Fargo removed it on April 21, 2014. Now pending are the Majors' motion to remand and Wells Fargo's motion to dismiss.
I. Majors' Motion to Remand
The Majors' motion to remand is based on an alleged lack of subject matter jurisdiction. They argue that there is not complete diversity between the parties and that the amount in controversy requirement is not satisfied. See 28 U.S.C. § 1332(a)(1).
A. Citizenship of Parties
There is no doubt that the Majors are citizens of California, and that the citizenship of Ndex is not relevant because it is a nominal party with a nonmonetary role in this case. See Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 460-61 (1980) ("[A] federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy."). That means diversity turns on the citizenship of Wells Fargo.
Under 28 U.S.C. § 1348, "[a]ll national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located." The critical word "located" is not defined by the statute and has been the source of considerable debate. See Rouse v. Wachovia Mortgage, FSB, 747 F.3d 707, 708 (9th Cir. 2014) ("The relevant statute is ambiguous, the courts are split on the question, and the Supreme Court has not squarely decided the issue.").
The Majors propose that the Court follow a 2013 decision that held Wells Fargo to be a citizen of both California, where it has its principal place of business, and South Dakota, where its main office is located. See Vargas v. Wells Fargo Bank N.A., 2013 WL 6235575 at *11 (N.D. Cal. Dec. 2, 2013). However, the Ninth Circuit held more recently in Rouse that "under § 1348, a national banking association is a citizen only of the state in which its main office is located. Accordingly, Wells Fargo is a citizen only of South Dakota...." Rouse, 747 F.3d 707 at 715. Following this more recent authority, the Court finds that Wells Fargo is solely a citizen of South Dakota, and that the parties are therefore diverse.
B. Amount in Controversy
Even though there is diversity of citizenship between the Majors and Wells Fargo, the Court would still lack jurisdiction if the amount in controversy does not exceed $75, 000. The Majors claim that "the entire loan amount is not in controversy" and that Wells Fargo therefore can't prove the amount in controversy exceeds $75, 000. (Mot. to Remand at 12:12-13.) Be that as it may, in a case of this kind where injunctive relief is sought, "the amount in controversy is measured by the object of the litigation." Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (citing Hunt v. Wash. State Apple Advertising Comm'n, 432 U.S. 333, 347 (1977)). Indeed, in actions arising out of the foreclosure of a plaintiff's home, the amount in controversy may be established by the value of the property or by the value of the loan. See, e.g., Chapman v. Deutsche Bank Nat'l Trust Co., 651 F.3d 1039, 1045 n. 2 (9th Cir. 2011) ("The object in litigation is the Property, which was assessed at a value of more than $200, 000, and therefore satisfies the amount-in-controversy requirement."); Ngoc Nguyen v. Wells Fargo Bank, N.A., 749 F.Supp.2d 1022, 1028 (N.D. Cal. 2010) ("Numerous courts have held that, where a complaint seeks to invalidate a loan secured by a deed of trust, the amount in controversy is the loan amount.").
In this case, the Deed of Trust indicates that the Majors borrowed $548, 000 against their home, which far exceeds the $75, 000 required for diversity jurisdiction. ( See Notice of Removal, Exh. A) Similarly, the Majors do not allege that the value of the home has dropped below $75, 000. Therefore, Wells Fargo has established by a preponderance of the evidence that the amount in controversy exceeds $75, 000. See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir.1996).
The amount-in-controversy requirement is therefore satisfied. Removal of this case was proper, and the Majors' motion to remand is DENIED.
II. Wells Fargo's Motion to Dismiss
The Majors assert six causes of action in their complaint, primarily based on California's Homeowner Bill of Rights ("HBOR"). These causes of action allege violations of at least eight individual statutes. Wells Fargo contests each one under Fed.R.Civ.P. 12(b)(6).
A. Legal Standard
A 12(b)(6) motion to dismiss for failure to state a claim challenges the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). The Court must accept all factual allegations as true and construe them in the light most favorable to the Majors. Cedars Sinai Med. Ctr. v. Nat'l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir.2007). To defeat Wells Fargo's motion to dismiss, the Majors' factual allegations need not be detailed, but they must be sufficient to "raise a right to relief above the speculative level...." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That is, "some threshold of plausibility must be crossed at the outset" before a case can go forward. Id. at 558 (internal quotations omitted). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for ...