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Khan v. U.S. Bank National Association

United States District Court, E.D. California

March 24, 2015

KHALID KHAN, Plaintiff,
v.
U.S. BANK NATIONAL ASSOCIATION, et al., Defendants.

ORDER

KIMBERLY J. MUELLER, District Judge.

This matter was referred to a United States Magistrate Judge under Local Rule 302(c)(21).

On July 8, 2014, the magistrate judge filed findings and recommendations recommending dismissal of the action for lack of subject matter jurisdiction. On November 20, 2014, the magistrate judge filed a second set of findings and recommendations recommending that this action be dismissed for lack of prosecution. Both sets of findings and recommendations were served on plaintiff and contained notice that any objections should be filed within fourteen days. Plaintiff has timely filed objections to both sets of findings and recommendations.

In accordance with the provisions of 28 U.S.C. ยง 636(b)(1)(C) and Local Rule 304, this court has conducted a de novo review of this case. Having carefully reviewed the entire file, the court declines to adopt either recommendation.

The first recommendation is based on plaintiff's failure to plead in the first amended complaint, ECF No. 9, two prerequisites to invocation of diversity jurisdiction: (1) that the citizenship of all defendants is diverse from plaintiff's citizenship; and (2) that the matter in controversy exceeds the sum or value of $75, 000. The magistrate judge also finds that plaintiff's second amended complaint, ECF No. 24, was filed without leave of court and that "it is apparent from the allegations of the second amended complaint that plaintiff has simply omitted the non-diverse defendant [T.D. Service Company] from the caption as a ploy to invoke diversity jurisdiction but intends to proceed on claims against this non-diverse defendant." ECF No. 25 at 2.

In his objections to this set of findings and recommendations plaintiff makes it clear that he wants to proceed with this action solely against defendant U.S. Bank National Association, as beneficiary, also known as U.S. Bank.com, N.A., and against defendant S.A. Challenger, Inc., and he requests leave to amend his complaint. Both U.S. Bank National Association and S.A. Challenger, Inc. are Minnesota corporations and their citizenship is completely diverse from the citizenship of plaintiff, who is a California resident. While the second amended complaint contains allegations referring to T.D. Service Company as a defendant, this is a defect that may be cured by amendment by permitting plaintiff to file a third amended complaint that omits all references to T.D. Service Company as a defendant, both in the caption and in the body of the third amended complaint.[1] In addition, the court is unable to determine at this stage of these proceedings that plaintiff's failure to allege that the amount in controversy exceeds the sum or value of $75, 000 cannot be cured by amendment. In his objections to the second set of findings and recommendations plaintiff avers that his interest in the property at issue is more than $500, 000, suggesting amendment is possible. See ECF No. 29 at 3. Accordingly, for these reasons, the court declines to dismiss this action for lack of subject matter jurisdiction and will grant plaintiff leave to file a third amended complaint.

The second recommendation is based on plaintiff's failure to serve process within 120 days as required by Federal Rule of Civil Procedure 4(m) and the magistrate judge's June 11, 2014 order, ECF No. 18, as well as plaintiff's failure to appear at a status conference set in that order. Based on the latter failure, the magistrate judge assumes plaintiff has abandoned this action. ECF No. 28 at 2. While plaintiff was properly served with notice of the status conference, [2] it is at this point apparent plaintiff has not abandoned this action.

With respect to plaintiff's failure to serve the first amended complaint within 120 days, the record shows that one week after the June 11, 2014 order directing issuance of summons and ordering service of the first amended complaint, the magistrate judge issued an order to show cause why this action should not be dismissed for lack of subject matter jurisdiction, ECF No. 18, and twenty days thereafter issued the July 8, 2014 findings and recommendations finding both the first and the second amended complaint insufficient to establish diversity jurisdiction and recommending dismissal for lack of subject matter jurisdiction. Under these circumstances, the court will not dismiss this action based on Federal Rule of Civil Procedure 4(m). Instead, for the reasons set forth in this order plaintiff will be given an opportunity to file a third amended complaint. If that third amended complaint is sufficient to invoke the subject matter jurisdiction of this court, the time for service of process under Federal Rule of Civil Procedure 4(m) will run from the date that determination is made by the magistrate judge or by this court.

Plaintiff requests reassignment of this action to a new magistrate judge. That request is denied as there is nothing in the record to suggest bias on the part of the assigned magistrate judge.

In accordance with the above, IT IS HEREBY ORDERED that:

1. The findings and recommendations filed July 8, 2014 are not adopted;

2. The findings and recommendations filed November 20, 2014 are not adopted;

3. Plaintiff is granted twenty days from the date of this order in which to file a third amended complaint in accordance with this order; and

4. This matter is referred back to the assigned magistrate judge for further proceedings.


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