United States District Court, N.D. California
ORDER GRANTING MOTION TO DISMISS RE:
DKT. NO. 12
GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE
Chet Lee brings this action against defendants Quality Loan
Service Corporation, Caliber Home Loans, Inc., LSF9 Master
Participation Trust, J.P. Morgan Chase Bank, N.A., U.S. Bank,
N.A.,  as Trustee for LSF9 Master Participation
Trust, Washington Mutual Bank, and forty-five unnamed
defendants for violations related to a foreclosure. (Dkt. No.
1-1, “Compl.”) Specifically, plaintiff alleges
that the defendants failed to contact plaintiff to
“explore options for avoiding foreclosure” as
required by certain laws prior to initiating foreclosure
before the Court is defendant J.P. Morgan Chase Bank,
N.A.’s (“Chase”) motion to dismiss the
complaint for failure to state a claim. (Dkt. No. 12,
“Mtn.”) Plaintiff has filed a response (Dkt. No.
20, “Opp’n”) and defendant has replied
(Dkt. No. 22, “Reply”).
carefully considered the pleadings and papers submitted, the
Court Dismisses Without Prejudice plaintiff’s claims
about July 20, 2000, plaintiff entered into a loan agreement
with Washington Mutual for $350, 000.00. (Compl. ¶ 22.)
As security for the loan, plaintiff executed a deed of trust,
mortgaging his property located at 107 Merion, Moraga,
California 94556 (the “Property”) to Washington
Mutual. (Id. at ¶¶ 19, 22.) At some point,
Washington Mutual ceased to exist and defendant Chase
acquired all of its assets, allegedly including Washington
Mutual’s security interest in the Property. (Dkt. No.
about April 14, 2014, Chase substituted the original trustee
on the deed of trust with an entity named ALAW, a
substitution which plaintiff alleges was executed unlawfully.
(Compl. ¶ 23.) Around April 15, 2015, plaintiff alleges
that Chase “issued a purported assignment of deed of
trust, transferring and assigning all beneficial interests
under the Note and deed of trust of [p]laintiff’s real
property to LSF9 Master Participation Trust.”
(Id. at ¶ 24.) Then, according to plaintiff,
around August 6, 2015, defendants LSF9 Master Participation
Trust and Caliber Home Loans transferred the interests under
the deed of trust to U.S. Bank, N.A., as trustee for LSF9
Master Participation Trust. (Id. at ¶ 26.) U.S.
Bank, N.A., in turn, substituted Quality Loan Service
Corporation (“Quality”) as the trustee under the
deed of trust. (Id. at ¶ 29.)
on or about September 23, 2015, Quality recorded a notice of
default and election to sell the Property. (Id. at
¶ 31.) Plaintiff alleges that the notice was
“false in that it fail[ed] to properly credit
[p]laintiff for the payments [p]laintiff made towards the
mortgage and therefore overstates the amount of
[p]laintiff’s default if any.” (Id.)
Additionally, plaintiff alleges that the notice had no force
or effect because “neither the loan servicer nor the
lender contacted [p]laintiff in person or by telephone to
discuss options of avoiding foreclosure as required by the
California Homeowner Bill of Rights.” (Id.) On
or about January 11, 2016, Quality recorded the notice of
trustee’s sale, and plaintiff alleges that this, too,
was unlawful because it overstated the amount of
plaintiff’s default and no party contacted plaintiff to
discuss options for avoiding foreclosure. (Id. at
SUBJECT MATTER JURISDICTION
Court first addresses plaintiff’s contention that it
should not rule on the motion to dismiss because the Court
lacks subject matter jurisdiction in this case. Plaintiff
originally filed this action in state court alleging
violations of California statutory and common laws on March
4, 2016. (Dkt. No. 1-1.) Defendants Caliber Home Loans, Inc.,
LSF9 Master Participation Trust, and U.S. Bank, N.A., with
the consent of all other defendants, filed a Notice of
Removal on May 3, 2016 on the basis of the Court’s
diversity jurisdiction. (Dkt. No. 1.) Plaintiff now argues
that complete diversity does not exist, and, therefore, the
Court lacks subject matter jurisdiction. Chase argues on
reply that the Court need not address this argument because
plaintiff has not filed a proper motion to remand.
Court has an independent obligation to address issues
directly related to its subject matter jurisdiction over an
action. Valdez v. Allstate Ins. Co., 372 F.3d 1115,
1116 (9th Cir. 2004). A case removed to federal court must be
remanded back to state court “if at any time before
final judgment it appears that the district court lacks
subject matter jurisdiction.” 28 U.S.C. § 1447(c).
Federal courts are courts of limited jurisdiction.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377 (1994) (federal courts “possess only that
power authorized by Constitution and statute”).
“Federal jurisdiction must be rejected if there is any
doubt as to the right of removal in the first
instance.” Gaus v. Miles, Inc., 980 F.2d 564,
566 (9th Cir. 1992); accord Matheson v. Progressive
Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).
A defendant may remove a civil action from state court if the
action could have originally been filed in federal court. 28
U.S.C. § 1441. Federal subject matter jurisdiction under
28 U.S.C. § 1332(a)(1) requires complete diversity of
citizenship and an amount in controversy in excess of $75,
000. For the purposes of determining whether complete
diversity of citizenship exists, courts ignore the
citizenship of “nominal or formal parties who have no
interest in the action and are merely joined to perform the
ministerial act of conveying the title if adjudged to the
complainant.” Prudential Real Estate Affiliates,
Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir.
2000) (citations omitted); see also Navarro Sav.
Ass’n v. Lee, 446 U.S. 458, 461 (1980) (“A
federal court must disregard nominal or formal parties and
rest jurisdiction only upon the citizenship of real parties
to the controversy.”).
plaintiff is correct that, at least from the face of the
complaint, there is a lack of complete diversity. Both
plaintiff and defendant Quality are California citizens.
However, as defendants explained in the Notice of Removal-and
which plaintiff does not dispute-Quality was sued only
“in its capacity as a trustee on the subject deed of
trust, in that it filed and served a Declaration of
Non-Monetary status in the State Court Action on April 11,
2016, and plaintiff has not filed an objection to that
declaration.” (Dkt. No. 1); see Docket Sheet,
Lee v. Quality Loan Service Corporation, et al., No.
C16-00435 (Cal. Sup. Ct.). Courts have routinely found that
parties who have served a declaration of non-monetary status
to which no objection is filed are properly deemed as nominal
parties for the purposes of determining diversity
jurisdiction. See, e.g., Jenkins v. Bank of Am.,
N.A., No. 14-CV-04545, 2015 WL 331114, at *6 (C.D. Cal.
Jan. 26, 2015) (finding that defendant Quality was a nominal
defendant because it had filed a declaration of non-monetary
status without objection) (citing cases); Cabriales v.
Aurora Loan Servs., No. 10-CV-00161, 2010 WL 761081, at
*2 (N.D. Cal. Mar. 2, 2010) (same); see also Cal.
Civ. Code § 2924l (stating that a
trustee’s filing of nonmonetary status without
objection obviates any requirement that the trustee
“participate any further in the action or proceeding,
” and the trustee “shall not be subject to any
monetary awards as and for damages, attorneys’ fees or
costs”). Accordingly, because Quality filed such a
declaration in the state court action without objection, the
Court finds that Quality is only a nominal party and is to be
disregarded for the purposes of establishing diversity
jurisdiction. Thus, the Court finds that complete diversity
exists and, therefore, the Court properly can exercise
subject-matter jurisdiction over the parties in this
MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM