United States District Court, C.D. California
Present: The Honorable PERCY ANDERSON, UNITED STATES DISTRICT
IN CHAMBERS - COURT ORDER
Honorable PERCY ANDERSON, UNITED STATES DISTRICT JUDGE.
the Court is a Notice of Removal filed by defendant Wells
Fargo Bank, N.A., successor by merger with Wells Fargo Bank
Southwest, N.A., f/k/a Wachovia Mortgage, FSB, f/k/a World
Savings Bank, FSB (“Wells Fargo”). In its Notice
of Removal, Wells Fargo asserts that this Court has
jurisdiction over the action brought against it by plaintiff
Victor Dyer (“Plaintiff”) based on the
Court’s diversity jurisdiction. See 28 U.S.C.
courts are courts of limited jurisdiction, having subject
matter jurisdiction only over matters authorized by the
Constitution and Congress. See, e.g., Kokkonen
v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct.
1673, 1675, 128 L.Ed.2d 391 (1994). A suit filed in state
court may be removed to federal court if the federal court
would have had original jurisdiction over the suit. 28 U.S.C.
§ 1441(a). A removed action must be remanded to state
court if the federal court lacks subject matter jurisdiction.
28 U.S.C. § 1447(c). “The burden of establishing
federal jurisdiction is on the party seeking removal, and the
removal statute is strictly construed against removal
jurisdiction.” Prize Frize, Inc. v. Matrix (U.S.)
Inc., 167 F.3d 1261, 1265 (9th Cir. 1999).
“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).
attempting to invoke this Court’s diversity
jurisdiction, Wells Fargo must prove that there is complete
diversity of citizenship between the parties and that the
amount in controversy exceeds $75, 000. 28 U.S.C. §
1332. To establish citizenship for diversity purposes, a
natural person must be a citizen of the United States and be
domiciled in a particular state. Kantor v. Wellesley
Galleries, Ltd., 704 F.2d 1088, 1090 (9th Cir. 1983).
Persons are domiciled in the places they reside with the
intent to remain or to which they intend to return. See
Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th
Cir. 2001). “A person residing in a given state is not
necessarily domiciled there, and thus is not necessarily a
citizen of that state.” Id. For the purposes
of diversity jurisdiction, a national bank is “a
citizen of the State in which its main office, as set forth
in its articles of association, is located.”
Wachovia Bank v. Schmidt, 546 U.S. 303, 307, 126
S.Ct. 941, 945, 163 L.Ed.2d 797 (2006) (construing 28 U.S.C.
§ 1348). The citizenship of an LLC is the citizenship of
its members. See Johnson v. Columbia Props. Anchorage,
LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[L]ike a
partnership, an LLC is a citizen of every state of which its
owners/members are citizens.”); Marseilles Hydro
Power, LLC v. Marseilles Land & Water Co., 299 F.3d
643, 652 (7th Cir. 2002) (“the relevant citizenship [of
an LLC] for diversity purposes is that of the members, not of
the company”); Handelsman v. Bedford Village
Assocs., Ltd. P’ship, 213 F.3d 48, 51-52 (2d Cir.
2000) (“a limited liability company has the citizenship
of its membership”); Cosgrove v. Bartolotta,
150 F.3d 729, 731 (7th Cir. 1998); TPS Utilicom Servs.,
Inc. v. AT & T Corp., 223 F.Supp.2d 1089, 1101 (C.D.
Cal. 2002) (“A limited liability company . . . is
treated like a partnership for the purpose of establishing
citizenship under diversity jurisdiction”).
Notice of Removal alleges that “Plaintiff is a
California citizen, based on domicile, as he pleads ownership
of a home . . . [in] Inglewood, California . . . . (Comp.
¶¶ 2, 3, 39).” (Notice of Removal: 2:20-22.)
The Notice of Removal additionally alleges that Plaintiff
maintained a Wells Fargo checking account listing his
Inglewood address and that, “[u]pon information and
belief, ” Plaintiff “resides in California with
the intention to remain indefinitely.” (Notice of
Removal: 3:1-5.) As the Notice of Removal indicates, the
Complaint, alleges only Plaintiff’s residence and
ownership of a home in Inglewood, California. Because the
only support for Wells Fargo’s allegation of
Plaintiff’s citizenship is an allegation of residence,
and residence is not the same as citizenship, the Notice of
Removal’s allegations are insufficient to establish
Plaintiff’s citizenship. “Absent unusual
circumstances, a party seeking to invoke diversity
jurisdiction should be able to allege affirmatively the
actual citizenship of the relevant parties.”
Kanter, 265 F.3d at 857; Bradford v. Mitchell
Bros. Truck Lines, 217 F.Supp. 525, 527 (N.D. Cal. 1963)
(“A petition [for removal] alleging diversity of
citizenship upon information and belief is
insufficient.”). As a result, Wells Fargo’s
allegations are insufficient to invoke this Court’s
Court additionally notes that Wells Fargo’s efforts to
have this Court ignore the California citizenship of
defendant Morgan Picks1, LLC, are insufficient to allow
removal based on diversity jurisdiction. According to the
Notice of Removal, the Complaint alleges that Morgan Picks1
maintains its principal place of business in California.
(Notice of Removal 6:12-14.) While this allegation does not
properly allege the citizenship of the LLC, Wells Fargo
assumes that Morgan Picks1 is a California citizen but
nevertheless contends that the Court should ignore the
presence of Morgan Picks1 because it has been fraudulently
joined. The Ninth Circuit has recognized an exception to the
complete diversity requirement where a non-diverse defendant
has been “fraudulently joined.” Morris v.
Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.
2001). If a plaintiff “fails to state a cause of action
against a resident defendant, and the failure is obvious
according to the settled rules of the state, the joinder of
the resident defendant is fraudulent.” McCabe v.
Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).
If the Court finds that the joinder of a non-diverse
defendant is fraudulent, that defendant’s presence in
the lawsuit is ignored for the purposes of determining
diversity. See, e.g., Morris, 236 F.3d at
is a presumption against finding fraudulent joinder, and
defendants who assert that plaintiff has fraudulently joined
a party carry a heavy burden of persuasion.” Plute
v. Roadway Package Sys., Inc., 141 F.Supp.2d 1005, 1008
(N.D. Cal. 2001). A claim of fraudulent joinder should be
denied if there is any possibility that the plaintiff may
prevail on the cause of action against the in-state
defendant. See id. at 1008, 1012. “The
standard is not whether plaintiffs will actually or even
probably prevail on the merits, but whether there is a
possibility that they may do so.” Lieberman v.
Meshkin, Mazandarani, No. C-96-3344 SI, 1996 WL 732506,
at *3 (N.D. Cal. Dec. 11, 1996); see also Good v.
Prudential Ins. Co. of Am., 5 F.Supp.2d 804, 807 (N.D.
Cal. 1998) (“[T]he defendant must demonstrate that
there is no possibility that the plaintiff will be able to
establish a cause of action in State court against the
alleged sham defendant.”). “In determining
whether a defendant was joined fraudulently, the court must
resolve ‘all disputed questions of fact and all
ambiguities in the controlling state law in favor of the
non-removing party.” Plute, 141 F.Supp.2d at
1008 (quoting Dodson v. Spiliada, 951 F.2d 40, 42-43
(5th Cir. 1992)). A court should remand a case “unless
the defendant shows that the plaintiff ‘would not be
afforded leave to amend his complaint to cure [the] purported
deficiency.’” Padilla v. AT&T Corp.,
697 F.Supp.2d 1156, 1159 (C.D. Cal. 2009) (quoting Burris
v. AT&T Wireless, Inc., No. C 06-02904 JSW, 2006 WL
2038040, at *2 (N.D. Cal. July 19, 2006)).
least on this record, this Court cannot conclude that
Plaintiff would not be afforded leave to amend his Complaint
to state a viable claim against Morgan Picks1. Wells Fargo
has therefore failed to meet its burden to establish that
Morgan Picks1 is fraudulently joined, and the Court will not
ignore its citizenship for purposes of evaluating whether
diversity jurisdiction exists. Because the Court cannot
ignore its citizenship as a purported nominal defendant, the
Court concludes that Wells Fargo has not established that the
citizenship of Morgan Picks1 is diverse from Plaintiff.
of the foregoing reasons, Wells Fargo has failed to meet its
burden to demonstrate the Court’s diversity
jurisdiction. Accordingly, the Court remands this action to
Los Angeles ...