Godoy v. Bank of New York Mellon

          PRESENT: THE HON. DAVID O. CARTER, JUDGE.

          ORDER GRANTING MOTION TO REMAND [12]

          HON. DAVID O. CARTER, JUDGE.

         Before the Court is Plaintiff Horacio Godoy’s (“Godoy” or “Plaintiff”) Motion to Remand (“Motion”) (Dkt. 12). The Court finds this matter appropriate for resolution without oral argument. Fed.R.Civ.P. 78; L.R. 7-15. After considering the Motion, the Court determines it lacks subject matter jurisdiction over the case. Accordingly, the case is REMANDED to Orange County Superior Court.

         I. Background

         On November 21, 2007, Plaintiff obtained a loan for $1, 000, 000 from Countrywide Bank, FSB (“Countrywide”). The loan was secured by a promissory note and a Deed of Trust with respect to the subject property at 23 Prairie, Irvine, CA 92618. Complaint (“Compl.”) (Dkt. 1-1) ¶¶ 8-10. The Deed of Trust states Countrywide is the lender, and ReconTrust Company, N.A. is the trustee to the Deed of Trust. Id. ¶ 10. Plaintiff disputes The Bank of New York Mellon fka The Bank of New York, as Trustee for the Benefit of CWMBS, Inc. CHL Mortgage Pass-Through Trust 2007-21 Mortgage Pass-Through Certificates, Series 2007-21 (“BNY”), Shellpoint Mortgage Servicing (“Shellpoint”), ^[1] and Peak Foreclosure Services Inc. (“Peak”) (collectively, “Defendants”) were properly substituted as the lender, loan servicer, and trustee, respectively. Id. ¶ 15. On February 17, 2016, Defendants recorded a notice titled “Notice of Default and Election to Sell Under Deed of Trust.” (“Notice of Default”). Id. ¶ 11. The crux of Plaintiff’s Complaint is that Defendants did not comply with the required procedures of the California Homeowner Bill of Rights (“HBOR”) before recording the Notice of Default and attempting to foreclose on Plaintiff’s property. See generally Compl.

         Plaintiff filed suit in Orange County Superior Court on May 6, 2016, asserting six claims: (1) violations of California Civil Code § 2923.55; (2) violations of California Civil Code § 2924.17; (3) violations of California Civil Code § 2923.6; (4) violations of California Civil Code § 2924(a)(6); (5) request to cancel instrument under California Civil Code § 3412; and (6) unfair, unlawful, and fraudulent business practices under California Business and Professions Code § 17200. See generally Compl.

         On June 6, 2016, Defendants removed the case to federal court based on diversity jurisdiction, pursuant to 28 U.S.C. § 1332. See Notice of Removal (Dkt. 1). Plaintiff filed the instant Motion on July 6, 2016. Defendants opposed on July 8, 2016. (Dkt. 14).

         II. Legal Standard

         “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). Because 28 U.S.C. § 1447(c) contains the word “shall, ” not the word “may, ” the court is powerless to hear the case when it lacks subject matter jurisdiction, and must remand the case to the state court. See Int’l Primate Prot. League v. Adm’rs of Tulane Educ. Fund, 500 U.S. 72, 87 (1991) (“[A] finding that removal was improper deprives that court of subject matter jurisdiction and obliges a remand under the terms of § 1447(c).”). Additionally, the court may remand sua sponte, not just upon motion by a party. Briano v. Conseco Life Ins. Co., 126 F.Supp.2d 1293, 1295 (C.D. Cal. 2000).

         A defendant may generally remove a civil action from a state court to a federal court “embracing the place where such action is pending” if the action could have been brought in federal court originally. 28 U.S.C. § 1441(a). A federal court has federal question jurisdiction over “civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331; see Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 807-08 (1986). A federal court has diversity jurisdiction if: (1) the controversy is between “citizens of different States”; and (2) the amount in controversy exceeds the sum or value of $75, 000. 28 U.S.C. § 1332; see Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978). Therefore, if the district court has a basis for subject matter jurisdiction under either 28 U.S.C. § 1331 or 28 U.S.C. § 1332, the action may be removed by a defendant. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 68-69 (1996); Wis. Dept. of Corrs. v. Schacht, 524 U.S. 381, 386 (1998).

         However, a major limitation exists regarding the defendant’s right to removal. A defendant may not remove a civil action to federal court in the state in which the action was brought if the defendant is a citizen of that state. 28 U.S.C. § 1441(b)(2); see Lincoln Prop. Co. v. Roche, 546 U.S. 81, 90, n.6 (2005) (noting lower courts’ characterization of the defect as procedural, not jurisdictional). Thus, a district court must remand a case removed by a “local” defendant - that is, a defendant who is a citizen of the state in which the action was originally brought. See Spencer v. U.S. Dist. Court for N. Dist. of Cal., 393 F.3d 867, 870 (9th Cir. 2004) (“It is thus clear that the presence of a local defendant at the time removal is sought bars removal.”).

         III. Discussion

         Plaintiff, a California citizen, argues the Court should use the principle place of business test and find that Defendants BNY and Shellpoint are citizens of California, and thus, diversity of citizenship is destroyed. Mot. at 13-15. In the Notice of Removal, Defendants assert BNY is a Delaware corporation with its principle place of business in New York, and Shellpoint is a dba for New Penn Financial, LLC, a Delaware limited liability company. Notice of Removal at 4.

         Thus, the Court must determine whether Defendants have met their burden to establish there is diversity of citizenship supporting diversity jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (“Federal courts are courts of limited jurisdiction . . . It is to be presumed that a cause lies outside this limited jurisdiction and the burden ...