United States District Court, C.D. California
Present: The Honorable PERCY ANDERSON, UNITED STATES DISTRICT
CIVIL MINUTES - GENERAL
IN CHAMBERS - COURT ORDER
the Court is a Notice of Removal filed by defendants Ocwen
Loan Servicing, LLC and Wilmington Savings Fund Society, FSB
(doing business as Christiana Trust as Trustee for HLSS
Mortgage Master Trust for the benefit of the holders of the
Series 2014-1 Certificates issues by HLSS Mortgage Master
Trust) (“Removing Defendants”). According to the
Notice of Removal, the Removing Defendants' co-defendant,
The Mortgage Law Firm, PLC (“The Mortgage Law
Firm”) consents to the removal. In their Notice of
Removal, Removing Defendants assert that this Court has
jurisdiction over the action brought against it by plaintiff
Daniel McCoy (“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,
Removing Defendants 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.”).
exception to the complete diversity requirement is
“nominal party” status. “Defendants who are
nominal parties with nothing at stake may be disregarded in
determining diversity, despite the propriety of their
technical joinder.” Strotek Corp. v. Air Transport
Ass'n of America, 300 F.3d 1129, 1133 (9th Cir.
2002) (citing Prudential Real Estate Affiliates, Inc. v.
PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir. 2000)).
“Removing Defendants bear the burden of proving a
defendant is a nominal party.” Latino v. Wells
Fargo Bank, N.A., 2011 WL 4928880, at *2 (E.D. Cal.
Ninth Circuit has also 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 1067.
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
to the Notice of Removal, The Mortgage Law Firm, like
Plaintiff, is a California citizen. Removing Defendants
assert, however, that “based on the allegations in the
Complaint, The Mortgage Law Firm states that it has been
joined as a nominal defendant and therefore its citizenship
is irrelevant for purposes of removing the State Court Action
to this Court.” (Notice of Removal 5:10-12.) The Notice
of Removal also alleges that The Mortgage Law Firm has filed
a Declaration of Nonmonetary Status (“DNMS”). The
time for Plaintiff to oppose The Mortgage Law Firm's DNMS
has not expired. See Cal. Civ. Code §
2924l(c). Moreover, “the State statute
allowing for declarations of nonmonetary status does not
render a defendant a sham defendant or a purely nominal
party. A defendant's declaration of nonmonetary status,
which excuses a party from active participation in the case,
is not conclusive.” Sublett v. NDEX West, LLC,
No. 11cv185-L(WMC), 2011 WL 663745 at *2 (S.D. Cal. Feb. 14,
the allegations in the Complaint necessarily establish that
The Mortgage Law Firm is either a nominal party or
fraudulently joined. See Perkins v. JPMorgan Chase Bank,
N.A., No. CV 16-445- PSG(SSx), 2016 WL 3844205, at *23
(C.D. Cal. July 15, 2016) (“In sum, the Court finds
that MTC is not a nominal party at this time. As a result,
MTC's citizenship is relevant to the diversity analysis.
Because Plaintiff and MTC are citizens of California,
complete diversity does not exist and Chase has failed to
satisfy its ‘burden of establishing that removal is
proper.'”) (citing Gaus, 980 F.2d at 566);
Gomez v. Wells Fargo Bank, N.A., No. C 15-2996 SBA,
2015 WL 4592060, at *2 (N.D. Cal. July 28, 2015) (“In
sum, the Court concludes that Wells Fargo has failed to carry
its burden of demonstrating that Cal-Western is either
fraudulently-joined or a nominal party whose citizenship may
be disregarded for purposes of diversity
jurisdiction.”); Nance v. Cal-W. Reconveyance
Corp., No. LA CV14-07950 JAK, 2015 WL 452747, at *3
(C.D. Cal. Jan. 29, 2015) (citing Latino v. Wells Fargo
Bank, N.A., No. 2:11-CV-02037-MCE, 2011 WL 4928880, at
*3 (E.D. Cal. Oct. 17, 2011)); Silva v. Wells Fargo Bank
NA, 2011 WL 2437514, at *5 (C.D. Cal. June 16, 2011)
(acknowledging “the trustee on a deed of trust is often
a nominal party” but finding the complaint on its face
adequately pleaded claims against Cal-Western as trustee).
there is “a non-fanciful possibility that plaintiff can
state a claim under [state] law against the non-diverse
defendants[, ] the court must remand.” Mireles v.
Wells Fargo Bank, N.A., 845 F.Supp.2d 1034, 1062 (C.D.
Cal. 2012) (quoting Macey v. Allstate Property & Cas.
Ins. Co., 220 F.Supp.2d 1116, 1117 (N.D. Cal. 2002))
(brackets in original). The Court finds the Removing
Defendants have not met the “heavy burden of
persuasion” that there is no possibility that Plaintiff
may prevail on the claims against The Mortgage Law Firm.
See Plute, 141 F.Supp.2d at 1008. Nor can the Court
conclude, on this record, that Plaintiff would not be
afforded leave to amend his Complaint to state a viable claim
against The Mortgage Law Firm. See Padilla, 697
F.Supp.2d at 1159. As a result, the Court finds that The
Mortgage Law Firm has not been fraudulently joined and this
Court cannot ignore its citizenship for purposes of assessing
the propriety of Removing Defendants' Notice of Removal.
of the foregoing reasons, Removing Defendants have failed to
meet its burden to demonstrate the Court's diversity
jurisdiction. Accordingly, the Court remands this action to
Los Angeles Superior Court, Case No. LC105148, for ...