United States District Court, C.D. California
Present: Honorable PERCY ANDERSON, UNITED STATES DISTRICT
CIVIL MINUTES - GENERAL
IN CHAMBERS - COURT ORDER
the Court is a Notice of Removal filed by defendant HSBC Bank
USA, N.A. (“Removing Defendant”). According to
the Notice of Removal, Removing Defendant's co-defendant,
Clear Recon Corp. (“Clear Recon”) consents to the
removal. (Notice of Removal, ¶ 5.) In its Notice of
Removal, Removing Defendant asserts that this Court has
jurisdiction over the action brought against it by plaintiff
Deborah Best (“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 Defendant 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.
support of its allegations that the Court possesses diversity
jurisdiction, the Notice of Removal alleges: “Based on
the allegations in the Complaint, Plaintiff is, and all times
relevant to this proceeding was, a citizen of and domiciled
in the State of California.” (Notice of Removal, ¶
9(a).) However, the Complaint alleges only that Plaintiff
“is a resident of the State of California, County of
Los Angeles.” (Id., Ex. A, ¶ 1.)
Therefore the Complaint's allegations fail to establish
Plaintiff's citizenship. See Kanter, 265 F.3d at
857. Nor can the Court agree with Removing Defendant's
assertion that Plaintiff's ownership of a property
located in California is “prima facie evidence
that Plaintiff is domiciled in California.”
(Id., ¶ 9(a).) One may own property in a
particular state, and reside there, without being a citizen
of that state. See Kanter, 265 F.3d at 857. Because
the only support for Removing Defendant's allegation of
Plaintiff's citizenship are allegations of residence and
property ownership, and neither is the same as citizenship,
the Notice of Removal's allegations are insufficient to
establish Plaintiff's citizenship. See id. As a
result, Removing Defendant's allegations are insufficient
to invoke this Court's diversity jurisdiction.
Court also notes that the Notice of Removal is silent as to
the citizenship of Clear Recon. Instead, the Notice of
Removal urges the Court to disregard Clear Recon's
citizenship because it is a nominal party. One 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, Recon Trust's citizenship must
be disregarded because it is a nominal party named only in
its capacity as Removing Defendant's trustee. As support
for this assertion, Removing Defendants highlight that Recon
Trust filed an unopposed Declaration of Non-Monetary Status
(“DNMS”) prior to the removal of this action.
However, because the DNMS was filed on March 29, 2017, the
time for Plaintiff to oppose Recon Trust's DNMS has not
expired. See Cal. Civ. Code § 2924l(c)
(“The parties who have appeared in the action or
proceeding shall have 15 days from the service of the
declaration by the trustee in which to object to the
nonmonetary judgment status of the trustee.”).
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, 2011).
the allegations in the Complaint necessarily establish that
Recon Trust 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 that Removing
Defendant has not met the “heavy burden of
persuasion” that there is no possibility that Plaintiff
may prevail on the claims against Recon Trust. 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 her Complaint to state a viable claim
against Recon Trust. See Padilla, 697 F.Supp.2d at
1159. As a result, the Court finds that Recon Trust has not
been fraudulently joined and this Court cannot ignore its
citizenship for purposes of assessing the propriety of
Removing Defendant's Notice of Removal.
of the foregoing reasons, Removing Defendant has 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. VC066130, for lack ...