United States District Court, C.D. California
Present: Honorable JOHN A. KRONSTADT, UNITED STATES DISTRICT
CIVIL MINUTES - GENERAL
(IN CHAMBERS) ORDER RE DEFENDANTS' MOTION TO DISMISS
PLAINTIFF'S COMPLAINT (DKT. 11); PLAINTIFF'S MOTION
TO REMAND CASE TO STATE COURT (DKT. 22) JS-6 as to Quality
Loan Service Corp., Aztec Foreclosure Corp. and SCME Mortgage
Miranda (“Plaintiff”) brought this action in the
Los Angeles Superior Court against SCME Mortgage Bankers,
Inc. (“SCME”), Quality Loan Service Corporation
(“Quality”), Aurora Loan Services LLC
(“Aurora”), Nationstar Mortgage LLC
(“Nationstar”), Wells Fargo Bank, N.A.
(“Wells Fargo”) and Aztec Foreclosure Corporation
“Defendants”). Dkt. 1 at 12. The Complaint
advances the following causes of action: (i) unfair
competition; (ii) wrongful foreclosure; (iii) fraud; and (iv)
cancellation of an instrument. Id. On April 26,
2017, Defendants removed the action. Dkt. 1. On May 3, 2017,
Defendants filed a Motion to Dismiss (“Motion to
Dismiss”). Dkt. 11. Plaintiff opposed the Motion to
Dismiss (Dkt. 36), and Defendants replied. Dkt. 41. On May
30, 2017, Plaintiff filed a Motion to Remand (“Motion
to Remand”). Dkt. 22. Defendants opposed the Motion to
Remand (Dkt. 31), and Plaintiff replied. Dkt. 35.
6, 2017, a hearing on the Motions was held, and they were
taken under submission. Dkt. 45. For the reasons stated in
this Order, the Motion to Remand is DENIED and the Motion to
Dismiss is GRANTED.
is a citizen of California. Notice of Removal, Dkt. 1 at 3
¶ 4. Nationstar is a citizen of Delaware and Texas.
Id. at 3 ¶¶ 5-6. Wells Fargo is a citizen
of South Dakota. Id. at 4 ¶ 7. Aurora is a
citizen of Delaware and Colorado. Id. at 4 ¶ 8.
Quality and Aztec each is a citizen of California. Compl.,
Dkt. 1 at 14 ¶¶ 7-8. SCME was a California
Corporation that has been defunct since 2008. Id. at
13 ¶ 2. SCME has not been served. Dkt. 37.
October 21, 2004, Plaintiff acquired the subject property
(“Property”), which is located at 15239 East
Bernard Court, Hacienda Heights, California. Compl., Dkt. 1
¶¶ 1, 15. Plaintiff borrowed $615, 000 from SCME
(“Loan”) that was memorialized in a promissory
note (“Note”), and secured by a deed of trust
(“Deed of Trust”) with respect to the Property.
Id.; Ex. 1 to Request for Judicial Notice
(“RJN”), Dkt. 12.
March 10, 2009, a substitution of trustee was recorded that
identified Quality as the successor trustee. Compl., Dkt. 1
at 19 ¶ 27. On May 1, 2009, Quality filed a notice of
trustee sale with respect to the Property. Id.
¶ 28. On September 1, 2010, an Assignment of Deed of
Trust was recorded. It assigned the Deed of Trust to Aurora.
Ex. 2 to RJN. On January 31, 2011, another notice of
trustee's sale was recorded as to the Property.
Id. at 20 ¶ 30; Ex. 7 to Compl., Dkt. 1. On
February 28, 2011, a notice of rescission of trustee's
deed upon sale was recorded. Compl., Dkt. 1 at 20 ¶ 31;
Ex. 8 to Compl., Dkt. 1.
January 31, 2013, an Assignment of Deed of Trust was
recorded. It assigned the Deed of Trust to Nationstar. Ex. 3
to RJN. On February 21, 2014, an Assignment of Deed of Trust
was recorded assigning the Deed of Trust to Wells Fargo, as
trustee. Ex. 4 to RJN.
September 10, 2015, a notice of default was recorded based on
the claim that Plaintiff had not met the payment obligations
under the Note. Ex. 5 to RJN. The notice of default stated
that Aztec was substituted as the trustee under the Deed of
Trust. Id. On February 10, 2016, a notice of
trustee's sale was recorded. It stated that a foreclosure
sale of the Property would proceed on March 9, 2016. Ex. 6 to
RJN. The Property was sold on March 8, 2017. Ex. 7 to RJN. On
March 14, 2017, the trustee's deed upon sale was
The Allegations of the Complaint
Complaint alleges that SCME violated California law in
issuing the Loan to Plaintiff. Compl., Dkt. 1 at 16-18
¶¶ 11-22. It alleges that SCME's actions are
all unlawful because SCME has been a defunct corporation
without a valid license since 2008. Id. ¶ 22.
The Complaint alleges that the Notice of Default issued by
Quality on January 15, 2009 is improper because Quality
failed to file a due diligence declaration. Id.
¶ 26. The Complaint alleges that the September 2015
notice of default is deficient because it did not accurately
state the amounts allegedly owed under the Note, confirms
that Plaintiff was not contacted as part of the declaration
of due diligence and was never served on Plaintiff.
Id. ¶ 33. The Complaint alleges that Defendants
wrongfully foreclosed on the Property because Plaintiff was
not provided with proper notice of the sale and thereby an
opportunity to cure the default. Id. ¶ 45.
Motion to Remand
motion to remand is the procedure used to challenge the
removal of an action. Moore-Thomas v. Alaska Airlines,
Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). In general, a
civil action may be removed only if it could have been filed
initially in a federal court. 28 U.S.C. § 1441(a). The
removing party has the burden of establishing that removal
was proper. Id. “If a case is improperly
removed, the federal court must remand the action because it
has no subject-matter jurisdiction to decide the case.”
ARCO Envtl. Remediation, L.L.C. v. Dep't of Health
& Envtl. Quality of Mont., 213 F.3d 1108, 1113 (9th
Cir. 2000). The removal statute is to be strictly construed;
any doubt about removal jurisdiction is to be resolved in
favor of remand. Gaus v. Miles, Inc., 980 F.2d 564,
566 (9th Cir. 1992).
courts have subject matter jurisdiction where the adverse
parties are citizens of different states, and the amount in
controversy exceeds $75, 000. 28 U.S.C. §§ 1332,
1441. “[O]ne exception to the requirement of complete
diversity is where a non-diverse defendant has been
‘fraudulently joined.'” Morris v.
Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.
2001). “[F]raudulently joined defendants will not
defeat removal on diversity grounds.” Ritchey v.
Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998).
joinder “is a term of art.” Morris, 236
F.3d at 1067. “Joinder of a non-diverse defendant is
deemed fraudulent, and the defendant's presence in the
lawsuit is ignored for purposes of determining diversity,
[i]f the 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.” Id. (internal
quotations omitted and alteration in original). The defendant
“is entitled to present the facts showing the joinder
to be fraudulent.” Id.; see also Id.
at 1068 (citing Cavallini v. State Farm Mut. Auto Ins.
Co., 44 F.3d 256, 263 (5th Cir. 1995), for the
proposition that “[f]raudulent joinder claims may be
resolved by ‘piercing the pleadings' and
considering summary judgment-type evidence such as affidavits
and deposition testimony”). In a claim of fraudulent
joinder, the defendant “must take and carry the burden
of proof.” Wilson v. Republic Iron & Steel
Co., 257 U.S. 92, 97 (1921) (“If in such a case a
resident defendant is joined, the joinder, although fair upon
its face, may be shown by a petition for removal to be only a
sham or fraudulent device to prevent a removal; but the
showing must consist of a statement of facts rightly leading
to that conclusion apart from the pleader's
district court must determine whether there is subject matter
jurisdiction before reaching the merits of an action.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377 (1994); Steel Co. v. Citizens for a Better
Env't., 523 U.S. 83, 94 (1998).
Motion to Dismiss
Civ. P. 8(a) provides that a “pleading that states a
claim for relief must contain . . . a short and plain
statement of the claim showing that the pleader is entitled
to relief . . . .” The complaint must state facts
sufficient to show that a claim for relief is plausible on
its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). The complaint need not include detailed factual
allegations, but must provide more than a “formulaic
recitation of the elements of a cause of action.”
Id. at 555. “The plausibility standard is not
akin to a ‘probability requirement, ' but it asks
for more than a sheer possibility that a defendant has acted
unlawfully. Where a complaint pleads facts that are
‘merely consistent with' a defendant's
liability, it stops short of the line between possibility and
plausibility of entitlement to relief.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal quotation
marks and citations omitted).
to Fed.R.Civ.P. 12(b)(6), a party may bring a motion to
dismiss a cause of action that fails to state a claim. It is
appropriate to grant such a motion only where the complaint
lacks a cognizable legal theory or sufficient facts to
support one. Mendiondo v. Centinela Hosp. Med. Ctr.,
521 F.3d 1097, 1104 (9th Cir. 2008). In considering a motion
to dismiss, the allegations in the challenged complaint are
deemed true and must be construed in the light most favorable
to the non-moving party. Cahill v. Liberty Mut. Ins.
Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However, a
court need not “accept as true allegations that
contradict matters properly subject to judicial notice or by
exhibit. Nor is the court required to accept as true
allegations that are merely conclusory, ...