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Miranda v. SCME Mortgage Bankers, Inc.

United States District Court, C.D. California

July 24, 2017

Jose A Miranda
SCME Mortgage Bankers, Inc., et al.



         Proceedings: (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 Bankers Inc.

         I. Introduction

         Jose 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 (“Aztec”) (collectively, “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.

         On July 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.

         II. Factual Background

         A. The Parties

         Plaintiff 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.

         B. The Loan

         On 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.[1]

         On 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.

         On 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.

         On 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 recorded. Id.

         C. The Allegations of the Complaint

         The 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.

         III. Analysis

         A. Legal Standards

         1. Motion to Remand

         A 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).

         Federal 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).

         Fraudulent 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 deductions.”).

         A 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).

         2. Motion to Dismiss

         Fed. R. 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).

         Pursuant 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, ...

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