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Miller v. Roundpoint Mortgage Servicing Corp.

United States District Court, S.D. California

February 23, 2018



          Hon. Roger T. Benitez United States District Judge

         Order Before the Court is the Ex Parte Motion for Temporary Restraining Order (“TRO Motion”) filed by Plaintiffs Walter Miller and Marie Miller. (Docket No. 9.) Defendant RoundPoint Mortgage Servicing Corporation (“RoundPoint”) filed an opposition. (Docket No. 11.) Defendant Clear Recon Corp (“CRC”) has not responded to the TRO Motion. As will be discussed in further detail below, the Court finds it does not have subject matter jurisdiction in this case because there is no federal question jurisdiction, and diversity jurisdiction is defeated by the California citizenship of CRC, which the Court finds is not a nominal party to the case. As a result, the Court REMANDS the action to the San Diego Superior Court.


         On December 14, 2017, Plaintiffs initiated this action by filing a Complaint in the San Diego Superior Court against Defendants.[1] (Docket No. 1, Ex. A.) In the Complaint, Plaintiffs alleged four claims for relief, all arising under California state law. (Id.; see also Notice of Removal (“NOR”) ¶ 1.) The Complaint was served on RoundPoint on December 18, 2017. (NOR ¶ 2.)

         On January 17, 2018, RoundPoint removed the action to this Court. (Docket No. 1.) In its removal papers, RoundPoint asserts diversity jurisdiction exists because there is complete diversity between Plaintiffs and all named Defendants, excluding CRC, which RoundPoint claimed was only a nominal party. (Id. ¶¶ 6-11.) According to RoundPoint, CRC's citizenship as a California corporation should be disregarded because CRC “filed a declaration of non-monetary status (“DNMS”) pursuant to California Civil Code section 29241 in the State Court Action on January 10, 2018.” (Id. ¶ 10.) Therefore, RoundPoint asserts, “CRC became a non-party to the instant action by operation of law.” (Id.) (citation omitted.)

         On February 21, 2018, RoundPoint filed a motion to dismiss Plaintiffs' Complaint (Docket No. 8.) Later the same day, Plaintiffs filed the instant TRO Motion.


         This Court has a sua sponte obligation to confirm that it has subject matter jurisdiction. Nevada v. Bank of Am. Corp., 672 F.3d 661, 673 (9th Cir. 2012) (“[I]t is well established that ‘a court may raise the question of subject matter jurisdiction, sua sponte, at any time during the pendency of the action[.]'” (quoting Snell v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002))). “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). The Court finds subject matter jurisdiction lacking in this action.

         First, RoundPoint's removal is procedurally defective because it has not demonstrated CRC's consent or joinder in the removal. See 28 U.S.C. § 1446(2)(a) (“[A]ll defendants who have been properly joined and served must join in or consent to the removal of the action.”); see also Proctor v. Vishay Intertechnology, Inc., 584 F.3d 1208, 1224-25 (9th Cir. 2009) (discussing requirement of all defendants to join or consent to removal under “unanimous joinder rule” or the Supreme Court's “rule of unanimity”) (citing Chicago, Rock Island, & Pac. Ry. Co. v. Martin, 178 U.S. 245, 248 (1900))).

         Second, even if removal were proper, RoundPoint failed to meet its burden to establish the existence of subject matter jurisdiction.

         “For a case to ‘arise under' federal law, a plaintiff's well-pleaded complaint must establish either (1) that federal law creates the cause of action or (2) that the plaintiff's asserted right to relief depends on the resolution of a substantial question of federal law.” K2 Am. Corp. v. Rolland Oil & Gas, LLC, 653 F.3d 1024, 1032 (9th Cir. 2011) (citation and internal quotation marks omitted). Here, the Complaint asserts only claims arising under California state law, specifically various sections of the California Civil Code, promissory estoppel, and unfair business practices. Thus, the Complaint does not arise under federal law, and the Court therefore does not have federal question jurisdiction.

         Subject matter jurisdiction based on diversity of citizenship is equally inapplicable here. Subject matter jurisdiction based on diversity of citizenship exists only where the amount in controversy exceeds $75, 000 and there is complete diversity of citizenship. 28 U.S.C. § 1332; Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978).

         “A party's residence is ‘prima facie' evidence of domicile.” Zavala v. Deutsche Bank Tr. Co. Americas, No. C 13-1040 LB, 2013 WL 3474760, at *3 (N.D. Cal. July 10, 2013) (citation omitted); see also Martingale Investments LLC v. Evans, No. CV 12-09502 SJO CWX, 2012 WL 5902352, at *1 (C.D. Cal. Nov. 26, 2012). In the absence of evidence to the contrary, a party will be treated as a citizen of its state of residence for federal diversity purposes. See Id. For federal diversity purposes, “a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.” Kuntz v. Lamar Corp., 385 F.3d 1177, 1181-82 (9th Cir. 2004) (citing 28 U.S.C. § 1332(c)(1)) (quotation marks omitted). According to the Complaint, Plaintiffs reside in the County of San Diego, California. (Compl. ¶ 1.) In the absence of evidence to the contrary, Plaintiffs are considered citizens of California for federal diversity purposes. See Zavala, 2013 WL 3474760, at *3.

         The Court takes judicial notice that CRC is incorporated in California with its principal place of business in San Diego, California. See Cal. Sec'y of State Website, Business Entity Detail for Clear Recon Corp, available at; see also Franklin v. Eisner, No. 96-CV-935 JSB, 1996 WL 406795, at *1 (N.D. Cal. July 12, 1996) (taking judicial notice of Walt Disney Company's state of incorporation ...

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