Opinion
CIV. NO. 2:16-566 WBS CKD
06-02-2016
DAVINA L. MOORE, an individual, Plaintiff, v. WELLS FARGO BANK, NATIONAL ASSOCIATION; BARRETT DAFFIN FRAPPIER TREDER & WEISS, LLP; and DOES 1 through 20, inclusive, Defendants.
MEMORANDUM AND ORDER RE: MOTION TO REMAND; MOTION TO DISMISS
Plaintiff Davina L. Moore filed this action in the Superior Court of California, County of Yuba against defendants Wells Fargo Bank, National Association ("Wells Fargo") and Barrett Daffin Frappier Treder & Weiss, LLP ("Barrett"), alleging wrongful foreclosure under California state law. Defendants removed the case to this court on the basis of diversity jurisdiction. See 28 U.S.C. §§ 1332, 1441(b). Wells Fargo now moves to dismiss plaintiff's Complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), (Docket No. 5), and Barrett has filed a joinder to that motion, (Docket No. 6). Plaintiff moves to remand this case to state court for lack of complete diversity pursuant to 28 U.S.C. § 1447(c). (Docket No. 10.) For the reasons explained below, the court grants plaintiff's motion to remand. Because this Order remands the case to state court, the Order does not reach the merits of defendants' motion to dismiss.
I. Factual and Procedural Background
In May 2007, plaintiff obtained a loan from World Savings Bank, FSB, which was secured by a Deed of Trust on real property located at 7599 State Highway 70, Marysville, California 95901 (the "Property"). (Notice of Removal ("NOR") Ex. A ("Compl.") ¶ 16 (Docket No. 1).) The Deed of Trust was recorded in the Yuba County Recorder's Office and identified plaintiff as the borrower, World Savings Bank, FSB as the lender, and Golden West Savings Association Service Co. ("Golden West") as the trustee. (Compl. Ex. A.) In November 2009, through a series of name changes and mergers, Wells Fargo became the successor in interest to World Savings Bank, FSB. (See NOR Ex. D.) In October 2015, Barrett became the substitute trustee under the Deed of Trust. (Suppl. to NOR Ex. B ¶ 2 (Docket No. 18).)
In November 2015, Barrett, as trustee for Wells Fargo, recorded a Notice of Default and Election to Sell Under the Deed of Trust against plaintiff's Property. (Compl. Ex. B.) The Notice of Default contained a declaration of compliance allegedly signed by a VP Loan Documentation agent of Wells Fargo and certified that Wells Fargo "exercised due diligence to contact the borrower pursuant to California Civil Code § 2923.55(f) to 'assess the borrower's financial situation and explore options for the borrower to avoid foreclosure.'" (Id. at 4.) Plaintiff claims that this declaration is false because Wells Fargo did not consider plaintiff's complete loan modification application that plaintiff submitted earlier that year. (See Compl. ¶¶ 17-19.)
Plaintiff commenced this action in the Superior Court on February 11, 2016, alleging that defendants engaged in unfair business practices and wrongfully instituted foreclosure proceedings on the Property in violation of California's Homeowner Bill of Rights ("HBOR"), Cal. Civ. Code §§ 2923.55, 2923.6, 2923.7, 2924.12, and California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200. (Id. ¶¶ 17-51.) Defendants removed the action to this court on March 17, 2016.
A "federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the category of claim in suit (subject-matter jurisdiction)." Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 430-31 (2007). The court therefore addresses plaintiff's motion to remand first.
Only Wells Fargo filed an opposition to plaintiff's motion to remand. (Opp'n (Docket No. 19).) Barrett did not file an opposition or statement of non-opposition to plaintiff's motion to remand as required by Local Rule 230(c). In Barrett's joinder to Wells Fargo's motion to dismiss, however, Barrett advances the same arguments that are raised in Wells Fargo's opposition to plaintiff's remand motion. (Docket No. 6.)
II. Analysis
"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district" where the action is pending. 28 U.S.C. § 1441(a). If it appears that the court lacks jurisdiction, it must remand the case. Id. § 1447(c). There is a "strong presumption" against removal and "the defendant always has the burden of establishing that removal is proper." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The removal statute is strictly construed and doubts regarding the court's jurisdiction are resolved in favor of remand. Luther v. Countrywide Home Loans S, LP, 533 F.3d 1031, 1034 (9th Cir. 2008).
Title 28 U.S.C. § 1332 confers original jurisdiction on federal courts "over suits for more than $75,000 where the citizenship of each plaintiff is different from that of each defendant." Hunter v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009) (citing 28 U.S.C. § 1332(a)). Complete diversity must exist at the time of removal. Newcombe v. Adolf Coors Co., 157 F.3d 686, 690 (9th Cir. 1998). Plaintiff argues here that this case should be remanded because complete diversity of citizenship is lacking. (Mot. at 4-10 (Docket No. 10).)
A. Plaintiff's Citizenship
The parties do not dispute that plaintiff is a citizen of California. However, the "fact that none of the parties contests the district court's jurisdiction does not [relieve the court of its] responsibility to determine whether [its] exercise of jurisdiction [is] proper." Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988); see also id. ("The parties have no power to confer jurisdiction on the district court by agreement or consent.").
A natural person's citizenship is determined by the person's "state of domicile." Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). A person is domiciled in the state "where he or she has established a fixed habitation or abode" and intends to remain indefinitely. Lew v. Moss, 797 F.2d 747, 749-50 (9th Cir. 1986) (citations omitted). Factors relevant to this determination include where the person resides, owns real property, and pays taxes. Id. at 750.
Plaintiff has owned the Property located in Yuba County, California since 2007 and currently resides there. (Compl. ¶ 1.) Her ownership indicates that she has paid property taxes on the Property to the State of California since 2007. Plaintiff also alleges that she has been attempting to obtain a first lien loan modification from Wells Fargo under HBOR. (Id. ¶¶ 14-18.) HBOR provides that a first lien loan modification applies to "owner-occupied residential real property" that "is the principal residence of the borrower." Cal. Civ. Code § 2924.15(a). The foregoing facts demonstrate that plaintiff is a California citizen for diversity purposes here.
"'First lien' means the most senior mortgage or deed of trust on the property that is the subject of the notice of default or notice of sale." Cal. Civ. Code § 2920.5(d).
B. Wells Fargo's Citizenship
Though the original lender under plaintiff's loan merged with Wells Fargo, the court considers Wells Fargo's citizenship because it is the surviving entity from that merger. Meadows v. Bicrodyne Corp., 785 F.2d 670, 672 (9th Cir. 1986) (holding that only the citizenship of the surviving entity after a merger is considered for diversity purposes). Plaintiff argues that Wells Fargo is a California citizen because its headquarters are located in San Francisco, California. (Mot. at 9.) There is no evidence here that Wells Fargo is headquartered in California. Rather, Wells Fargo is a national bank, which is a corporate entity "chartered not by any State, but by the Comptroller of the Currency of the U.S. Treasury." Wachovia Bank v. Schmidt, 546 U.S. 303, 306 (2006).
Unlike state-chartered banks or other corporations whose citizenship is governed by 28 U.S.C. § 1332, a national bank's citizenship for diversity purposes is "the State designated in its articles of association as its main office." Id. at 318. A national bank "is a citizen only of the state in which its main office is located." Rouse v. Wachovia Mortgage, FSB, 747 F.3d 707, 715 (9th Cir. 2014) (emphasis added). Wells Fargo's articles of association state that its main office is located in Sioux Falls, South Dakota. (NOR Ex. D). Accordingly, Wells Fargo is a South Dakota citizen for diversity purposes. See Rouse, 747 F.3d at 715 (concluding that "Wells Fargo is a citizen only of South Dakota, where its main office is located").
C. Barrett's Citizenship
Barrett is a Texas limited liability partnership ("LLP") with partners located in California. (NOR at 4.) In Texas, a LLP is an optional registration made by an underlying, pre-existing partnership. See Tex. Bus. Orgs. Code Ann. §§ 152.801-.806, 153.351-.353. A Texas LLP is therefore treated like a partnership for diversity purposes. A partnership is a citizen of every state "of which any of its partners is a citizen." Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 569 (2004). Since at least one of Barrett's partners is a California citizen, Barrett is a California citizen for diversity purposes.
There is thus a lack of complete diversity between plaintiff and Barrett here. Wells Fargo argues that the court should disregard Barrett's citizenship for diversity purposes because (1) Barrett is a nominal defendant, and (2) Barrett was fraudulently joined.
1. Nominal Party
"[A] federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy." Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 461 (1980). A nominal defendant is one "who holds the subject matter of the litigation in a subordinate or possessory capacity as to which there is no dispute." SEC v. Colello, 139 F.3d 674, 676 (9th Cir. 1998) (internal quotation marks omitted). Wells Fargo argues that Barrett is a nominal defendant because Barrett has "no financial interest in the Property" and its only involvement in the foreclosure proceedings is "strictly within its ministerial role as the Substitute Trustee under the Deed of Trust." (NOR at 4.) As evidence of this, Wells Fargo points to the Declaration of Non-Monetary Status ("DNS") that Barrett had filed in state court prior to this action's removal. (Opp'n at 4; see Suppl. to NOR Exs. A-B.)
California Civil Code section 29241 permits a trustee to file a DNS if it is named in a state-court action "solely in its capacity as trustee, and not arising out of any wrongful acts or omissions on its part in the performance of its duties as trustee." Cal. Civ. Code § 2924l(a). If a plaintiff does not object to the trustee's DNS within fifteen days of service, the trustee becomes a nominal party in the action. Id. § 2924l(d). If the case is then removed to federal court, the district court "treat[s] the trustee as a nominal party and disregard[s] its citizenship for diversity purposes." Lawrence v. Aurora Loan Servs. LLC, Civ. No. 1:09-1598 LJO DLB, 2010 WL 449734, at *4 (E.D. Cal. Feb. 8, 2010). A trustee does not become a nominal party, however, "when the case is removed to federal court before the fifteen-day objection period has expired." Jenkins v. Bank of Am., N.A., Civ. No. 14-4545 MMM JCX, 2015 WL 331114, at *8 (C.D. Cal. Jan. 26, 2015) (collecting cases). " [N]onmonetary status may not be granted in federal court." Tran v. Wash. Mut. Bank, Civ. No. S-09-3277 LKK DAD, 2010 WL 520878, at *1 (E.D. Cal. Feb. 11, 2010).
Plaintiff was served with Barrett's DNS on March 11, 2016 and defendants removed this case on March 17, 2016, six days later. (See NOR; Suppl. to NOR Ex. B at 4-5.) Because this case was removed before the fifteen-day objection period had passed, Barrett did not obtain nominal party status at the time of removal. Wells Fargo's argument that Barrett is a nominal defendant because plaintiff failed to object to Barrett's DNS within fifteen days therefore fails. (Opp'n at 4); e.g., Moore v. Wells Fargo Bank, N.A., Civ. No. 2:12-2125 LKK EFB PS, 2012 WL 4433323, *3 (E.D. Cal. Sept. 24, 2012) (holding that the trustee was not a nominal party where "the 15 day objection period did not run" before the action was removed); accord Boggs v. Wells Fargo Bank NA, Civ. No. C-11-2346 SBA, 2012 WL 2357428, at *3 (N.D. Cal. June 14, 2012) (trustee was not a nominal party where defendants removed the action fourteen days after the trustee's DNS was filed); Sun v. Bank of Am. Corp., Civ. No. SA-10-4 AG MLGX, 2010 WL 454720, at *2 (C.D. Cal. Feb. 8, 2010) (trustee was not a nominal party where defendants removed the action thirteen days after the trustee's DNS was filed).
Wells Fargo cites four cases in arguing that "[a] plaintiff's failure to object to the Trustee's [DNS] 'transforms the Trustee into a nominal party whose citizenship is disregarded for purposes of assessing diversity jurisdiction.'" (Opp'n at 4.) Three of those cases are distinguishable and the fourth actually supports the conclusion that Barrett is not a nominal party here. The first case, Navarro Savings Ass'n v. Lee, 446 U.S. 458 (1980), is distinguishable because it involves the individual trustees of a business trust that was organized under Massachusetts law. Id. at 461-66 (holding that the individual trustees could file suit in their own names); see Americold Realty Trust v. Conagra Foods, Inc., 136 S. Ct. 1012, 1016 (2016) (stating that Navarro had nothing to do with the citizenship of a trust, but rather "reaffirmed a separate rule that when a trustee files a lawsuit in her name, her jurisdictional citizenship is the State to which she belongs--as is true of any natural person").
The second case, Smith v. Bank of America, N.A., Civ. No. 1:11-141 OWW SMS, 2011 WL 1332035 (E.D. Cal. Apr. 6, 2011), was not removed based on diversity jurisdiction and the court there remanded the case after the plaintiffs dismissed their federal claims. Id. at *2. In the third case, Cabriales v. Aurora Loan Services, Civ. No. C-10-161 MEJ, 2010 WL 761081 (N.D. Cal. Mar. 2, 2010), the court held that the trustee was a nominal party because, unlike here, it filed its DNS in state court more than fifteen days before the action was removed. Id. at *1-2. The fourth case on which Wells Fargo relies, Silva v. Wells Fargo Bank NA, Civ. No. 11-3200 GAF JCGX, 2011 WL 2437514 (C.D. Cal. June 16, 2011), involves analogous circumstances to those here. In Silva, the court remanded the case after finding that the non-diverse trustee defendant was not a nominal party because the defendants removed the action before the fifteen-day objection period to the trustee's DNS had expired. Id. at *4.
Wells Fargo further argues that Barrett is a nominal party because its only involvement in this matter is its narrow role in preparing for and conducting the trustee's sale. (Opp'n at 5.) The court acknowledges that, under California law, a "trustee in nonjudicial foreclosure is not a true trustee with fiduciary duties, but rather a common agent for the trustor and beneficiary" responsible for ministerial acts that result in the transfer of title after the trustee's sale. Pro Value Properties, Inc. v. Quality Loan Serv. Corp., 170 Cal. App. 4th 579, 583 (2d Dist. 2009) (citation omitted). "The scope and nature of the trustee's duties are exclusively defined by the deed of trust and the governing statutes, " and "[n]o other common law duties exist." Id.
However, a party's "status as a trustee is not itself sufficient to render it a nominal party." Natividad v. Ocwen Loan Servicing, LLC, Civ. No. 2:14-1670 MCE DAD, 2014 WL 6611054, at *4 (E.D. Cal. Nov. 19, 2014). A trustee is not considered a nominal party if the plaintiff pleads substantive allegations against and seeks to recover money damages from the trustee. Latino v. Wells Fargo Bank, N.A., Civ. No. 2:11-2037 MCE DAD, 2011 WL 4928880, at *3 (E.D. Cal. Oct. 17, 2011). The Complaint here asserts all causes of action against both Barrett and Wells Fargo jointly. The Complaint alleges that "each of them, are, and at all times . . . were, the agents, joint venturers, officers, members representatives, servants, consultants or employees of their co-defendants, and in committing the acts herein alleged, were acting within the scope of such affiliation with the knowledge, permission, consent or subsequent ratification of their co-defendants." (Compl. ¶ 5.) The Complaint suggests that Barrett and Wells Fargo conspired to include false information in the Notice of Default and to record the Notice of Default while plaintiff's loan modification application was under review. (See id. ¶¶ 13-40.)
Plaintiff's specific allegations of wrongdoing against Barrett include (1) prematurely recording the Notice of Default in violation of California Civil Code section 2923.55, which prohibits a trustee from recording a notice of default until certain specified requirements are met; (2) engaging in "dual tracking" in violation of Civil Code section 2923.6, which prohibits a trustee from recording a notice of default while a borrower's "complete first lien loan modification application is pending"; (3) recording a false declaration attached to the Notice of Default; and (4) engaging in unfair and deceptive business practices with the deliberate intent to injure plaintiff. (Id. ¶¶ 13-34, 46-51.) Plaintiff's final claim is brought under California Civil Code section 2924.12(a)(1), which authorizes actions for injunctive relief against a trustee before a deed of sale has been recorded. (Id. ¶¶ 41-45.) Plaintiff's prayer for relief against Barrett explicitly seeks compensatory, general, consequential, and incidental damages, restitution of profits, injunctive relief, and declaratory relief. (Id. at 12-13.) Because the Complaint pleads substantive allegations against and seeks to recover money damages from Barrett, Barrett is not a nominal party here solely by virtue of its status as trustee. See Latino, 2011 WL 4928880, at *3.
Courts have found similar allegations sufficient to establish that a trustee is not a nominal party and that its citizenship must be considered in ascertaining whether diversity jurisdiction exists. See, e.g., Dejillo v. Wells Fargo Bank, N.A., Civ. No. 5:15-3080 RMW, 2015 WL 5187344, at *3 (N.D. Cal. Sept. 4, 2015) ("[P]laintiff has alleged that Barrett and Wells Fargo together engaged in acts to improperly initiate foreclosure. Moreover, plaintiff is seeking monetary damages against Barrett. Under these circumstances, Wells Fargo has failed to show that Barrett is merely a nominal party."); see also Jenkins, 2015 WL 331114, at *11 & n.65 (collecting cases). Accordingly, Wells Fargo has not met its burden of demonstrating that Barrett is a nominal party and Barrett's citizenship thus cannot be disregarded on this ground. /// ///
2. Fraudulent Joinder
Wells Fargo additionally argues that Barrett's citizenship should not be considered because plaintiff fraudulently joined Barrett in an attempt to defeat diversity. There is a "general presumption against fraudulent joinder" and "the party seeking removal bears a heavy burden of proving that the joinder of the in-state party was improper." Hunter, 582 F.3d at 1046 (citation and alterations omitted). "Joinder of a non-diverse defendant is deemed fraudulent, and the defendant's presence in the lawsuit is ignored for purposes of determining diversity, if 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." Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001) (internal quotation marks and alterations omitted). If "there is any possibility that the state law might impose liability on a resident defendant under the circumstances alleged in the complaint, the federal court cannot find that joinder of the resident defendant was fraudulent, and remand is necessary." Hunter, 582 F.3d at 1044 (citation omitted). "[A] plaintiff need only have one potentially valid claim against a non-diverse defendant." Knutson v. Allis-Chalmers Corp., 358 F. Supp. 2d 983, 993 (D. Nev. 2005).
"Fraudulent joinder must be proven by clear and convincing evidence." Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). The court may find fraudulent joinder only if, "after all disputed questions of fact and all ambiguities in the controlling state law are resolved in the plaintiff's favor, the plaintiff could not possibly recover against the party whose joinder is questioned." Nasrawi v. Buck Consultants, LLC, 713 F. Supp. 2d 1080, 1084 (E.D. Cal. 2010) (Wanger, J.) (citing Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1426 (9th Cir. 1989)). A case should be remanded unless the defendant shows that the plaintiff would not be afforded leave to amend its complaint in state court to cure any purported deficiencies. Id. at 1084-85.
Wells Fargo argues that Barrett was fraudulently joined because plaintiff has not alleged any viable claims against Barrett and her claims "relate solely to her efforts to obtain a loan modification from Wells Fargo[] and her belief that Wells Fargo violated the Homeowners' Bill of Rights." (Opp'n at 6.) That is not the case. As discussed above, the Complaint contains substantive allegations against Barrett and seeks money damages, restitution, and injunctive relief from Barrett. California's UCL additionally "gives broad grounds for claims on the basis of unfairness." Shears v. Citimortgage, Inc., Civ. No. 2:14-2689 TLN DAD, 2015 WL 4393915, at *5 (E.D. Cal. July 15, 2015) (citing Kasky v. Nike, Inc., 27 Cal. 4th 939, 949 (2002)).
In addition, Wells Fargo has failed to demonstrate that plaintiff would be prohibited from amending her Complaint to address any purported pleading deficiencies. See Nickelberry v. DaimlerChrysler Corp., Civ. No. C-06-1002 MMC, 2006 WL 997391, *1 (N.D. Cal. Apr. 17, 2006) (finding no fraudulent joinder where defendant failed to show that the plaintiff would not be afforded leave to amend her complaint). Viewed in the light most favorable to plaintiff, therefore, plaintiff has at least one potentially valid claim against Barrett here. See Hunter, 582 F.3d at 1044.
Other courts have found that a trustee is not fraudulently joined under analogous circumstances. E.g., Shears, 2015 WL 4393915, at *4 ("[T]he Court finds Defendant's position untenable; essentially Defendant is asking this Court to believe that there are no possible circumstances in which [the trustee] could be found liable to Plaintiff. However, considering the breadth of § 17200, the Court cannot agree."); Dejillo, 2015 WL 5187344, at *3 (holding that Barrett was not fraudulently joined because the complaint "at least implie[d] that Wells Fargo and Barrett acted in conspiracy to improperly initiate foreclosure by recording foreclosure documents without providing plaintiff with the required notice and opportunity to cure"); Alabastro v. Wells Fargo Bank, N.A., No. 5:14-CV-034 69 EJD, 2015 WL 138235, at *3 (N.D. Cal. Jan. 9, 2015) ("The potential for Plaintiff to state a viable claim against [the trustee], although narrow, is enough to raise doubt regarding the propriety of the removal."); see also Mireles v. Wells Fargo Bank, N.A., 845 F. Supp. 2d 1034, 1063-64 (C.D. Cal. 2012) (holding that the trustee was not fraudulently joined despite being mentioned once in the 84-page complaint).
Wells Fargo relies on California Civil Code section 2924(d) to argue that Barrett is immune from liability for performing statutorily-required actions in a non-judicial foreclosure, such as executing and recording foreclosure notices. (Opp'n at 6-7.) "[C]ourts ordinarily do not consider a non-diverse defendant's defenses on the merits in determining whether that defendant's joinder was fraudulent." Moore, 2012 WL 4433323, at *3. Where the defendant "must resort to defenses to the merits of the action to demonstrate the defendant was fraudulently named, it cannot be said that the plaintiff's failure to state a claim against the [non-diverse] defendant is 'obvious according to the settled rules of the state.'" D.A. ex rel. Wilson v. McKesson Corp., Civ. No. 1:13-1700 LJO JLT, 2014 WL 202738, at *4 (E.D. Cal. Jan. 17, 2014); see also Castle v. Bank of Am., N.A., Civ. No. 15-1657 GW ASX, 2015 WL 1842726, at *2 (C.D. Cal. Apr. 20, 2015) ("It may be that, on the merits, Plaintiff cannot make out a claim against [the trustee], but the Court does not engage in that merits determination simply for purposes of assessing whether subject matter jurisdiction exists."). Barrett's qualified immunity under Civil Code section 2924 therefore does not bear on the question of fraudulent joinder here.
In addition, as Wells Fargo acknowledges, Barrett's qualified immunity under section 2924(d) does not apply where there is a showing of malice. See Kachlon v. Markowitz, 168 Cal. App. 4th 316, 325 (2d Dist. 2008). In the non-judicial foreclosure context, "malice is defined as actual malice, meaning that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights." Id. at 336 (citations omitted). Plaintiff here alleges that Barrett's actions "were willful, oppressive, and malicious, in that [it] engaged in acts of unfair competition with the deliberate intent to injure Plaintiff." (Compl. ¶ 50.) Courts have found similar allegations to be sufficient in precluding a finding of fraudulent joinder based on qualified immunity under Civil Code section 2924. E.g., Natividad, 2014 WL 6611054, at *5 ( trustee's joinder was not fraudulent where plaintiff alleged that the trustee acted knowingly and "with oppression, fraud and malice" toward plaintiff); Smith v. Quality Loan Serv. Corp., Civ. No. S-11-2108 KJM EFB, 2012 WL 202055, at *3 (E.D. Cal. Jan. 23, 2012) (allegation that the trustee acted fraudulently was sufficient to overcome the qualified immunity privilege and precluded the conclusion that the trustee was fraudulently joined). Wells Fargo has thus failed to carry its heavy burden of showing that Barrett's joinder was fraudulent here. See Moore, 2012 WL 4433323, at *3 (Wells Fargo, in arguing that the trustee's acts were privileged, failed to carry "its heavy burden of showing that the joinder of [the trustee] was fraudulent").
Wells Fargo relies on three distinguishable cases to argue that Barrett was fraudulently joined as a defendant. In Sherman v. Wells Fargo Bank, N.A., Civ. No. S-11-0054 KJM EFB, 2011 WL 1833090 (E.D. Cal. May 12, 2011), the court found the trustee was fraudulently joined because (1) the plaintiffs did not allege that the trustee violated any statutory duties it owed to them, and (2) the only factual allegation against the trustee was that the plaintiffs called the trustee "and learned that the trustee's sale had been postponed." Id. at *2. Unlike Sherman, plaintiff here alleges that Barrett violated multiple statutory duties owed to her under California Civil Code sections 2923.55, 2923.6, 2923.7, and 2924.12. (Compl. ¶¶ 15-45.) Plaintiff's Complaint here also contains more than one factual allegation against Barrett. (See id.)
Wells Fargo also relies on Moreno v. Wells Fargo, Civ. No. C-11-05189 EDL, 2011 WL 6372637 (N.D. Cal. Dec. 20, 2011). There, the plaintiffs alleged only two claims against the trustee: "one for violation of California Civil Code section 2923.5 and one for violation of California Business and Professions Code section 17200." Id. at *5. The court in Moreno found the trustee was fraudulently joined because the plaintiffs failed to show that the trustee "acted as Wells Fargo's agent in connection with obligations under section 2923.5." Id. at *6-8. The court additionally reasoned that the plaintiffs failed to show that the trustee "did anything in connection with the loan . . . other than record it" or "engaged in any activities that would exempt it from immunity under [California Civil Code section 2924]." Id. at *7.
Unlike Moreno, plaintiff here does not claim that Barrett violated California Civil Code section 2923.5. She alleges, rather, that Barrett violated Civil Code sections 2923.55, 2923.6, 2923.7, and 2924.12. Moreno did not analyze whether the trustee was fraudulently joined for purposes of the specific claims that plaintiff brings here. In this case, plaintiff also alleges that Barrett did much more than merely record her loan. In addition, Moreno did not consider whether the trustee's actions were exempt from immunity because, as here, they were alleged to be "willful, oppressive, and malicious." (Compl. ¶ 50.) Moreno is therefore distinguishable from the facts of this case and Wells Fargo's reliance upon it is unavailing.
Lastly, Wells Fargo cites Marquez v. Wells Fargo Bank, N.A., Civ. No. C-13-2819 PJH (N.D. Cal. Sept. 13, 2013), in which the court denied the plaintiff's motion to remand. See Sept. 13, 2013 Order, Marquez. There, however, the court found that complete diversity of citizenship existed because the plaintiff was a California citizen and Wells Fargo was a South Dakota citizen. The court found that the non-diverse trustee did "not appear to have been served" in the action and had "made no appearance" in the district court. See id. at 1-4, 12. Since all three of Wells Fargo's cited cases are inapplicable to the instant case, Wells Fargo has failed to meet its heavy burden of showing that Barrett was fraudulently joined as a defendant.
Because Barrett was not a nominal defendant at the time of removal and was not fraudulently joined, the court must consider Barrett's citizenship for diversity purposes. Considering Barrett's California citizenship, it is clear that complete diversity is lacking in this case because plaintiff and Barrett are both California citizens. Accordingly, because the court lacks subject matter jurisdiction, it must grant plaintiff's motion and remand this case to state court. See 28 U.S.C. § 1447(c).
Because the court does not have subject matter jurisdiction for lack of complete diversity, it need not reach the question of whether the amount of controversy in this matter exceeds $75,000. (See Mot. at 9-10.) --------
D. Plaintiff's Request for Attorney's Fees and Costs
In its motion to remand, plaintiff requests an award of costs and expenses, including attorney's fees, incurred as a result of removal pursuant to 28 U.S.C. § 1447(c). (Mot. at 10-11.) In support of its request, plaintiff simply states that removal was improper and that defendants are "under an obligation not to waste or abuse judicial resources, harass a party to an action, or mislead the court as to the application of law or facts." (Id.)
Section 1447(c) provides, "An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. 1447(c). "Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). If "an objectively reasonable basis exists, fees should be denied." Id.
The Court does not find that defendants necessarily lacked an objectively reasonable basis for seeking removal here. As explained above, defendants adequately established the diverse citizenships of plaintiff and Wells Fargo. Although the court disagrees with defendants' argument that Barrett's citizenship must be disregarded, that argument is not entirely frivolous. As noted above, defendants who have filed declarations of non-monetary status are often treated as nominal defendants. Defendants were not completely unreasonable in seeking to rely on such a declaration to establish Barrett's nominal party status here. Nor is the argument that Barrett's citizenship can be disregarded under the fraudulent joinder doctrine totally untenable based on this circuit's relevant case law. And plaintiff has not shown here that defendants removed this action in bad faith or for the purpose of delay. No award of costs or fees is therefore justified. Accordingly, plaintiff's request for costs and fees is denied.
E. Defendants' Motion to Dismiss
Because this case is remanded to state court, defendants' motion to dismiss is hereby denied as moot.
IT IS THEREFORE ORDERED that:
(1) plaintiff's motion to remand, (Docket No. 10), be, and the same hereby is, GRANTED. This action is hereby REMANDED to the Superior Court of the State of California, in and for the County of Yuba;
(2) plaintiff's request for attorney's fees and costs under 28 U.S.C. § 1447(c) be, and the same hereby is, DENIED; and
(3) defendants Wells Fargo Bank, National Association and Barrett Daffin Frappier Treder & Weiss, LLP's motion to dismiss, (Docket No. 5), be, and the same hereby is, DENIED as moot.
IT IS SO ORDERED. Dated: June 2, 2016
/s/_________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE