De Venecia v. Nationstar Mortgage ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 ESTRELLITA DE VENECIA, an No. 2:20-cv-01330-JAM-AC individual, 12 Plaintiff, 13 ORDER DENYING PLAINTIFF’S MOTION v. TO REMAND 14 NATIONSTAR MORTGAGE LLC dba 15 MR. COOPER; U.S. BANK NATIONAL ASSOCIATION, as 16 trustee and successor in interest to Bank of America; 17 NATIONAL ASSOCIATION, as trustee and successor in 18 interest to Lasalle Bank National Association, as 19 trustee for Merrill Lynch Mortgage Investors Trust, 20 Mortgage Loan Asset-Backed Certificates, Series 2006- 21 RM4; THE MORTGAGE LAW FIRM, PLC; and DOES 1-50, 22 inclusive, 23 Defendants. 24 This matter is before the Court on Estrellita De Venecia’s 25 (“Plaintiff”) Motion to Remand. Mot. to Remand (“Mot.”), ECF No. 26 6. Nationstar Mortgage, LLC and U.S. Bank National Association 27 (“Defendants”) filed an opposition to Plaintiff’s motion, Opp’n, 28 1 ECF No. 9, to which Plaintiff replied, Reply, ECF No. 11. After 2 consideration of the parties’ briefing on the motion and relevant 3 legal authority, the Court DENIES Plaintiff’s Motion to Remand.1 4 5 I. BACKGROUND 6 Plaintiff, a citizen and resident of California, is the 7 owner of a property located at 8414 Center Parkway in Sacramento, 8 California. Compl. ¶ 11, ECF No. 1. In July 2006, Plaintiff 9 refinanced the loan on her property. Compl. ¶ 13. The loan was 10 assigned to Nationstar Mortgage LLC (“Nationstar”) in November 11 2013. Id. Nationstar is a Delaware corporation with a principal 12 place of business in Texas. Notice of Removal at 2–3, ECF No. 1. 13 Plaintiff defaulted on the loan and, on September 3, 2019, 14 Nationstar recorded a notice of trustee’s sale. Compl. ¶ 14. 15 Upon receiving notice, Plaintiff offered to sell the property at 16 a short sale. Compl. ¶ 15. Nationstar refused but agreed to 17 allow Plaintiff to pay off the full debt by selling the house at 18 a regular sale. Id. Plaintiff found a buyer and entered into a 19 contract with the buyer to sell the property to him for $280,000. 20 Compl. ¶ 16. 21 Around this time, Nationstar set a trustee’s sale of the 22 property for January 7, 2020. Compl. ¶ 17. However, Nationstar 23 assured Plaintiff that the sale would be postponed to allow 24 Plaintiff to sell the property herself. Id. Nationstar agreed 25 to the closing date being set after the date set for the 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for October 13, 2020. 1 trustee’s sale. Id. Nationstar approved of a February 10, 2020, 2 closing date—the same day on which the balance of Plaintiff’s 3 loan was due. Compl. ¶ 18. The buyer’s loan was in escrow on 4 January 24, 2020, and the buyer and Plaintiff intended to close 5 on January 28, 2020. Compl. ¶ 19. However, when the title 6 insurance company investigated the status of the property, it 7 discovered that the property had already been sold on January 7, 8 2020, to U.S. Bank National Association (“U.S. Bank”) despite 9 Nationstar’s assurances. Compl. ¶ 20. U.S. Bank is a national 10 bank with its principal place of business in Ohio. Notice of 11 Removal at 3. The property was sold to U.S. Bank for $219,626, 12 approximately $60,000 less than what Plaintiff was to receive 13 from the buyer. Compl. ¶ 22. 14 Plaintiff filed suit against Defendants in Sacramento County 15 Superior Court on May 6, 2020. See Compl. Nationstar received a 16 copy of Plaintiff’s complaint on June 16, 2020; U.S. Bank 17 received a copy on June 17, 2020; and The Mortgage Law Firm 18 received a copy on June 22, 2020. Norby Decl. ¶¶ 3-5. 19 Defendants filed a timely notice of removal on July 2, 2020. See 20 Notice of Removal, ECF No. 1; see also 28 U.S.C. § 1446(b); Fed. 21 R. Civ. Proc. 6(a). The notice invoked the Court’s diversity 22 jurisdiction, arguing (1) the Court should dismiss The Mortgage 23 Law Firm, a citizen of California, as fraudulently joined; and 24 (2) the amount in controversy exceeds $75,000. Notice of Removal 25 at 2–4. In response, Plaintiff filed a motion to remand. See 26 Mot. 27 /// 28 /// 1 II. OPINION 2 A. Judicial Notice 3 Defendants request that the Court take judicial notice of 4 (1) the docket for the state court action, Sacramento County 5 Superior Court Case No. 34-2020-00278176, and (2) the 6 declaration of non-monetary status filed by The Mortgage Law 7 Firm in the state court action on July 21, 2020. Request for 8 Judicial Notice (“RJN”), ECF No. 10. Plaintiff does not oppose 9 this request. Rule 201 of the Federal Rules of Evidence allows 10 a court to take judicial notice of an adjudicative fact that is 11 “not subject to reasonable dispute,” because it (1) “is 12 generally known within the trial court’s territorial 13 jurisdiction”; or (2) “can be accurately and readily determined 14 from sources whose accuracy cannot reasonably be questioned.” 15 Fed. R. Evid. 201(a)-(b). This includes “undisputed matters of 16 public record . . . [like] documents on file in federal or 17 state courts.” Harris v. County of Orange, 682 F.3d 1126, 1132 18 (9th Cir. 2012). 19 The state court docket and declaration are the proper 20 subject of judicial notice. Accordingly, Plaintiff’s request 21 for judicial notice is GRANTED. 22 B. Legal Standard 23 For a defendant to remove a civil case from state court, he 24 must prove the federal court has original jurisdiction over the 25 suit. 28 U.S.C. § 1441. A federal court may exercise 26 jurisdiction over a case involving purely state law claims when 27 there is complete diversity between the parties and an amount in 28 controversy exceeding $ 75,000. 28 U.S.C. § 1332(a). To 1 satisfy Section 1332’s diversity requirement, no plaintiff may 2 be a citizen of the same state as any defendant. Id. When a 3 case is removed on the basis of diversity jurisdiction, no 4 defendant may be a citizen of the state where Plaintiff brought 5 the suit. 28 U.S.C. § 1441(b)(2). 6 A court will dismiss a fraudulently-joined defendant and 7 disregard its citizenship when determining whether the parties 8 are diverse. McCabe v. General Foods Corp., 811 F.2d 1336, 1339 9 (9th Cir. 1986). A joinder is fraudulent when (1) there is 10 actual fraud in the pleading of jurisdictional facts; or (2) a 11 plaintiff cannot establish a cause of action against the non- 12 diverse party in state court. Id. Courts do not often find 13 joinder fraudulent—the burden of persuasion is high and rests 14 squarely on defendants’ shoulders. Grancare, LLC v. Thrower by 15 and through Mills, 889 F.3d 543, 548 (9th Cir. 2018). A court 16 resolves “all disputed questions of fact and all ambiguities in 17 the controlling state law . . . in the plaintiff’s favor.” 18 Warner v. Select Portfolio Servicint, et al., 193 F. Supp. 3d 19 1132, 1135 (C.D. Cal. 2016). After which, it must “appear to 20 near certainty” that joinder was fraudulent. Diaz v. Allstate 21 Insur. Group, 185 F.R.D. 581, 586 (C.D. Cal. 1998). 22 When a defendant adopts the second approach to showing 23 fraudulent joinder, he must prove plaintiff “fail[ed] to state a 24 cause of action against a resident defendant . . . [that] is 25 obvious according to the settled rules of the state.” Hunter v. 26 Philip Morris USA, 582 F.3d 1039, 1043-44 (9th Cir. 2008). 27 Courts do not take this obviousness requirement lightly. If 28 there is even a “‘possibility’” that a state court would find 1 that the complaint states a cause of action against any of the 2 [non-diverse] defendants,” a federal court “must find the 3 defendant properly joined and remand the case to state court.” 4 Grancare, LLC, 889 F.3d at 549 (emphasis and modification in 5 original). 6 C. Analysis 7 1. Fraudulent Joinder 8 The Mortgage Law Firm was the foreclosure trustee for 9 Plaintiff’s home loan. Compl. ¶ 6. Plaintiff alleges eight of 10 nine causes of action against it for: (1) wrongful foreclosure; 11 (2) fraud; (3) intentional interference with prospective 12 economic advantage; (4) intentional interference with 13 contractual relations; (5) unjust enrichment; (6) breach of the 14 covenant of good faith and fair dealing; (7) violation of 15 Business and Professions Code § 17200 et seq.; and (8) elder 16 financial abuse. See generally Compl. The underlying wrong 17 alleged is that the firm, as trustee, sold her home for 18 Nationstar on January 7, 2020, and did not notify her that it 19 did so. See Compl. ¶¶ 28, 31, 37, 66, 80, 81, 95. 20 There is no dispute that Plaintiff and The Mortgage Law 21 Firm are both citizens of California. Instead, the issue is 22 whether The Mortgage Law Firm’s citizenship destroys diversity. 23 Plaintiff argues that it does. Mot. at 6–9. Defendants argue 24 that it does not as The Mortgage Law Firm was fraudulently 25 joined. See Notice of Removal at 2–4; Opp’n at 2–5. The firm’s 26 involvement in the foreclosure of Plaintiff’s home was so 27 limited that Plaintiff cannot state a viable claim for relief 28 against it. Id. Thus, its citizenship should be ignored, and 1 complete diversity exists between the remaining parties. Id. 2 The Court agrees. 3 The firm acted only as the foreclosure trustee. Compl. 4 ¶ 6. Its role was merely to record the notice of default and 5 trustee’s sale and to re-convey the property after the sale. 6 See generally Cal. Civ. Code § 2924 et seq. “The trustee in 7 nonjudicial foreclosure is not a true trustee with fiduciary 8 duties, but rather a common agent for the trustor and 9 beneficiary.” Pro Value Properties, Inc. v. Quality Loan 10 Service Corp., 170 Cal.App.4th 579, 583 (2009) (internal 11 quotation marks and citation omitted). The trustee’s duties are 12 exclusively defined by the deed of trust and the governing 13 statutes. Id. “No other common law duties exist.” Id. 14 Foreclosure trustees with similarly limited involvement in 15 foreclosure proceedings are routinely deemed fraudulently-joined 16 defendants where the plaintiff has failed to allege a violation 17 of the statutory or contractual duties owed to her by the 18 foreclosure trustee. See, e.g., Sherman v. Wells Fargo Bank, 19 N.A., 2011 WL 1833090 at *2–3 (E.D. Cal. 2011) (finding the 20 foreclosure trustee fraudulently joined where the complaint did 21 not allege it violated any statutory or contractual duties owed 22 to plaintiffs); Ogamba v. Wells Fargo Bank, N.A., 2017 WL 23 4251124 at *3 (E.D. Cal. 2017) (finding the foreclosure trustee 24 fraudulently joined where the complaint alleged no violation of 25 its statutory duties, which are limited to foreclosing on a 26 defaulted mortgage loan and re-conveying the deed of trust); 27 Kelley v. Caliber Home Loans, Inc., 2018 WL 2064633 at *3 (E.D. 28 Cal. 2018) (finding foreclosure trustee defendant fraudulently 1 joined where its only role was recording notices of default and 2 trustee’s sale, and re-conveying the property after the sale). 3 As in Sherman, Ogamba, and Kelley, The Mortgage Law Firm’s 4 only role was to record the notices of default and trustee’s 5 sale, and to re-convey the property after the sale. The 6 complaint does not allege that The Mortgage Law Firm violated 7 any of these limited statutory duties. See generally Compl. 8 Insofar as Plaintiff argues in her motion that The Mortgage Law 9 Firm violated its statutory duties pursuant to California Civil 10 Code § 2924.12(b), see Mot. at 8, this argument fails. The 11 recording of a notice of default and trustee sale are privileged 12 acts, upon which no tort claim, other than malicious 13 prosecution, may be based. See Cal. Civ. Code § 2924(d)(1) 14 (“[t]he mailing, publication, and delivery of notices as 15 required by this section” shall constitute privileged 16 communications pursuant to Section 47); see also Kachlon v. 17 Markowitz, 168 Cal.App.4th 316, 333 (2008) (“We hold that 18 section 2924 deems the statutorily required mailing, 19 publication, and delivery of notices in nonjudicial 20 foreclosure, and the performance of statutory nonjudicial 21 foreclosure procedures, to be privileged communications under 22 the qualified common-interest privilege of section 47, 23 subdivision (c)(1).”). 24 Plaintiff does not assert The Mortgage Law Firm took any 25 wrongful action beyond recording the notice of default and re- 26 conveying the property after the sale, both of which are 27 privileged acts. Moreover, Plaintiff has presented no facts to 28 suggest The Mortgage Law Firm acted with malice. See Kachlon, 1 168 Cal.App.4th at 344 (“Mere negligence in making a sufficient 2 inquiry into the facts on which the statement was based does 3 not, of itself, relinquish the privilege. Mere inadvertence or 4 forgetfulness, or careless blundering, is no evidence of 5 malice.”) (internal quotation marks and citation omitted). 6 Thus, “[t]he substance of Plaintiff’s claims is therefore truly 7 directed at the other Defendants[,]” not the firm. Kelley, 2018 8 WL 2064633 at *4. Plaintiff cannot possibly allege a cause of 9 action against it. As a result, The Mortgage Law Firm is a 10 fraudulently-joined defendant and, without it, complete 11 diversity of citizenship exists. 12 To the extent Plaintiff argues that the case should be 13 remanded because The Mortgage Law Firm has not consented to 14 removal, that argument is also without merit. The removal 15 statute requires that “all defendants who have been properly 16 joined and served must join in or consent to the removal of the 17 action.” 28 U.S.C. §  1446(b)(2)(A). However, “[a] narrow 18 exception to the unanimity rule is recognized where removal 19 consent is not obtained from ‘nominal, unknown or fraudulently 20 joined parties.’” Hafiz v. Greenpoint Mortg. Funding, Inc., 652 21 F.Supp.2d 1050, 1052 (N.D. Cal. 2009) (quoting United Computer 22 Sys., Inc. v. AT&T Corp., 298 F.3d 756, 762 (9th Cir. 2002)). 23 The Mortgage Law Firm is a fraudulently-joined defendant 24 and has filed a declaration of non-monetary status in the state 25 court action. See Ex. 1 to RJN, ECF No. 10-1; Ex. 2 to RJN, ECF 26 No. 10-2; see also Hafiz, 652 F.Supp.2d at 1052 (“When a trustee 27 under a deed of trust files a declaration of non-monetary 28 status, the party is transformed into a ‘nominal’ party, thus 1 excusing it from participating in the action.”) (citing Cal. 2 Civ. Code §  2924l). Thus, The Mortgage Law Firm’s consent was 3 not necessary. 4 2. Amount in Controversy 5 Plaintiff also argues that Defendants have failed to 6 establish the amount in controversy exceeds the $75,000 required 7 to remain in federal court. Mot. at 9. Plaintiff contends that 8 because she had contracted to sell her home for $280,000 and, 9 instead, her home was sold in the foreclosure sale for $219,000, 10 that the amount in controversy is only around $60,000. Id. 11 However, where injunctive relief is sought, “it is well 12 established that the amount in controversy is measured by the 13 value of the object of the litigation.” Cohn v. Petsmart, Inc., 14 281 F.3d 837, 840 (9th Cir. 2002) (internal quotation marks and 15 citation omitted). In actions challenging the nonjudicial 16 foreclosure of real property by the lender pursuant to a 17 borrower’s default, the value of the object of the litigation is 18 measured by either the value of the underlying loan or the value 19 of the property securing the loan. See, e.g., Gardner v. 20 Nationstar Mortgage, LLC, 2014 WL 7239496 at *2 (E.D. Cal. 21 2014). Here, Plaintiff requests injunctive relief, see Compl. 22 at 19, and the property was sold to U.S. Bank for $219,000, see 23 Compl. ¶¶ 22, 73. Thus, the amount in controversy is well above 24 the statutorily required $75,000. 25 D. Sanctions 26 Plaintiff exceeded the Court’s 5-page limit on reply 27 memoranda. See Reply; see also Order re Filing Requirements 28 (Order), ECF No. 2-2. Violations of the Court’s standing order em EE IE OS NNR OIRO EIR III EI INO EIEIO IIE SII SOIREE I IEEE Dee 1 require the offending counsel (not the client) to pay $50 per 2 | page over the page limit to the Clerk of the Court. Order at 1. 3 Moreover, the Court will not consider arguments made past the 4 page limit. Id. In total, Plaintiff’s reply memorandum exceeded 5 the Court’s page limit by 3 pages. Plaintiff’s counsel must 6 therefore send a check payable to the Clerk for the Eastern 7 District of California for $150.00 no later than seven days from 8 the date of this order. 9 10 Til. ORDER 11 For the reasons set forth above, The Mortgage Law Firm is 12 DISMISSED as a defendant and the Court DENIES Plaintiff’s Motion 13 to Remand. 14 IT IS SO ORDERED. 15 Dated: December 14, 2020 16 ke Me 17 teiren staves odermacr 7008 18 19 20 21 22 23 24 25 26 27 28 11