Algaier v. CMG Mortg. Inc.
| Decision Date | 14 January 2013 |
| Docket Number | NO: 13-CV-0380-TOR,: 13-CV-0380-TOR |
| Court | U.S. District Court — District of Washington |
| Parties | TIMOTHY ALGAIER, and DEBRA EDDY, Plaintiffs, v. CMG MORTGAGE INC, a California Corporation doing business in Washington State; BANK OF AMERICA NA, a national bank doing business in Washington State; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., a corporation doing business in Washington State; PACIFIC NORTHWEST TITLE COMPANY, a Trustee doing business in Washington state; FIRST AMERICAN TITLE COMPANY, successor in interest to Pacific Northwest Title Company, a Trustee, doing business in Washington state; DOES 1-100, inclusively and all persons unknown claiming any legal or equitable right, title, estate, lien or interest in the property described in the complaint adverse to Plaintiffs' title or any cloud on plaintiffs' title thereto, Defendants. |
TO DISMISS AND PLAINTIFFS'
BEFORE THE COURT are Defendants Bank of American, N.A., and Mortgage Electronic Registration Systems, Inc.'s Motion to Dismiss Plaintiffs' Complaint (ECF No. 8); Plaintiffs' Motion to Remand (ECF No. 12); and Plaintiffs' Motion to Expedite Hearing on Motion to Remand (ECF No. 11). This matter was submitted for consideration without oral argument. The Court has reviewed the briefing and the record and files herein, and is fully informed.
This case concerns a threatened nonjudicial foreclosure.
Plaintiffs purchased property at 4416 N. Simpson Road in Otis Orchards, Washington, on or about July 3, 2006. In 2009, Plaintiffs refinanced the property, a single family dwelling they used as their primary residence, with CMG Mortgage, Inc., a defendant in the instant lawsuit. The property was allegedly the security under a deed of trust, and the loan was evidenced by a promissory note the currentowner of which Plaintiffs claim "is yet a mystery and unknown." Bank of America, N.A. ("BANA") is allegedly the loan servicer, though Plaintiff contests the ownership of the note.
Plaintiffs made payments due on the loan through December 2011. On December 5, 2011, Plaintiffs claim Anna Lopez, an agent of Defendant BANA, contacted Plaintiffs offering a novation of the existing promissory note, reducing monthly payments from $1,872 to $1,252. They claim that she told them:
If you stopped making payments under the Note for 3 consecutive months, they would be 'guaranteed' to qualify for a new Note or modified term or novation beneficially altering the current payment to a lower amount under the existing Note. The new conditions would be implemented and terms made known immediately so no default would be declared or foreclosure brought into play.
They claim Lopez further told them on December 12, 2011, to "just stop paying from January, 2012 through March 2012, and you will qualify, guaranteed." Plaintiff state that Lopez told them BANA would treat the December 2011 payment as "confirmation in lieu of any written contract in confirmation of this new modification plan."
Plaintiffs filed a lawsuit in Spokane County Superior Court, alleging 1) negligence; 2) fraud and deceit; 3) violation of the Washington Foreclosure Fairness Act ("FFA"); 4) equitable accounting; 5) breach of contract; 6) unjust enrichment and promissory estoppel; 7) quiet title; 8) declaratory relief; and 9)injunctive relief in the form of a temporary restraining order ("TRO") and preliminary injunction. The superior court entered a TRO postponing the sale.
Plaintiffs, appearing pro se, move the Court to remand this matter back to the state court, arguing that this Court lacks jurisdiction because not all Defendants are diverse.
Defendants may remove any action filed in state court over which federal district courts have original jurisdiction. 28 U.S.C. § 1441(a). The Court may remand a case to state court when the Court finds it lacks subject matter jurisdiction over the claims asserted. 28 U.S.C. § 1447(c). Subject matter jurisdiction is established: (1) when there is diversity of citizenship under 28 U.S.C. § 1332; or (2) where a claim arises under federal law. 28 U.S.C. § 1441(c). Removal based on diversity requires establishing the parties' diverse citizenship, and an amount in controversy exceeding $75,000. 28 U.S.C. § 1332(c). Diversity jurisdiction under 28 U.S.C. § 1332 requires complete diversity. Teledyne v. Kone Corp., 892 F.2d 1404, 1408 (9th Cir. 1989).
For purposes of 28 U.S.C. 1332 and 28 U.S.C. 1441, "a corporation shall be deemed to be a citizen of every state and foreign state by which it has beenincorporated and of the State or foreign state where it has its principal place of business." 28 U.S.C. 1332(c).
The removing party bears the burden to prove that removal is proper. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The defendant is obligated to do so by a preponderance of the evidence. Id. at 567. Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance. Id. at 566.
Plaintiffs specifically attack the citizenship of Defendants BANA and Mortgage Electronic Registration Systems, Inc. ("MERS"), but because Plaintiffs appear pro se, the Court construes their complaint and motion liberally. Plaintiffs argue that "diversity required applies to ALL defendants, including those unserved" and that "the citizenship of each member of an unincorporated association or partnership must be considered in determining diversity." ECF No. 12 at 5. Accordingly, the Court examines the citizenship of each Defendant in turn.
Plaintiffs argue that that the Court lacks jurisdiction over this matter because BOA and MERS do business in Washington State, and thus there is not complete diversity. ECF No. 12 at 5. Defendants contend that Plaintiffs have confused the requirements for diversity jurisdiction and employ incorrect analysis. ECF No. 14 at 6.
Defendants are correct. Though somewhat unclear, Plaintiffs appear to argue that the proper test for citizenship is where defendant is doing business, citing 28 U.S.C. § 1391, the statute on venue; J.A. Olson Co. v. City of Winona, Miss., 818 F.2d 401, 405 (5th Cir. 1987); and Co-Efficient Energy Systems v. CSL Industries, Inc. (9th Cir. 1987). However, the statute on venue is inapplicable to questions of citizenship for diversity purposes, and the two circuit court cases cited are overruled by the Supreme Court's more recent ruling in Hertz Corp. v. Friend, 559 U.S. 77 (2010), as Defendants note. As Hertz makes clear, the phrase "principal place of business" in the federal diversity jurisdiction statute refers to the "nerve center" of the corporation, or "the place where a corporation's officers direct, control and coordinate the corporation's activities." Hertz, 559 U.S. at 92-93. The nerve center is a single place. Id. at 93.
Here, Plaintiffs argue that BANA and MERS "cannot swear under oath that they do not do business or have minimum contacts in Washington." ECF No. 12 at 6. However, Plaintiffs do not appear to dispute that BANA and MERS are neither incorporated in Washington nor that they do not have their principal place of business in Washington—Defendants assert that MERS is a Delaware corporation with its principal place of business in Virginia, and BANA is a citizen of North Carolina. Accordingly, diversity jurisdiction is not destroyed by MERS or BANA.
Plaintiffs have sued "inclusively and All persons Unknown Claiming Any Legal or Equitable Right, Title, Estate, Lien, or Interest in the Property Described in the Complaint Adverse to Plaintiff's Title, Or Any Cloud on Plaintiff's Title Thereto," collectively called "Does 1-100" in their complaint. They appear to challenge the diversity of these Does by reference to "unserved" defendants. ECF No. 12 at 5. However, "[i]n determining whether a civil action is removable on the basis of the jurisdiction under section 1332(a) of this title, the citizenship of defendants sued under fictitious names shall be disregarded." 28 U.S.C. § 1441. Thus, in the instant case, the citizenship of the unnamed Does is disregarded for purposes of diversity jurisdiction under 28 U.S.C. 1332(a). Accordingly, the unnamed defendants do not defeat diversity jurisdiction.
Plaintiffs have also sued Northwest Trustee Services, Inc., a trustee doing business in Washington State; Pacific Northwest Title Company, a trustee doing business in Washington State; and First American Title Company, successor in interest to Pacific Northwest Title Company. In their notice for removal, BOA and MERS argue that, although these companies are alleged to be doing business in Washington, they are nominal defendants that the Court should disregard for purposes of determining diversity jurisdiction.
The issue of alignment for purposes of diversity jurisdiction requires a court to "look beyond the pleadings" to the actual interests of the parties respecting the subject matter of the lawsuit. Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 872 (9th Cir. 2000) (quoting City of Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 69, 62 S.Ct. 15, 86 L.Ed. 47 (1941) (quotations omitted). The Ninth Circuit has held that a nominal defendant is "a person who 'holds the subject matter of the litigation in a subordinate or possessory capacity and to which there is no dispute.'" S.E.C. v. Colello, 139 F.3d 674, 676 (9th Cir. 1998) (quoting S.E.C. v. Cherif 933 F.2d 403, 414 (7th Cir. 1991)). "The paradigmatic nominal defendant is 'a trustee, agent, or depositary ... [who is] joined purely as a means of facilitating collection.'" Id. (quoting Cherif, 933 F.2d at 414). A nominal defendant's relation to an action is merely incidental and "it is of no moment [to him] whether the one or the other side in [the] controversy succeed [s]." Bacon v. Rives, 106 U.S. 99, 104, 1 S .Ct. 3, 6, 27 L.Ed. 69 (1882). "Because of the non-interested status...
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