Lee v. American Home Mortgage Servicing, Inc. et al, No. 4:2012cv02287 - Document 25 (N.D. Cal. 2012)
Court Description: ORDER GRANTING PLAINTIFFS 17 MOTION TO REMAND, DENYING PLAINTIFFS REQUEST FOR ATTORNEYS FEES AND DENYING AS MOOT DEFENDANTS 15 MOTION TO DISMISS. Signed by Judge Claudia Wilken on 7/20/2012. (ndr, COURT STAFF) (Filed on 7/20/2012)
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Lee v. American Home Mortgage Servicing, Inc. et al Doc. 25 1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 SHEK Y. LEE, 5 Plaintiff, 6 7 8 9 United States District Court For the Northern District of California ORDER GRANTING PLAINTIFF’S MOTION TO REMAND, DENYING PLAINTIFF’S REQUEST FOR ATTORNEYS’ FEES AND DENYING AS MOOT DEFENDANTS’ MOTION TO DISMISS (Docket Nos. 5 and 17) v. AMERICAN HOME MORTGAGE SERVICING, INC.; FIDELITY NATIONAL TITLE COMPANY; POWER DEFAULT SERVICES, INC.; and DOES 1-20. , Defendants. 10 11 No. C 12-2287 CW ________________________________/ Plaintiff Shek Y. Lee moves to remand this case to state 12 court and seeks attorneys’ fees. Defendants American Home 13 Mortgage Servicing, Inc. (AHMSI) and Power Default Services, Inc. 14 oppose Plaintiff’s motion, and move to dismiss all claims against 15 them. Plaintiff opposes Defendants’ motion to dismiss. The Court 16 takes the parties’ motions under submission on the papers. For 17 the reasons set forth below, the Court GRANTS Plaintiff’s motion 18 to remand and DENIES AS MOOT Defendants’ motion to dismiss. The 19 Court also DENIES Plaintiff’s request for attorneys’ fees. 20 BACKGROUND 21 Plaintiff, a California resident, filed his complaint in San 22 Mateo County Superior Court, asserting various claims related to 23 the servicing of his residential mortgage loan and the pending 24 foreclosure of his property located at 366 Serra Drive in South 25 San Francisco, California. His claims are brought against various 26 Defendants, including Fidelity National Title Company, which is 27 allegedly a California citizen. 28 Dockets.Justia.com 1 Plaintiff brings claims against all Defendants for (1) fraud 2 and deceit; (2) negligent misrepresentation; (3) constructive 3 fraud; (4) intentional infliction of emotional distress; 4 (5) negligent infliction of emotional distress; (6) unjust 5 enrichment; (7) promissory estoppel; (8) violation of California 6 Civil Code section 2923.5; (9) violation of California Business 7 Code section 17500; and (10) violation of California Business Code 8 section 17200. 9 among other things, Defendants did not comply with California United States District Court For the Northern District of California 10 11 Plaintiff intends to seek a declaration that, Civil Code 2923.5. Defendants AHMSI and Power Default removed this action on May 12 7, 2012 pursuant to the Court’s diversity jurisdiction, 28 U.S.C. 13 § 1332. 14 15 LEGAL STANDARD A defendant may remove a civil action filed in state court to 16 federal district court so long as the district court could have 17 exercised original jurisdiction over the matter. 18 § 1441(a). 19 means that the defendant always has the burden of establishing 20 that removal is proper.” 21 (9th Cir. 1992). 22 is any doubt as to the right of removal in the first instance.” 23 Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (citations 24 omitted). 25 28 U.S.C. “The ‘strong presumption’ against removal jurisdiction Gaus v. Miles, Inc., 980 F.2d 564, 566 Federal jurisdiction “must be rejected if there District courts have original jurisdiction over all civil 26 actions “where the matter in controversy exceeds the sum or value 27 of $75,000, exclusive of interest and costs, and is between . . . 28 citizens of different States.” 28 U.S.C. § 1332(a). 2 When federal 1 subject matter jurisdiction is predicated on diversity of 2 citizenship, complete diversity must exist between the opposing 3 parties. 4 74 (1978). 5 Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373– A non-diverse party named in a complaint can be disregarded 6 for purposes of determining whether diversity jurisdiction exists 7 if a district court determines that the party’s inclusion in the 8 action is a “sham” or “fraudulent.” 9 Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). McCabe v. General Foods “If the plaintiff United States District Court For the Northern District of California 10 fails to state a cause of action against a resident defendant, and 11 the failure is obvious according to the settled rules of the 12 state, the joinder of the resident defendant is fraudulent.” 13 The defendant need not show that the joinder of the non-diverse 14 party was for the purpose of preventing removal. 15 need only demonstrate that there is no possibility that the 16 plaintiff will be able to establish a cause of action in state 17 court against the alleged sham defendant. 18 Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). 19 a presumption against finding fraudulent joinder and defendants 20 who assert it have a heavy burden of persuasion. 21 Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). 22 23 24 Id. The defendant Id.; Ritchey v. Upjohn However, there is Emrich v. Touche DISCUSSION I. Motion for Remand Plaintiff argues that, because he and Fidelity are citizens 25 of California, complete diversity does not exist and thus this 26 Court lacks diversity jurisdiction over this action. Defendants 27 do not dispute that Fidelity is a California citizen. Instead, 28 3 1 they contend that removal was proper because Fidelity was 2 fraudulently joined in this action.1 3 Defendants have failed to demonstrate that there is no 4 possibility that Plaintiff will be able to establish a cause of 5 action for violation of section 2923.5 against Fidelity in state 6 court. 7 first step in the foreclosure process: The recording of a notice 8 of default as required by section 2924.” 9 185 Cal. App. 4th 208, 221 (2010). California Civil Code section 2923.5 “concerns the crucial Mabry v. Superior Court, Under section 2923.5, a lender United States District Court For the Northern District of California 10 may not file a notice of default until thirty days after it has 11 contacted “the borrower by phone or in person to ‘assess the 12 borrower’s financial situation and explore options for the 13 borrower to avoid foreclosure.’” 14 § 2923.5(a)(2)).2 15 advise the borrower that the borrower may request additional 16 meetings, which the lender must schedule within fourteen days, and 17 the lender must provide the borrower with the toll-free telephone Id. (quoting Cal. Civ. Code During this conversation, the lender must 18 19 1 20 21 22 23 24 25 26 27 28 The Court notes that Defendants failed to file an opposition within the time period permitted by Civil Local Rule 7-3(a), and that it could properly strike Defendants’ opposition for failure to comply with the local rules. Defendants maintain that this failure should be excused, because it is less “egregious” than Plaintiff’s purported “jurisdictional gamesmanship,” which consisted of filing the instant motion to remand, and then participating in the Court’s Alternative Dispute Resolution (ADR) telephone conference several days later. Defendants have not offered any evidence of improper conduct by Plaintiff; the Court mandated the parties’ participation in the ADR telephone conference. Docket No. 14. Nonetheless, the Court exercises its discretion to consider the merits of Defendants’ opposition. 2 Alternatively, a lender may comply with section 2923.5 by completing the due diligence requirements of subdivision (g) of the statute. Mabry, 185 Cal. App. 4th at 221. 4 1 number for the United States Department of Housing and Urban 2 Development (HUD) to find a HUD-certified housing counseling 3 agency. 4 complied with, then there is no valid notice of default, and 5 without a valid notice of default, a foreclosure sale cannot 6 proceed.” 7 section 2923.5 is “to postpone the sale until there has been 8 compliance with” the statute. 9 § 2924g(c)(1)(A)). United States District Court For the Northern District of California 10 Cal. Civ. Code § 2923.5(a)(2). Id. at 223. “If section 2923.5 is not The remedy for a failure to comply with Id. (citing Cal. Civ. Code Plaintiff alleges that, before Fidelity recorded the Notice 11 of Default on December 8, 2011, he was not contacted by any 12 Defendant to assess his financial situation or explore any options 13 to avoid foreclosure, and that he was not offered a subsequent 14 meeting or offered HUD counseling. 15 Request for Judicial Notice (RJN), Ex. 3, 2. 16 that this claim must fail, because Plaintiff also “alleges that he 17 spoke with AHMSI on or about August 2011, regarding a foreclosure 18 alternative, specifically, a loan modification.” 19 However, this allegation does not establish that Defendants 20 complied with the requirements of section 2923.5(a)(2). 21 Specifically, it does not show that Defendants initiated the 22 requisite telephone calls or in-person meetings. 23 support that during this conversations Defendants informed 24 Plaintiff of his right to request a further meeting in person or 25 over the phone, to take place within fourteen days, or of the HUD 26 toll-free telephone number. 27 28 Compl. ¶¶ 75-77; Defs.’ Defendants contend Opp. at 4. It also does not Defendants also claim that any prejudice is vitiated by the parties’ subsequent participation in the Court’s initial ADR 5 1 telephone conference and engaged in preliminary loan modification 2 discussions. 3 there be contact prior to the notice of default,” and “[t]he 4 timing requirement expressly imposed by the statute cannot be 5 ignored.” 6 LEXIS 72202, at *10 (citing Mabry, 185 Cal. App. 4th at 225). 7 “The right conferred by section 2923.5 is a right to be contacted 8 to ‘assess’ and ‘explore’ alternatives to foreclosure prior to a 9 notice of default.” United States District Court For the Northern District of California 10 11 This argument fails, because “§ 2923.5 requires that Tamburri v. Suntrust Mortg., Inc., 2011 U.S. Dist. Mabry, 185 Cal. App. 4th at 225 (emphasis in original). Further, to the extent that Defendants argue that the 12 purposes of section 2923.5 were fulfilled because Plaintiff 13 contacted them to discuss a possible loan modification, 14 Plaintiff’s complaint alleges that, while he tried to contact 15 AHMSI to find out about his options, he did not receive 16 information that he requested and that, to the extent that he was 17 able to speak with AHMSI, it made false representations to him 18 about the process and availability of such a modification. 19 Defendants have not established that section 2923.5’s “obvious 20 goal of forcing parties to communicate . . . about a borrower’s 21 situation and the options to avoid foreclosure” was fulfilled. 22 Id. at 224 (emphasis in original). 23 Thus, Because the Court concludes that Defendants have not met 24 their burden to establish that Plaintiff cannot succeed on its 25 section 2923.5 claim against Fidelity, it need not consider 26 whether Defendants have met this burden for Plaintiff’s remaining 27 claims. 28 6 1 II. Attorneys’ Fees and Costs 2 Plaintiff seeks an order compelling Defendants to reimburse 3 him for attorneys’ fees and costs he incurred in connection with 4 the improper removal. 5 to “require payment of just costs and any actual expenses, 6 including attorney fees, incurred as a result of the removal.” 7 Under § 1447(c), “absent unusual circumstances, attorney’s fees 8 should not be awarded when the removing party has an objectively 9 reasonable basis for removal.” United States District Court For the Northern District of California 10 11 Title 28 U.S.C. § 1447(c) allows the Court Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005). Although the Court was not persuaded by Defendants’ 12 arguments, they had an objectively reasonable basis for removal. 13 Therefore, the Court declines to award Plaintiff his attorneys’ 14 fees and costs under § 1447(c). 15 CONCLUSION 16 For the foregoing reasons, Plaintiff’s motion to remand is 17 GRANTED and his request for attorneys’ fees and costs is DENIED 18 (Docket No. 17). 19 (Docket No. 5). 20 21 22 Defendants’ motion to dismiss is DENIED as moot The Clerk shall remand this action to San Mateo County Superior Court and close the file. IT IS SO ORDERED. 23 24 25 Dated: 7/20/2012 CLAUDIA WILKEN United States District Judge 26 27 28 7
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