ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND DENYING DEFENDANTS' MOTION TO DISMISS
MARGARET M. MORROW, District Judge.
On May 15, 2015, Moshe Yhudai filed this action in Los Angeles Superior Court against Mortgage Electronic Registration Systems, Inc. ("MERS"); Bank of America N.A. ("BofA"); Bank of New York Mellon ("BNY"), f/k/a The Bank of New York, as trustee on behalf of the holders of the Alternative Loan Trust 2005-51; National Default Servicing Corp. ("NDSC") as trustee for BNY; Select Portfolio Servicing, Inc. ("SPS"); and certain fictitious defendants (collectively "defendants").
On July 16, 2015, Yhudai filed a motion to remand, asserting that the notice of removal had been filed more than thirty days after the service of the complaint on certain defendants, and that not all defendants had consented to removal.
Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court finds this matter appropriate for decision without oral argument. The hearing calendared for October 5, 2015, is therefore vacated, and the matter is taken off calendar.
I. FACTUAL AND PROCEDURAL BACKGROUND
Yhudai is the owner of real property located at 3539 Summerfield Drive, Los Angeles, California 91423.
On or about February 18, 2015, SPS, the loan servicer, executed a notice of default on behalf of NDSC, stating that Yhudai was $89,578.62 in arrears on his mortgage loan.
Yhudai alleges that defendants do not have a right to sell his property at foreclosure because they were not parties to the original mortgage loan. He also asserts that all defendants conspired unlawfully to foreclose on the property, and that each defendant acted in the course and scope of its agency for the remaining defendants with full knowledge and consent of the co-defendants.
A. Legal Standard for Removal
The right to remove a case to federal court is entirely a creature of statute. See Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). The removal statute, 28 U.S.C. § 1441, allows defendants to remove when a case originally filed in state court presents a federal question or is between citizens of different states. See 28 U.S.C. §§ 1441(a), (b). Only state court actions that could originally have been filed in federal court can be removed. 28 U.S.C. § 1441(a) ("Except as otherwise expressly provided by Act of Congress, any 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 and division embracing the place where such action is pending"); see Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988).
The removing defendants bear the burden of establishing that removal is proper. See Gaus v. Miles, 980 F. 2d. 564, 566 (9th Cir. 1992); Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921)); see also Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996) (when removing a case to federal court, defendants bear the burden of proving, by a preponderance of the evidence, actual facts sufficient to support jurisdiction). The removal statute is strictly construed against removal, and all doubts respecting jurisdiction must be resolved in favor of remand. Gaus, 980 F.2d at 566; Libhart, 592 F.2d at 1064.
B. Whether the Court Should Remand the Action to Los Angeles Superior Court on Procedural Grounds
Yhudai advances several arguments in support of his motion to remand. Citing the procedural requirements for removal, he asserts that defendants' removal was untimely and that not all defendants consented to the removal.
28 U.S.C. § 1446 governs the timeliness of removal. It provides that "[t]he notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter." 28 U.S.C. § 1446(b)(1). Where multiple defendants are served on different dates, "[e]ach defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons described in paragraph (1) to file the notice of removal." 28 U.S.C. § 1446(b)(2)(B).
Yhudai argues that, because SPS filed a notice of removal more than thirty days after the complaint was served on MERS, BNY, and BofA, the removal was untimely under 28 U.S.C. § 1446(b)(1).
Yhudai also contends that removal was improper because not all defendants consented to removal.
Yhudai asserts that BofA could not have consented to the notice of removal, filed July 2, 2015, since prior to that, on June 30, 2015, it had entered into a stipulation with him to extend its time to respond to the complaint in state court.
C. Whether the Court has Federal Question Jurisdiction
Defendants' notice of removal invokes the court's federal question jurisdiction.
Under 28 U.S.C. § 1331, district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Federal question jurisdiction is presumed absent unless defendants, as the parties seeking to invoke the court's jurisdiction, show that plaintiff has either alleged a federal cause of action, American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916) ("a suit arises under the law that creates the action"), a state cause of action that turns on a substantial dispositive issue of federal law, Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9 (1983); Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199 (1921), or a state cause of action that Congress has transformed into an inherently federal claim by completely preempting the field of its subject matter, Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 560 (1968); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987).
Whether a claim "arises under" federal law must be determined by reference to the "well-pleaded complaint." Franchise Tax Bd., 463 U.S. at 9-10. Since a defendant may remove a case under 28 U.S.C. § 1441(b) only if the claim could have been brought in federal court, the existence of removal jurisdiction must also be determined by reference to the "well-pleaded complaint." Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808 (1986). The well-pleaded complaint rule makes plaintiff the "master of the claim" for purposes of removal jurisdiction. Caterpillar, Inc., 482 U.S. at 392. In instances where a plaintiff could assert claims under both federal and state law, he can, as the master of the claim, prevent removal by ignoring the federal claim and alleging only state law causes of action. Rains v. Criterion Systems, Inc., 80 F.3d 339, 344 (9th Cir. 1996).
For federal question jurisdiction to attach, "a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action." Gully v. First Nat'l Bank in Meridian, 299 U.S. 109, 112 (1936). Only where the "right to relief under state law requires resolution of a substantial question of federal law in dispute between the parties" does a state law cause of action "arise under" the laws of the United States. Franchise Tax Bd., 463 U.S. at 13. A claim does not present a "substantial question" of federal law merely because a federal question is an "ingredient" of the state cause of action. Indeed, "the mere presence of a federal issue in a state cause of action does not automatically confer federal question jurisdiction." Merrell Dow Pharmaceuticals, 478 U.S. at 813.
Yhudai chose not to assert a claim under the federal FDCPA, and instead alleged violations of California's RFDCPA. He cites the federal FDCPA merely to support his state law claim, and thus his complaint does not raise a federal question. Zielinski v. Target Nat. Bank, No. CV 10-2954 GAF (CWx), 2010 WL 2569059, *2 (C.D. Cal. June 21, 2010) ("Plaintiff[ does] not characterize [his] Rosenthal Act claim as a federal claim, but instead seek[s] to simply borrow FDCPA violations as a means for proving [his] Rosenthal Act claim. Accordingly, the Rosenthal Act claim is not properly characterized as a federal claim, and [this] basis for federal question jurisdiction is unavailing"). See Leal v. U.S. Bank Nat'l Ass'n, No. CV 10-3925 PA, 2010 WL 2389959, *2 (C.D. Cal. June 9, 2010) ("Merely using the potential violation of a federal statute to form part of the basis for a state law cause of action does not transform the cause of action into a federal claim"); Oritz v. Indymac Bank, F.S.B., No. CV 09-8669 PSG (AJWx), 2010 WL 2035791, *1 n. 3 (C.D. Cal. May 20, 2010) (basing a § 17200 claim, inter alia, on the violation of an implementing regulation of the Truth in Lending Act ("TILA") did not transform the state law claim into a federal cause of action); California v. H & R Block, Inc., No. C 06-2058 S.C. 2006 WL 2669045, *3-4 (N.D. Cal. Sept. 18, 2006) (explaining that § 17200 claim alleging a TILA violation did not "arise under" federal law); see also Rains, 80 F.3d at 346 ("When a claim can be supported by alternative and independent theories — one of which is a state law theory and one of which is a federal law theory — federal question jurisdiction does not attach because federal law is not a necessary element of the claim"). Defendants have therefore not met their burden of showing that the court has federal question jurisdiction under 28 U.S.C. § 1331.
D. Whether the Court has Diversity Jurisdiction
Defendants also contend the court has diversity jurisdiction to hear the action. "[J]urisdiction founded on [diversity] requires that parties be in complete diversity and the amount in controversy exceed $75,000." Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003); see 28 U.S.C. § 1332(a)(1) ("The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States . . ."). Federal courts have jurisdiction only where there is complete diversity, i.e., plaintiff's citizenship is diverse from that of each named defendant. 28 U.S.C. §§ 1332(a)(1), (c)(1); see Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 n. 3 (1996); see also Cook v. AVI Casino Enters., Inc., No. 07-15088, 2008 WL 4890167, *3 (9th Cir. Nov. 14, 2008) (Unpub. Disp.) ("We have jurisdiction only if Cook, a resident of California, has citizenship which is diverse from that of every defendant," citing Lewis, 519 U.S. at 68).
1. Amount in Controversy
The court first examines whether the amount in controversy exceeds $75,000. "[W]hen a complaint filed in state court alleges on its face an amount in controversy sufficient to meet the federal jurisdictional threshold, [the amount in controversy] requirement is presumptively satisfied unless it appears to a `legal certainty' that the plaintiff cannot actually recover that amount." Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). See also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938) (stating that "the sum claimed by the plaintiff controls if the claim is apparently made in good faith," and that "[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal"). Where, by contrast, "it is unclear or ambiguous from the face of a state-court complaint whether the requisite amount in controversy is pled[,] . . . [courts] apply a preponderance of the evidence standard." Guglielmino, 506 F.3d at 699. Finally, "when a state-court complaint affirmatively alleges that the amount in controversy is less than the jurisdictional threshold, the `party seeking removal must prove with legal certainty that [the] jurisdictional amount is met.'" Id. (quoting Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 1000 (9th Cir. 2007)).
"In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). Here, the value of the mortgage loan is an appropriate measure of the amount in controversy. In the notice of removal, defendants contend that the amount in controversy exceeds $75,000 because plaintiff's claims concern the validity of the $960,000 note he executed and secured with a deed of trust on the property.
2. Yhudai's Citizenship
Defendants' notice of removal alleges that plaintiff is a citizen of California.
A person is a citizen of the state in which he has his domicile, i.e., a permanent home where he intends to remain or to which he intends to return. See Gilbert v. David, 235 U.S. 561, 569 (1915); Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001) ("A person's domicile is her permanent home, where she resides with the intention to remain or to which she intends to return"). A person's residency does not determine citizenship for diversity jurisdiction purposes. Kanter, 265 F.3d at 857 ("[T]he diversity jurisdiction statute, 28 U.S.C. § 1332, speaks of citizenship, not of residency. To be a citizen of a state, a natural person must first be a citizen of the United States. The natural person's state citizenship is then determined by her state of domicile, not her state of residence. A person's domicile is her permanent home, where she resides with the intention to remain or to which she intends to return. A person residing in a given state is not necessarily domiciled there, and thus is not necessarily a citizen of that state"); see also Weible v. United States, 244 F.2d 158, 163 (9th Cir. 1957) ("Residence is physical, whereas domicile is generally a compound of physical presence plus an intention to make a certain definite place one's permanent abode, though, to be sure, domicile often hangs on the slender thread of intent alone, as for instance where one is a wanderer over the earth").
Defendants base their allegation that Yhudai is a California domiciliary, inter alia, on Yhudai's assertion that he is a California resident and the fact that he has owned the property in question since 2005.
Defendants' invocation of the California Homeowner's Bill of Rights ("HBOR") is likewise not sufficient to establish Yhudai's intent to remain in California. HBOR applies only to mortgage loans secured by deeds of trust on owner-occupied residential real property. CAL. CIV. CODE § 2924.15(a) (HBOR requirements are applicable only to "mortgages or deeds of trust that are secured by owner-occupied residential real property . . . [which] means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes"). The court cannot infer that the owner-occupied requirement is met simply from the fact that Yhudai asserts a claim under HBOR, as the complaint contains no factual allegations to that effect, and the HBOR claim might be subject to dismissal on that ground.
Defendants have adduced no evidence that any of the other factors courts consider in determining a party's citizenship — e.g., voter registration, payment of taxes, place of employment, or driver's license and vehicle registration information — demonstrate Yhudai is a California citizen. See Lew v. Moss, 797 F.2d 747, 750 (9th Cir. 1986). As the pleadings stand, therefore, defendants have failed adequately to demonstrate that Yhudai is a California citizen.
3. Defendants' Citizenship
"[A] corporation [is] deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business." 28 U.S.C. § 1332(c)(1). The term "principal place of business" means "the place where a corporation's officers direct, control, and coordinate the corporation's activities. It is the place that Courts of Appeals have called the corporation's `nerve center.' And in practice it should normally be the place where the corporation maintains its headquarters — provided that the headquarters is the actual center of direction, control, and coordination." Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010).
Defendants allege the citizenship of the four corporate defendants in the notice of removal, referencing the state of incorporation and principal place of business for each.
"[A] national bank, for § 1348 purposes, is a citizen of the State in which its main office, as set forth in its articles of association, is located." Wachovia Bank v. Schmidt, 546 U.S. 303, 307 (2006). Defendants allege in the notice of removal that BofA's main office is located in North Carolina.
Although none of the defendants is a citizen of California, defendants have not adequately shown that Yhudai is a California citizen. Consequently, they have not met their burden of establishing that there is complete diversity of citizenship among parties as required by § 1332. The court therefore finds that it lacks diversity jurisdiction to hear the action.
E. Whether Yhudai is Entitled to Attorneys' Fees
Yhudai's motion to remand also seeks fees and costs incurred in connection with the motion to remand. 28 U.S.C. 1447(c). "Under 28 U.S.C. § 1447(c), `[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.'" Federal Home Loan Mortg. Corp. v. Lettenmaier, No. CV-11-165-HZ, 2011 WL 1297960, *1 (D. Or. Apr. 5, 2011) (quoting 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. Conversely, when an objectively reasonable basis exists, fees should be denied.'" Id. (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)).
"Removal is not objectively unreasonable solely because the removing party's arguments lack merit and the removal is ultimately unsuccessful." Id. (citing Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008)). "Rather, the court should assess `whether the relevant case law clearly foreclosed the defendant's basis of removal' by examining the `clarity of the law at the time of removal.'" Id. (quoting Lussier, 518 F.3d 1066); see also Patel v. Del Taco, Inc., 446 F.3d 996, 999-1000 (9th Cir. 2006) ("Del Taco's state court petition to confirm the arbitration award contained only one state law cause of action; it did not contain any federal claim that could provide the basis for a § 1441(c) removal. Joinder of a federal claim and a claim for removal of a state court action in a federal complaint cannot effect a § 1441(c) removal. There being no objectively reasonable basis for removal, the district court did not abuse its discretion in awarding attorney's fees under § 1447(c) to Del Taco").
The court declines to award attorneys' fees. California courts have concluded that pro se plaintiffs are not entitled to an award of attorneys' fees. See Sue Tsang v. Select Portfolio Servicing, Inc., No. EDCV 12-00127 VAP, 2012 WL 10423187, *9 (C.D. Cal. Aug. 3, 2012) (denying attorneys' fees to a plaintiff after granting a motion to remand because plaintiff was pro se, quoting Blanchard v. Morton Sch. Dist., 509 F.3d 934, 936 (9th Cir. 2007) ("Pro se plaintiffs, though, are not entitled to attorney's fees")). Because Yhudai is proceeding pro se and has incurred no attorneys' fees, the court concludes that he is not entitled to a fee award.
Further, although not ultimately persuasive, the court does not find defendants' arguments so objectively unreasonable as to warrant an award of attorneys' fees. See Lussier, 518 F.3d at1065 (noting that while "[t]here is no question that [defendant's] arguments were losers[,] . . . removal is not objectively unreasonable solely because the removing party's arguments lack merit, or else attorney's fees would always be awarded whenever remand is granted"); Morales v. Gruma Corp., No. CV 13-7341CAS (FFMx), 2013 WL 6018040, *6 (C.D. Cal. Nov. 12, 2013) (declining to award attorneys' fees); Coastal Const. Co. v. N. Am. Specialty Ins. Co., No. CV 10-00206-DAE-BMK, 2010 WL 2816694, *8 (D. Haw. July 14, 2010) ("While the Court concludes that NAS's arguments for fraudulent joinder lack merit, the Court does not find NAS's arguments to be objectively unreasonable as to warrant payment of attorneys' fees and costs"). Accordingly, the court declines to award attorneys' fees.
For the reasons stated, the court concludes that it lacks subject matter jurisdiction and grants Yhudai's motion to remand. The clerk is directed to remand the action to Los Angeles Superior Court forthwith.
In Standard Fire Insurance Company v. Knowles, 133 S.Ct. 1345, 1347 (2013), plaintiff filed a class action lawsuit, alleging that he and the "Class stipulate[d] they [would] seek to recover total aggregate damages of less than [the CAFA jurisdictional threshold of] five million dollars." Defendant removed, invoking CAFA. Id. at 1348. The district court remanded. It found that although the amount in controversy would have exceeded $5,000,000 in the absence of the stipulation, it could not be met given the stipulation. Id. The Supreme Court held that the district court erred in relying on the stipulation because "a plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified." Id. at 1349.
In Rodriguez v. AT&T Mobility Services LLC, 728 F.3d 975 (9th Cir. 2013), the Ninth Circuit recognized that Standard Fire overruled Lowdermilk's "legal certainty" standard in CAFA cases. See id. at 977 ("Our reasoning there for imposing on defendants the burden to prove the amount in controversy to a legal certainty, rather than the ordinary preponderance of the evidence standard, is clearly irreconcilable with the Supreme Court's reasoning in Standard Fire"). The court held that the second principle informing the Lowdermilk rule — to "preserve the plaintiff's prerogative . . . to forgo a potentially larger recovery to remain in state court"— was "directly contradicted by Standard Fire[`s holding that] a plaintiff seeking to represent a putative class could not evade federal jurisdiction by stipulating that the amount in controversy fell below the jurisdictional minimum." Id. at 980, 981. The also concluded that Standard Fire had overruled Lowdermilk's directive that district courts "need not look beyond the four corners of the complaint to determine whether the CAFA jurisdictional amount is met," and that § 1332(d) required district courts to evaluate the potential claims of absent class members rather than plaintiff's complaint. Id. at 981.
Since Rodriguez was decided, district courts in the Ninth Circuit have disagreed as to whether the legal certainty standard continues to apply in non-CAFA cases. Compare Stelzer v. CarMax Auto Superstores Cal., LLC, 13-CV-1788-LAB-JMA, 2013 WL 6795615, *5 & n. 2 (S.D. Cal. Dec. 20, 2013) (applying the legal certainty standard) with Cagle v. C&S Wholesale Grocers, Inc., No. 2:13-cv-02134-MCE-KJN, 2014 WL 651923, *7 (E.D. Cal. Feb. 19, 2014) (holding that the preponderance of the evidence standard applies).
The court believes that Standard Fire and Rodriguez leave the legal certainty rule intact in non-CAFA cases. The rationale underlying those decisions — i.e., that a plaintiff cannot bind absent class members before a class is certified — has no application outside the class action context. In contrast, the reasoning that underlies the Lowdermilk rule — i.e., that federal courts are courts of limited jurisdiction, and that a plaintiff is "master of her complaint" — applies with full force in non-CAFA cases. Moreover, the "legal certainty" test for cases such as this, where plaintiff alleges damages in excess of the jurisdictional minimum, does not derive from Lowdermilk and rests on a distinct line of reasoning. The Ninth Circuit announced the rule in Sanchez v. Monumental Life Insurance Company, 102 F.3d 398, 402 (9th Cir. 1996). There, it adopted the reasoning of Garza v. Bettcher Indus., Inc., 752 F.Supp.753 (E.D. Mich. 1990), which it quoted at length:
Accordingly, the court concludes that neither Knowles nor Rodriguez disturbs the "legal certainty" rule used to determine the amount in controversy in removal cases where plaintiff alleges damages in excess of the jurisdictional minimum. The court therefore applies the "legal certainty" rule here.