Esperanza Corral v. Select Portfolio Servicing
878 F.3d 770
| 9th Cir. | 2017Background
- Corral and Balgas received a notice of default and applied for a loan modification; a trustee sale was scheduled while the application was pending.
- Plaintiffs obtained a temporary restraining order (TRO) halting a trustee sale, then settled a prior state-action agreement giving them 30 days to submit a completed modification application; sale was later re-scheduled.
- Plaintiffs filed a state-court suit under California’s HBOR and UCL seeking a temporary injunction enjoining foreclosure while the loan-modification application was reviewed.
- Defendant SPS removed to federal court asserting diversity jurisdiction, alleging the amount in controversy exceeded $75,000 based on the loan balance/secured note value (~$680,000–$806,512.74).
- District court denied remand and later dismissed the amended complaint; the Ninth Circuit reviewed de novo and reversed the denial of remand, vacating the dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal diversity jurisdiction exists because amount in controversy exceeds $75,000 | Corral implicitly argued; complaint sought only temporary injunction and did not allege >$75,000 | SPS: the loan’s principal/unpaid balance (value of property/debt) satisfies jurisdictional amount | Held: amount in controversy for temporary injunction is not the full loan value or debt; removal not established and remand required |
| Proper measure of amount in controversy for injunctive relief delaying foreclosure pending loan-mod review | The injunction’s object is limited — interim possession/review delay; value should be measured by the delay’s pecuniary effect | SPS: the object is the property/loan (foreclosure), so property value/debt amount is the appropriate measure | Held: amount in controversy is the value of the object of litigation, but here the object is a temporary delay; property value/debt are improper measures for a short injunction |
| Burden of proof for removal when complaint omits a specific amount | Corral notes complaint did not state >$75,000; thus SPS must prove amount by preponderance | SPS relied on loan balance/note value as evidence of amount in controversy | Held: removing party must prove amount in controversy by preponderance; SPS failed because it offered only loan/debt figures which are not appropriate here |
| Whether temporary injunctive relief could still meet $75,000 threshold by other measures | Plaintiffs: relief limited — likely small pecuniary benefit (temporary possession) | SPS: could argue transactional costs or other lender harms equal >$75,000 | Held: other measures (e.g., lender’s delay costs or fair rental value) might support jurisdiction if proved, but SPS presented none here |
Key Cases Cited
- Cohn v. Petsmart, Inc., 281 F.3d 837 (9th Cir. 2002) (amount in controversy for injunctive relief measured by value of the object of litigation)
- Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333 (U.S. 1977) (same; used for object-of-litigation rule)
- In re Ford Motor Co./Citibank (S. Dakota), N.A., 264 F.3d 952 (9th Cir. 2001) (either-viewpoint rule: consider pecuniary effect to either party)
- Matheson v. Progressive Specialty Insurance Co., 319 F.3d 1089 (9th Cir. 2003) (removing party must prove amount in controversy by preponderance)
- Chapman v. Deutsche Bank National Trust Co., 651 F.3d 1039 (9th Cir. 2011) (quiet-title/permanent injunction actions place property value in controversy)
- Garfinkle v. Wells Fargo Bank, 483 F.2d 1074 (9th Cir. 1973) (suit to enjoin foreclosure implicates property value as amount in controversy)