Miller v. Roundpoint Mortgage Servicing Corporation
3:18-cv-00106
S.D. Cal.Feb 23, 2018Background
- Plaintiffs Walter and Marie Miller sued RoundPoint Mortgage Servicing Corp. and Clear Recon Corp (CRC) in San Diego Superior Court alleging only California state-law claims (civil code violations, promissory estoppel, UCL).
- CRC filed a Declaration of Non-Monetary Status (DNMS) on Jan 10, 2018; RoundPoint removed the case to federal court on Jan 17, 2018.
- RoundPoint argued federal subject-matter jurisdiction based on diversity, treating CRC as a nominal party because of the DNMS; CRC is a California corporation with principal place of business in San Diego.
- Plaintiffs moved ex parte for a temporary restraining order; RoundPoint filed an opposition; CRC did not respond to the TRO motion.
- The court sua sponte examined subject-matter jurisdiction and found removal procedurally defective for failure to show CRC’s consent to removal and substantively defective because CRC’s California citizenship could not be disregarded.
- Because CRC was not a nominal party at the time of removal (the 15-day objection period had not expired), there was no complete diversity and no federal-question basis; the case was remanded to San Diego Superior Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction exists | Complaint alleges only state-law claims; no federal question | N/A | No federal-question jurisdiction; complaint arises under state law |
| Whether diversity jurisdiction exists | Plaintiffs are California citizens; CRC is California citizen | RoundPoint: CRC nominal due to DNMS, so diversity exists between non-California parties | No diversity: CRC’s citizenship counts because DNMS did not convert CRC to nominal party before removal |
| Whether CRC is a nominal party for diversity purposes | DNMS insufficient given timing; CRC remains a defendant | CRC claims DNMS made it non-monetary and thus nominal | CRC was not nominal at removal (15-day objection period had not run); its citizenship cannot be disregarded |
| Whether removal was procedurally proper (unanimous consent) | Removal required all served defendants to join or consent | RoundPoint failed to show CRC’s consent/joinder | Removal defective for failing to demonstrate CRC’s consent to removal |
Key Cases Cited
- Nevada v. Bank of Am. Corp., 672 F.3d 661 (9th Cir.) (district courts may raise subject-matter jurisdiction sua sponte)
- Snell v. Cleveland, Inc., 316 F.3d 822 (9th Cir.) (courts may inquire into subject-matter jurisdiction at any time)
- Proctor v. Vishay Intertechnology, Inc., 584 F.3d 1208 (9th Cir.) (requirement that all defendants join or consent to removal)
- K2 Am. Corp. v. Rolland Oil & Gas, LLC, 653 F.3d 1024 (9th Cir.) (test for federal-question jurisdiction under well-pleaded complaint rule)
- Kuntz v. Lamar Corp., 385 F.3d 1177 (9th Cir.) (corporate citizenship for diversity purposes)
- Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867 (9th Cir.) (ignoring citizenship of nominal parties in diversity analysis)
- Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365 (U.S. Supreme Court) (requirement of complete diversity for federal diversity jurisdiction)