Robert K Ruegsegger v. Caliber Home Loans, Inc.
8:20-cv-00531
C.D. Cal.May 19, 2020Background
- Plaintiffs Robert and Gigi Ruegsegger removed their case to federal court based on diversity jurisdiction.
- The sole dispute for remand is the citizenship of defendant LSF9 Master Participation Trust (LSF9).
- Defendants contend LSF9 was fraudulently joined and thus its citizenship should be ignored for diversity purposes.
- Plaintiffs previously dismissed LSF9 twice under Fed. R. Civ. P. 41 in earlier, substantially similar actions.
- The court applied the fraudulent-joinder doctrine and the Rule 41 “two dismissal” rule and concluded Plaintiffs are barred from re-suing LSF9.
- Because LSF9 is fraudulently joined and disregarded, complete diversity exists among the remaining parties and the Court denied the motion to remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LSF9's citizenship defeats diversity jurisdiction | LSF9 is a proper party; its citizenship prevents federal jurisdiction | LSF9 was fraudulently joined and should be disregarded for diversity | LSF9 is fraudulently joined; its citizenship is ignored, diversity exists |
| Whether Rule 41’s two-dismissal rule bars Plaintiffs from suing LSF9 again | Prior dismissals do not preclude the current suit against LSF9 | Two prior voluntary dismissals of LSF9 under Rule 41 preclude re-filing the same claims | Two-dismissal rule applies; Rule 41 bars Plaintiffs from suing LSF9 here |
| Whether the case should be remanded to state court | Remand required if a non-diverse defendant remains | Removal is proper because the non-diverse defendant is disregarded | Motion to remand denied |
Key Cases Cited
- Morris v. Princess Cruises, Inc., 236 F.3d 1061 (9th Cir. 2001) (sets out fraudulent-joinder standard)
- Ritchey v. Upjohn Drug Co., 139 F.3d 1313 (9th Cir. 1998) (fraudulently joined defendants will not defeat removal)
- Lake at Las Vegas Inv’rs Grp. v. Pac. Malibu Dev. Corp., 933 F.2d 724 (9th Cir. 1991) (interprets Rule 41 two-dismissal bar, including partial-party dismissals)
- Melamed v. Blue Cross of Cal., [citation="557 F. App'x 659"] (9th Cir. 2014) (applies the two-dismissal rule to bar re-filing after two voluntary dismissals)