Ruiz v. Alley Bank
1:25-cv-00641
| E.D. Cal. | Jun 5, 2025Background
- Plaintiff, Michael Shane Ruiz, filed suit in California state court alleging violations of the California Homeowner Bill of Rights and Unfair Competition Law against Ally Bank, National Default Servicing Corporation, and Finance of America Mortgage LLC.
- Defendant Ally Bank removed the case to the U.S. District Court for the Eastern District of California, citing diversity jurisdiction under 28 U.S.C. § 1332.
- The court sua sponte questioned whether Defendant met the requirements for federal subject matter jurisdiction, specifically the complete diversity of citizenship among the parties.
- Ally Bank failed to properly allege the citizenship of all members of Finance of America Mortgage LLC, as required for determining diversity jurisdiction.
- The court issued an order to show cause, giving Ally Bank 14 days to support its assertion of diversity jurisdiction with competent proof, and allowing Plaintiff 10 days to respond.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether subject matter jurisdiction exists based on diversity | Not specified in this order | Removal proper based on diversity; alleged that Finance of America Mortgage LLC is a PA LLC with PA principal place of business | Ally Bank failed to prove diversity because it did not allege citizenship of all LLC members |
| Whether removal to federal court was valid | Not specified | Removal valid upon proper allegations of diversity | Removal jurisdiction not established; must show cause why case should not be remanded |
| Requirement to allege citizenship of LLC members for diversity | Not specified | Stated LLC’s state of formation and principal place of business | Citizenship of all members, not just formation/principal office, is required |
| Presumption against removal jurisdiction | N/A | Removal presumed proper | Strong presumption against removal; burden on removing party |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts are courts of limited jurisdiction; burden is on party asserting jurisdiction)
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (federal diversity jurisdiction requires complete diversity and amount in controversy)
- Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894 (LLC citizenship determined by citizenship of all its members)
- Kanter v. Warner-Lambert Co., 265 F.3d 853 (party seeking removal must affirmatively allege actual citizenship of parties)
- Gaus v. Miles, Inc., 980 F.2d 564 (removal statute to be strictly construed; strong presumption against removal jurisdiction)