ORDER GRANTING PLAINTIFFS’ MOTION TO REMAND; DENYING DEFENDANTS’ MOTION TO DISMISS AS MOOT
On August 16, 2011, рlaintiffs filed this action in Los Angeles Superior Court.
I. FACTUAL BACKGROUND
A. The Complaint’s Factual Allegations
The complaint in this action was filed on behalf of 108 named plaintiffs. It is a sprawling document that is 84 pages and 387 numbered paragraphs long; many paragraphs contain multiple subparagraphs. The court summarizes the complaint’s allegations below.
The complaint alleges that “[a]s the result of an aggressive and relentlessly pursued growth strategy between 2003 and 2009,” Wells Fargo Bank, N.A. (“Wells Fargo”) became the fourth largest banking institution in the nation, and was the “master servicer” for loans and mortgages at issue in this action.
Defendants allegedly created risky “mortgage pools,” promising investors lucrative benefits, and “managed risk through leverage and derivatives trading.”
With the proceeds of TARP funds, defendants allegedly committed numerous fraudulent acts, including issuing notices of default in violation of California law, misrepresenting their intention to arrange loan modifications for plaintiffs, and failing to respond to plaintiffs’ communications.
The complaint also contains a number of allegations regarding Wachovia, and its acquisition of Golden West Financing Corporation (“Golden West”). Golden West was an Oakland, California-based mortgage lender run by Herbert and Marion Sandler.
When Wachovia announced its purchase of Golden West, the housing market was already beginning to decline, and investors were concerned about their potential exposure.
The Pick-A-Pay loans were allegedly concentrated in California, and when these loans “reset prematurely due to the contractual breaches by Wells Fargo,” many homeowners lost their homes through foreclosure.
Plaintiffs contend that, according to data reported pursuant to the Home Mortgage Disclosure Act, fully one-fifth of all the loans defendants made to low and moderate income borrowers, including plaintiffs, were high-cost refinance loans with an average interest rate of 9.8%; these loans purportedly represented close to $11 billion in lending. Plaintiffs assert that the loans went directly into mortgage pools securitized and sold by defendants, who profited from the loans’ “secret excessive markups.”
The complaint alleges that had all of this information been properly disclosed to plaintiffs, they would havе behaved differently, deferring their purchase of a home and refusing to enter into expensive adjustable rate mortgages.
“(1) establish due diligence policies, procedures and controls reasonably designed to detect and report instances of money laundering, (2) establish procedures to take reasonable and practicable measures to verify the identity of those applying for an account with the institution and maintain records of the information used to verify a person’s identity, including name, address, and other identifying information, (3) determine and report the sources of funds used for the mortgages they originate[d] and service[d], as well as the sources of funds used to acquire any mortgages, [and] (4) disclose to Plaintiffs the identities, address and telephone numbers of transferees of their mortgages.”35
Essentially, the complaint asserts that defendants engaged in a fraudulent scheme by offering mortgages at unsustainable loan-to-value ratios, often to individuals who they knew were a poor credit risk and at high risk of default.
Plaintiffs charge that defendants fraudulently misrepresented to multiple plaintiffs that they would receive assistance securing a loan modification.
Plaintiffs also allege that defendants sold the notes and deeds of trust relating to plaintiffs’ properties in transactions that were unlawful or fraudulent in various ways. The sales allegedly
“(a) [i]ncluded sales to nominees who were not authorized under law at the time to own a mortgage, including, among others, MERS;
(b) [involved misrepresentations by Defendants to investors and concealment from investors of Plaintiffs’] true financial condition and the true value of Plaintiffs’] home[s] and mortgaged];
(c) [finvolved misrepresentations by Defendants to investors and concealment from investors of the true financial condition of other borrowers and the true value of their homes and mortgages also included in the pools;
(d) [w]ere for consideration greater than the actual value of the said notes and deeds of trust;
(e) [w]ere for consideration greater than the income stream that could be generated from the instruments even assuming a 0% default rate thereon....”40
Plaintiffs assert that, had they been aware of defendants’ conduct, they would not have entered into their mortgages or purchased homes.
Plaintiffs allege that Wells Fargo is now under investigation by various governmental agencies, and is being sued in several class actions.42 They contend that Wells Fargo settled a lawsuit with the California Attorney General that alleged lending vio-
The complaint describes in detail a consent decree into which Wells Fargo entered with the Office of the Comptroller of the Currency (“OCC Order”). The decree purportedly states that various federal agencies, including the Board of Governors of the Federal Rеserve System, the FDIC, and the Office of Thrift Supervision, found that Wells Fargo had engaged in “unsafe or unsound practices” in its handling of foreclosure-related activities.
“filed or caused to be filed in state and federal courts numerous affidavits executed by its employees or employees of third-party service providers making various assertions, such as ownership of the mortgage note and mortgage, the amount of the principal and interest due, and the fees and expenses chargeable to the borrower, in which the affiant repre*1044 sented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of the relevant books and records----”48
Plaintiffs allege that under the OCC Order, Wells Fargo was required to submit to audits and execute a comprehensive plan to “reimburse homeowners who had been improperly foreclosed upon.”
The complaint pleads six state law claims. The first four, asserted by all plaintiffs, allege (1) fraudulent concealment; (2) intentional misrepresentation; (3) negligent misrepresentation; and (4) violation of the Unfair Competition Law (“UCL”), California Business & Professions Code § 17200 et seq.
B. The Complaint’s Allegations Regarding Citizenship of the Parties and Amount in Controversy
The cоmplaint contains various allegations regarding the citizenship of the parties and the amount in controversy. Paragraphs 43 through 153 are a non-alphabetized list of the 108 plaintiffs, all of whom are alleged to reside in and own property in California.
The complaint names nine defendants: Wells Fargo Bank, N.A., which is a national banking association that is chartered in Sioux Falls, South Dakota and has its primary headquarters in San Francisco, Califorma;
As respects the amount in controversy, the prayer for relief seeks, inter alia, general and special damages, exemplary damages, statutory relief, restitution, injunctive relief and attorneys’ fees.
“fewer than 100 plaintiffs are alleging claims or amounts in controversy that would, as to them[,] equal or exceed the jurisdictional amount for federal jurisdiction under 28 U.S.C. § 1332(a) and that no relief of any kind is sought under any federal statute or rule.”67
C. The Notice of Removal
1. CAFA “Mass Action” Jurisdiction
Defendants Wells Fargo and Cal-Western invoke the court’s jurisdiction over “mass actions” as defined in 28 U.S.C. § 1332(d)(ll)(B)(i).
Defendants also assert that the minimal diversity requirement is satisfied because at least one plaintiff is a California citizen and Wells Fargo is a South Dakota citizen.
2. Diversity Jurisdiction
In addition to asserting that this is a mass action over which the court has jurisdiction under CAFA, defendants invoke the court’s diversity jurisdiction under 28 U.S.C. § 1332(a). As noted, most of the named defendants have either merged into Wells Fargo or no longer exist.
Defendants cite allegations in the complaint to establish that amount in controversy exceeds $75,000. They note that paragraph 153 alleges that “fewer than 100 plaintiffs are alleging claims in amounts
Finally, defendants submit evidence that each plaintiff has placed more than $75,000 in controversy.
II. DISCUSSION
A. Plaintiffs’ Motion for Remand 1. Legal Standards Governing Removal Jurisdiction
The right to remove a case to federal court is entirely a creature of statute. See Libhart v. Santa Monica Dairy Co.,
The Ninth Circuit “strictly constructs] the removal statute against removal jurisdiction,” and “[federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc.,
2. Requirements for Jurisdiction as a CAFA Mass Action
CAFA supplements the original removal statute, giving district courts, inter
Essentially, “CAFA provides that a qualifying mass action ‘shall be deemed to be a class action’ removable to federal court under the Act, so long as the rest of CAFA’s jurisdictional requirements are met. Among these requirements, the aggregate amount in controversy must exceed ‘$5,000,000, exclusive of interest and costs,’ and at least one plaintiff must be a citizen of a state or foreign state different from that of any defendant. In addition, there must be minimal diversity between the parties.’ ” Tanoh v. Dow Chemical Co.,
CAFA’s mass action provisions contain a number of exceptions, howevеr. As the mass action statutes explicitly incorporate the other requirements necessary to maintain a class action, 28 U.S.C. § 1332(d)(ll)(A), any exceptions to the court’s jurisdiction under CAFA’s class action provisions also apply. See 28 U.S.C. § 1332(d)(3) (setting forth various situations in which the court may decline to exercise jurisdiction over a class action “in the interests of justice and looking at the totality of the circumstances”); id. § 1332(d)(4) (setting forth circumstances in which the district court is required to decline to exercise jurisdiction). In addition, 28 U.S.C. § 1332(d)(ll)(B)(i) provides that in a mass action, “jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under subsection (a).”
The mass action-specific exceptions are found in 28 U.S.C. § 1332(d)(ll)(B), which states:
“[T]he term ‘mass action’ shall not include any civil action in which—
(I) all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly resulted in injuries in that State or in States contiguous to that State;
(II) the claims are joined upon motion of a defendant;
(III) all of the claims in the action are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class) pursuant to a State statute specifically authorizing such action; or
(IV) the claims have been consolidated or coordinated solely for pretrial proceedings.”
3. Whether CAFA’s Mass Action Requirements Are Met
The parties do not dispute: (1) that the number of plaintiffs in this action exceeds 100; (2) that “plaintiffs’ claims involve common questions of law or fact,” 28 U.S.C. § 1332(d)(ll)(B); (3) and that the citizenship of the parties is minimally diverse, as all the plaintiffs are citizens of California and Wells Fargo Bank South Central, N.A. (formerly known as Wacho
a. The Applicable Burden of Proof
Although the burden of proving that removal jurisdiction exists rests with defendants, the burden of proof they must satisfy differs depending on the nature of the damages allegations included in plaintiffs’ complaint. “[W]hen the plaintiffs] fail[] to plead a specific amount of damages, ... defendants] seeking removal ‘must prove by a prepondеrance of the evidence that the amount in controversy requirement has been met.’ ” Lowdermilk v. United States Bank Nat’l Assoc.,
“[I]f the complaint alleges damages in excess of the federal amount-in-controversy requirement, [however,] then the amount-in-controversy requirement is presumptively satisfied unless ‘it appears to a ‘legal certainty’ that the claim is actually for less than the jurisdictional minimum.’ ” Id. (quoting Abrego Abrego, 443 at 683 n. 8). Similarly, a defendant
Here, plaintiffs do not allege the aggregate amount in controversy on their claims. They also do not allege a specific amount in controversy for each individual plaintiff. Instead, the complaint pleads that “fewer than 100 plaintiffs are alleging claims or amounts in controversy that would, as to them[,] equal or exceed the jurisdictional amount for federal jurisdiction under 28 U.S.C. § 1332(a).
This manner of pleading, however, is apparently explained by plaintiffs’ interpretation of certain portions of CAFA’s mass action provisions. Plaintiffs cite § 1332(d)(ll)(B)(i), which states that where jurisdiction exists to hear a mass action, it “exist[s] only over those plaintiffs whose claims ... satisfy the jurisdictional amount requirements under subsection (a).” Plaintiffs contend this means that the court has mass action jurisdiction only when “100 or more persons” each place an amount in controversy that exceeds $75,000, even if the action otherwise meets CAFA’s minimal diversity and aggregate amount in controversy requirements. Defendants, by contrast, urge that the court adopt the Eleventh Circuit’s view that “the $75,000 provision was not intended to bar district courts from asserting jurisdiction over the entire case if each individual plaintiffs claims do not exceed $75,000,” so long as the numerosity and $5 million aggregate amount in controversy thresholds are met. Lowery v. Alabama Power Co.,
The court similarly concludes that addressing this difficult question of statutory interpretation is not necessary here to address the applicable burden of proof or to answer the ultimate question as to whether the court can exercise jurisdiction over this case. As to burden of proof, to remove a mass action under CAFA, the aggregate amount in controversy for all plaintiffs must exceed $5 million. 28 U.S.C. § 1332(d)(2). The complaint here neither affirmatively alleges an amount in controversy of less than $5 million, nor pleads specific amounts in controversy as to each individual plaintiff. The only allegation plaintiffs offer is that some number of plaintiffs “fewer than 100” alleges an amount in controversy less than $75,000. This is insufficient to quantify the aggregate amount placed at issue by the complaint.
The ambiguity of the pleading places it squarely within the rule articulated in Abrego Abrego and Guglielmino that defendants must show by a preponderance of the evidence that the amount in controversy requirement is satisfied. See, e.g., Guglielmino,
b. Whether Defendants Have Met Their Burden of Proof as to Amount in Controversy
The court thus examines whether defendants have met their burden of showing by a preponderance that the amount in controversy exceeds $5 million. As noted, the only proof defendants proffer is the Dolan declaration. Dolan states that as an operations analyst in Wachovia Mortgage, FSB’s portfolio retention department, he has “custody over and access to various business records of Wells Fargo, and [is] familiar with Wells Fargo’s business practices and business records.”
Dolan also states that “each of the Plaintiffs has, or at one time had, a mortgage loan with an outstanding principal balance in excess of $75,000.”
Dolan notes that he could find no records for thirteen of the 108 plaintiffs and was unable to “locate any loans in [their] names.”
Defendants contend that Dolan’s declaration is sufficient to demonstrate an aggregate amount in controversy exceeding $5 million. This contention is largely based on their assertion that whatever the allegations of the complaint, plaintiffs actually seek to enjoin foreclosure of their properties or to unwind foreclosures that have already taken place. As evidence of this, they cite allegations challenging defendants’ rights to enforce the mortgages and foreclose on plaintiffs’ properties.
While the complaint is hardly a model of clarity, the court believes that defendants have not read it accurately. It is true that the pleading contains various allegations questioning defendants’ right to enforce the mortgages in question. A closer examination of each of the claims and causes of action, however, does not support the view that plaintiffs seek injunctive or declaratory relief that places the entire value of their mortgages at issue. See Naiyan v. Sodexo, Inc., No. CV 10-9872 PSG (CWx),
The fourth cause of action arises under the UCL, and seeks restitution “for all sums received by Defendants with respect [to the mortgages], including, without limitation, interest payments ..., fees ..., and premiums received upon selling the mortgages at an inflated value.”
The fifth cause of action, which is asserted by eleven plaintiffs, alleges wrongful
Unlike the claims that precede them, the fifth and sixth claims — which are asserted by small subsets of individual plaintiffs— implicate the foreclosure or threatened foreclosure of their homes and may fairly be said to place the full value of then-properties into controversy. The Dolan declaration contains minimal information about nine of the plaintiffs who allege wrongful foreclosure. It reports only that each of their “loan[s] had an unpaid principal balance in excess of $75,000.”
Defendants also contend that the amount in controversy is satisfied by allegations that purport to describe the magnitude of the fraudulent scheme at issue here. Specifically, defendants cite paragraphs 25 and 360 of the complaint. Paragraph 25 states that “Wells Fargo and the other Defendants took from Plaintiffs and other borrowers billions of dollars in interest payments and fees.”
Defendants’ reliance on other allegations concerning sizable settlements is similarly unavailing.
Defendants contend that plaintiffs’ allegations concerning these settlements constitute admissions that the amount in controversy in this litigation exceeds $5 million. While settlements and jury verdicts in similar cases can provide evidence of the amount in controversy, the cases must be factually identical or, at a minimum, analogous to the case at issue. See Simmons v. PCR Technology,
“The strong presumption against removal jurisdiction necessarily means that federal jurisdiction ‘must be rejected if there is any doubt as to the right of removal in the first instance.’ ” Sauer v. Prudential Ins. Co. of Am,., No. 2:11-cv-08699-JHN-RZ,
Defendants also invoke the court’s diversity jurisdiction over each of the individual plaintiffs’ claims.
The parties dispute a number of issues concerning diversity jurisdiction. First, they disagree as to whether Wells Fargo should be considered a California citizen; if it is, this would defeat complete diversity. Second, defendants contend that plaintiffs have fraudulently joined Cal-Western Reconveyance; if this is not the case, the fact that it is a defendant would also defeat diversity. Finally, the parties dispute whether defendants have adequately proved the amount in controversy. The court addresses each issue in turn.
a. Whether the Complete Diversity Requirement Is Satisfied
i. Legal Standard Governing the Citizenship of National Banking Associations for Diversity Purposes
28 U.S.C. § 1348 states:
“The district courts shall have original jurisdiction of any civil action commenced by the United States, or by direction of any officer thereof, against any national banking association, any civil action to wind up the affairs of any such association, and any action by a banking association established in the district for which the court is held, under chapter 2 of Title 12, to enjoin the Comptrоller of the Currency, or any receiver acting under his direction, as provided by such chapter. All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.”
In Wachovia Bank v. Schmidt,
“When Congress first authorized national banks in 1863, it specified that any ‘suits, actions, and proceedings by and against [them could] be had’ in federal court. National banks thus could ‘sue and be sued in the federal district and circuit courts solely because they were national banks, without regard to diversity, amount in controversy or the existence of a federal question in the usual sense.’ State banks, however, like other state-incorporated entities, could initiate actions in federal court only on the basis of diversity of citizenship or the existence of a federal question. Congress ended national banks’ automatic qualification for federal jurisdiction in 1882. An enactment that year provided in relevant part:
‘[T]he jurisdiction for suits hereafter brought by or against any association established under any law providing for national-banking associations ... shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business where such national-banking associations may be doing business when such suits may be begun[.]’ ...
Under this measure, national banks could no longer invoke federal-court jurisdiction solely ‘on the ground of their Federal origin;’ instead, for federal jurisdictional purposes, Congress placed national banks ‘on the same footing as thе banks of the state where they were located.’ ” Id. at 309-10,126 S.Ct. 941 (citations omitted).
The Court further explained that, “[i]n 1887 revisions to prescriptions, on federal jurisdiction, Congress replaced the 1882 provision on jurisdiction over national banks and first used the ‘located’ language today contained in § 1348.... Like its 1882 predecessor, the 1887 Act ‘sought to limit ... the access of national banks to, and their suability in, the federal courts to the same extent to which non-national banks [were] so limited.’ ” Id. at 310-11,
“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. Were we to hold, as the Court of Appeals did, that a national bank is additionally a citizen of every State in which it has established a branch, the access of a federally chartered bank to a federal forum would be drastically curtailed in comparison to the access afforded state banks and other state-incorporated entities. Congress, we are satisfied, created no such anomaly.” Id. at 307,126 S.Ct. 941 .
“To achieve complete parity with state banks and other state-incorporated entities, a national banking association would have to be deemed a citizen of both the State of its main office and the State of its principal place of business. Congress has prescribed that a corporation ‘shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.’ 28 U.S.C. § 1332(c)(1). The counterpart provision for national banking associations, § 1348, however, does not refer to ‘principal place of business;’ it simply deems such associations ‘citizens of the States in which they are respectively located.’ The absence of a ‘principal place of business’ reference in § 1348 may be of scant practical significance for, in almost every case, as in this one, the location of a national bank’s main office and of its principal place of business coincide.” Id. at 317 n. 9,126 S.Ct. 941 (additional citation omitted).
ii. Whether Wells Fargo Is a Citizen of California
In the absence of guidance from either the Supreme Court or the Ninth Circuit, district courts in the circuit have reached conflicting conclusions regarding the citizenship of national banks. Compare Goodman v. Wells Fargo Bank, NA, No. CV 11-2685 JFW (RZx),
Courts concluding that Wells Fargo is a
In Excelsior Funds, Inc. v. JP Morgan Chase Bank, N.A.,
The court finds this analysis persuasive.
The complaint also pleads claims against Cal-Western, which is allegedly a California citizen.
“It is a commonplace that fraudulently joined defendants will not defeat removal on diversity grounds.” Ritchey v. Upjohn Drug Co.,
Defendants argue that plaintiffs refer to Cal-Western only once in their 84-page complaint. That allegation does nothing more than refer to Cal-Western’s citizenship.
The sufficiency of plaintiffs’ current allegations against Cal-Western is questionable, given that the only specific reference to Cal-Western in the complaint
Although the court does not presently decide the sufficiency of plaintiffs’ conspiracy allegations, it does note that under a conspiracy theory, all defendants could be held responsible for the acts of their co-conspirators, so long as those acts were undertaken in furtherance of the conspiracy. As a result, it is untrue that the complaint lacks allegations that could result in Cal-Western being held liable for the wrongful conduct charged.
Defendants contend, however, that as a trustee, Cal-Western is immunized as a matter of law from liability on tort causes of action. “[A] trustee’s actions in executing a non-judicial foreclosure are privileged communication s under Cal. Civ. Code section 47, and as such will not support a tort claim other than one for malicious prosecution.” Champlaie v. BAC Home Loans Servicing, LP,
Most of plaintiffs’ claims sound in tort, making them subject to California Civil Code 47.
“The overall balance of interests reflected in the statutory scheme, however, favors protection of trustors’ property rights, thus suggesting that trustors should not be entirely deprived of the ability to vindicate their property rights if wrongfully violated by the trustee. Granting absolute immunity from such wrongdoing would wholly sacrifice the trustor’s interest in favor of the trustee. The qualified common interest privilege, on the other hand, would provide a significant level of protection to trustees, leaving them open to liability only if they act with malice. At the same time, it preservеs the ability of trustors to protect against the wrongful loss of property caused by a trustee’s malicious acts.” Kachlon,168 Cal.App.4th at 340 ,85 Cal.Rptr.3d 532 .
Plaintiffs’ wrongful foreclosure claim alleges that “[djefendants acted outrageously and persistently with actual malice in performing the acts alleged in this cause of action.”
Defendants also argue that plaintiffs’ UCL claim fails because plaintiffs lack standing to assert such a claim. See Daro v. Superior Court,
Defendants rely heavily on the California Court of Appeal’s decision in Bank of America Corp. v. Superior Court,
Defendants contend that Bank of America controls, since plaintiffs are proceeding on a similar theory. The court disagrees. First, plaintiffs’ UCL claim pleads different forms of injury. Plaintiffs allege that they have experienced “rеduced credit scores, unavailability of credit, increased costs of credit, reduced availability of goods and services tied to credit ratings ... [and incurred] attorneys’ fees and costs,”
The Bank of America court, moreover, “emphasized] the limited nature of [its] holding,” which was only that plaintiffs had failed to state a cause of action for fraudulent concealment because they had not ad
Defendants also complain that certain of the statutes on which plaintiffs’ UCL claim is based do not support the cause of action. Specifically, they contend that plaintiffs’ citation of California Civil Code § 2923.5 is insufficient,
b. Whether Defendants Have Met Their Burden of Demonstrating Amount in Controversy
Diversity jurisdiction is lacking for another reason as well, i.e., that defendants have failed to demonstrate that the amount in controversy on each plaintiffs claims exceeds $75,000. As noted, when a complaint is silent regarding the amount in controversy, defendants bear the burden of proving, by a preponderance of the evidence, that the jurisdictional threshold is met. See, e.g., Lowdermilk,
As noted, plaintiffs’ complaint is ambiguous regarding the amount in controversy in this litigation. They plead only that “fewer than 100” plaintiffs allege an amount in controversy equal to or above the jurisdictional threshold of $75,000. This allegation does not specify the amount in controversy on the claims of any individual plaintiff. Nor, because it states that certain claims equal or exceed $75,000, does it affirmatively limit the claim of any plaintiff to an amount below the jurisdictional threshold of $75,000. Additionally, “fewer than 100” could mean that no plaintiff alleges an amount in controversy above the jurisdictional threshold, or that 99 do. Thus, defendants must show that the amount in controversy requirement is met by a preponderance of the evidence.
The court previously addressed the deficiencies in defendants’ amount in controversy arguments regarding CAFA mass action jurisdiction in Part II.A.3.a, supra. Similаr problems bedevil their amount in controversy arguments regarding diversity jurisdiction. Once again, the only evidence defendants proffer is the Dolan declaration, which does not address the claims of eleven of the 108 plaintiffs. As to those individuals, therefore, defendants have adduced no evidence regarding the amount in controversy on their claims. As respects the remaining plaintiffs, Dolan states only that each “has, or at one time had, a mortgage loan with an outstanding principal balance in excess of $75,000.”
The only plaintiffs who have arguably placed the full value of their mortgage at issue are those who plead claims for wrongful foreclosure and breach of contract, i.e., those named in the fifth and sixth causes of action. The Dolan declaration provides information only for nine of
It is true that “[i]n actions seeking declaratory or injunctive relief, ... the amount in controversy is measured by the value of the object of the litigation.” Hunt v. Washington State Apple Advertising Com’n,
The Dolan declaration, however, provides no information regarding the value of any plaintiffs property or, indeed, the size of loan obtained by any plaintiff who has asserted a wrongful foreclosure claim. It states only that “at the time of those foreclosures, each loan had an unpaid principal balance in excess of $75,-000.”
For all of these reasons, result, defendants have failed to meet their burden of demonstrating by a preponderance of the evidence that the claims of each individual plaintiff meet the jurisdictional threshold for diversity jurisdiction.
III. CONCLUSION
For the reasons stated, the court grants plaintiffs’ motion, and directs the clerk to remand the action to Los Angeles Superior Court forthwith. The court denies defendants’ motion to dismiss as moot.
Notes
. Notice of Removal (“Removal”), Docket No. 1 (Sept. 16, 2011), Exh. A ("Complaint”).
. Removal, ¶ 16.
. Id., ¶ 28.
. Motion to Remand (“Remand Motion”), Docket No. 13 (Oct. 14, 2011).
. Motion to Dismiss Complaint ("MTD”), Docket No. 21 (Oct. 21, 2011). Cal-Western Reconveyance Corporation joined the motion to dismiss. (Motion for Joinder in Motion to Dismiss Complaint, Docket No. 25 (Oct. 24, 2011).)
. Opposition to Motion to Remand Case (“Remand Opp.”), Docket No. 28 (Dec. 5, 2011); Opposition to Motion to Dismiss Complaint (“MTD Opp.”), Docket No. 30 (Dec. 5, 2011); Reply in Support of Motion to Remand Case ("Remand Reply”), Docket No. 33 (Dec. 12, 2011); Reply in Support of Motion to Dismiss Complaint ("MTD Reply”), Docket No. 32 (Dec. 12, 2011).
. Complaint, ¶ 3.
. Complaint, ¶ 9.
. Id., ¶ 10.
. Id.
. Id., ¶ 15.
. Id., ¶ 16.
. Id.,n 18-21.
. Id., ¶ 22.
. Id. The complaint pleads specific examples of this purportedly experienced by the named plaintiffs, who attempted to secure loan modifications or have defendants honor certain provisions of their loan contracts without success. (Id., ¶¶ 38-41.)
. Id., ¶ 26.
. Id., ¶ 27. The complaint contains a number of allegations regarding "MERS,” which is Mortgage Electronic Registration Systems. Plaintiffs allege that MERS operates as a registry to track servicing rights and the ownership of mortgages. Although it contends that it is the owner of the security interests associated with the mortgages, plaintiffs allege that defendants use the company to facilitate the unlawful transfer of mortgages. (Id., ¶¶ 30-34.) They contend that MERS’s "status” was suspended in California on May 31, 2002. (Id., ¶ 36.) They also allege that MERS has entered into a consent decree with various federal agencies to correct its allegedly "unsafe or unsound practices.” (Id., ¶ 37; see also id., ¶¶ 231-36 (describing the MERS consent decree in greater detail).) The complaint pleads further details regarding MERS's participation in allegedly fraudulent mortgage transfers in later paragraphs. (Id., ¶¶ 252-66.)
. Id., ¶ 179.
. Id., ¶¶ 178-79.
. Id., ¶179.
. Id., ¶ 180.
. Id., ¶ 181.
. Id.
. Id. USA Today allegedly described the Sandlers as "ruthless home lenders who helped destroy Wachovia Corp.” (Id.)
. Id., ¶ 182.
. Id., ¶ 191.
. Id., ¶ 183-84.
. Id., ¶ 186.
. Id.
. id., ¶ 188.
. Id., ¶ 188. The complaint alleges:
"Defendants now seek to capitalize on these losses which Defendants themselves created. For example, utilizing their rights of first right of refusal at trustee sales, Defendants have purchased the properties on which they foreclosed and retain these distressed properties at a discount to the detriment of the homeowner. These properties are being leased out to the public and are being held for sale in the Defendants’ REO portfolio by their affiliate, Premiere Asset Services, awaiting the market rebound. Defendants can then avoid flooding the market with cheap fire-sale real estate and further devastate their own market values that they now wish to recoup, in contrast to the time frame when Defendants caused these declines in value.” (Id., ¶ 189.)
. Id.., ¶ 190.
. Id., V 193. The complaint states that the enforcement director of the SEC characterized the loans as "secret” and "excessive.” . m
. Id., ¶¶ 196-99.
. Id., ¶ 200.
. Id., ¶¶ 209-10.
. Id., ¶ 211. Although the complaint contains allegations that sound in fraud, the precise thrust of the claims is unclear. The complaint alleges that certain plaintiffs were fraudulently induced to enter into mortgages they could not afford, and that defendants engaged in a broader scheme to deceive their investors and the public at large about the lax nature of their underwriting and business practices. At different times the complaint appears to base its fraud allegations on both theories of liability.
. Id., ¶ 212.
. Id., ¶212.
. Id., ¶ 218.
. Id.,n 221-28.
. Id., ¶ 229.
. Id., ¶ 230.
. Id.
. Id., ¶ 231.
. Id., ¶ 232.
. Id., ¶ 237.
. Id.
. Id., ¶ 238-39.
. Id., ¶ 244.
. Id., ¶ 247.
. This cause of action alleges a number of violations of the UCL’s "unlawful” prong, including violations of federal securities laws, California Civil Code provisions governing the non-judicial foreclosure process, the U.S.A. PATRIOT Act, assorted state and federal fair debt collection statutes, and the Truth in Lending Act. (Complaint, ¶¶ 338-62.)
. Id., ¶¶ 290-387. The complaint also alleges that defendants violated the Truth in Lending Act, 15 U.S.C. § 1640 et seq., and the USA Patriot Act, 31 U.S.C. § 5318, et seq., but does not allege causes of action arising under those laws. Instead, violations of those laws (in addition to other federal laws) are alleged to satisfy the “unlawful” conduct prong of the California UCL. (Id., ¶¶ 346, 350-51.)
The subsets of plaintiffs bringing the fifth and sixth causes of action do not overlap with one another, with the exception of plaintiff Cristina Magana. (Id. at 77, 81.)
. Complaint, ¶¶ 43-151.
. Id.
. Id., ¶ 152.
. Id.., ¶ 154.
. Id., ¶ 155.
. Id., ¶ 156.
. Id., ¶ 157.
. Id., ¶ 158.
. Id., ¶ 159.
. Id., ¶ 160.
. Id., ¶ 161.
. Id., ¶ 162.
. Id. at 84.
. Id.
. Removal, ¶ 16.
. Id., ¶ 17.
. Id., ¶ 20 (citing paragraph 360, which states that plaintiffs seek "restitution for all sums received by Defendants with respect [to their mortgage loans], including without limitаtion interest payments made by Plaintiffs [and any] fees paid to Defendants", and paragraph 25, which states that Wells Fargo "took from Plaintiffs and other borrowers billions of dollars in interest payments and fees”).
. Id., ¶23.
. Id., ¶ 26.
. Id., V 24.
. Id., ¶ 27.
. Id., ¶¶9-15. World Savings, Inc. was formerly a subsidiary of Golden West Financial Corporation, and no longer exists. {Id., ¶ 15.) A company that merges into another company adopts the citizenship of the merged company for diversity purposes. See Meadows v. Bicrodyne Corp.,
. Id., ¶ 13.
. Id.
. Id., ¶¶ 28-30.
. Id.,n 31-33.
. Id., ¶ 34 ("because Plaintiffs cannot state any cause of action against Cal-Western, it was fraudulently joined ... ”).
. Removal, ¶ 37.
. Id.
. Declaration of Michael J. Dolan in Support of Removal ("Dolan Decl.”), Docket No. 4 (Sept. 16, 2011).
. Removal, ¶ 38.
. Although the complaint alleges that plaintiffs are California residents, rather than citizens, there is no indication that plaintiffs are citizens of states that would destroy minimal diversity here.
. At oral argument, plaintiffs invoked 28 U.S.C. § 1332(d)(l l)(B)(ii)(I), which provides that federal courts do not have jurisdiction to hear cases in which "all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly resulted in injuries in that State or in States contiguous...." That provision, however, has been narrowly interpreted to refer to claims involving a " 'single event or occurrence, such as an environmental accident, that gives rise to the claims of all plaintiffs.’ " Dunn v. Endoscopy Center of Southern Nevada, No. 2:11-cv-00560-RLH-PAL,
The legislative history of the section confirms that this exception applies only in cases involving a single “event or occurrence,” and that it explicitly excludes product liability cases, since "[t]he sale of a product to different people does not qualify as an event.” S.Rep. No. 109-14, at 47, reprinted in 2005 U.S.C.C.A.N. 3, 44. While рlaintiffs’ factual allegations concern an allegedly fraudulent scheme, that scheme involved a multitude of individual transactions involving many different parties. The claims, therefore, can hardly be said to be based on a single, unitary "event.” Because the parties did not brief this issue, no authority has been cited suggesting that 28 U.S.C. § 1332(d)(ll)(B)(ii)(I) should be extended to cover circumstances such as this. Consequently, the court declines to remand on this basis.
. Complaint at 84 (emphasis added). See also id.., ¶ 153.
. Under the Eleventh Circuit's interpretation, the court would have to remand any individual plaintiff's claims that did not meet the $75,000 threshold. Lowery,
. Dolan Decl., ¶ 2.
. Id., ¶ 11.
. Id., ¶ 12.
. Id.
. Id. at n. 1. These plaintiffs are Rosa Courtney, Rebecca Sierra, David and Gaviela Zamora, Daniel and Cosmina Spatacean, Paul and Cynthia Pease, Renan and Jeannette Pulicio, and Terri A. and Rhonda K. Penkert. {Id.)
. Id. at n. 2. These two individuals are Rosa Courtney and Katherine Ward.
. See, e.g., Complaint, ¶ 27 (“Defendants lack the legal right to enforce the foregoing because they have not complied with disclosure requirements intended to assure that mortgages are funded with monies obtained lawfully”); id., ¶ 29 (“Accordingly, Defendants are not and were not at the relevant times allowed legally to enforce the notes or deeds of trust”); id., ¶ 202 ("Defendants have made demand for payment on the Plaintiffs with respect to Plaintiffs' properties at a time when Defendants are incapable of establishing ... who owns the promissory notes Defendants are purportedly servicing”); id., ¶ 250 ("Defendants continue to demand payment and to foreclose and threaten to foreclose on Plaintiffs, despite the facts that ... Defendants have no proof that they own the notes and deeds of trust they seek to enforce ...”); id., V 321 ("Defendants seek to enforce the loans and mortgages irrespective of this massive fraud”).
. Complaint, ¶ 319.
. Id.. ¶¶ 302. 325. 336.
. Complaint, ¶ 360.
. Id.. ¶ 361.
. Id., ¶ 374.
. These plaintiffs are Allen and Rose Bickerstaff, Stirling and Michelle Hale, Robert and Geraldine Harrick, Cristina Magana, and William and Janet Schraner. (Complaint at 81.)
. Id., ¶ 386.
. id., ¶ 384(c).
. Id. at 84.
. Dolan Decl., ¶ 12.
. Complaint, V 25.
. Id., ¶ 360.
. Removal, ¶ 24 (quoting Complaint, ¶¶ 230-31, 247).
. Complaint, ¶ 230.
. Id., ¶ 231.
. Id., ¶247.
. Id., ¶ 228.
. Given the сourt’s conclusion regarding defendants’ proof of the amount in controversy, it declines to address the parties’ arguments as to whether CAFA's "local controversy” and "home state” exceptions apply here. The court observes, however, that the "local controversy” exception may apply here. This exception requires that the district court decline jurisdiction over any class action in which:
"(00) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;
"(II) at least 1 defendant is a defendant—
"(aa) from whom significant relief is sought by members of the plaintiff class;
"(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and
"(cc) who is a citizen of the State in which the action was originally filed; and
"(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and
"(ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons.” 28 U.S.C. § 1332(d)(4)(A).
Here, all of the plaintiffs are California citizens. In Part II.A.4.a.iii, infra, the court concludes that Cal-Western has not been fraudulently joined. Consequently, at least one defendant is also a California citizen. The complaint pleads a number of claims against each of the defendants, including Cal-Western, and seeks a variety of forms of relief from them in the aggregate. The complaint thus seeks "significant relief” from Cal-Western. In addition, Cal-Western's conduct "forms a significant basis for the claims asserted” by plaintiffs, given that it purportedly played a key role in effecting a number of the allegedly wrongful foreclosures, and also purportedly conspired with other defendants to commit assorted violations of California’s Unfair Competition Law. See Kaufman v. Allstate New Jersey Ins. Co.,
For this exception to apply, it must be the case that "no other class action ... asserting the same or similar factual allegations” have been filed in the last three years. Defendants contend that Nelson v. Wells Fargo Bank, N.A., CV No. 11-05573 DMG (Ssx), alleges "almost identical” facts against Wells Fargo. (Remand Opp. at 20.) Despite the purported identity of facts, neither defendants nor plaintiffs sought to relate this case to Nelson, or to
Plaintiffs raised this issue in its motion, but did not respond to defendants' arguments against it in their reply brief, instead focusing on the issue of Wells Fargo's citizenship. It is plaintiffs' burden to demonstrate that this exception applies. Serrano v. 180 Connect, Inc.,
. Removal, ¶ 28.
. In a prior case, this court decided, in ruling on an ex parte application to remand, that Wells Fargo was a citizen of California. Stewart v. Wachovia Mortg. Corp., No. CV 11-06108 MMM (AGRx),
. Plaintiffs' reliance on Horton v. Bank One, N.A.,
. In their opposition, plaintiffs contend that Wells Fargo has “judicially admitted” that its principal place of business is California. Plaintiffs cite two district court cases in which Wells Fargo alleged in its complaint that its principal place of business was in California. See Wells Fargo Bank, N.A. v. Siegel, No. 05 C 5635,
Plaintiffs appear, moreover, to be invoking the doctrine of judicial estoppel, rather than judicial admission. Under the doctrine of judicial estoppel, “ 'absent any good explanation, a party should not be allowed to gain an advantage by litigation on one theory, and then seek an inconsistent advantage by pursuing an incompatible theory.’ ” New Hampshire v. Maine,
Factors relevant in deciding whether to apply the dоctrine include: (1) whether a party’s later position is “clearly inconsistent” with its earlier position; (2) whether the party has successfully advanced the earlier position, such that judicial acceptance of an inconsistent position in the later proceeding would create a perception that either the first or the second court had been misled; and (3)
To invoke judicial estoppel, plaintiffs would have to demonstrate that Wells Fargo has argued that it is a citizen both of the state in which it has its principal place of business and the state in which its main office is located. They would also have to show that those courts relied on Wells Fargo's arguments in determining that they either had or lacked jurisdiction. Plaintiffs have adduced no evidence that either factor is true, as the cited cases and pleadings state only that Wells Fargo alleged that its principal place of business was in California. In Siegel, for example, the district court stated that Wells Fargo’s complaint alleged that its principal place of business was in California and that its operational center was South Dakota.
. Complaint, ¶ 162.
. Removal, V 31.
. Complaint, ¶ 162.
. Removal, ¶ 33; Declaration of Drew A. Robertson in Support of Defendant’s Notice of Removal ("Robertson Decl.”), Docket No. 3 (Sept. 16, 2011), Exh. A (Declaration of Non-Monetary Status by Cal-Western (“Cal-Western Decl.”), ¶¶ 3-5 (stating the company’s belief that it was named in the lawsuit solely in its capacity as trustee, and not due to wrongful acts or omissions arising out of its performance as trustee). Under California law, when a trustee has been named in an action solely in its capacity as trustee, it may file a declaration of “non-monetary status.” If no party opposes the declaration within fifteen days, the trustee is not required to participate in the action, and is not liable for damages or costs awarded in the action. See Cal. Civ. Code 2924; Couture v. Wells Fargo Bank, N.A., No. 11-CV-1096-IEG (CAB),
. Complaint, ¶¶ 164-69.
. The court is mindful of the rule articulated by the California Supreme Court in Doctors’ Co. v. Superior Court,
. Plaintiffs appear to concede that their fraudulent concealment, intentional misrepresentation, and negligent misrepresentation claims are tort causes of action that, to the extent assertеd against Cal-Western, are barred by Civil Code § 47. Their reply, in fact, offers no argument regarding these claims. (Reply at 21-22.) Similarly, plaintiffs' breach of contract claim does not allege that plaintiffs had a contract with Cal-Western; their reply does not address the issue. As the existence of a contract is one of the elements of a breach of contract claim, it appears that this claim cannot proceed against Cal-Western. See Appling v. Wachovia Mortgage, FSB,
. Complaint, ¶ 375.
. Given this conclusion, the court declines to address defendants' arguments regarding the sufficiency of the wrongful foreclosure allegations. Defendants correctly assert, however, that plaintiffs' wrongful foreclosure claim fails to the extent it is based on a theory that the foreclosing party must possess the original note to initiate a non-judicial foreclosure sale. See, e.g., Maguca v. Aurora Loan Serv., CV No. 09-1086 JVS (ANx),
Plaintiffs counter that their wrongful foreclosure claim is not based on the fact that defendants failed physically to produce the note, but on the fact that defendants аre not the lawful holders of the note. (Complaint, ¶¶ 369, 373.) In their opposition, plaintiffs cite Kelley v. Upshaw,
This assertion appears inconsistent with factual allegations that defendants fraudulently induced plaintiffs to enter into mortgage agreements with them. The mass of allegations in the complaint, however, makes it difficult to ascertain the theory underlying the wrongful foreclosure claim, and amendment may cure any deficiencies that exist.
. Complaint, ¶ 355.
. Id., ¶ 358.
. Id., ¶ 360.
. Complaint, ¶¶ 350-51. The UCL claim also relies on violations of TILA, the USA Patriot Act, the Fair Credit Reporting Act, the California Financial Information Privacy Act, and other constitutional and statutory provisions.
. Dolan Decl., ¶ 12.
. Id.
. Id.
. Given the court’s conclusion, it need not address defendants' arguments that if the court has jurisdiction over the claims of the individuals who assert the fifth and sixth causes of action, it can exercise supplemental jurisdiction over the claims of the remaining plaintiffs under 28 U.S.C. § 1367(a). The court notes, however, that exercising supplemental jurisdiction as defendants suggest would be unwarranted.
When a federal claim is joined with state claims in the same action, the federal court has "supplemental jurisdiction over all other claims that are so related to [the federal] claim[ ] ... that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). If "a plaintiff's claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.” United Mine Workers v. Gibbs,
Having the court exercise supplemental jurisdiction is not a matter of right, however. See Gibbs,
"(1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction....”
Gibbs noted that "if it appears that the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals.” Gibbs,
Defendants cannot argue persuasively that the wrongful foreclosure claims of nine individuals predominate over the myriad claims of the remaining plaintiffs, who number almost 100. While it is true that the complaint alleges a “common plan and scheme designed to conceal ... material facts” from plaintiffs (Complaint, ¶ 163), the nine individuals who assert wrongful foreclosure and breach of contract claims seek a form of relief that is unavailable to the remaining plaintiffs. The proof that will be required to prevail on their claims will be distinct and in large measure separate from the evidence that will be necessary to prove the remaining claims.
Defendants have not demonstrated that judicial economy and fairness would be served by requiring almost 100 plaintiffs who allege claims outside federal jurisdiction to litigate those claims in federal court. This is especially true since their claims can just as easily be adjudicated in state court with no prejudice to any party. Consequently, if the court were to reach the issue, it would decline to exercise supplemental jurisdiction over the claims of plaintiffs who do not assert a wrongful foreclosure or breach of contract claim.
. Complaint at 84 (emphasis added).