Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-00106/USCOURTS-casd-3_18-cv-00106-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332fc Diversity - Foreclosure

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

WALTER MILLER; MARIE MILLER,

Plaintiff,

v.

ROUNDPOINT MORTGAGE 

SERVICING CORPORATION; CLEAR 

RECON CORP,

Defendants.

Case No.: 3:18-cv-00106-BEN-BLM

ORDER REMANDING CASE TO 

SUPERIOR COURT OF 

CALIFORNIA

Before the Court is the Ex Parte Motion for Temporary Restraining Order (“TRO 

Motion”) filed by Plaintiffs Walter Miller and Marie Miller. (Docket No. 9.) Defendant 

RoundPoint Mortgage Servicing Corporation (“RoundPoint”) filed an opposition. 

(Docket No. 11.) Defendant Clear Recon Corp (“CRC”) has not responded to the TRO 

Motion. As will be discussed in further detail below, the Court finds it does not have 

subject matter jurisdiction in this case because there is no federal question jurisdiction, 

and diversity jurisdiction is defeated by the California citizenship of CRC, which the 

Court finds is not a nominal party to the case. As a result, the Court REMANDS the 

action to the San Diego Superior Court. 

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BACKGROUND

On December 14, 2017, Plaintiffs initiated this action by filing a Complaint in the 

San Diego Superior Court against Defendants.1 (Docket No. 1, Ex. A.) In the 

Complaint, Plaintiffs alleged four claims for relief, all arising under California state law. 

(Id.; see also Notice of Removal (“NOR”) ¶ 1.) The Complaint was served on 

RoundPoint on December 18, 2017. (NOR ¶ 2.) 

On January 17, 2018, RoundPoint removed the action to this Court. (Docket No. 

1.) In its removal papers, RoundPoint asserts diversity jurisdiction exists because there is 

complete diversity between Plaintiffs and all named Defendants, excluding CRC, which 

RoundPoint claimed was only a nominal party. (Id. ¶¶ 6-11.) According to RoundPoint, 

CRC’s citizenship as a California corporation should be disregarded because CRC “filed 

a declaration of non-monetary status (“DNMS”) pursuant to California Civil Code 

section 29241 in the State Court Action on January 10, 2018.” (Id. ¶ 10.) Therefore, 

RoundPoint asserts, “CRC became a non-party to the instant action by operation of law.” 

(Id.) (citation omitted.) 

On February 21, 2018, RoundPoint filed a motion to dismiss Plaintiffs’ Complaint 

(Docket No. 8.) Later the same day, Plaintiffs filed the instant TRO Motion. 

SUBJECT MATTER JURISDICTION

This Court has a sua sponte obligation to confirm that it has subject matter 

jurisdiction. Nevada v. Bank of Am. Corp., 672 F.3d 661, 673 (9th Cir. 2012) (“[I]t is 

well established that ‘a court may raise the question of subject matter jurisdiction, sua 

sponte, at any time during the pendency of the action[.]’” (quoting Snell v. Cleveland, 

Inc., 316 F.3d 822, 826 (9th Cir. 2002))). “If at any time before final judgment it appears 

that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 

U.S.C. § 1447(c). The Court finds subject matter jurisdiction lacking in this action.

 

1 Case No. 37-2017-00048126-CU-OR-CTL. (Docket No. 1, Ex. A.)

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First, RoundPoint’s removal is procedurally defective because it has not 

demonstrated CRC’s consent or joinder in the removal. See 28 U.S.C. § 1446(2)(a) 

(“[A]ll defendants who have been properly joined and served must join in or consent to 

the removal of the action.”); see also Proctor v. Vishay Intertechnology, Inc., 584 F.3d 

1208, 1224-25 (9th Cir. 2009) (discussing requirement of all defendants to join or 

consent to removal under “unanimous joinder rule” or the Supreme Court’s “rule of 

unanimity”) (citing Chicago, Rock Island, & Pac. Ry. Co. v. Martin, 178 U.S. 245, 248 

(1900))). 

Second, even if removal were proper, RoundPoint failed to meet its burden to 

establish the existence of subject matter jurisdiction. 

“For a case to ‘arise under’ federal law, a plaintiff’s well-pleaded complaint must 

establish either (1) that federal law creates the cause of action or (2) that the plaintiff’s 

asserted right to relief depends on the resolution of a substantial question of federal law.” 

K2 Am. Corp. v. Rolland Oil & Gas, LLC, 653 F.3d 1024, 1032 (9th Cir. 2011) (citation 

and internal quotation marks omitted). Here, the Complaint asserts only claims arising 

under California state law, specifically various sections of the California Civil Code, 

promissory estoppel, and unfair business practices. Thus, the Complaint does not arise 

under federal law, and the Court therefore does not have federal question jurisdiction.

Subject matter jurisdiction based on diversity of citizenship is equally inapplicable 

here. Subject matter jurisdiction based on diversity of citizenship exists only where the 

amount in controversy exceeds $75,000 and there is complete diversity of citizenship. 28 

U.S.C. § 1332; Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978).

“A party’s residence is ‘prima facie’ evidence of domicile.” Zavala v. Deutsche 

Bank Tr. Co. Americas, No. C 13-1040 LB, 2013 WL 3474760, at *3 (N.D. Cal. July 10, 

2013) (citation omitted); see also Martingale Investments LLC v. Evans, No. CV 12-

09502 SJO CWX, 2012 WL 5902352, at *1 (C.D. Cal. Nov. 26, 2012). In the absence of 

evidence to the contrary, a party will be treated as a citizen of its state of residence for 

federal diversity purposes. See id. For federal diversity purposes, “a corporation shall be 

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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.” Kuntz v. Lamar Corp., 385 F.3d 1177, 1181-

82 (9th Cir. 2004) (citing 28 U.S.C. § 1332(c)(1)) (quotation marks omitted). According 

to the Complaint, Plaintiffs reside in the County of San Diego, California. (Compl. ¶ 1.)

In the absence of evidence to the contrary, Plaintiffs are considered citizens of California

for federal diversity purposes. See Zavala, 2013 WL 3474760, at *3.

The Court takes judicial notice that CRC is incorporated in California with its 

principal place of business in San Diego, California. See Cal. Sec’y of State Website, 

Business Entity Detail for Clear Recon Corp, available at

https://businesssearch.sos.ca.gov/; see also Franklin v. Eisner, No. 96-CV-935 JSB, 1996 

WL 406795, at *1 (N.D. Cal. July 12, 1996) (taking judicial notice of Walt Disney 

Company’s state of incorporation and place of principal business). Therefore, CRC is a 

California citizen for purposes of diversity jurisdiction.

RoundPoint acknowledges that CRC is a California citizen, but contends that 

CRC’s citizenship should be set aside because CRC is a nominal party. (NOR ¶ 10.) As 

noted above, RoundPoint contends that “CRC’s citizenship is irrelevant to the diversity 

inquiry because it filed a declaration of non-monetary status” and thereby “became a nonparty to the instant action by operation of law.” (Id.)

For purposes of diversity jurisdiction, the courts ignore the citizenship of nominal 

parties “who have no interest in the action” and “are merely joined to perform [a] 

ministerial act.” Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 

873 (9th Cir. 2000). RoundPoint, as the removing party, bears the burden of establishing 

that CRC is a nominal party. Silva v. Wells Fargo Bank NA, No. CV 11-3200 GAF 

JCGX, 2011 WL 2437514, at *3 (C.D. Cal. June 16, 2011) (“[T]he burden of 

demonstrating that the defendant is a nominal party rest[s] with the removing party.” 

(citation omitted)).

California Civil Code section 2924l permits a trustee to file a DNMS if it is named 

in a state-court action “solely in its capacity as trustee, and not arising out of any 

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wrongful acts or omissions on its part in the performance of its duties as trustee.” Cal. 

Civ. Code § 2924l(a). If a party does not object to the trustee’s DNMS within fifteen 

days of service, the trustee becomes a nominal party in the action. Id. § 2924l(d). If the 

case is then removed to federal court, the district court “treat[s] the trustee as a nominal 

party and disregard[s] its citizenship for diversity purposes.” Lawrence v. Aurora Loan 

Servs. LLC, Civ. No. 1:09-1598 LJO DLB, 2010 WL 449734, at *4 (E.D. Cal. Feb. 8, 

2010). However, a trustee does not become a nominal party, “when the case is removed 

to federal court before the fifteen-day objection period has expired.” Jenkins v. Bank of 

Am., N.A., Civ. No. 14-4545 MMM JCX, 2015 WL 331114, at *8 (C.D. Cal. Jan. 26, 

2015) (collecting cases) (emphasis added). In this situation, “nonmonetary status may 

not be granted in federal court.” Tran v. Wash. Mut. Bank, Civ. No. S-09-3277 LKK 

DAD, 2010 WL 520878, at *1 (E.D. Cal. Feb. 11, 2010). 

Here, CRC served its DNMS on January 10, 2018. (NOR ¶ 10; Docket No. 1, Ex. 

B.) Seven days later, on January 17, 2018, RoundPoint removed this case. (Docket No. 

1.) Therefore, this case was removed before the fifteen-day objection period had passed, 

and CRC did not obtain nominal party status at the time of removal. Jenkins, Civ. No. 

2015 WL 331114, at *8. As a result, RoundPoint’s assertion that CRC is a nominal 

defendant because Plaintiffs allegedly failed to object to CRC’s DNMS is irrelevant and 

fails. See Moore v. Wells Fargo Bank, N.A., Civ. No. 2:12-2125 LKK EFB PS, 2012 WL 

4433323, *3 (E.D. Cal. Sept. 24, 2012) (holding that the trustee was not a nominal party 

where “the 15 day objection period did not run” before the action was removed); accord 

Boggs v. Wells Fargo Bank NA, Civ. No. C-11-2346 SBA, 2012 WL 2357428, at *3 

(N.D. Cal. June 14, 2012) (trustee was not a nominal party where defendants removed the 

action fourteen days after the trustee's DNS was filed); Sun v. Bank of Am. Corp., Civ. 

No. SA-10-4 AG MLGX, 2010 WL 454720, at *2 (C.D. Cal. Feb. 8, 2010) (trustee was 

not a nominal party where defendants removed the action thirteen days after the trustee's 

DNS was filed).

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In sum, because RoundPoint has not met its burden of demonstrating that CRC is a 

nominal party, the Court may not disregard CRC’s California citizenship on this ground. 

Based on the lack of complete diversity, the Court does not need to reach the issue of 

whether the amount in controversy exceeds the $75,000 threshold. Thus, the Court has 

neither federal question nor diversity jurisdiction over the claims in this Complaint. 

Accordingly, the Court REMANDS the action to the San Diego Superior Court.

IT IS SO ORDERED.

Dated: February 23, 2018

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