Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-00161/USCOURTS-cand-3_10-cv-00161-2/pdf.json

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

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UNITED 

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DISTRICT 

COURT

For the Northern District of California

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UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

Northern District of California

VICTOR CABRIALES and CLAUDIA

CABRIALES,

Plaintiff,

v.

AURORA LOAN SERVICES, et al.,

Defendants.

_____________________________________/

No. C 10-161 MEJ

ORDER RE PLAINTIFF’S MOTION

TO REMAND [Dkt. #8] AND

DEFENDANT DICHTER’S MOTION

TO TRANSFER [Dkt. #6]

Pending before the Court is Plaintiffs Victor Cabriales and Claudia Cabriales’ (“Plaintiffs”)

Motion to Remand. (Dkt. #4.) Pursuant to Civil Local Rule 7-1(b), he Court finds this matter

suitable for resolution without oral argument and hereby VACATES the March 25, 2010 hearing. 

After considering the parties’ briefs, supporting materials, and controlling authorities, the Court

DENIES Plaintiffs’ Motion to Remand for the reasons set forth below. 

I. INTRODUCTION 

Plaintiffs initiated this action by filing a Complaint in Contra Costa County Superior Court

against Defendant Aurora Loan Services, LLC (“Defendant”) and Defendant Quality Loan Service

Corporation (“Quality Loan”) for Breach of Contract, Unfair Business Practices, Fraud, and

Injunctive Relief. (Compl., Dkt. #1, Ex. 1.) Plaintiffs are residents of Contra Costa County, State of

California. In their Complaint, Plaintiffs seek to enjoin a foreclosure sale on their residence. 

Plaintiffs are “husband and wife, and co-owners” of the property located at 1701 Esmond Street,

Richmond, California. (Compl. ¶ 3.) The Richmond property is Plaintiffs’ family home. (Shalaby

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COURT

For the Northern District of California

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 Pursuant to California Civil Code section 2924l, a trustee may file a declaration of

nonmonetary status in the event that it is named in an action in which that deed of trust is the

subject, and in the event that the trustee maintains a reasonable belief that it has been named in the

action solely in its capacity as trustee, and not arising out of any wrongful acts or omissions on its

part in the performance of its duties. Cal. Civ. Code § 2924a. In the event that no objection is

served within 15 days plus 5 days from the date of service, the trustee shall not be required to

participate in the action and shall not be subject to any damages. Id. at § 2924b, d.

2

Decl., Compl. Ex. 1.) Defendant is a limited liability company with its home office in Delaware. 

(Removal Not., Dkt. #1, ¶ 6.) On December 22, 2009, Quality Loan timely filed a declaration of

non-monetary status pursuant to California Civil Code section 2924l, id. at Ex. 3, and is no longer a

party to this action.1

On January 13, 2010, Defendant removed the action to this Court pursuant to 28 U.S.C. §

1441, on the basis of diversity jurisdiction under 28 U.S.C. § 1332. (Dkt. #1 at 1.) Thereafter, on

January 17, 2010, Plaintiffs moved to remand the case back to Contra Costa Superior Court. (Dkt.

#4.) Defendant filed its opposition on February 4, 2010, (Dkt. #11), and Plaintiffs filed a reply on

February 26, 2010 (Dkt. #17). 

II. DISCUSSION

In their Motion, Plaintiffs do not argue that diversity jurisdiction is improper based on the

citizenship of the parties. Instead, Plaintiffs seek to remand this matter based on alleged procedural

defects and the amount in controversy. Specifically, Plaintiffs argue that removal is untimely

because they served Defendant with the complaint on December 8, 2009, but Defendant did not

remove the case until January 13, 2010, which would appear to be past the removal deadline. 

Plaintiffs also allege that removal was invalid because Defendant’s counsel failed to file a

substitution of attorney in the state action, and thus argue that Defendant’s new counsel has no

legally-recognizable authority to represent it. Plaintiffs also argue that the amount in controversy

does not exceed $75,000. 

In response, Defendant argues that removal was timely because the complaint was not

removable until after Quality Loan filed its Declaration of Nonmonetary Status on December 22,

2009. Defendant further argues that it is not required to file a substitution of counsel - all that is

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For the Northern District of California

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required is that a written notice of the substitution be given to the adverse party, which it states it

did. As to the amount in controversy, Defendant argues that the amount is well over $75,000

because Plaintiffs seek injunctive relief to prevent foreclosure, yet they obtained a loan from

Defendant in the amount of $465,000. Defendant also notes that Plaintiffs seek punitive damages

and argue that this should be taken into consideration for purposes of determining the amount in

controversy. Finally, as to Plaintiffs’ request for injunctive relief, Defendant argues that the request

is not moot because Plaintiffs have not amended the complaint to remove their request to enjoin the

sale of their house, the sale of the property has not been cancelled, and it will not be cancelled as

long as their loan is in default.

The Court shall consider each argument in turn.

A. Legal Standard

If at any time before final judgment it appears that the district court lacks subject matter

jurisdiction over a case that has been removed to federal court, the case shall be remanded. 28

U.S.C. § 1447(c). The Court “strictly construe[s] the removal statute against removal jurisdiction.” 

Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). This strong presumption against removal

jurisdiction means that the defendant always has the burden of proving that removal is proper. Id. 

“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first

instance.” Id.

District courts have diversity jurisdiction over all civil actions between citizens of different

states, or between citizens of a state and citizens or subjects of a foreign state, where the amount in

controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332. When a plaintiff

files in state court a civil action over which the federal district courts would have had original

jurisdiction based on diversity of citizenship, the defendants may remove the action to federal court,

provided that no defendant is a citizen of the state in which such action is brought. Caterpillar, Inc.

v. Lewis, 519 U.S. 61, 62 (1996) (citing 28 U.S.C. §§ 1441(a) and (b)).

B. Whether Removal was Untimely

Plaintiffs first argue that removal was untimely because they served the complaint on

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December 8, 2009; therefore, the notice of removal filed on January 13, 2010 is untimely under the

30-day statutory time period to remove a case. In response, Defendant argues that the 30-day period

should be determined from the time that Quality Loan became a nominal party and therefore not

considered for purposes of diversity.

Pursuant to 28 U.S.C. § 1446(b), a defendant seeking to remove a case to federal court must

do so within thirty days after service of the summons and complaint. However, the statute provides

for a renewed thirty-day removal period if the defendant learns, “through service or otherwise, of a

copy of an amended pleading, motion, order or other paper from which it may first be ascertained

that the case is one which is or has become removable[.]” 28 U.S.C. § 1446(b). 

Here, Quality Loan filed its declaration on December 22, 2009, and, when no objections

were filed, it transformed into a nominal party whose citizenship is disregarded for purposes of

assessing diversity jurisdiction. See Cal. Civil Code § 29241l(d); see also Navarro Sav. Ass'n v. Lee,

446 U.S. 458, 461 (1980) (“[a] federal court must disregard nominal or formal parties and rest

jurisdiction only upon the citizenship of real parties to the controversy”). Accordingly, for purposes

of determining the thirty-day removal period, the Court finds that Defendant properly removed

based on a renewed thirty-day period under § 1446(b). 

C. Whether Defendant was Required to File a Substitution of Attorney

Plaintiffs next argue that removal was improper because Defendant failed to file a

substitution of attorney form in the state action. Thus, Plaintiffs contend that Defendant’s present

counsel has no legally recognizable authority to represent it, and had no authority to remove the

action. Plaintiffs cite to California Civil Code sections 284 and 285 in support of their argument. 

The Court finds that Plaintiffs’ argument is without merit. Under section 284, the attorney in

an action may be changed at any time with the consent of both client and attorney. Cal. Civ. Code §

284. Under section 285, written notice of the change must then be given to the adverse party. Cal.

Civ. Code § 285. Here, Defendant provided written notice of the substitution to Plaintiffs on

January 12, 2010. (Shalaby Decl. Ex. 4.) Accordingly, the Court finds that removal was not invalid

on this ground.

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D. Whether the Amount in Controversy Exceeds $75,000

Plaintiffs’ third argument is that the amount in controversy is below the $75,000

jurisdictional requirement. Specifically, Plaintiffs argue that the amount is, at most, the estimated

$13,076.33 in loan arrears at issue, plus punitive damages “of up to three times that amount, for a

total judgment of perhaps $52,000 on a good day.” (Pls.’ Mot. 8:13-17.) In response, Defendant

argues that the amount Plaintiffs owe on their loan is far more than $13,000. Defendant further

argues that, since Plaintiffs complaint seeks injunctive relief, under which they seek to have the

foreclosure enjoined, the amount should be measured by the value of the object of the litigation. 

Although Plaintiffs contend in their motion that the injunctive relief claim has been mooted by

stipulation to cancel the sale of the property, (Pls.’ Mot. 6:19-23), Defendant argues that the sale was

not cancelled, but rather postponed.

As a preliminary matter, the Court finds no indication that the injunctive relief claim has

been mooted by any stipulation of the parties. First, as Defendant notes in its opposition, the face of

Plaintiffs’ complaint clearly demonstrates that they seek to enjoin the sale of their house, and

Plaintiffs have not amended their complaint to remove this request for relief. Second, Defendant

states that, while it has postponed the sale at the request of Plaintiffs’ counsel, it has not been

cancelled and will not be cancelled as long as Plaintiffs’ loan is in default. (Def.’s Opp’n. 9:24-

10:3.) Accordingly, the Court finds that Plaintiffs have not established that the requested injunctive

relief is no longer part of their complaint.

As to the amount in controversy, “[i]n actions seeking declaratory or injunctive relief, it is

well established that the amount in controversy is measured by the value of the object of the

litigation.” Cohn v. Petsmart, 281 F.3d 837, 840 (9th Cir. 2002) (citing Hunt v. Wash. State Apple

Adver. Comm'n, 432 U.S. 333, 347 (1977). Here, Plaintiffs allege in their complaint that they

“obtained a loan, secured by a FIRST deed of trust, on the subject property, from Aurora, in the

amoung of approximately $465,000.” (Compl. ¶ 5.) Although Defendant admits that the property

value has likely decreased since 2006, (Def.’s Opp’n. 8:1-2), there is no evidence before the Court

showing that it is worth less than $75,000. In addition, Plaintiffs seek an undetermined amount of

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COURT

For the Northern District of California

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UNITED 

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DISTRICT 

COURT

For the Northern District of California

punitive damages, which is taken into consideration for purposes of determining the amount in

controversy. See, e.g., Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001) (“punitive

damages are part of the amount in controversy in a civil action”). Thus, the Court finds that

Defendant has met its burden of showing that the amount in controversy exceeds $75,000.

Plaintiffs cite to Thirteen South Ltd. v. Summit Village, Inc., 936 F.2 579 (9th Cir. 1991),

arguing that the Ninth Circuit in that case looked to the value of the equity, not the value of the

property. However, Plaintiffs’ argument is without merit because the court in Thirteen South looked

to “the value of the land” to determine the amount in controversy. Id. at 1. Further, Thirteen South

is an unpublished opinion and, pursuant Ninth Circuit Rule 36-3(c), it may not be cited to the courts

of this circuit.

Plaintiffs also cite to Garfinkle v. Wells Fargo Bank, 483 F.2d 1074 (9th Cir. 1973), in which

the court held that the “matter in controversy ha[d] a value in excess of $10,000 [(which was the

threshold amount to be met at the time)], exclusive of interest and costs.” Id. at 1076. Plaintiffs

argue that the court in Garfinkle held that the amount in controversy is based on the equity in and

not the value of the object of the litigation. (Pls.’ Mot. 6:1-11.) However, the Garfinkle court did

not make any such holding. The court did not state whether its conclusion was based on either the

“value” of the equity in the house or the “value” of the property. In fact, the court made no mention

at all in its opinion of the value of the equity remaining in the property. As stated above, since

Plaintiffs seek injunctive relief, the amount in controversy is measured by the value of the object of

the litigation. Cohn, 281 F.3d at 840 (citations omitted). 

III. CONCLUSION

For the reasons set forth above, the Court DENIES Plaintiffs’ request to remand this action

to California state court. 

IT IS SO ORDERED.

Dated: March 2, 2010 _______________________________

Maria-Elena James 

Chief United States Magistrate Judge 

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