Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-04798/USCOURTS-cand-4_16-cv-04798-3/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

NATHANIEL BASOLA SOBAYO,

Plaintiff, 

v. 

CALIBER HOME LOANS, INC., et al., 

Defendants. 

Case No. 16-cv-04798-PJH 

ORDER DENYING MOTION TO 

REMAND; GRANTING MOTIONS TO 

SET ASIDE DEFAULT; GRANTING 

MOTIONS TO DISMISS; DENYING 

MOTION FOR PRELIMINARY 

INJUNCTION; DENYING MOTIONS TO 

STRIKE 

Re: Dkt. 8, 13, 31, 47, 50, 54, 61, 62, 86 

 On October, 26, 2016, a number of motions in this matter came on for hearing: (1) 

plaintiff Nathaniel Basola Sobayo’s motion to remand (Dkt. 50); (2) defendants Real Time 

Resolutions, Inc. (“RTR”), Caliber Home Loans, Inc. (“Caliber”), and Summit 

Management Company LLC’s (“Summit”) motions to set aside state court defaults (Dkt. 

14, 54); (3) RTR and defendant Bank of America, Inc.’s (“BoA”) motions to dismiss (Dkt. 

8, 47); and (4) plaintiff’s motion for a preliminary injunction (Dkt. 31). Plaintiff appeared 

pro per. Caliber and Summit appeared through their counsel, Kenneth MacArthur. BoA 

appeared through its counsel, Jason Richardson. RTR appeared through its counsel, 

Nathaniel Lucey. Having read the papers filed by the parties and carefully considered 

their arguments and the relevant legal authority, and good cause appearing, the court 

hereby DENIES the motion to remand, GRANTS the motions to set aside the defaults, 

DENIES the motion for a preliminary injunction, and GRANTS the motions to dismiss with 

leave to amend for the following reasons, as well as those stated at the hearing. 

BACKGROUND 

A. Facts Alleged in the Complaint 

The case concerns Sobayo’s claim to the property located at 329 Hawk Ridge 

Drive, Richmond, CA 94806 (the “Property”). On February 11, 2015, BoA approved a 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 1 of 10
2 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

short sale of the Property by Martin Musonge to Kingsway Capital Partners, LLC 

(“Kingsway”). Compl. ¶ 8 & Ex. A (Dkt. 1-1). This document (the “February 11 Letter” or 

“the Letter”) names the “approved buyer” as Kingsway, Sobayo’s LLC. Compl. Ex. A at 

2. The complaint conflates Sobayo and his LLC by naming the plaintiff as “Nathaniel 

Basola Sobayo, dba Kingsway Capital Partners LLC.” Compl. at 1. Thus, although the 

complaint appears to allege that Sobayo, personally, was the buyer, the documents 

themselves make clear that the buyer was Kingsway. 

Approval of the short sale was needed as Musonge owed hundreds of thousands 

of dollars on his outstanding mortgages on the Property. Compl. Ex. A. The February 11 

Letter from BoA to Musonge indicates that the approved sales price is $580,000, and that 

the approval is “void” unless closing takes place by March 26, 2015. Id. at 2. A 

subsequent letter from BoA, dated March 24, 2015, extends the deadline by a few weeks, 

stating that “[c]losing must take place not later than April 10, 2015 or this approval is 

void.” Id. at 6. 

Relying on the short sale approval letter, Musonge and Kingsway entered into a 

contract for plaintiff to purchase the Property on July 10, 2015. See Compl. ¶ 11 & Ex. B. 

The real estate purchase contract indicates that the buyer is Kingsway, and the price is 

given as $570,000. Compl. Ex. B at 1. 

On July 7, 2015, prior to the signing of the real estate purchase contract, BoA 

transferred the deeds of trust on Musonge’s loans. Compl. ¶ 13. Caliber was substituted 

as trustee on the first deed of trust. Id. When plaintiff tried to close on the short sale in 

August, Caliber objected. Compl. ¶ 14. On November 6, 2015, however, Caliber 

approved the proposed short sale. Compl. ¶ 15 & Ex. C. This approval lists the required 

sales price as not less than $570,000. When plaintiff again attempted to close on the 

sale, he could not do so because the second deed of trust had “not been transferred or 

assigned by [BoA].” Compl. ¶ 16. 

In January 2016, RTR “claimed ownership” of the second deed of trust. Compl. 

¶ 17. RTR has refused to approve the short sale without receiving compensation. The 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 2 of 10
3 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

short sale approval allegedly was “cancel[ed]” by the “defendant[s]” on May 9, 2016. 

Compl. ¶ 19. 

Plaintiff’s complaint asserts three causes of action, relying on the February 11 

Letter from BoA to Musonge as a contract/promise that was breached by the 

“defendants,” who are treated as a collective. The first cause of action construes the 

February 11 Letter as a “contract” and asserts that this contract was breached when the 

short sale was cancelled. Compl. ¶¶ 8–20. The second claim is for promissory estoppel. 

It alleges that the February 11 Letter was a promise, on which Sobayo reasonably relied, 

which induced him to enter into a contract to purchase the Property and to submit a 

$40,000 down payment. Compl. ¶¶ 21–27. The third cause of action for fraud alleges 

that the representations in the February 11 Letter were knowingly false. Plaintiff relied on 

these misrepresentations to perform due diligence regarding the Property, to enter into a 

contract to purchase the Property, and to make a down payment. 

B. Procedural History

 Sobayo’s complaint was filed in state court on July 15, 2016, and served on all 

defendants on July 21. Dkt. 1-1. Under California Rule of Civil Procedure 412.20(a)(3), 

defendants’ response to the complaint would have been due on August 22, 2016. 

On August 19, defendants removed the case to this court on the basis of diversity 

and filed a notice of removal in this court. Dkt. 1. On August 22, plaintiff agreed to a 

stipulation to extend the time period for defendants to respond to the complaint for 60 

days, until October 25, 2016. On August 23, that stipulation was filed with this court. 

Dkt. 5. In a handwritten note on the stipulation, Sobayo indicates that he stipulates only 

“if this court has jurisdiction” and “declares” that default was entered. Id. 

On August 23, the day after the state law deadline to respond, Sobayo had 

requested entry of default in the state court. Default was entered against Caliber, 

Summit, and RTR on that same day. See Dkt. 16 at 43–44 (state court docket). The 

notice of removal was filed with the state court on the following day, August 24, after 

which the state court relinquished jurisdiction. 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 3 of 10
4 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

On September 8, 2016, plaintiff filed a motion for a temporary restraining order 

and preliminary injunction to prevent a foreclosure sale scheduled for September 13, 

2016. Dkt. 31. Following Caliber and Summit’s representation that they would delay the 

foreclosure sale until plaintiff’s motion for a preliminary injunction could be heard, Dkt. 37, 

this court denied the motion for a temporary restraining order. Dkt. 38. 

SOBAYO’S MOTION TO REMAND 

A. Legal Standard 

“[A]ny civil action brought in a State court of which the district courts of the United 

States have original jurisdiction, may be removed by the defendant . . . to the district 

court of the United States for the district and division embracing the place where such 

action is pending.” Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 7–

8 (1983) (citation omitted); see also 28 U.S.C. § 1441. 

However, federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. 

Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Accordingly, the burden of 

establishing federal jurisdiction for purposes of removal is on the party seeking removal, 

and the removal statute is construed strictly against removal jurisdiction. Valdez v. 

Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004); Gaus v. Miles, Inc., 980 F.2d 564, 

566 (9th Cir.1992). “Federal jurisdiction must be rejected if there is any doubt as to the 

right of removal in the first instance.” Gaus, 980 F.2d at 566. 

B. Analysis 

 Sobayo raises two concerns about the propriety of the notice of removal, neither of 

which has merit. First, Sobayo alleges that all of the defendants failed to “join in” the 

removal, because there is no separate signature from each defendant indicating their 

consent to removal. However, “individual consent documents” are not required in this 

circuit. See Proctor v. Vishay Intertech. Inc., 584 F.3d 1208, 1225 (9th Cir. 2009) The 

notice of removal is signed by Caliber’s attorney of record and indicates that “[a]ll 

defendants consent to removal.” Dkt. 1 ¶ 4. “One defendant’s timely removal notice 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 4 of 10
5 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

containing an averment of the other defendants’ consent and signed by an attorney of 

record is sufficient” in the Ninth Circuit. Proctor, 584 F.3d at 1225. 

 Second, Sobayo argues that there is no complete diversity of the parties because 

both he and Summit are citizens of California. However, the evidence submitted by 

Caliber indicates that Summit is not a citizen of California. Rather, as an LLC, Summit’s 

citizenship is determined by its members, and the only member of Summit is Caliber. 

Caliber is incorporated in Delaware with a principal place of business in Texas. Dkt. 59-2 

Ex. D. The only evidence that Sobayo submits to the contrary—a webpage of “Summit 

Property Management, Inc.”, Dkt. 52 Ex. B—appears to refer to a completely different 

entity with a similar name. Dkt. 59-2 Exs. C–D. 

 For these reasons, removal was proper and plaintiff’s motion to remand is 

DENIED. 

CALIBER AND RTR’S MOTION TO VACATE STATE COURT DEFAULT 

A. Legal Standard 

A court may set aside a default for “good cause shown.” See Fed. R. Civ. P. 

55(c). The good cause analysis considers three factors: (1) whether defendant engaged 

in culpable conduct that led to the default; (2) whether defendant had a meritorious 

defense; and/or (3) the prejudice to plaintiff. See TCI Group Life Ins. Plan v. Knoebber, 

244 F.3d 691, 696 (9th Cir.2001). These factors are disjunctive, and the district court is 

free to deny the motion “if any of the three factors [is] true.” See Franchise Holding II, 

LLC v. Huntington Restaurants Group, Inc., 375 F.3d 922, 925–26 (9th Cir. 2004) 

(quotation omitted). 

In a removed case, the Rule 55 standard governs motions to set aside defaults 

entered in state court because a “federal court takes the case as it finds it on removal 

and treats everything that occurred in the state court as if it had taken place in federal 

court.” Miles v. Banque Paribas, 106 F.3d 408 (9th Cir. 1997) (table decision) (citing 

Butner v. Neustadter, 324 F.2d 783, 785 (9th Cir.1963)).

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 5 of 10
6 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

B. Analysis 

 As explained at the hearing, the court has significant doubts as to whether default 

was properly entered in state court. Once the case was removed on August 19, the 

Federal Rules of Civil Procedure applied; Rule 81(c)(2)(C) extended the deadline for 

defendants’ response to the complaint, which was further extended by stipulation. Dkt. 5. 

Regardless of whether the entry of default was proper, good cause exists to set 

aside the defaults against RTR, Caliber, and Summit. There is no culpability by 

defendants, nor any prejudice to plaintiff. Defendants are actively defending on the 

merits in this court, having filed motions to dismiss the complaint. Accordingly, the court 

GRANTS Caliber, Summit, and RTR’s motions to set aside the state court defaults. 

Sobayo has filed motions to strike RTR and Caliber’s pleadings for lack of 

standing based on their default. Dkt. 61, 62. In light of this court’s decision to set aside 

the defaults, the court hereby DENIES Sobayo’s motions to strike. 

SOBAYO’S MOTION FOR A PRELIMINARY INJUNCTION 

For the reasons stated on the record at the hearing, the court DENIES Sobayo’s 

motion for a preliminary injunction (Dkt. 31) as MOOT. Caliber and Summit have 

represented to the court that they will postpone any foreclosure sale of the Property until 

a final judgment or settlement in this case. Dkt. 57-1 ¶ 4 (Decl. of Russ Fukano). There 

is therefore no threatened irreparable injury to justify an injunction. Moreover, were the 

court to reach the merits of this motion, it would find that plaintiff has not shown a 

likelihood of success, for the reasons stated below regarding the motions to dismiss. 

RTR’S AND BOA’S MOTIONS TO DISMISS 

A. Legal Standard 

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the 

legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 

1191, 1199–1200 (9th Cir. 2003). To survive a motion to dismiss for failure to state a 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 6 of 10
7 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

claim, a complaint generally must satisfy the requirements of Federal Rule of Civil 

Procedure 8, which requires that a complaint include a “short and plain statement of the 

claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). 

A complaint may be dismissed under Rule 12(b)(6) for failure to state a claim if the 

plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to 

support a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 

(9th Cir. 1990). The court is to “accept all factual allegations in the complaint as true and 

construe the pleadings in the light most favorable to the nonmoving party.” Outdoor 

Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899–900 (9th Cir. 2007). 

Legally conclusory statements, not supported by actual factual allegations, need not be 

accepted by the court. Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009). The allegations 

in the complaint “must be enough to raise a right to relief above the speculative level.” 

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and quotations 

omitted). “A claim has facial plausibility when the plaintiff pleads factual content that 

allows the court to draw the reasonable inference that the defendant is liable for the 

misconduct alleged.” Iqbal, 556 U.S. at 678 (citation omitted). “[W]here the well-pleaded 

facts do not permit the court to infer more than the mere possibility of misconduct, the 

complaint has alleged – but it has not ‘show[n]’ – ‘that the pleader is entitled to relief.’” Id. 

at 679. In the event dismissal is warranted, it is generally without prejudice, unless it is 

clear the complaint cannot be saved by any amendment. See Sparling v. Daou, 411 F.3d 

1006, 1013 (9th Cir. 2005). 

B. Analysis 

RTR and BoA’s motions to dismiss raise several issues with Sobayo’s complaint. 

First, defendants argue that Sobayo lacks standing to bring this suit. Any injury here was 

to the potential buyer—Kingsway—and not to Sobayo. Second, BoA argues that all of 

plaintiff’s claims fail because Sobayo failed to meet the express conditions of the Letter. 

In particular, the Letter makes clear that the short sale approval is contingent upon 

closing taking place by April 10, 2015 with a purchase price of $580,000. Compl. Ex. A. 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 7 of 10
8 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

Kingsway did not even enter into a contract to purchase the property until months after 

the deadline, and the purchase price was $570,000. Compl. Ex. B. Third, RTR argues 

that all claims against it must be dismissed because the complaint contains no 

allegations of any contract, promise, or misrepresentations made to Sobayo by RTR. 

The court finds that each of these arguments has merit. 

Under the express terms of the Letter and the real estate purchase contract, the 

potential buyer contemplated was Kingsway. Thus, any injury was to Kingsway, an LLC, 

not to Sobayo personally. Sobayo lacks standing to pursue the claims here and 

accordingly Sobayo is hereby DISMISSED as a plaintiff in this matter. If Sobayo wishes 

to pursue claims on behalf of his LLC, he cannot do so pro se and must secure legal 

representation. See United States v. High Country Broad. Co., 3 F.3d 1244, 1245 (9th 

Cir. 1993); Civil Local Rule 3-9(b). 

Although the standing issue would be in itself sufficient to mandate dismissal, the 

court finds the complaint must also be dismissed for failure to state a claim. The terms of 

the Letter require closing to take place by April 10, 2015; the short sale approval is “void” 

otherwise. The complaint admits that no closing took place by April 2015; on the 

contrary, the real estate purchase contract with Musonge was not even entered into until 

July 2015. Thus, even accepting all of the allegations in the complaint as true, Sobayo 

has not stated a claim for breach of contract. Sobayo’s promissory estoppel claims fail 

for analogous reasons. Because the short sale approval was expressly contingent on the 

sale being finalized before April 10, 2015, there could be no “reasonable reliance” by 

Sobayo on the Letter’s promise when closing did not occur by the deadline. Nor was 

there any fraudulent misrepresentation when defendants’ actions were entirely consistent 

with the terms of the Letter. 

Finally, RTR is correct that the complaint lacks any allegations of a contract 

between RTR and Sobayo, a promise by RTR to Sobayo, or a misrepresentation by RTR 

to Sobayo. Rather, as currently plead, plaintiff’s claims arise from BoA’s Letter. All the 

complaint says about RTR is that it “claimed ownership” of the second deed of trust in 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 8 of 10
9 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

United States District Court 

Northern District of California 

January 2016 and demanded $63,823.95. Compl. ¶ 19. Sobayo provides no explanation 

for why RTR (or Caliber/Summit) would be vicariously liable for BoA’s actions. 

For all these reasons, the motions to dismiss Sobayo’s complaint are GRANTED.1 

The court will, however, provide Sobayo leave to amend the complaint, in accordance 

with its instructions below. 

C. Instructions Regarding Leave to Amend 

 First, any amended complaint must be brought on behalf of Kingsway Capital 

Partners, LLC. Kingsway must be represented by legal counsel, who shall enter an 

appearance on the docket. 

 Second, to the extent that Kingsway wishes to rely on the Letter as the operative 

contract/promise, it must allege specific facts that explain why the April 10,2015 deadline 

was inapplicable and/or had been extended by the defendants. A similar explanation 

must be made with regard to the fact that the purchase price in the contract between 

Kingsway and Musonge is lower than that approved in the Letter. To the extent that 

Kingsway wishes to rely on other short sale approvals by defendants, those facts must be 

pled in the complaint. 

 Third, to the extent that Kingsway seeks to assert claims against RTR, Caliber, 

and Summit, it must allege a contract, promise, or misrepresentation made by these 

defendants. As pled, the complaint focuses on representations made by BoA to 

Musonge in the Letter. Even presuming that Kingsway can claim to be a third party 

beneficiary to the Letter, it is not clear to the court why RTR, Caliber, or Summit would be 

bound by the representations in the Letter. Any amended complaint shall make clear 

what specific contracts/promises/representations were made by each defendant, or why 

each defendant is bound by the contracts/promises/representations of another defendant. 

It is not sufficient to treat all of the defendants as an undifferentiated group. 

 

1

 A day before the hearing in this matter, Caliber filed a motion to dismiss. Dkt. 86. As 

this motion is moot in light of the court’s decision to dismiss the complaint, the motion has 

been withdrawn. Sobayo need not respond to this motion, and Caliber may of course 

move again to dismiss if an amended complaint is filed. 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 9 of 10
United States District Court 

Northern District of California 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

no

wh

Mo

ap

Co

[T]

sal

an

an

pre

ple

am

res

Da

Fourth

tify it regard

hy any defe

oreover, the

pears to be

ompl. Ex. A 

he new ser

le.”). 

Finally

For the

d Caliber’s 

d BoA’s mo

eliminary in

eadings (Dk

Sobayo

mended com

spond. 

IT IS S

ated: Octob

, to the exte

ding the tra

ndant had a

e amended 

e consistent

(“[S]ervicin

rvicer may 

, no new ca

e foregoing 

motions to

otions to dis

junction (D

kt. 61, 62) a

o shall have

mplaint on b

SO ORDER

ber 27, 201

ent Kingsw

ansfer of se

a duty to no

complaint 

t with the e

ng for this lo

not be requ

auses of ac

reasons, S

o vacate sta

smiss (Dkt.

kt. 31) is D

are DENIED

e until Dece

behalf of Ki

RED. 

6 

10

ay seeks to

rvicing of M

otify Kingsw

should add

xpress term

oan may be

uired to acc

ction may b

CONCLU

Sobayo’s m

ate court de

 8, 47) are 

DENIED as 

D. 

ember 12 t

ngsway. D

__

PH

Un

0

o rely on the

Musonge’s l

way about t

dress why th

ms of the Le

e transferre

cept the term

e asserted 

USION 

otion to rem

efaults (Dkt.

GRANTED

moot, and S

to secure re

Defendants 

__________

HYLLIS J. H

nited States

e theory tha

loans, King

the transfer

he transfer 

etter, was f

ed to a diffe

ms and con

in the ame

mand (Dkt. 

. 13, 54) are

D, Sobayo’s

Sobayo’s m

epresentati

shall have 

__________

HAMILTON

s District Ju

at defendan

gsway must

r of servicin

of servicing

fraudulent. 

rent loan se

nditions of a

ended comp

50) is DEN

e GRANTE

s motion for

motions to s

on and file 

21 days th

__________

udge 

nts failed to

t explain 

ng. 

g, which 

See 

ervicer . . . 

a short 

plaint. 

NIED, RTR 

ED, RTR 

r a 

strike 

an 

ereafter to 

_______ 

o

. 

Case 4:16-cv-04798-PJH Document 88 Filed 10/27/16 Page 10 of 10