Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00546/USCOURTS-azd-2_11-cv-00546-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1441 Petition for Removal- Fraud

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Michael Wilson,

Plaintiff, 

vs.

GMAC Mortgage, et al.,

Defendants. 

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No. CV-11-0546-PHX-FJM

ORDER

We have before us plaintiff’s motion to remand (doc. 8), defendants’ response (doc.

9), and plaintiff’s reply (doc. 10). We also have defendants’ notice of supplemental support

and authority (doc. 11). Plaintiff moves to remand on the grounds that (1) the amount in

controversy does not meet the jurisdictional minimum, (2) the parties lack complete diversity,

and (3) we should abstain because plaintiff’s claims raise matters of significant state policy.

Plaintiff filed this action in the Superior Court of Arizona in Maricopa County.

Defendants removed based on diversity jurisdiction. 28 U.S.C. § 1332. Plaintiff asserts

causes of action for (1) fraud, (2) constructive fraud, (3) breach of contract, (4) intentional

infliction of emotional distress, (5) negligence, (6) violation of the Arizona Consumer Fraud

Act, A.R.S. § 44-1521, et seq., and (7) unjust enrichment. 

I

Plaintiff argues that defendants have not demonstrated that the amount in controversy

exceeds $75,000, as required by 28 U.S.C. § 1332(a). “We strictly construe the removal

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statute against removal jurisdiction. Federal jurisdiction must be rejected if there is any

doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566

(9th Cir. 1992) (citations omitted). Defendants bear the burden of establishing that removal

is proper. Id. When the amount in controversy is not clear from the face of the complaint,

defendant must show by a preponderance of the evidence that the jurisdictional threshold has

been met. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403–04 (9th Cir. 1996). 

Plaintiff alleges the amount in controversy is $45,271.51, the amount plaintiff paid

defendants in accordance with the parties’ settlement agreement, under which plaintiff was

to receive a loan modification and restoration of title. Plaintiff alleges that defendants

breached the settlement agreement by failing to modify the loan and restore title to the

property. Complaint, ¶ 40 (doc. 1-1). Defendants argue that the amount in controversy is

the unpaid balance on plaintiff’s home loan. Although plaintiff’s request for relief is made

in generalized terms, he apparently seeks to have the loan reinstated and title to the property

restored, in accordance with settlement agreement that defendants allegedly breached. See

Complaint, ¶ 23. Plaintiff’s settlement offer, which proposes reducing the amount of the loan

from over $1.5 million to $787,500.00, also suggests that plaintiff seeks to reinstate the loan.

See Submission of Supplemental Support, ex. B, “Settlement Proposal” (doc. 11-1). Courts

have concluded that “where a complaint seeks to invalidate a loan secured by a deed of trust,

the amount in controversy is the loan amount.” Ngoc Nguyen v. Wells Fargo Bank, N.A.,

749 F. Supp. 2d 1022, 1028 (N.D. Cal. 2010). Similarly, where plaintiff seeks to have a loan

reinstated, the amount in controversy is the value of the loan. The unpaid balance of the loan

is at least $729,750, see Motion at 3, and therefore this action meets the jurisdictional

minimum. 

We also note that even if we accepted plaintiff’s argument that his complaint is not

about the underlying loan, but about the settlement agreement, it is still more likely than not

that the amount in controversy exceeds $75,000. Plaintiff argues that the amount in

controversy is only $45,271.51, which he paid to defendants in accordance with the

settlement agreement. But plaintiff asserts seven causes of action, and seeks compensatory,

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1

 Defendants assert that a third LLC defendant, GMAC Home Services, was sold to

another company, and has no affiliation with the GMAC parties. Notice of Removal at 2–3.

2

The Notice of Removal does not fully explain the ownership of the LLCs, simply

alleging that GMAC Mortgage and Homecomings Financial are Delaware corporations.

Notice of Removal, ¶¶ 7, 9. However, in their Corporate Disclosure Statement, defendants

allege that “GMAC Parties are indirect wholly owned subsidiaries of Ally Financial Inc.”

Corporate Disclosure Statement at 2 (doc. 5). The uncontested allegations about the

citizenship of the LLCs’ owners, along with the explanation of the parties’ relationship in the

Corporate Disclosure Statement, are sufficient to establish the diversity of the parties. 

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statutory, and punitive damages. It is more likely than not that the damages for all these

claims could exceed $75,000. 

II

Plaintiff alleges that the Notice of Removal (doc. 1) applied the citizenship standard

for corporations to defendant limited liability companies (“LLCs”). Motion at 5. 

Plaintiff is a citizen of Arizona. Two of the GMAC defendants are LLCs,

Homecomings Financial LLC and GMAC Mortgage LLC.1

 An “LLC is a citizen of every

state of which its owners/members are citizens.” Johnson v. Columbia Properties Anchorage,

LP, 437 F.3d 894, 899 (9th Cir. 2006). The GMAC LLCs are wholly owned indirect

subsidiaries of Ally Financial, Inc., a Delaware corporation. See Response at 3.2

 A

corporation is a citizen of the state in which it is incorporated and where it has its principal

place of business. See 28 U.S.C. § 332(c)(1). Ally Financial is incorporated in Delaware,

and has its principal place of business in either Pennsylvania, Michigan or Minnesota.

Plaintiff provides no evidence contradicting defendants’ allegations regarding their

citizenship. Because Ally Financial is not a citizen of Arizona, neither are the wholly-owned

LLC defendants. Therefore, there is complete diversity among the parties. 

III

Plaintiff argues that we should abstain from adjudicating his claims because his

complaint raises significant policy issues under Arizona law, and because our review will

disrupt the state’s efforts to adjudicate matters of public concern, within the meaning of

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Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098 (1943). 

We “have a strict duty to exercise the jurisdiction that is conferred upon [us] by

Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716, 116 S.Ct. 1712, 1720

(1996). We may abstain pursuant to the Burford doctrine only when a case presents

“difficult questions of state law . . . whose importance transcends the result in the case then

at bar,” or if adjudication in this court would disrupt “state efforts to establish a coherent

policy with respect to a matter of substantial public concern.” Id. 517 U.S. at 726–27, 116

S.Ct. at 1726 (citing New Orleans Public Service, Inc. v. Council of City of New Orleans,

491 U.S. 350, 361, 109 S.Ct. 2506, 2514 (1989)). The “power to dismiss recognized in

Burford represents an extraordinary and narrow exception to the duty of the District Court

to adjudicate a controversy properly before it.” Id. (citing Colorado River Conservation Dist.

v. U.S., 424 U.S. 800, 813, 96 S.Ct 1236, 1244 (1976)). Burford abstention is only

appropriate upon a showing: “(1) that the state has concentrated suits involving the local

issue in a particular court; (2) the federal issues are not easily separable from complicated

state law issues with which the state courts may have special competence; and (3) that federal

review might disrupt state court efforts to establish a coherent policy.” Tucker v. First Md.

Sav. & Loan, Inc., 942 F.2d 1401, 1404–05 (9th Cir. 1991). 

Plaintiff points to Arizona’s high rate of foreclosures, his claim under the Arizona

Consumer Fraud Act, and the state law scheme governing foreclosure. Here, the state has

not concentrated its actions in a particular court. Moreover, we have repeatedly denied

plaintiffs’ requests for abstention and exercised jurisdiction over mortgage-related claims.

See, e.g., Schayes v. T.D. Service Co. of Arizona, 2011 WL 1793161, *6 (D. Ariz.); Schultz

v. BAC Home Loans Servicing, LP, 2011 WL 1771679, *3 (D. Ariz.); Campbell v.

California Reconveyance Co., 2011 WL 1740183, *1 (D. Ariz.); Frame v. Cal-Western

Reconveyance Corp., 2011 WL 1576712, *4 (D. Ariz.). 

Plaintiff also argues that our adjudication of his claims would disrupt Arizona’s efforts

to establish a coherent policy. See Poulos v. Caesars World, Inc., 379 F.3d 654, 671

(9th Cir. 2004). Plaintiff notes that Arizona has filed an action against Bank of America,

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alleging violations of the Arizona Consumer Fraud Act, and contends that if we deny his

motion to remand, it will “chill Arizona’s interest in properly applying its consumer fraud

laws and illegal foreclosure protections to state concerns.” Motion at 9. We disagree.

Plaintiff’s complaint does not implicate a “complicated state regulatory scheme.” United

States v. Morros, 268 F.3d 695, 705 (9th Cir. 2001). In fact, “questions relating to

foreclosures are regularly and seamlessly decided in Arizona’s federal court.” Yares v. Bear

Stearns Residential Mortg. Corp., 2011 WL 1376277, *5 (D. Ariz.). Given the extent of

foreclosure-related litigation in this state, plaintiff’s contention that our jurisdiction will

prevent the Arizona courts from fully addressing the issue is without merit. See Motion at

10. Moreover, if a truly unsettled question of state law arises that is critical to the state but

has evaded state review, certification is potentially available. 

Because plaintiff’s claims do not arise from exceptional circumstances or raise novel

issues of Arizona law, we do not abstain from exercising jurisdiction. 

Therefore, IT IS ORDERED DENYING plaintiff’s motion to remand (doc. 8). 

DATED this 7th day of June, 2011.

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