Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-01325/USCOURTS-casd-3_12-cv-01325-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

U.S. BANK

Plaintiff,

CASE NO: 12-CV-1325 W (NLS)

ORDER DENYING

DEFENDANT’S MOTION TO

DISMISS [DOCS. 6, 8] 

v.

LAURA F. STERN and KIDS IN

MOTION GYMNASTICS, LLC

Defendants.

Pending before the Court is Defendants’ motion to dismiss the First Amended

Complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure

12(b)(1). Plaintiff U.S. Bank opposes the motion. 

The motion being fully briefed, the Court decides the matter on the papers

submitted and without oral argument. See Civ. L.R. 7.1(d.1). For the reasons discussed

below, the Court DENIES Defendant’s motion to dismiss the FAC [Doc. 8]. 

Additionally, the Court DENIES Defendants motion to dismiss the original complaint

as moot [Doc. 6]. 

I. BACKGROUND

On June 4, 2012, U.S. Bank initiated this action against Defendants Laura Stern

and Kids in Motion Gymnastics, LLC (“KIMG”). U.S. Bank asserts two causes of action:

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(1) breach of promissory note and (2) breach of guaranty. (First Amended Compl. (“FAC”}

[Doc. 7].)

According to the FAC, Plaintiff U.S. Bank loaned $1,800,000 to Defendant Stern

in 2008. She used the money to purchase land for her business, KIMG. The Small

Business Administration (“SBA”), a federal agency, participated in and authorized the

loan agreement, in which KIMG assumed all obligations and Stern became the

guarantor. 

On September 16, 2009, U.S. Bank and KIMG signed a change of terms

agreement, which included a forum-selection clause. KIMG subsequently went out of

business, and Stern defaulted on the loan. U.S. then Bank bought the property at a nonjudicial foreclosure sale for a credit bid of $950,000. U.S. Bank now seeks a deficiency

judgement for the remainder of the debt. 

On July 13, 2012, Stern filed a motion to dismiss the complaint for lack of subjectmatter jurisdiction or, in the alternative, to transfer for improper venue. (See Doc. 6.)

U.S. Bank mooted the motion by filing the FAC, which addressed the venue concern

raised in Stern’s motion. Stern now seeks to dismiss the FAC based solely on the ground

of lack of subject matter jurisdiction.

II. DISCUSSION 

Federal Courts must dismiss actions for lack of subject matter jurisdiction. Fed.

R. Civ. P. 12(h)(3). A Federal District Court has diversity jurisdiction over a civil action

if both parties are citizens of different states and the amount in controversy exceeds

$75,000. 23 U.S.C. 1332(a). For purposes of diversity jurisdiction, a national bank is

a citizen of the state in which its main office is located. Wachovia Bank v. Schmidt, 546

U.S. 303, 318 (2006). 

Stern argues that the Court lacks subject-matter jurisdiction because the case is

premised on state law claims and does not arise under Federal law. U.S. Bank argues

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that this Court has subject-matter jurisdiction because the parties are diverse. The Court

agrees with U.S. Bank.

According to the FAC, Stern is a California resident and KIMG was a California

company. (FAC, ¶¶2, 3.) Additionally, U.S. Bank is a national bank, and its main office

is in Ohio. (Id., ¶1.) Because both parties are citizens of different states, this Court has

diversity jurisdiction. 23 U.S.C. 1332(a). 

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III. CONCLUSION

The Court DENIES Defendant’s motion to dismiss the original complaint as

moot [Doc. 6]. The Court DENIES the FAC on the ground that diversity jurisdiction

exists. 

IT IS SO ORDERED.

DATED: March 11, 2013

Hon. Thomas J. Whelan

United States District Judge

Stern also contends that California law does not permit creditors to obtain deficiency

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judgments after non-judicial foreclosures. However, because the motion is brought under

Federal Rule of Civil Procedure 12(b)(1), and not 12(b)(6) (see Notice of Mt. [Doc. 8], 1:22–25,

the issue is not properly before the Court.

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