Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01930/USCOURTS-azd-2_11-cv-01930-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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The Court can consider publicly filed documents, such as the Deed of Trust, when

deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) without

concerting the motion to a motion for summary judgment. Coto Settlement v. Eisenberg, 593

F.3d 1031, 1038 (9th Cir. 2010).

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Donald W. Kamela and Sierra W. Kamela,

Plaintiffs, 

vs.

OneWest Bank FSB; et al.

Defendants. 

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No. CV-11-1930-PHX-JAT

ORDER

Currently pending before the Court are: a Motion to Dismiss filed by Defendants

MTC Financial, Inc. and Rande Johnsen (Doc. 8); a Motion to Dismiss filed by Defendants

IMB Hold Company LLC, MERS, and One West Bank FSB (Doc. 11); and a Motion to

Remand to State Court filed by Plaintiffs Donald and Sierra Kamela (Doc. 18). The Court

now rules on the motions.

I. BACKGROUND

Plaintiffs Donald and Sierra Kamela refinanced their mortgage loan in August of

2007. (Deed of Trust, Doc. 11-1.)1

 As part of the refinance, Plaintiffs obtained a loan for

$1,000,000. (Id.) The loan was secured by their property at 9429 East Adobe Drive,

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Scottsdale, Arizona 85255 (the “Property”).

Plaintiffs defaulted on their loan at some point, and a notice of trustee sale was

recorded on April 20, 2009. (Ex. 6 to Compl.) The trustee’s sale was not actually held until

June 15, 2011. 

After the sale, Plaintiffs filed a Complaint in Maricopa County Superior Court on

August 30, 2011. (Doc. 1-1.) Defendants MTC Financial Inc. d/b/a Trustee Corps and

Rande Johnsen removed to this Court on September 30, 2011. (Doc. 1.)

II. MOTION TO REMAND

28 U.S.C. §1331 gives federal district courts original jurisdiction over all civil actions

arising under the Constitution, laws, or treaties of the United States. And §1332 gives federal

district courts “original jurisdiction of all civil actions where the matter in controversy

exceeds the sum or value of $75,000, exclusive of interests and costs, and is between . . .

citizens of different States[.]” 28 U.S.C. §1332(a)(1). The removal statute, 28 U.S.C. § 1441,

provides, in pertinent part: “[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.” 28 U.S.C. § 1441(a); see Caterpillar, Inc. v. Williams, 482

U.S. 386, 392 (1987) (“Only . . . actions that originally could have been filed in federal court

may be removed to federal court by the defendant.”). 

Courts strictly construe the removal statute against removal jurisdiction. See, e.g.,

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gaus v. Miles, Inc., 980

F.2d 564, 566 (9th Cir. 1992). There is a “strong presumption” against removal, and

“[f]ederal 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 (internal citations omitted). “The ‘strong

presumption’ against removal jurisdiction means that the defendant always has the burden

of establishing that removal is proper.” Id. If at any time it appears that the district court

lacks subject matter jurisdiction, the case must be remanded. 28 U.S.C. § 1447(c).

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Plaintiffs do not state the specific grounds for their request to remand to state court.

But this Court has an ongoing obligation to ensure that subject matter jurisdiction exists. See

Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). And the

Court must remand, even sua sponte, if at any time before final judgment subject matter

jurisdiction is lacking. 28 U.S.C. §1447(c). 

As the proponents of the Court’s jurisdiction, the removing Defendants bear the

burden of establishing jurisdiction. Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676,

685 (9th Cir. 2006). In responding to the Motion to Remand, Defendants MTC Financial Inc.

d/b/a Trustee Corps and Rande Johnsen point to their Removal Petition. They argue that

removal was proper because it appeared from the face of the Complaint that the lawsuit had

claims arising under federal law and because diversity jurisdiction existed. 

A. Federal Question Jurisdiction

Federal question jurisdiction exists only if the complaint establishes that the case

arises under federal law. Franchise Tax Bd. of State of California v. Constr. Laborers

Vacation Trust, 463 U.S. 1, 10 (1983). A review of Plaintiffs’ Complaint reveals that they

allege only state law causes of action. Although Plaintiffs mention the federal Truth in

Lending Act (TILA) in their Complaint, they only mention TILA when discussing a different

law suit they pursued. Plaintiffs do not make any claims under TILA in the pending

litigation. And Defendants’ failure to move to dismiss any alleged TILA claim supports the

conclusion that Plaintiffs were not attempting to make any TILA claims. 

Other than TILA, the Complaint does not even mention a federal statute or

constitutional provision. The Court finds the Complaint completely devoid of any federal

causes of action and the Court therefore does not have federal question jurisdiction pursuant

to 28 U.S.C. §1331.

B. Diversity Jurisdiction

For the Court to have diversity jurisdiction, each plaintiff must be a citizen of a

different state than each of the defendants. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).

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The Complaint does not plead the citizenship of all the members of Prescott Equity

Solutions LLC. But the Arizona Corporation Commission’s public website lists Mark Reed

and Brandon Riddick as the members of Prescott Equity Solutions LLC, both of whom list

Arizona addresses. 

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Defendants do not dispute that complete diversity is lacking with the parties as named in the

Complaint because Plaintiffs are citizens of Arizona and one of the Defendants, Prescott

Equity Solutions LLC, may have at least one member that is an Arizona citizen.2

 But

Defendants argue that the Court nonetheless has diversity jurisdiction because the fraudulent

joinder exception to the complete diversity requirement applies. They claim that Plaintiffs

fraudulently joined Prescott Equity to defeat diversity jurisdiction. 

Fraudulent joinder is a “term of art.” Morris v. Princess Cruises, Inc., 236 F.3d 1061,

1067 (9th Cir. 2001). Joinder of a non-diverse defendant is considered fraudulent, and the

Court ignores the defendant’s presence in the lawsuit for purposes of determining diversity,

if the plaintiff fails to state a cause of action against the resident defendant and the failure is

obvious according to the settled rules of the state. Id. 

The Court resolves any doubt about whether Plaintiffs have stated a valid cause of

action under Arizona law in favor of the case being retained by the state court. Albi v. Street

& Smith Publ’ns, 140 F.2d 310, 312 (9th Cir. 1944). “It is only where the plaintiff has not,

in fact, a cause of action against the resident defendant, and has no reasonable ground for

supposing he has, and yet joins him in order to evade the jurisdiction of the federal court, that

the joinder can be said to be fraudulent . . ..” Id. 

Defendant Prescott Equity purchased Plaintiffs’ home at the foreclosure sale.

Plaintiffs alleged their quiet title claim against Prescott Equity because Prescott Equity

claims an interest in the Property via the foreclosure sale. Plaintiffs clearly have to name

Prescott Equity as a defendant if they want to clear title to their home. 

Defendants argue that Plaintiffs’ joinder of Prescott Equity as a Defendant is

fraudulent because Plaintiffs obviously cannot state a quiet title claim against Prescott

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Equity. Defendants assert that a plaintiff must prove her own title to state a claim for quiet

title in Arizona, A.R.S. §12-1101, and that Plaintiffs cannot assert their own title because

they lost title at the foreclosure sale. Defendants further argue that to the extent the claim for

quiet title relies on wrongful foreclosure, the quiet title claim must fail because Arizona does

not recognize a tort for wrongful foreclosure. (Doc. 1 p.6)(citing Cervantes v. Countrywide

Home Loans, Inc., 656 F.3d 1034, 1038 (9th Cir. 2011)). 

Defendants are correct that in any action to quiet title, a plaintiff must rely on the

strength of her own title, rather than the weakness of her adversary’s. Allison v. State, 420

P.2d 289, 292 (Ariz. 1966)(en banc). And, as the case now stands, while Plaintiffs are in

possession of the Property, they no longer have legal title to it. But if the Plaintiffs succeed

on their claims that the trustee sale did not comply with the requirements of the Arizona

statute, title could be restored to them. If that happens, problems with their own title would

not prohibit their quiet title claim against Prescott Equity.

While the Court has severe doubts that Plaintiffs will succeed on their claims, the

Court cannot say that it is obvious from Arizona state law that they will not. Surprisingly,

given the sharp rise in mortgage foreclosure litigation, there are very few reported Arizona

cases on mortgage foreclosure issues. The Court could not find a case directly addressing

Plaintiffs’ arguments regarding the invalidity of a trustee sale if the trustee was not a proper

trustee under Arizona statutes. Also, while no Arizona state court has yet recognized a tort

of wrongful foreclosure, no Arizona court has said that such a cause of action does not exist

in Arizona. So, again, although the Court by no means believes the Plaintiffs will prevail,

it cannot say, based on Arizona law, that it is obvious they will not. The Court therefore

finds that Plaintiffs did not fraudulently join Prescott Equity. 

Because the Court has found that Plaintiffs did not fraudulently join Prescott Equity

and Prescott Equity’s presence defeats complete diversity, the Court does not have diversity

jurisdiction over this case.

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III. CONCLUSION

The Court does not have federal question or diversity jurisdiction over this case.

Because the Court lacks subject matter jurisdiction, it must remand pursuant to 28 U.S.C.

§1447(c). The Court therefore will grant the Plaintiffs’ Motion to Remand and will not reach

the Defendants’ Motions to Dismiss, which shall remain pending before the Arizona state

court.

Accordingly,

IT IS ORDERED Granting Plaintiff’s Motion to Remand (Doc. 18) to Maricopa

County Superior Court pursuant to 28 U.S.C. §1447(c).

IT IS FURTHER ORDERED that the Motion to Dismiss filed by Defendants MTC

Financial, Inc. and Rande Johnsen (Doc. 8) and the Motion to Dismiss filed by Defendants

IMB Hold Company LLC, MERS, and One West Bank FSB (Doc. 11) remain pending for

decision by the state court. 

DATED this 1st day of May, 2012.

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