Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-01861/USCOURTS-casd-3_12-cv-01861-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Contract Dispute

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

PHYLLIS R. RIOS, et al.,

Plaintiffs,

v.

AMERICAN HOME MTG SERVICES

INC., et al.,

Defendants.

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Case No. 12-cv-1861-L(BGS)

ORDER REMANDING ACTION TO

STATE COURT

On July 6, 2012, Plaintiffs Phyllis R. Rios and Ernesto Rios Sr. commenced this

foreclosure action against Defendants American Home MTG Services Inc., also known as

Homeward Residential, and Power Default Services, Inc. in the San Diego Superior Court. 

Plaintiff alleges eight causes of action related to real property located in El Cajon, California. 

On July 27, 2012, Defendants filed a notice of removal, removing this action to this Court. The

notice of removal is based on diversity jurisdiction under 28 U.S.C. §§ 1332 and 1441.

For the following reasons, the Court finds that Defendant’s Notice of Removal is facially

deficient and REMANDS this action to the San Diego Superior Court.

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I. LEGAL STANDARD

“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of

Am., 511 U.S. 375, 377 (1994). “They possess only that power authorized by Constitution or a

statute, which is not to be expanded by judicial decree.” Id. (internal citations omitted). “It is to

be presumed that a cause lies outside this limited jurisdiction and the burden of establishing the

contrary rests upon the party asserting jurisdiction.” Id. (internal citations omitted); see also

Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006). 

Consistent with the limited jurisdiction of federal courts, the removal statute is strictly

construed against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992);

see also Sygenta Crop Prot. v. Henson, 537 U.S. 28, 32 (2002); O’Halloran v. University of

Wash., 856 F.2d 1375, 1380 (9th Cir. 1988). “The strong presumption against removal

jurisdiction means that the defendant always has the burden of establishing that removal is

proper.” Gaus, 980 F.2d at 566; see also Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d

709, 712 n.3 (9th Cir. 1990); O’Halloran, 856 F.2d at 1380. “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. 

Although there has not been a request to remand, it is well-established that “a district

court’s duty to establish subject matter jurisdiction is not contingent upon the parties’

arguments.” See United Investors Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960, 966 (9th

Cir. 2004). Courts may consider the issue sua sponte. Demery v. Kupperman, 735 F.2d 1139,

1149 n.8 (9th Cir. 1984). Indeed, the Supreme Court has emphasized that “district courts have

an ‘independent obligation to address subject-matter jurisdiction sua sponte.’” Grupo Dataflux v.

Atlas Global Grp., L.P., 541 U.S. 567, 593 (2004) (quoting United States v. S. Cal. Edison Co.,

300 F. Supp. 2d 964, 972 (E.D. Cal. 2004)).

II. ANALYSIS

In attempting to invoke this Court’s diversity jurisdiction, the defendant must prove that

there is complete diversity of citizenship between the parties and that the amount in controversy

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exceeds $75,000. 28 U.S.C. § 1332. “Subject matter jurisdiction based upon diversity of

citizenship requires that no defendant have the same citizenship as any plaintiff.” Tosco Corp. v.

Communities for a Better Env’t, 236 F.3d 495, 499 (9th Cir. 2001) (per curiam), abrogated on

other grounds by Hertz Corp v. Friend, 130 S. Ct. 1181 (2010). “In determining whether there

is diversity between corporate parties, ‘a corporation shall be deemed to be a citizen of any State

by which it has been incorporated and of the State where it has its principal place of business.’”

Id. (quoting 28 U.S.C. § 1332(c)(1)). “[W]here corporations are involved, the party seeking

jurisdiction must allege the state of the corporation’s principal place of business as well as the

state of incorporation.” United States v. Aldridge, 56 F.3d 73 (9th Cir. 1995) (unpublished table

decision) (emphasis added). 

In the Notice of Removal, Defendants identify Plaintiffs as “domiciled in California at the

time of filing.” (Removal Notice ¶ 3.) They also identify Homeward Residential as a citizen of

Texas because it is headquartered in Coppell, Texas at the time of filing, and Power Default

Services also as a citizen of Texas because it is headquartered in Irving, Texas. (Id. ¶¶ 3–4.) 

Defendants do not identify either Defendants’ state of incorporation in the Notice of Removal. 

Looking beyond the Notice of Removal, neither party provides any additional evidence, and a

closer inspection of the underlying complaint shows that Plaintiffs allege that Homeward

Residential is a Delaware corporation with its principle place of business in Road Coppell,

Texas. (Compl. ¶ 2.) However, Plaintiffs only allege that Power Default Services “is and at all

times relevant hereto was a corporation actively conducting business within the State of

California.” (Id. ¶ 3.) That allegation suggests Power Default Services’ principle place of

business is California, which would make it a California citizen, thereby defeating complete

diversity. Setting that aside, neither the Notice of Removal nor the complaint identifies the state

of incorporation for Power Default Services. In order to establish jurisdiction for a corporation,

Power Default Services’ principle place of business and state of incorporation must be alleged. 

Tosco, 236 F.3d at 499. But the latter is missing here, and thus, there is doubt as to the right of

removal in the first instance. See Gaus, 980 F.2d at 566. 

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III. CONCLUSION & ORDER

In light of the foregoing, the facts presented in the notice of removal do not meet the

burden of establishing removal jurisdiction. “If at any time before final judgment it appears that

the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. §

1447(c). Therefore, the Court VACATES the order dismissing this action (Doc. 7) because it

lacked jurisdiction at the time, and REMANDS this action to the San Diego Superior Court.

IT IS SO ORDERED.

DATED: September 21, 2012

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. BERNARD G. SKOMAL

UNITED STATES MAGISTRATE JUDGE

ALL PARTIES/COUNSEL

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