Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-02482/USCOURTS-azd-2_11-cv-02482-0/pdf.json

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

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

John Morin; Judy Morin, 

Plaintiffs, 

vs. 

Peoples Mortgage Co., IndyMac Bank, 

IndyMac Home Loan Servicing, Mortgage 

Electronic Registration Systems, MTC 

Finance dba Trustee Corps and Does 1 

through 100, 

Defendants.

No. CV 11-02482-PHX-NVW

ORDER 

Before the Court is the “Motion to Dismiss Plaintiffs’ Complaint Against 

Defendant, MTC Financial Inc., dba Trustee Corps for Failure to State Claim Upon 

Which Relief May Be Granted” (Doc. 7). Plaintiffs were required to respond to this 

motion by January 9, 2012. Plaintiffs filed no response. However, the Court sua sponte

required Trustee Corps to show cause why the case should not be remanded to state court 

for lack of diversity jurisdiction. (Doc. 13.) Trustee Corps, in its response, did not 

sustain its burden of establishing jurisdiction. This case will therefore be remanded and 

Trustee Corps’ motion will be denied as moot. 

I. FACTS 

In 2006, Plaintiffs John and Judy Morin purchased a home in Surprise, Arizona. 

To finance this purchase, “Plaintiff’s [sic] became indebted to Defendant Peoples 

Mortgage Co[.], later acquired by IndyMac Bank . . . pursuant to a promissory note 

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secured by a deed of trust . . . .” (Doc. 1 at 8 ¶ 6.) Peoples Mortgage is an Arizona 

corporation. IndyMac Bank is incorporated in Delaware and headquartered in California. 

The recent economic downturn resulted in reduced income for the Morins, and 

they experienced difficulty in making their monthly mortgage payments. Eventually they 

received a notice of trustee’s sale. They twice attempted to reach a loan modification, but 

have not succeeded. Their home was sold at a trustee’s sale on October 20, 2011. 

II. LEGAL STANDARD 

Federal courts may exercise removal jurisdiction over a case only if jurisdiction 

existed over the suit as originally brought by the plaintiff, 28 U.S.C. § 1441(a), such as 

where a civil action is between citizens of different states and the amount in controversy 

exceeds $75,000, 28 U.S.C. § 1332. The removing party bears the burden of establishing 

federal subject matter jurisdiction. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 

(9th Cir. 1988). There is a strong presumption against removal jurisdiction. See Gaus v. 

Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). If at any time before final judgment it 

appears that the district court lacks subject matter jurisdiction over a case removed from 

state court, the case must be remanded. 28 U.S.C. § 1447(c). 

III. ANALYSIS 

The Morins brought this suit in Maricopa County Superior Court on November 14, 

2011, alleging breach of contract and various tort claims. Defendant “MTC Finance,” 

whose real name is MTC Financial, Inc., and who does business as Trustee Corps, 

removed this case to federal court alleging diversity jurisdiction. Trustee Corps’ notice 

of removal states — and the Morins have not contradicted — that the Morins and Peoples 

Mortgage are Arizona citizens. Normally, the presence of Peoples Mortgage as a 

defendant would defeat diversity jurisdiction and require remand to state court. 

However, if a non-diverse defendant has been “fraudulently joined,” no remand is 

required. 

“Fraudulent joinder is a term of art. If the plaintiff fails to state a cause of action 

against a resident defendant, and the failure is obvious according to the settled rules of 

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the state, the joinder of the resident defendant is fraudulent.” McCabe v. Gen. Foods 

Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). In this case, the failure is not obvious. 

The complaint’s allegations regarding the relationship between Peoples Mortgage 

and IndyMac — “Plaintiff’s [sic] became indebted to Defendant Peoples Mortgage Co[.], 

later acquired by IndyMac Bank” (Doc. 1 at 8 ¶ 6) and “People’s Mortgage Co., 

(hereinafter referred to as IndyMac and/or its successors)” (id. at 9 ¶ 13) — are 

ambiguous in light of the generally known fact within this jurisdiction, see Fed. R. Evid. 

201(b)(1), that Peoples Mortgage remains an operating business entity within Arizona. 

Thus, it is not clear whether IndyMac acquired all of Peoples Mortgage’s assets, or just 

the Morins’ loan, or something else. Each of these has distinct jurisdictional 

consequences. 

In addition, the complaint alleges that Peoples Mortgage or IndyMac marked up 

“charges for work that they did not perform” and sought “payment for services which 

Defendants were not entitled.” (Id. at ¶ 14.) The complaint also alleges “marked-up fees 

for late charges, escrow, and failing to disclose actual costs . . . .” (Id. at 10 ¶ 15.) 

The specifics of these allegations are not clear, but they suggest wrongdoing both 

in the origination and the servicing of the loan. If challenged on a motion to dismiss, 

they would likely fail but with leave to amend to provide more details and clarity. Thus, 

the Court cannot conclude on this record that Peoples Mortgage has been fraudulently 

joined. 

Trustee Corps received an opportunity to sustain jurisdiction through “exhibits, if 

necessary” (Doc. 13) but instead rested on the Morins’ ambiguous allegations regarding 

the relationship between Peoples Mortgage and IndyMac. These allegations do not 

suffice. Here, it appears that Peoples Mortgage is a non-diverse defendant against whom 

a non-“fraudulent” claim may have been asserted. Trustee Corps therefore has not 

sustained its burden to show diversity jurisdiction and the case will be remanded. The 

“Motion to Dismiss Plaintiffs’ Complaint Against Defendant, MTC Financial Inc., dba 

Trustee Corps for Failure to State Claim Upon Which Relief May Be Granted” (Doc. 7) 

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remains open for decision by the Superior Court to the extent its procedures 

accommodate unresolved motions filed before remand. 

IT IS THEREFORE ORDERED that the Clerk shall REMAND this case to 

Maricopa County Superior Court. The Clerk shall terminate this case. 

Dated this 25th day of January, 2012. 

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