Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_13-cv-00379/USCOURTS-azd-4_13-cv-00379-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Elva E. Damian, 

Plaintiff, 

vs.

CitiMortgage, Inc. and its successors

and assigns; CitiBank N.A., and its

successors and assigns; Federal National

Home Mortgage Association (Fannie

Mae); CSW Financial LLC DBA Titan

Wholesale, a Nevada Limited Liability

Company; JOHN DOES 1-10; JANE

ROES 1-10; ABC CORPORATIONS

1-10; XYZ LIMITED LIABILITY

COMPANIES 1-10; and 123

PARTNERSHIPS 1-10, 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-13-0379-TUC-RCC (BGM)

REPORT AND RECOMMENDATION

Pending before this Court is Plaintiff’s (Corrected) Motion for Joinder Under Rule 21,

F.R.C.P. etc. (or Alternatively Motion to Amend Under Rule 15) and Motion to Remand

Case to State Court (Pima Superior Court No. C20130048) (Doc. 10) (hereinafter Motion for

Joinder). Plaintiff seeks to join Ms. Stephanie Abcede, the Notary who notarized foreclosure

documents authorizing the foreclosure sale of Plaintiff’s property, as a Defendant in this

matter. Such joinder would destroy diversity jurisdiction of this Court. Pursuant to the Rules

of Practice in this Court, the matter was assigned to Magistrate Judge Macdonald for a report

and recommendation. The Magistrate recommends the District Court, after its independent

Case 4:13-cv-00379-RCC Document 13 Filed 02/19/14 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

The Court recognizes Plaintiff’s failure to comply with the mandates of LRCiv. 15.1

regarding amended pleadings, and the burden that this places on Defendants and this Court. In its

discretion, however, the Court will consider Plaintiff’s motion for joinder in order to assess its

jurisdiction over this cause of action.

- 2 -

review of the record, grant Plaintiff’s motion for joinder and remand the matter to the state

court.

I. Procedural Background

Plaintiff’s original complaint was filed in Pima County Superior Court on January 4,

2013. See Compl. (Doc. 1-2). On May 24, 2013, Defendants properly removed the case to

this Court pursuant to 28 U.S.C. §§ 1441 and 1332. On June 24, 2013, Plaintiff filed a

motion and subsequent corrected Motion for Joinder Under Rule 21, F.R.C.P. etc. (or

Alternatively Motion to Amend Under Rule 15) and Motion to Remand Case to State Court

(Pima Superior Court No. C20130048) (Docs. 9 & 10). Defendants have opposed Plaintiff’s

motion asserting Plaintiff’s failure to comply with Rule 15, Federal Rules of Civil Procedure,

and that Plaintiff cannot meet her burden pursuant to Rule 19(a), Fed. R. Civ. P., regarding

joinder. Plaintiff has replied, directly addressing the standard set forth under Rule 19(a).

II. Joinder of Stephanie Abcede, Former Notary Public1

Section 1447(e), 28 U.S.C., provides: “If after removal the plaintiff seeks to join

additional defendants whose joinder would destroy subject matter jurisdiction, the court may

deny joinder, or permit joinder and remand the action to the State court.” “[T]he decision

regarding joinder of a diversity destroying defendant is left to the discretion of the district

court[.]” Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998). “In deciding

whether to deny joinder of a diversity-destroying party, courts . . . consider[] a variety of

factors including: (1) whether the person sought to be joined is needed for just adjudication

and would be a necessary party under Rule 19(a); (2) the plaintiff’s motive for seeking

joinder and whether plaintiff is seeking to add a defendant solely to destroy diversity of

citizenship; (3) the delay in seeking to add the new defendant; (4) whether, if joinder is

Case 4:13-cv-00379-RCC Document 13 Filed 02/19/14 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

denied, the statute of limitations would bar an action against the new defendant in state court;

(5) the apparent validity of the claim; and (6) any prejudice to the plaintiff if the amendment

is denied.” Estate of Harmon ex rel. Patrick v. Avalon Health Care, Inc., 2012 WL 6674425,

*3 (D. Ariz.) (citing Clinco v. Roberts, 41 F.Supp.2d 1080, 1082 (C.D.Cal. 2011); Ansley v.

Metro Life Ins. Co., 215 F.R.D. 575, 579-80 (D.Ariz. 2003)).

A. Rule 19(a)

A party must be joined if “in that person’s absence, the court cannot accord complete

relief among existing parties” or when a parties’ absence will impede its ability to protect its

interest or subject a party to a substantial risk of incurring inconsistent obligations. Fed. R.

Civ. P. 19(a). A party’s “status as a ‘necessary’ party is not judged by any prescribed

formula, but instead ‘can only be determined in the context of particular litigation.’” CP

Nat’l Corp. v. Bonneville Power Admin., 928 F.2d 905, 911 (9th Cir. 1991) (quoting

Provident Tradesmen Bank and Trust Co. v. Patterson, 390 U.S. 102, 118, 88 S.Ct. 733, 742,

19 L.Ed.2d 936 (1968)). “Necessary parties have been described generally, however, as

those ‘[p]ersons having an interest in the controversy, and who ought to be made parties, in

order that the court may act on that rule which requires it to decide on, and finally determine

the entire controversy, and do complete justice, by adjusting all the rights involved in it.’”

Id. at 912 (quoting Shields v. Barrow, 58 U.S. (17 How.) 130, 139, 15 L.Ed. 158 (1855))

(alterations in original).

Defendants argue that Ms. Abcede is not a necessary party to this litigation. Defs.’

Resp. to Pl.’s Mot. for Joinder (Doc. 11) at 4. Defendants rely on district court cases in

which employee-agents of the original defendant were found not to be necessary parties to

the litigation. Id. at 4-5. Plaintiff asserts that Ms. Abcede is a necessary party, because as

a notary she can be held personally liable for any false notarization. Pl.’s Reply re: Mot. for

Joinder (Doc. 12) at 4. Plaintiff further argues that “[a]llegations that the Deed of Trust

statutes were violated, including an allegation that a notary falsely certified a signature, are

sufficient to state a claim for relief.” Id.

Case 4:13-cv-00379-RCC Document 13 Filed 02/19/14 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

The Arizona Supreme Court recognizes that “[n]otaries public must conform their

conduct to a defined statutory duty of care.” City Consumer Services, Inc. v. Metcalf, 161

Ariz. 1, 5, 775 P.2d 1065, 1069 (Ariz. 1989) (upholding jury verdict finding notary public

negligent in executing certificate of acknowledgment). The Court finds that Plaintiff’s

allegations against Ms. Abcede are separate and distinct from those against Defendants, and

that such claims arise from the same transaction or occurrence. As such, this factor weighs

in favor of joinder.

B. Plaintiff’s Motive

“[A] trial court should look with particular care at [Plaintiff’s] motive” in seeking to

add a diversity-destroying defendant. Desert Empire Bank v. Insurance Co. of North

America, 623 F.2d 1371, 1376 (9th Cir. 1980) (upholding a district court’s decision to deny

a diversity destroying amendment post removal). Defendants argue that Plaintiff seeking to

“simply add Ms. Abcede’s name to the existing complaint . . . weighs in favor of finding an

improper motive.” Defs.’ Resp. to Pl.’s Mot. for Joinder (Doc. 11) at 5. Defendants also rely

on the fact that the motion for joinder is coupled with a motion for remand, as a clear

indication of Plaintiff’s desire to have this matter heard in the state court. Id. Plaintiff

counters that she learned of Ms. Abcede’s license suspension “just hours before the

Complaint was filed[,]” and did not have a “sufficient opportunity to fully investigate the

actions of all potential Defendants[.]” Pl.’s Reply re: Mot. for Joinder (Doc. 12) at 5.

Defendants have not provided any convincing evidence to refute Plaintiff’s claims.

Because it is unclear that Plaintiff’s desire to add Ms. Abcede as a defendant is solely to

destroy diversity jurisdiction, this factor weighs in favor of joinder.

C. Delay

Plaintiff alleges that she discovered Ms. Abcede’s role in this case immediately prior

to filing her Complaint. Pl.’s Reply re: Mot. for Joinder (Doc. 12) at 5. Defendants argue

that the six months between Plaintiff’s filing of her Complaint and seeking to join Ms.

Abcede indicates that her motives are suspect. Defs.’ Resp. to Pl.’s Mot. for Joinder (Doc.

11) at 6. Plaintiff counters that there were issues with service, and that Defendants

Case 4:13-cv-00379-RCC Document 13 Filed 02/19/14 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

immediately removed the matter from state court. Pl.’s Reply re: Mot. for Joinder (Doc. 12)

at 8.

The timing of Plaintiff’s request for joinder may be questionable in light of the delay

between filing her Complaint and seeking the addition of Ms. Abcede. At this point in the

litigation, however, very little has occurred. Defendants filed a motion to dismiss in the state

court action prior to removal; however, this motion is not fully briefed, nor pending before

this Court subject to a decision regarding the Court’s jurisdiction. Additionally, a scheduling

conference pursuant to Rule 16, Federal Rules of Civil Procedure, has yet to take place and

no discovery has occurred. Accordingly, the Court finds that Plaintiff’s request is not unduly

delayed, thereby supporting joinder.

D. Statute of Limitations

In Arizona, the statute of limitations for negligence or other tort claims is two years.

A.R.S. § 12-542. Defendants assert that because Plaintiff’s claims are barred by the statute

of limitation, joinder should be denied. If Defendants’ assertions are correct, however, the

denial of joinder would bar Plaintiff from filing a separate state court action. As such, this

factor supports joinder.

E. Strength of Claim

Defendants argue that Plaintiff has failed to state a valid claim against Ms. Abcede,

in particular that Arizona does not recognize a tort of wrongful foreclosure. Defs.’ Resp. to

Pl.’s Mot. for Joinder (Doc. 11) at 7; see Jada v. Wells Fargo Bank, N.A., 2011 WL 3267330

(D.Ariz.); Woods v. BAC Home Loans Service, LP, 2011 WL 2746310 (D.Ariz.). Plaintiff

argues that other courts in this district, however, have recognized that Arizona courts have

neither recognized nor precluded the tort of wrongful foreclosure and considered the same.

Pl.’s Reply re Mot. for Joinder (Doc. 12) at 10; See Schrock v. Federal Nat’l Mortgage

Assoc., 2011 WL 3348227; Herring v. Countrywide Home Loans, Inc., 2007 WL 2051394

(D.Ariz.). Plaintiff further argues that Ms. Abcede’s liability extends beyond the tort of

wrongful foreclosure.

Case 4:13-cv-00379-RCC Document 13 Filed 02/19/14 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

The Court finds that Arizona courts have not squarely rejected the tort of wrongful

foreclosure. Additionally, there may be tort-based liability arising from Ms. Abcede’s duty

as a Notary Public. Therefore, this factor weighs in favor of allowing joinder.

F. Prejudice to Plaintiff

Defendant argues that Plaintiff would not suffer any prejudice if joinder were denied.

Defendant asserts that if Plaintiff’s claims are valid, she will prevail irrespective of whether

Ms. Abcede is joined, that it would be more difficult to collect a judgment against a

suspended Notary Public than the corporate defendants currently before the Court, that Ms.

Abcede’s testimony would be helpful to Plaintiff’s claims, and that it is unlikely that Plaintiff

would bring a separate claim against Ms. Abcede thereby mitigating any potential

“downside” to having to litigate in two forums. Defs.’ Resp. to Pl.’s Mot. for Joinder (Doc.

11) at 8-9. Plaintiff argues only that there is a separate pool of bond money “for the purpose

of remedying injuries caused by Notaries who abuse their authority.” Pl.’s Reply re Mot. for

Joinder (Doc. 12) at 10-11.

The Court finds that Plaintiff would be prejudiced by denying joinder. It is unlikely

Plaintiff would bring a separate cause of action against Ms. Abcede; however, in light of any

concerns regarding the statute of limitations and Ms. Abcede’s separate liability this factor

favors joinder.

G. Conclusion

Upon consideration of the factors regarding joinder of a diversity-destroying

defendant, the Court finds that these weigh in favor of joining, Ms. Abcede. Furthermore,

“[i]f 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. Because joinder of Ms. Abcede

destroys the diversity jurisdiction of this Court, the case should be remanded to the Superior

Court for the State of Arizona, Pima County.

Case 4:13-cv-00379-RCC Document 13 Filed 02/19/14 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

IV. RECOMMENDATION

For the reasons delineated above, the Magistrate Judge recommends that the District

Judge enter an order:

(1) GRANTING Plaintiff’s (Corrected) Motion for Joinder Under Rule 21,

F.R.C.P. etc. (or Alternatively Motion to Amend Under Rule 15) and Motion

to Remand Case to State Court (Pima Superior Court No. C20130048) (Doc.

10); and

(2) REMANDING this case to Pima County Superior Court (Cause #

C20130048).

Pursuant to 28 U.S.C. § 636(b) and Rule 72(b)(2) of the Federal Rules of Civil

Procedure, any party may serve and file written objections within fourteen (14) days after

being served with a copy of this Report and Recommendation. A party may respond to

another party’s objections within fourteen (14) days after being served with a copy. Fed. R.

Civ. P. 72(b)(2). No replies shall be filed unless leave is granted from the District Court. If

objections are filed, the parties should use the following case number: CV-13-379-TUCRCC.

Failure to file timely objections to any factual or legal determination of the Magistrate

Judge may result in waiver of the right of review.

DATED this 19th day of February, 2014.

Case 4:13-cv-00379-RCC Document 13 Filed 02/19/14 Page 7 of 7