Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-02996/USCOURTS-cand-4_15-cv-02996-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

SERVIO T. GOMEZ, et al., 

 Plaintiffs, 

 vs. 

WELLS FARGO BANK, N.A., et al., 

 Defendants. 

Case No: C 15-2996 SBA 

ORDER REMANDING ACTION 

On May 21, 2015, Plaintiffs Servio and Martha Gomez, through counsel, filed the 

instant wrongful foreclosure action against Wells Fargo Bank N.A. (“Wells Fargo”) and 

Cal-Western Reconveyance Corporation (“Cal-Western”) in the Contra Costa County 

Superior Court. See Gomez, et al. v. Wells Fargo Bank, N.A., et al., Contra Costa Cnty. 

Super. Ct. No. C15-00923. According to Plaintiffs, Cal-Western, in its capacity as the 

agent for Wells Fargo and as the substitute trustee under the Deed of Trust, conspired with 

Wells Fargo to illegally foreclose on their property in 2011. The Complaint alleges causes 

of action for: (1) wrongful foreclosure; (2) violation of California Civil Code 

§ 2934a(a)(1)(A); (3) violation of California Business and Professions Code § 17200; 

(4) fraud; and (5) unjust enrichment. 

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On June 26, 2015, Wells Fargo removed the action to this Court on the basis of 

diversity of citizenship, see 28 U.S.C. § 1332, and recently filed a motion to dismiss, 

pursuant to Federal Rule of Civil Procedure 12(b)(6).1 Dkt. 1, 5. Before considering the 

motion to dismiss, the Court must first assess whether it has subject matter jurisdiction over 

the action. See United Investors Life Ins. Co. v. Waddell & Reed, Inc., 360 F.3d 960, 967 

(9th Cir. 2004) (noting that a district court has “a duty to establish subject matter 

jurisdiction over the removed action sua sponte, whether the parties raised the issue or 

not.”). 

Under the federal removal statute, 28 U.S.C. § 1441(a), a defendant may remove to 

federal court any matter over which a federal court has original jurisdiction. Caterpillar 

Inc. v. Williams, 482 U.S. 386, 392 (1987). “The basic statutory grants of federal-court 

subject-matter jurisdiction are contained in 28 U.S.C. §§ 1331 and 1332.” Arbaugh v. 

Y&H Corp., 546 U.S. 500, 513 (2006). Section 1331 provides for “federal-question” 

jurisdiction, while § 1332 provides for “diversity of citizenship” jurisdiction. Id. Pertinent 

here is the diversity jurisdiction statute, which confers federal subject matter jurisdiction in 

cases where the parties are citizens of different states and where the amount in controversy 

exceeds the sum of $75,000. 28 U.S.C. § 1332. Both the diversity and removal statutes are 

strictly construed and any doubts are resolved against finding jurisdiction. Luther v. 

Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th Cir. 2008); Kantor v. 

Wellesley Galleries, Ltd., 704 F.2d 1088, 1092 (9th Cir. 1983). 

In its Notice of Removal, Wells Fargo acknowledges that Cal-Western is not diverse 

from Plaintiffs, but avers that Cal-Western is a “fraudulently-joined, nominal party” whose 

citizenship need not be considered for purposes of diversity jurisdiction. Dkt. 1 at 3. 

“[O]ne exception to the requirement of complete diversity is where a non-diverse defendant 

has been ‘fraudulently joined.’” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th 

Cir. 2001). “Fraudulent joinder is a term of art. If the plaintiff fails to state a cause of 

 1 The motion is noticed for hearing on August 12, 2015. 

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

of the state, the joinder of the resident defendant is fraudulent.” Mercado v. Allstate Ins. 

Co., 340 F.3d 824, 826 (9th Cir. 2003) (quoting McCabe v. General Foods Corp., 811 F.2d 

1336, 1339 (9th Cir. 1987)). “In such a case, the district court may ignore the presence of 

that defendant for the purpose of establishing diversity.” Hunter v. Philip Morris USA, 582 

F.3d 1039, 1043 (9th Cir. 2009). There is a “general presumption against fraudulent 

joinder” and the defendant’s burden of demonstrating that a joinder is fraudulent is a 

“heavy” one. Id. at 1046. 

Wells Fargo contends that Plaintiffs cannot state any viable claims against CalWestern, “which merely conducted the ministerial duties of a foreclosure trustee.” Notice 

of Removal at 4, Dkt. 1. However, the pleadings in this case do not predicate CalWestern’s potential liability solely on its role a substitute trustee. To the contrary, Plaintiffs 

allege that Cal-Western conspired with Wells Fargo by, inter alia, knowingly issuing 

invalid and fraudulent foreclosure documents and illegally appointing itself as the substitute 

trustee under the Deed of Trust in order to effectuate the foreclosure. See, e.g., Compl. 

¶¶ 30, 35, 38, 47, 48, 49, 60, 62, 70, 80, 95, 96. These and other allegations of the 

Complaint clearly demonstrate that Plaintiffs’ claims against Cal-Western are not merely 

predicated on its ministerial role as a substitute trustee. E.g., Alabastro v. Wells Fargo 

Bank, N.A., No. 5:14-cv-03469 EJD, 2015 WL 138235, *3 (N.D. Cal. Jan. 5, 2015) 

(finding that while “most of the current allegations against Cal-Western focus on activity 

common to that of a foreclosure trustee,” plaintiffs’ allegations implied that “Cal-Western 

may have conspired with other defendants to improperly or fraudulently initiate foreclosure 

proceedings against [their] . . . property,” which, in turn, precluded defendants’ showing of 

fraudulent joinder). 

Wells Fargo also contends that, pursuant to California Civil Code § 2924(d), CalWestern is immune from liability for executing and recording foreclosure notices. Dkt. 1 at 

5. Federal courts have questioned whether this provision protects a foreclosing trustee 

which allegedly was not authorized to pursue foreclosure proceedings in the first instance. 

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Knott v. Caliber Home Loans Inc., No. CV 15-4752 PA (JPRx), 2015 WL 3932668, *4 

(C.D. Cal. June 26, 2015); e.g., Nance v. Cal-Western Reconveyance Corp., No. LA CV 

14-07950 JAK (PLAx), 2015 WL 452747, *4 (C.D. Cal. Jan. 29, 2015) (finding allegations 

that “that Cal-Western did not have the legal authority to initiate the foreclosure 

proceedings because it was not the actual trustee” could support a showing of malice, 

thereby vitiating any immunity afforded under § 2924(d)); Silva v. Wells Fargo Bank N.A., 

No. CV 11-3200 GAF (JCGx), 2011 WL 2437514, at *5 (C.D. Cal. June 16, 2011) (finding 

that it is “unclear whether these provisions [i.e., Cal. Civ. Code § 2924] would also apply 

where, as here, the plaintiff alleges that the foreclosing trustee was not actually the trustee 

authorized to initiate non-judicial foreclosure proceedings.”). 

Alternatively, Wells Fargo alleges that Cal-Western is a nominal party. Dkt. 1 at 3-

4. When evaluating whether diversity jurisdiction is present, “a federal court must 

disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real 

parties to the controversy.” Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461 (1980). 

Nominal parties are those “with nothing at stake . . . despite the propriety of their technical 

joinder.” Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d 1129, 1133 (9th Cir. 2002). 

Here, Wells Fargo claims that Cal-Western has no financial interest in the property, and 

was nothing more than the substitute trustee in the foreclosure process. “However, other 

courts have held that ‘Cal-Western’s status as trustee is not itself sufficient to render CalWestern a nominal party.’” Nance, 2015 WL 452747, at *3 (citing cases). Moreover, as 

discussed above, Plaintiffs’ claims against Cal-Western are based on its alleged course of 

collusive conduct with Wells Fargo, and not simply Cal-Western’s status as a substitute 

trustee. Alabastro, 2015 WL 138235, *3 n.1 (allegations that Cal-Western conspired with 

other defendants to improperly or fraudulently initiate foreclosure, which included the 

fabrication of documents, were “sufficient to preclude a finding that Cal-Western should be 

disregarded from the jurisdictional analysis as a nominal party.”). 

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In sum, the Court concludes that Wells Fargo has failed to carry its burden of 

demonstrating that Cal-Western is either a fraudulently-joined or nominal party whose 

citizenship may be disregarded for purposes of diversity jurisdiction. Accordingly, 

IT IS HEREBY ORDERED THAT the instant action is REMANDED to the 

Superior Court of California, County of Contra Costa. Because removal jurisdiction is 

lacking, the Court does not reach the merits of Wells Fargo’s pending motion to dismiss, 

which is DENIED without prejudice. 

IT IS SO ORDERED. 

Dated: 7/27/15 ______________________________ 

SAUNDRA BROWN ARMSTRONG 

United States District Judge 

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