Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-00096/USCOURTS-casd-3_12-cv-00096-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RONEN HERSHCU,

Plaintiff,

CASE NO. 12-CV-00096 BEN (BLM)

ORDER:

(1) REMANDING ACTION TO

THE SAN DIEGO COUNTY

SUPERIOR COURT

(2) DENYING PLAINTIFF’S

REQUEST FOR ATTORNEYS’

FEES AND COSTS

[Docket No. 11]

vs.

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

Defendants.

Presently before the Court is Plaintiff’s Motion to Remand. (Docket No. 11.) For the reasons

stated below, the Motion to Remand is GRANTED IN PART AND DENIED IN PART. This action

is REMANDED to the San Diego County Superior Court. Plaintiff’s request for an award of

attorneys’ fees and costs is DENIED.

BACKGROUND

On November 16, 2011, Plaintiff Ronen Hershcu, a citizen of California, originally filed this

foreclosure action in the San Diego County Superior Court, naming Wells Fargo Bank and CalWestern Reconveyance Corporation as Defendants. The Complaint asserts eleven causes of action:

(1) breach of contract; (2) breach of contract implied in fact; (3) breach of implied covenant of good

faith and fair dealing; (4) promissory estoppel; (5) fraud and deceit (false promise); (6) unjust

enrichment; (7) rescission of loan contracts; (8) wrongful foreclosure; (9) violation of Business and

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Professions Code Section 17200; (10) quiet title; and (11) injunction. On December 20, 2011, CalWestern filed a declaration of non-monetary status. On January 11, 2012, Wells Fargo removed the

action under 28 U.S.C. § 1441(a), contending that the Court has diversity jurisdiction over the action

under 28 U.S.C. § 1332. 

Presently before the Court is Plaintiff’s Motion to Remand.1 The hearing on the Motion to

Remand was originally scheduled to take place on March 12, 2012, at 10:30 a.m. Plaintiff moved to

shorten time on the Motion to Remand so that he would be able to seek an injunction enjoining a

trustee’s sale scheduled for February 14, 2012, once the Motion to Remand was ruled upon. 

Accordingly, the hearing was rescheduled for February 13, 2012, at 10:30 a.m. This hearing was

subsequently vacated pursuant to Civil Local Rule 7.1.d. 

DISCUSSION

Congress has authorized a defendant to remove a civil action from state court to federal court. 

28 U.S.C. § 1441. However, the removing party “always has the burden of establishing that removal

was proper.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The district court must remand

any case previously removed from a state court “if at any time before final judgment it appears that

the district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c). Moreover, there is a strong

presumption against removal jurisdiction; doubts as to whether the federal court has subject matter

jurisdiction must be resolved in favor of remand. See Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir.

1

 Plaintiff requests that the Court take judicial notice of: (1) the Notice of Default, recorded

in the San Diego County Recorder’s Office as Document No. 2011-0213364 on April 25, 2011; (2)

the Substitution of Trustee, recorded in the San Diego County Recorder’s Office as Document No.

2011-0281836 on June 2, 2011; and (3) Sublett v. NDEX West, LLC, Case No. 11-CV-185 (S.D. Cal.

Feb. 14, 2011). Wells Fargo requests that the Court take judicial notice of (1) the Minute Order in

Case No. 37-2011-00095472-CU-PT-CTL (Cal. Super. Ct. Sept. 15, 2011); (2) the Register of Actions

Notice in Case No. 37-2011-00095472-CU-PT-CTL (Cal. Super. Ct. Jan. 27, 2012); (3) the Docket

Sheet in Case No. 11-15378-LT13 (Bankr. S.D. Cal.); (4) the Order Dismissing Chapter 13 Case in

Case No. 11-15378-LT13 (Bankr. S.D. Cal. Nov. 18, 2011); (5) the Docket Sheet for Case No. 12-

00163-LT13 (Bankr. S.D. Cal.); (6) the Order Dismissing Case Without Prejudice in Case No. 12-

00163-LT13 (Bankr. S.D. Cal. Jan. 23, 2012); (7) the Notice of Default and Election to Sell Under

Deed of Trust, dated April 25, 2011 and filed in the San Diego County Recorder’s Office as Document

No. 2011-0213364; (8) the Substitution of Trustee, dated May 19, 2011 and filed in the San Diego

County Recorder’s Office as Document No. 2011-0281836; and (9) the Notice of Trustee’s Sale, dated

July 26, 2011 and filed in the San Diego County Recorder’s Office as Document No. 2011-0377011. 

The Court GRANTS both requests for judicial notice. See FED. R. EVID. 201(b); In re Bare

Escentuals, Inc. Sec. Litig., 745 F. Supp. 2d 1052, 1067 (N.D. Cal. 2010) (“[T]he court may take

judicial notice of the existence of unrelated court documents, although it will not take judicial

notice of such documents for the truth of the matter asserted therein.”). 

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1996); see also Gaus, 980 F.2d at 566 (“Federal jurisdiction must be rejected if there is any doubt as

to the right of removal in the first instance.”). 

Wells Fargo removed the action under 28 U.S.C. § 1441(a), contending that the Court has

diversity jurisdiction over the action under 28 U.S.C. § 1332. Section 1332(a) provides, “The district

courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the

sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States.” 

It is undisputed that both Plaintiff and Cal-Western are citizens of California. In the Notice of

Removal, Wells Fargo argues that Cal-Western’s citizenship should be ignored because it was

fraudulently joined only to defeat diversity.

A non-diverse party named in the state court action may be disregarded if the federal court

determines that party’s joinder is a “sham” or “fraudulent” so that no possible cause of action has been

stated against that party. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). “The

burden of proving a fraudulent joinder is a heavy one. The removing party must prove that there is

absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state

defendant in state court, or that there has been outright fraud in the plaintiff’s pleadings of

jurisdictional facts.” Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir. 1983). Courts do not

ordinarily consider a nondiverse defendant’s defenses on the merits in determining whether that

defendant’s joinder was “fraudulent.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1044 (9th Cir.

2009). 

First, Wells Fargo argues that none of the causes of action successfully states a claim against

Cal-Western. Here, the Court will consider only the eighth cause of action for wrongful foreclosure

asserted against Cal-Western. Plaintiff alleges that Cal-Western exceeded the scope of its authority

as an agent of Wells Fargo when it recorded the notice of default. Wells Fargo argues that CalWestern was fraudulently joined because Cal-Western’s actions in recording the notice of default is

privileged under California Civil Code Section 2924(d) and because the eighth cause of action fails

to meet the Federal Rule of Civil Procedure 8 pleading standard. However, these are not proper

considerations for determining whether a party was fraudulently joined. See Hunter, 582 F.3d at 1044

(courts do not ordinarily consider a nondiverse defendant’s defenses on the merits in determining

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whether that defendant’s joinder was “fraudulent”).

Second, Wells Fargo argues that Cal-Western is a nominal party that should be ignored for

diversity purposes because it is a trustee under the deed of trust and has filed a Declaration of NonMonetary Status, which remains unchallenged. California Civil Code Section 2924, which allows

for declarations of nonmonetary status, does not render a defendant a sham defendant or a purely

nominal party: 

A defendant’s declaration of nonmonetary status, which excuses a party from active

participation in the case, is not conclusive. A timely objection, or even facts which

arise during discovery, are allowed to show the defendant was not entitled to

nonmonetary status. . . . [E]ven if a defendant’s nonmonetary status declaration

remains unchallenged for the duration of the action, the defendant is bound by the

nonmonetary terms of the judgment.

Sublett v. NDEX West, LLC, No. 11-CV-185, 2011 WL 663745, at *2 (S.D. Cal. Feb. 14, 2011)

(citations omitted) (emphasis added).2 The citizenship of Cal-Western may not be ignored for

diversity purposes because it has filed a Declaration of Non-Monetary Status. Cal-Western has

not been fraudulently joined. Accordingly, because Plaintiff and Cal-Western are both citizens

of California, this Court does not have jurisdiction under § 1332. This action is REMANDED

to the San Diego County Superior Court.

In addition, Plaintiff requests that the Court order Wells Fargo to pay Plaintiff 

attorneys’ fees and costs incurred in preparing the Motion to Remand, in the amount of

$2,887.50. Under 28 U.S.C. § 1447(c), “An order remanding the case may require payment of

just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” 

“Absent unusual circumstances, courts may award attorney’s fees under § 1447(c) only where

the removing party lacked an objectively reasonable basis for seeking removal. Conversely,

when an objectively reasonable basis exists, fees should be denied.” Martin v. Franklin Capital

Corp., 546 U.S. 132, 141 (2005). Such an award of attorneys’ fees is discretionary. Id. at 136. 

2

 Wells Fargo cites Cabriales v. Aurora Loan Services, No. 10-161, 2012 U.S. Dist. LEXIS

24726, at *6-7 (N.D. Cal. Mar. 2, 2010), for the proposition that a trustee under a deed of trust that

has filed a declaration of non-monetary status becomes a nominal party whose citizenship is

disregarded for purposes of assessing diversity jurisdiction. Cabriales, however, is not binding

authority, and its reasoning is not persuasive. 

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Here, although this Court has found that Cal-Western was not fraudulently joined, Wells Fargo

nonetheless had an objectively reasonable basis for removal. Plaintiff’s request for attorneys’

fees and costs is DENIED.

CONCLUSION

For the reasons stated above, the Motion to Remand is GRANTED IN PART AND

DENIED IN PART. This action is REMANDED to the San Diego County Superior Court. 

Plaintiff’s request for attorneys’ fees and costs is DENIED.

IT IS SO ORDERED.

DATED: February 10, 2012

Hon. Roger T. Benitez

United States District Judge

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