Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_19-cv-01557/USCOURTS-caed-1_19-cv-01557-0/pdf.json

Parties Involved:
American First Finance, Inc.
Defendant
Furniture Deals, Inc.
Defendant
Ramos Furniture Home Store
Defendant
Ken A. Smith
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

This case arises from Plaintiff Ken Smith’s (“Smith”) purchase of furniture from 

Defendant Furniture Deals, Inc., doing business as Ramos Furniture Home Store, (“FDI”) and 

financing from Defendant American First Finance, Inc. (“AFF”). Smith alleges violations of state 

common law and statutory provisions, as well as violations of the federal Truth In Lending Act 

and the Holder Rule (16 C.F.R. § 433). Defendant AFF removed this case from the Fresno 

County Superior Court on the basis of federal question jurisdiction. Currently before the Court is 

Smith’s motion to remand and request for monetary sanctions and AFF’s motion to compel 

arbitration. For the reasons that follow, the Court will grant the motion to remand, decline to 

sanction AFF, and deny the motion to compel arbitration without prejudice.

 FACTUAL BACKGROUND

On August 29, 2018, Smith purchased a sofa and love seat from FDI for $1,887. Smith 

paid $188 down and financed approximately $1,700. Smith was told at the store that he would be 

emailed the financing information, but the salesman did not inform Smith of the financing terms, 

the amount of payments, the number of payments, or the identity of the lender, and did not provide 

KEN A. SMITH,

Plaintiff

v.

FURNITURE DEALS, INC., a corporation 

d/b/a Ramos Furniture Home Store,

AMERICAN FIRST FINANCE, INC., and 

DOES 1-20, inclusive,

Defendants

CASE NO. 1:19-CV-1557 AWI EPG

ORDER ON PLAINTIFF’S MOTION TO 

REMAND AND DEFENDANT’S 

MOTION TO COMPEL ARBITRATION

(Doc. Nos. 4, 11)

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Smith with any financing documents. FDI asked Smith to e-sign a document on a computer 

screen and told Smith that the e-document merely authorized FDI to send the sales order to “the 

lender.” Smith electronically signed based on the salesman’s representations. Smith was also told 

that he was getting the best possible price because of the Labor Day sale.

In late September 2018, FDI delivered the furniture to Smith. FDI informed Smith that he

should ask AFF about payments and gave Smith AFF’s number. 

On October 1, 2018, Smith called AFF and learned that his payment would be $108.16 per 

month. Smith authorized the first payment. 

On October 9, 2018, and unbeknownst to Smith, AFF made an automatic withdrawal from 

Smith’s bank account for another $108.16, despite the prior October 1 payment.

On October 24, 2018, AFF made another automatic withdrawal from Smith’s bank account 

for $108.16, which caused an overdraft charge to be made against Smith. Smith was not expecting 

either the October 9 or 24 withdrawals because he was told his payments would be monthly.

In November 2018, December 2018, and January 2019, AFF made two automatic 

withdrawals from Smith’s account, with the second withdrawal of each month causing Smith to 

incur overdraft fees. 

In February 2019, Smith finally called AFF and instructed them not to make the second 

monthly withdrawal. AFF agreed. Smith also believes that he learned for the first time during the 

February 2019 phone call that AFF was charging him a 144.9% interest rate. 

In April 2019, AFF withdrew $108.16 from Smith’s account on April 1 and April 8. 

On April 9, 2019, Smith called AFF and requested a copy of his loan contract. The 

contract arrived two days later, and he learned for the first time that he would ultimately pay 

$5,380.14 for his furniture. 

On April 29, 2019, AFF withdrew another $108.16, and has continued to withdraw two 

payments of $108.16 each month thereafter. 

On August 28, 2019, Smith filed his complaint against Defendants in the Fresno County 

Superior Court. AFF was served with the Complaint on October 4, 2019, and removed the matter 

to this Court on November 1, 2019.

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AFF’s notice of removal notes that this Court has federal question subject matter 

jurisdiction through Smith’s Truth In Lending Act claim. The notice also expressly states that 

“Defendant Furniture Deals, Inc., dba Ramos Furniture Home Store, consents to removal of this 

action.” Doc. No. 1. In support of this assertion, Exhibit C is referenced.

Exhibit C to the notice of removal is a consent. The consent reads:

Whereas, on August 28, 2019, a complaint was filed against defendant Second 

Generation Furniture, Inc., erroneously sued herein as Furniture Deals, Inc., dba 

Ramos Furniture Store, and defendant [AFF] by [Smith], in an action pending in 

the Superior Court of the State of California in and for the County of Fresno . . . .

Whereas, this action is a civil action of which this Court has original jurisdiction 

under 28 U.S.C. § 1331 and which may be removed to this Court pursuant to the 

provisions of 28 U.S.C. § 1441(a); and,

Whereas, defendant [AFF] seeks to remove this action to this Court, 

Therefore, defendant Second Generation Furniture, Inc., hereby consents to the 

removal of this action.

Ex. C to Doc. No. 1. The consent is signed by Jorge Ramos as Secretary of Second 

Generation Furniture Inc. dba Ramos Furniture (“SGF”). Id.

 PLAINTIFF’S MOTION

Plaintiff’s Argument

Smith argues that FDI was properly served on October 9, 2019, and AFF did not obtain 

FDI’s consent. Instead, AFF obtained SGF’s consent, but SGF is not a party to this lawsuit and is 

a separate entity from FDI. Smith asserts that Ramos Furniture has 10 stores in California which 

are independently owned operated, including two in Fresno. A fictitious business name search of 

the Fresno County Clerk’s records shows that Ramos Furniture on Shaw Avenue in Fresno is 

owned by SGF. The Fresno County Clerk’s records show that Ramos Furniture on Blackstone 

Avenue in Fresno is owned by FDI. Smith purchased the furniture at issue from the Blackstone 

location. Smith argues that the Fresno County Clerk’s records show that FDI is “inactive” and has 

an expiration date of May 2020. Also, records from the California Secretary of State lists different 

officers for SGF and FDI. Jorge Ramos, who signed the consent on behalf of SGF, told Smith’s 

counsel that he signed the consent as a favor to AFF, he did not prepare the consent, he did not 

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question the contents of the consent, and he did not understand the content or the implications of 

the consent. 

Smith argues that he did not erroneously name FDI as a defendant, rather he named the 

defendant that comports with the Fresno County Clerk’s records for the owner listed of the Ramos 

Furniture location on Blackstone Ave. California Secretary of State records show that FDI is 

suspended, but a suspended corporation is still a proper defendant in a civil action. Because FDI 

is the identified owner of the Blackstone Ave. store, and because FDI was properly named and 

served, the failure of AFF to obtain a consent from FDI renders the removal improper and remand 

necessary.

Smith also argues that sanctions should be imposed for the improper removal. On 

November 20, 2019, counsel for each party met, and Smith counsel explained the factual findings 

and business findings regarding FDI and SGF. AFF’s counsel provided no further support for the 

contention that FDI was erroneously sued instead of SGF, or that Ramos or SGF has any standing 

to provide consent in this case. In the absence of contrary evidence, relying on SGF’s consent was 

objectively unreasonable. Therefore, AFF should pay reasonable attorney fees in the amount of 

$3,937 based on a rate of $375 per hour.

Defendant’s Opposition

AFF argues that the remand motion is little more than a disagreement between Smith and 

the co-defendant as to the co-defendant’s proper legal name. As reflected in the consent, the codefendant contends that its legal name is SGF and that it was erroneously sued as FDI. On 

October 31, 2019, AFF spoke with Jorge Ramos and Mr. Ramos advised that the proper name of 

the co-defendant is SGF. Ramos expressed his authority to agree to consent on behalf of SGF and 

he ultimately did so. Because of the disagreement regarding the co-defendant’s proper name, the 

consent was styled by as a consent by SGF “erroneously sued herein as [FDI] . . . .” The consent 

not only highlights the disagreement between Smith and the co-defendant, but it clearly reflects 

the co-defendant’s agreement and consent to removal. Although AFF represents that it has been 

unable to speak with Mr. Ramos regarding Smith’s remand motion, there remains sufficient 

evidence to deny the motion. 

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Alternatively, AFF argues that a procedural defect can be cured before entry of judgment

and that limited jurisdictional discovery is permitted to establish the propriety of removal. If the 

Court is persuaded by Smith’s arguments, limited jurisdictional discovery should occur, including 

the deposition of Mr. Ramos. That way, the Court would have the benefit of hearing from the 

unrepresented co-defendant. The limited discovery will likely cure any deficiencies from the 

removal process. 

Finally, AFF argues that sanctions are not appropriate. AFF argues that it reasonably 

relied on Mr. Ramos’s statements that he had authority to consent on the co-defendant’s behalf. 

Smith has cited no similar cases in which an objectively reasonable attempt to remove a matter 

resulted in an award of sanctions. 

Legal Standard

Removal statutes are strictly construed against removal, and any doubt as to the propriety 

of removal is resolved against removability. Luther v. Countrywide Home Loans, 533 F.3d 1031, 

1034 (9th Cir. 2008). 28 U.S.C. § 1446 establishes the procedures to be followed by a defendant

in removing a case from state court to federal court. Progressive W. Ins. Co. v. Preciado, 479 F.3d 

1014, 1018 (9th Cir. 2007). In part, “all defendants who have been properly joined and served in 

the action must join in or consent to the removal of the action.” 28 U.S.C. § 1446(b)(2)(A); see

Destfino v. Reiswig, 630 F.3d 952, 956 (9th Cir. 2011); Emrich v. Touche Ross & Co., 846 F.2d 

1190, 1193 n.1 (9th Cir. 1988). Only defendants who have been properly served must join in or 

consent to the removal. Destfino, 630 F.3d at 956; Emrich, 846 F.2d at 1193 n.1. Defendants who 

have been improperly served, see Destfino, 630 F.3d at 956-57, or who have not been served, 

Salveson v. W. States Bankcard Ass’n, 731 F.2d 1423, 1429 (9th Cir. 1984), or who are “nominal, 

unknown or fraudulently joined” defendants, Emrich, 846 F.2d at 1193 n.1, are not required to 

join in or consent to removal. A violation of the defendant unanimity rule, i.e. the failure to obtain 

the joinder or consent of all properly served defendants, is a procedural defect. See Destfino, 630 

F.3d at 956-57; Atlantic Nat’l Trust LLC v. Mt. Hawley Ins. Co., 621 F.3d 931, 938 (9th Cir. 

2010). Further, the failure of a defendant to affirmatively explain the absence of a co-defendant in 

the notice of removal is a procedural defect. Prize Frize, Inc. v. Matrix, Inc., 167 F.3d 1261, 1266 

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(9th Cir. 1999). “If the removal suffers from procedural defects, the plaintiff is responsible for 

bringing those defects to the attention of the district court in a timely motion to remand.” Polo v. 

Innoventions Int'l, LLC, 833 F.3d 1193, 1196 (9th Cir. 2016). Once the plaintiff raises a 

procedural defect in the removal, it is the removing defendant's burden to show compliance with 

the pertinent procedural requirement. See Gomez v. Global Video Games, 2016 U.S. Dist. LEXIS 

98305, *2 (C.D. Cal. July 26, 2016); Bea v. Encompass Ins. Co., 2013 U.S. Dist. LEXIS 58251, 

*5 (N.D. Cal. Apr. 23, 2013); Riggs v. Plaid Pantries, Inc., 233 F. Supp. 2d 1260, 1264 (D. Or. 

2001). 

Additionally, under 28 U.S.C. § 1447(c), the Court may require payment of attorneys’ fees 

and costs incurred as a result of an improper 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.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141, 126 

S. Ct. 704, 163 L. Ed. 2d 547 (2005); Chan Healthcare Group, PS v. Liberty Mut. Fire Ins. Co., 

844 F.3d 1133, 1141 (9th Cir. 2017). “[R]emoval is not objectively unreasonable because the 

removing party’s arguments lack merit, or else attorney’s fees would always be awarded whenever

remand is granted.” Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008). 

Discussion

1. Defendant Unanimity

Smith has submitted substantial evidence that there is more than a mere disagreement 

about the proper name of the co-defendant, Smith’s evidence indicates that FDI and SGF are 

separate entities. Smith has submitted documentation from the Fresno County Clerk and the 

California Secretary of State regarding FDI and SGF. Smith is correct that documents relating to 

fictitious business names, as recorded in the Fresno County Clerk’s office, reflect two locations 

for Ramos furniture in Fresno, one on Blackstone and one on Shaw.1 See id. at Exs. C, D. 

 

1 The Court notes that the Ramos Furniture website has a “store finder” function that lists two locations in Fresno, one 

on Blackstone and one on Shaw, each with the same address as the two stores listed in the Fresno County Clerk’s 

records. Cf. Hinton Dec. Exs. C, D. with http://www.ramosfurniture.com. The Court takes judicial notice of the two 

locations identified on the Ramos Furniture website. See Fed. R. Civ. P. 201; Matthews v. National Football League 

Mgmt Council, 688 F.3d 1107, 1113 & n.5 (9th Cir. 2012) (taking judicial notice of a website); 23-34 94th St. 

Grocery Corp. v. New York City Bd. of Health, 685 F.3d 174, 183 n.7 (2d Cir. 2012) (same).

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Different registrants are listed for these stores. See id. SGF is listed as the only registrant of the 

Shaw location, see id. at Ex. C, and FDI is listed as the only registrant of the Blackstone location. 

See id. at Ex. D. Also, the Secretary of State documents show that FDI and SGF have different 

registered officers and different locations, although they do share the same agent for service of 

process. See Hinton Dec. Exs. G, I. No documentary evidence has been submitted that reflects 

that SGF and FDI are essentially the same (through a merger, for example) or otherwise explains 

the relationship between SGF and FDI. Therefore, the documentary evidence submitted indicates 

that SGF and FDI are separate entities. If FDI and SGR are separate entities, then obtaining only a 

consent from SGF is ineffectual, and AFF would be in violation of the defendant unanimity rule. 

AFF does not in any way address or attempt to refute the governmental records submitted 

by Smith, nor does it challenge Smith’s assertion that each Ramos furniture store is independently 

owned and operated. Instead, AFF relies heavily on the consent itself and a conversation its 

counsel had with Mr. Ramos. However, the consent merely states that Smith erroneously named 

FDI instead of SGF. The consent does not explain why Ramos believes that FDI is the wrong 

defendant and it does not explain the relationship between FDI and SGF. Further, AFF in 

opposition has only generally described a conversation its counsel had with Mr. Ramos. No 

particulars of the conversation are provided. Of note, AFF does not explain how or why AFF’s 

counsel came to believe that Mr. Ramos was an appropriate contact person for the “co-defendant;” 

AFF does not attempt to describe or clarify the relationship between FDI and SGF; AFF does not 

explain why Ramos believed that FDI was improperly named instead of SGF; and AFF does not 

explain why Ramos believed he could sign on behalf of FDI. In other words, AFF does not 

explain why the conversation with Ramos justified obtaining his signature on the consent as the 

secretary of SGF. The consent submitted by AFF and the description of the discussion with Mr. 

Ramos are too general and conclusory to sufficiently negate Smith’s records from the Secretary of 

State and the Fresno County Clerk.

Additionally, both sides have submitted declarations that somewhat describe conversations 

with Mr. Ramos. AFF does not challenge Smith’s assertions that Mr. Ramos did not question the 

consent or understand its content or implications, and that he signed it merely as a favor. See

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Hinton Dec. ¶ 14. AFF has represented that it has been unable to reach Mr. Ramos to address the 

issues raised in Smith’s motion. AFF apparently had no difficulty reaching Mr. Ramos prior to his 

November 19 conversation with Smith’s counsel. It is not unreasonable to infer that Mr. Ramos 

did not necessarily understand what he was signing and that he and SGF no longer wish to help 

AFF. While the purported statements and actions of Mr. Ramos would not definitively negate the 

consent, they do tend to undermine the consent and raise significant questions.

AFF argues that limited jurisdictional discovery can clear up the issues as to the codefendant’s proper name and the validity of the consent. In general, “a court may allow discovery 

to aid in determining whether it has in personam or subject matter jurisdiction.” Wells Fargo & 

Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977). Such discovery “may be 

appropriately granted where pertinent facts bearing on the question of jurisdiction are controverted 

or where a more satisfactory showing of the facts is necessary.” Boschetto v. Hansing, 539 F.3d 

1011, 1020 (9th Cir. 2008). Here, however, there is no dispute that the Court has jurisdiction over 

this matter. Smith’s Truth In Lending Act claim clearly provides federal question jurisdiction. 

There is no ambiguity or questions regarding subject matter jurisdiction (and nothing suggests that 

personal jurisdiction is at issue). The problem with the removal in this case is the defendant 

unanimity rule. The defendant unanimity rule is a procedural rule and thus, its violation is a 

procedural defect, not jurisdictional. See Destfino, 630 F.3d at 956-57; Atlantic Nat’l Trust LLC 

v. Mt. Hawley Ins. Co., 621 F.3d 931, 938. AFF cites no cases that authorize “limited procedural 

discovery” to correct a procedural defect. Therefore, no limited discovery will be permitted.2 

Finally, it is true that a violation of the defendant unanimity rule may be corrected prior to 

entry of judgment. Destfino, 630 F.3d at 957. When a plaintiff objects to a violation of the rule of 

unanimity, often defendants who did not initially join the notice of removal will file a separate 

joinder or consent, e.g. Parrino v. FHP, Inc., 146 F.3d 699, 703 (9th Cir. 1998),3or the removing 

 

2 The Court notes that some courts have held that post-removal jurisdictional discovery is improper. E.g. Lowery v. 

Alabama Power Co., 483 F.3d 1184, 1217-18 (11th Cir. 2007); May v. Wal-Mart Stores, Inc., 751 F.Supp.2d 946, 952 

(E.D. Ky. 2010). Because there is not jurisdictional problem in this case, it is enough for the Court to note that there 

are questions regarding post-removal jurisdictional discovery.

3 Superseded by statute as stated by Abrego v. Dow Chem., 443 F.3d 676, 681-82 (9th Cir. 2006).

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defendant will seek leave to file an amended notice of removal that properly addresses all served 

defendants. E.g. Destfino v. Kennedy, 2008 U.S. Dist. LEXIS 95149, *11 (E.D. Cal. Nov. 12, 

2008). Here, there has been no joinder by FDI or anyone purporting to act on FDI’s behalf. 

Further, as discussed above, Mr. Ramos is not communicating with AFF, so it is hardly surprising 

that AFF has not submitted significant contrary evidence in opposition to Smith’s motion or 

attempted to file an amended notice of removal. Therefore, there is no indication that any defects 

with the unanimity rule can be timely cured or addressed. Cf. Destfino, 630 F.3d at 957. 

In sum, the documentation submitted by Smith, Mr. Ramos/SGF’s apparent unwillingness 

to cooperate further with AFF, and the absence of evidence that describes any particulars 

regarding either AFF’s conversations with Ramos or its investigative efforts, together create 

significant doubt about the procedural propriety of removal. That doubt is resolved against 

removal. See Luther, 533 F.3d at 1034. Because AFF has not sufficiently shown compliance with 

the § 1446(b)’s unanimity requirement, the Court will grant Smith’s motion to remand. See 28 

U.S.C. § 1447(c); Atlantic Nat’l, 621 F.3d at 940.

2. Sanctions

The Court cannot find that sanctions are appropriate. First, Smith’s counsel does not 

explain the basis for the requested hourly rate of $375 per hour. What counsel charges and what 

this Court has found to be a reasonable rate in the community in other cases may or may not 

coincide. Second, and more importantly, it is apparent that AFF’s counsel somehow received Mr. 

Ramos’s name and, after speaking with Mr. Ramos, believed that Smith erroneously named FDI 

instead of SGF. Through Mr. Ramos, AFF had some objective basis for removal. It is not clear 

what investigative efforts AFF actually undertook to find the appropriate co-defendant or to 

research FDI and SGF. It is possible that AFF simply contacted Mr. Ramos without asking or 

attempting to learn specifics about FDI, the Shaw location, or the Blackstone location. However, 

the standard for imposing fees is not whether a thorough investigation has been conducted, it is 

whether there was an objectively reasonable basis for removal. Although a close call, the Court 

does not conclude that AFF removed this matter without any objectively reasonable basis. 

Therefore, Smith’s request for attorney’s fees will be denied. 

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3. Motion to Compel Arbitration

Because the Court is remanding this case, it would be inappropriate to rule on AFF’s 

motion to compel arbitration. For administrative purposes, the Court will deny the motion to 

compel arbitration without prejudice to refiling in the Superior Court.

 ORDER

Accordingly, IT IS HEREBY ORDERED that:

1. Plaintiff’s motion to remand (Doc. No. 11) is GRANTED;

2. Pursuant to 28 U.S.C. § 1447(c) and the violation the defendant unanimity rule, this case is 

REMANDED forthwith to the Fresno County Superior Court; 

3. The Court DECLINES to impose sanctions against Defendant for an improper removal; 

4. AFF’s motion to compel arbitration (Doc. No. 4) is DENIED without prejudice to refiling

in the Superior Court; and

5. The Clerk shall CLOSE this case.

IT IS SO ORDERED.

Dated: January 27, 2020 

 SENIOR DISTRICT JUDGE

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