Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_16-cv-01111/USCOURTS-caed-2_16-cv-01111-1/pdf.json

Parties Involved:
NBS Default Services, LLC
Defendant
Rachel Pacray
Plaintiff
TBM Funding LLC
Defendant
Wells Fargo Home Mortgage, Inc.
Defendant

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UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

RACHEL PACRAY, an individual, 

Plaintiff, 

v. 

WELLS FARGO HOME MORTGAGE, 

INC.; NBS DEFAULT SERVICES, LLC; 

TBM FUNDING LLC; and DOES 1 

through 20, inclusive, 

Defendants. 

No. 2:16-cv-01111-KJM-EFB 

ORDER 

Plaintiff Rachel Pacray prefers to litigate her claims against Wells Fargo Home 

Mortgage, Inc.; NBS Default Services, LLC (“NBS LLC”); and TBM Funding LLC (“TBM 

LLC”) (collectively, “Defendants”) in Solano County Superior Court. She moves to remand the 

case after Wells Fargo Bank N.A. (“Wells Fargo”)1

 removed it on May 23, 2016. The matter was 

submitted without argument, as provided by Local Rule 230(g). ECF No. 21. The motion to 

remand is granted, but on grounds different than those on which Pacray moves. 

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 Wells Fargo Home Bank N.A. asserts Pacray has erroneously named it as “Wells 

Fargo Home Mortgage, Inc.” Notice of Removal (NOR) 4:2–15, ECF No. 1. Wells Fargo Home 

Mortgage, Inc. merged into Wells Fargo Bank N.A. on May 8, 2004, and ceased to be a separate 

entity. NOR Ex. G. 

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I. MOTION TO REMAND 

Pacray filed her complaint in state court in April 2016. NOR Ex. A (“Compl.”), 

ECF No. 1-1. She alleges six claims for: (1) violation of California Civil Code section 2923.55; 

(2) violation of California Civil Code section 2923.6; (3) violation of California Civil Code 

section 2923.7; (4) negligence; (5) unfair business practices under California Business and 

Professions Code sections 17200 and 17203; and (6) violation of California Civil Code section 

2924.19. Id. 

Wells Fargo removed the case on May 23, 2016, asserting subject matter 

jurisdiction on the basis of diversity of citizenship under 28 U.S.C. § 1332(a). See NOR. NBS 

LLC consented and joined in the notice of removal. Def. NBS LLC’s Consent to Removal by 

Wells Fargo, ECF No. 1-4. 

On June 22, 2016, Pacray filed a motion to remand. Pl.’s Notice of Mot., Mot. to 

Remand; Decl. of Kenley Dygert (“Mot.”), ECF No. 7. Wells Fargo filed an opposition. Def.’s 

Opp’n to Mot. (“Opp’n”), ECF No. 13. Pacray has replied. ECF No. 18. 

II. LEGAL STANDARD ON MOTION TO REMAND 

The removal statute provides: “[A]ny civil action brought in a State court of which 

the district courts of the United States have original jurisdiction, may be removed by” a defendant 

to a federal district court. 28 U.S.C. § 1441(a). Federal courts have original jurisdiction “where 

the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs” 

and where there is complete diversity between the parties. Id. § 1332(a). 

The Ninth Circuit “strictly construe[s] the removal statute against removal 

jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “Federal jurisdiction must 

be rejected if there is any doubt as to the right of removal in the first instance.” Id. There is a 

“‘strong presumption’ against removal jurisdiction[, which] means that the defendant always has 

the burden of establishing that removal is proper.” Id. Furthermore, “removal jurisdiction is 

strictly construed in favor of remand.” Nasrawi v. Buck Consultants, LLC, 776 F. Supp. 2d 1166, 

1169 (E.D. Cal. 2011) (citing Harris v. Bankers Life and Cas. Co., 425 F.3d 689, 698 (9th Cir. 

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2005)). Accordingly, “the court resolves all ambiguity in favor of remand to state court.” 

Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). 

III. DISCUSSION 

Pacray seeks to remand this action to state court on the following grounds: 

(1) Wells Fargo and NBS LLC are California citizens; and (2) Wells Fargo has not shown the 

amount in controversy exceeds $75,000. Mot. 2:7–16. The parties’ citizenship is discussed 

below. 

A. Pacray’s Citizenship 

The parties do not dispute that Pacray is a citizen of California. A person is a 

citizen of the state in which she is domiciled. See Gilbert v. David, 235 U.S. 561, 569 (1915). “A 

person’s domicile is her permanent home, where she resides with the intention to remain or to 

which she intends to return.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). 

Pacray alleges she has resided in California “at all times relevant to the facts,” Compl. ¶ 1, and 

the court finds Pacray is a California citizen. 

B. Wells Fargo’s Citizenship 

Pacray contends Wells Fargo “should be deemed [a] California citizen[] through 

[its] significant activities in California.” Mot. 2:10–13. Wells Fargo counters Ninth Circuit 

precedent confirms it is a South Dakota citizen. Opp’n 1:3–10, 2:17–18. 

Unlike corporations, “a national bank is a citizen only of the state in which its 

main office is located.” Rouse v. Wachovia Mortg., FSB, 747 F.3d 707, 709 (9th Cir. 2014) 

(citing 28 U.S.C. § 1348). A bank’s main office, which must be “designated in the bank’s articles 

of association,” id., is “the ‘place where its operations of discount and deposit are to be carried 

on,’” Wachovia Bank v. Schmidt, 546 U.S. 303, 307 n.1 (2006) (quoting 12 U.S.C. § 22). 

Wells Fargo’s articles of association state that its main office is located in Sioux 

Falls, South Dakota. NOR Ex. F, at 67; see also Rouse, 747 F.3d at 715 (concluding “Wells 

Fargo is a citizen only of South Dakota, where its main office is located”). Accordingly, Wells 

Fargo is a South Dakota citizen for diversity purposes. 

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Lastly, Wells Fargo suggests Pacray should be sanctioned, under Federal Rule of 

Civil Procedure (“Rule”) 11(c)(3), for arguing Wells Fargo is a California citizen despite “the 

controlling Ninth Circuit case in Rouse.” Opp’n 2:13–16. A district court has power under Rule 

11(c)(3) to impose sanctions sua sponte even if no motion is made, but the Court declines to 

exercise this power here. 

C. NBS LLC’s Citizenship 

Pacray argues NBS LLC should be deemed a California citizen because it “holds 

[itself] out to California laws and statu[t]es by do[ing] business in California and placing [its] 

California address on all recorded documents and documents sent to” Pacray. Mot. 7:1–5. 

Pacray has not cited evidence or provided further examples. Moreover, she seems to 

misunderstand how a court determines a limited liability company’s citizenship, which is 

explained below. 

“[U]nincorporated associations are not legal entities independent of their 

members. . . . [A]n LLC is a citizen of every state of which its owners/members are citizens.” 

Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (citation omitted). 

In its notice of removal, Wells Fargo asserts NBS LLC is a limited liability company whose sole 

member is NBSC Group Holdings, Inc. (“NBSC Holdings”), a corporation. NOR 4:17–5:1 

(citing NOR Ex. H, at 84–86). Under 28 U.S.C. § 1332(c)(1), “a corporation shall be deemed to 

be a citizen of every State . . . by which it has been incorporated and of the State . . . where it has 

its principal place of business.” In Hertz Corp. v. Friend, the Supreme Court considered the 

Circuits’ varying interpretations of this provision and concluded that a corporation’s “principal 

place of business” for diversity purposes 

is best read as referring to the place where a corporation’s officers 

direct, control, and coordinate the corporation’s activities. It is the 

place that Courts of Appeals have called the corporation’s “nerve 

center.” And in practice it should normally be the place where the 

corporation maintains its headquarters—provided that the 

headquarters is the actual center of direction, control, and 

coordination, i.e., the “nerve center,” and not simply an office 

where the corporation holds its board meetings . . . . 

559 U.S. 77, 92–93 (2010). 

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Wells Fargo asserts “NBSC Holdings was incorporated in Delaware and maintains 

its principal place of business in Addison, Texas.” NOR 5:2–3. A printout from the Delaware 

Secretary of State website confirms NBSC Holdings is in fact incorporated in Delaware. NOR 

Ex. I, at 87. Wells Fargo also has presented the declarations of the following NBSC Holdings’ 

officers: James B. “Brad” Cloud; Luke Madole; and Lawrence “Larry” Buckley. NOR Ex. H, at 

84–86. The officers each declare that NBSC Holdings has its principal place of business in 

Addison, Texas. 

The court concludes NBS LLC is a citizen of Delaware and Texas. Granted, the 

officers state a conclusion about NBSC Holdings’ principal place of business, without supporting 

facts such as where NBSC Holdings has its headquarters. But Pacray fails to set forth evidence 

contravening NBS LLC’s asserted citizenship. The court notes at least one other district court 

recently has found NBS LLC is a citizen of Delaware and Texas. Calimpusan v. Wells Fargo 

Bank, N.A., No. CV1508452ABKLSX, 2015 WL 9581727, at *3 (C.D. Cal. Dec. 28, 2015). 

The court need not and does not reach the issue of NBS LLC’s potential nominal 

or fraudulently-joined status, raised by Wells Fargo in its notice of removal, because NBS LLC’s 

presence in the lawsuit does not destroy complete diversity. 

D. TBM LLC’s Citizenship 

The complaint alleges TBM LLC “is a California limited liability company 

registered in the state of California, bound by the laws of the state of California, doing business in 

the County of Solano, State of California.” Compl. ¶ 4. Wells Fargo asserts TBM LLC “is a 

California limited liability corporation.” NOR 6:22. Assuming TBM LLC is a limited liability 

company, it “is a citizen of every state of which its owners/members are citizens.” Johnson, 

437 F.3d at 899. Wells Fargo does not identify TBM LLC’s citizenship because it does not 

identify the citizenship of TBM LLC’s owners/members. However, Wells Fargo asserts in its 

notice of removal that the court should disregard TBM LLC’s citizenship because it was 

fraudulently joined. NOR 6:23–24. 

Pacray’s motion does not discuss TBM LLC’s citizenship, and neither does Wells 

Fargo’s opposition. “But federal courts have an independent obligation to ensure that they do not 

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exceed the scope of their jurisdiction, and therefore they must raise and decide jurisdictional 

questions that the parties either overlook or elect not to press.” Henderson ex rel. Henderson v. 

Shinseki, 562 U.S. 428, 434 (2011). 

1. Legal Standard Governing Fraudulent Joinder 

A resident defendant has been fraudulently joined “[i]f a plaintiff fails to state a 

cause of action against [the] resident defendant, and the failure is obvious according to the wellsettled rules of the state.” United Comput. Sys., Inc. v. AT & T Corp., 298 F.3d 756, 761 (9th Cir. 

2002). In the Ninth Circuit, a non-diverse defendant is deemed to be fraudulently joined if, after 

all disputed questions of fact and all ambiguities in the controlling state law are resolved in the 

plaintiff’s favor, the plaintiff could not possibly recover against the party whose joinder is 

questioned. Dodson v. Spiliada Mar. Corp., 951 F.2d 40, 42 (9th Cir. 1992). A court may look 

beyond the pleadings to determine if a defendant is fraudulently joined, but “a plaintiff need only 

have one potentially valid claim against a non-diverse defendant” to survive a fraudulent joinder 

challenge. See Knutson v. Allis–Chalmers Corp., 358 F. Supp. 2d 983, 993–95 (D. Nev. 2005) 

(collecting cases); Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). 

“There is a presumption against finding fraudulent joinder, and defendants who 

assert that plaintiff has fraudulently joined a party carry a heavy burden of persuasion.” Plute v. 

Roadway Package Sys., Inc., 141 F. Supp. 2d 1005, 1008 (N.D. Cal. 2001). A defendant seeking 

removal based on an allegedly fraudulent joinder must do more than show that the complaint at 

the time of removal fails to state a claim against the non-diverse defendant. See Burris v. AT&T 

Wireless, Inc., No. C 06-02904 JSW, 2006 WL 2038040, at *2 (N.D. Cal. July 19, 2006). 

“Fraudulent joinder must be proven by clear and convincing evidence.” Hamilton Materials, 

Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). Indeed, “[r]emand must be 

granted unless the defendant shows that the plaintiff ‘would not be afforded leave to amend h[er] 

complaint to cure [the] purported deficiency.’” Padilla v. AT & T Corp., 697 F. Supp. 2d 1156, 

1159 (C.D. Cal. 2009) (third alteration in original) (quoting Burris, 2006 WL 2038040, at *2). 

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2. Whether Wells Fargo Has Shown Fraudulent Joinder 

Wells Fargo asserts “the complaint lacks any charging allegations against TBM 

[LLC] and seeks no relief as to this defendant . . . . Notably, the complaint is dedicated to 

challenging the foreclosure process . . . [whereas] TBM [LLC] played no role in the foreclosure 

mechanics.” NOR 6:24–27. The sufficiency of Pacray’s current allegations against TBM LLC is 

questionable. The only specific references to TBM LLC concern its citizenship, Compl. ¶ 4, and 

its purported ownership of Pacray’s property, which is evidenced by the Trustee’s Deed Upon 

Sale, id. ¶¶ 25, 34, 47; NOR Ex. A, at 51–53. Pacray, however, brings all of her claims against 

all “defendants,” which necessarily includes TBM LLC. 

Moreover, as noted, the mere failure to state a claim is insufficient to invoke 

fraudulent joinder, and Wells Fargo has not demonstrated that Pacray “would not be afforded 

leave to amend h[er] complaint to cure [the] purported deficiency.” Burris, 2006 WL 2038040, at 

*2. Specifically, Wells Fargo argues Pacray’s claims for violations of California Civil Code 

sections 2923.55, 2923.6 and 2923.72

 fail because “P[acray] has not alleged and cannot allege 

that this defendant had any duty regarding these statutes.” NOR 7:1–4. Wells Fargo cites no 

authority for this assertion, and it fails to show “‘the pleading could not possibly be cured by the 

allegation of other facts.’” Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995) (quoting Cook, 

Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990)). It has 

made no showing whatsoever as to Pacray’s remaining three claims. 

Furthermore, the allegations taken as a whole imply that TBM LLC colluded, or 

perhaps conspired, with other defendants to improperly foreclose on Pacray’s residence. In a case 

with similar, albeit more detailed factual allegations, the court found “the potential for [a] 

foreclosure-based conspiracy to develop as a theory of the case” “raise[d] doubt regarding the 

propriety of the removal.” Alabastro v. Wells Fargo Bank, N.A., No. 5:14-CV-03469 EJD, 

2015 WL 138235, at *3 (N.D. Cal. Jan. 9, 2015); see Compl. ¶ 26 (“Defendants have abused their 

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typographical error. 

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rights as a lender, have engaged in unfair business practices, and have breached several promises 

as well as fiduciary duties to Plaintiff.”), ¶ 62 (“[D]efendants . . . have engaged in unfair 

competition within the meaning of California Business and Professions Code [section] 17200”). 

For these reasons, Wells Fargo’s conclusory assertions fall short of carrying its 

heavy burden of proving TBM LLC’s fraudulent joinder by clear and convincing evidence. See

Hamilton, 494 F.3d at 1206. Consequently, the court cannot disregard TBM LLC’s citizenship in 

determining whether diversity jurisdiction exists. Because Wells Fargo has not properly alleged 

TBM LLC’s citizenship, or because TBM LLC is a California citizen as the parties indicate, 

Wells Fargo has not shown complete diversity of citizenship, and this case should be remanded to 

Solano County Superior Court. 

The court need not and does not reach the parties’ remaining arguments about the 

amount in controversy, because even if this jurisdictional requirement is met, the case must be 

remanded on lack of complete diversity grounds. 

E. Pacray’s Request for Costs and Attorneys’ Fees 

Pacray seeks costs and attorneys’ fees under 28 U.S.C. § 1447(c) “incurred as a 

result of unnecessary removal.” Mot. 9:21. Wells Fargo counters, inter alia, its “removal was 

objectively reasonable.” Opp’n 4:22–23. 

Courts have discretion to award attorneys’ fees when considering motions to 

remand. Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005). “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.” 28 U.S.C. § 1447(c). A district court may award fees to plaintiffs in 

§ 1447(c) cases even absent a finding of bad faith. Moore v. Permanente Med. Grp., Inc., 

981 F.2d 443, 446 (9th Cir. 1992). The purpose of an award is not to punish defendants, but to 

reimburse plaintiffs for unnecessary litigation costs incurred as a result of the unsuccessful 

removal attempt. Id. at 447. 

While Wells Fargo has failed to meet the high bar for establishing fraudulent 

joinder, its assertions about TBM LLC’s liability were objectively reasonable. Although Wells 

Fargo did not address all of Pacray’s claims, sufficient ambiguity in the pleading exists to warrant 

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a reasonable belief that there were no viable claims against TBM LLC. Accordingly, Pacray’s 

request for costs and attorneys’ fees is denied. 

IV. CONCLUSION 

For the foregoing reasons, Pacray’s motion to remand is hereby GRANTED and 

her request for costs and attorneys’ fees is DENIED. Wells Fargo’s motion to dismiss, ECF 

No. 4, is hereby DENIED as moot. This case is REMANDED to Solano County Superior Court. 

The Clerk of Court is directed to CLOSE this case. 

IT IS SO ORDERED. 

DATED: August 24, 2016. 

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