MARGARET M. MORROW, District Judge.
On April 2, 2014, Hertis Jackson, John T. Borenin, Kassem Dickens, Diane Diemer, Deborah Kambich, Edward Martinez, Ray Mendoza, Linda Price, Ian Simango, Andrea Somerville, Esequiel Venegas, and Brian Woods (collectively "plaintiffs") filed this action in Los Angeles Superior Court against Specialized Loan Servicing, LLC ("SLS") and various fictitious defendants.
Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court finds this matter appropriate for decision without oral argument. The hearing calendared for November 3, 2014 is therefore vacated, and the motions are taken off calendar.
Lenders purportedly securitize home loans because they desire to convert non-liquid thirty-year mortgage loans into relatively safe, liquid securities that can be bought, sold, and traded on the stock market, e.g., certificates, bonds, and stock.
Plaintiffs contend that the REMIC Act allows RMBS's to achieve "bankruptcy remoteness" if two "true sales" of the loan occur.
Plaintiffs contend that Mortgage Electronic Registration Systems ("MERS") is a shell corporation formed by mortgage lenders to circumvent the REMIC Act's "true sale" requirements and avoid having physically to endorse, assign, transfer, or record the note following securitization of the loan.
The gravamen of plaintiffs' claims is best summarized in paragraph sixteen of the complaint:
Plaintiffs are twelve individuals, each with a home mortgage loan that is being serviced by SLS.
Plaintiffs assert that the PSAs governing the REITs in which their home loans were pooled required that all endorsements, transfers, and assignments of a note occur prior to the closing of the REIT.
Plaintiffs contend that, to cure these defects in the chain of title, their loans have been unlawfully moved into and out of REITs in violation of the loans' PSAs and state statutes.
Plaintiffs also allege that the purportedly "failed securitization process" has resulted in their notes being "irreparably split from their corresponding trust deeds."
Plaintiffs' complaint alleges claims for fraud;
SLS requests that the court take judicial notice of sixteen documents related to plaintiffs' claims.
A court can consider evidence proffered by the parties in deciding a remand motion, including documents that can be judicially noticed. See, e.g., Ryti v. State Farm General Ins. Co., No. C 12-01709 JW, 2012 WL 2339718, *1 n. 4 (N.D. Cal. May 30, 2012) (granting plaintiffs' request for judicial notice and considering the judicially noticeable documents with their motion to remand); Vasquez v. Arvato Digital Services, LLC, No. CV 11-02836 RSWL (AJWx), 2011 WL 2560261, *2 (C.D. Cal. June 27, 2011) (considering judicially noticeable documents in deciding a motion to remand); Aniel v. TD Serv. Co., No. C 10-05323 WHA, 2011 WL 109550, *3 (N.D. Cal. Jan. 13, 2011) (court took judicial notice of court orders and the judgment in a prior case as public records in deciding a motion to remand); Deutsche Bank Nat. Trust Co. v. Sitanggang, No. 1:09cv01835 AWI DLB, 2010 WL 144439, * 1 n. 1 (E.D. Cal. Jan. 11, 2010) (taking judicial notice of documents proffered by plaintiff in deciding a motion to remand); Flower v. Wachovia Mortg. FSB, No. C 09-343 JF (HRL), 2009 WL 975811, *2-3 (N.D. Cal. Apr. 10, 2009) (in analyzing a motion to remand, court took judicial notice of Office of Thrift Supervision documents regarding the corporate structure of Wells Fargo and Wachovia to determine the citizenship of the defendant corporation).
In deciding a Rule 12(b)(6) motion, however, courts generally look only to the face of the complaint and documents attached thereto. Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). Although a court must normally convert a Rule 12(b)(6) motion into a Rule 56 motion for summary judgment if it "considers evidence outside the pleadings . . . [it] may . . . consider certain materials — documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice — without converting the motion to dismiss into a motion for summary judgment." United States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003). See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (a court may consider "other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice"); Branch v. Tunnell 14 F.3d 449, 453 (9th Cir. 1994) (noting that a court may consider a document whose contents are alleged in a complaint, so long as no party disputes its authenticity), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).
Thus, in deciding plaintiffs' motion to remand and SLS's motion to dismiss, the court can consider material that can be judicially noticed under Rule 201 of the Federal Rules of Evidence. FED.R.EVID. 201. Under Rule 201, the court can take judicial notice of "[o]fficial acts of the legislative, executive, and judicial departments of the United States," and "[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." Courts have held that "[j]udicial notice is appropriate for records and `reports of administrative bodies.'" United States v. 14.02 Acres of Land More or Less in Fresno County, 547 F.3d 943, 955 (9th Cir. 2008) (quoting Interstate Natural Gas Co. v. Southern California Gas Co., 209 F.2d 380, 385 (9th Cir. 1954)).
SLS asks that the court take notice of fifteen recorded documents: (1) a register of deeds from the Geary County, Kansas, Recorder, which reflects that lender American General Finance made a mortgage loan to plaintiff Hertis Jackson that was recorded on March 20, 2001;
These documents have been recorded by county recorder's offices, are time and date stamped, and have record numbers. Other courts have taken judicial notice of such documents as public filings. See Velazquez v. GMAC Mortgage Corp., 605 F.Supp.2d 1049, 1057-58 (C.D. Cal. 2008) (taking judicial notice of documents recorded by the Los Angeles County Recorder's Office, including deeds of trust); see also Krug v. Wells Fargo Bank, N.A., No. 11-CV-5190 YGR, 2012 WL 1980860, *2 (N.D. Cal. June 1, 2012) (public records are judicially noticeable under Rule 201); Grant v. Aurora Loan Services, Inc., 736 F.Supp.2d 1257, 1264 (C.D. Cal. 2010) (noting that a "[party] provided a reference number for the document, showing that it was in fact recorded; this demonstrates that it is a public record"); Fimbres v. Chapel Mortgage Corp., No. 09-CV-0886-IEG (POR), 2009 WL 4163332, *3 (S.D. Cal. Nov. 20, 2009) (taking judicial notice of a deed of trust, notice of default, notice of trustee's sale, assignment of deed of trust, and substitution of trustee as each was a public record); Angulo v. Countrywide Home Loans, Inc., No. 1:09-CV-877-AWI-SMS, 2009 WL 3427179, *3 n. 3 (E.D. Cal. Oct. 26, 2009) ("The Deed of Trust and Notice of Default are matters of public record. As such, this court may consider these foreclosure documents"); Distor v. U.S. Bank NA, No. C 09-02086 SI, 2009 WL 3429700, *2 (N.D. Cal. Oct. 22, 2009) (finding that a deed of trust, notice of default and election to sell under deed of trust, and notice of trustee's sale were matters of public record and thus proper subjects of judicial notice). The court therefore takes judicial notice of these documents as requested by SLS.
SLS also seeks to have the court take judicial notice of plaintiff Deborah Kambich's Chapter 13 Bankruptcy Schedules, which were filed on May 7, 2011 in her voluntary bankruptcy proceeding in the United States Bankruptcy Court for the Southern District of California, Case No. 11-07696-CL13.
"Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "If at any time before final judgment [, however,] it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
The right to remove a case to federal court is entirely a creature of statute. See Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). The removal statute, 28 U.S.C. § 1441, allows defendants to remove when a case originally filed in state court presents a federal question or is between citizens of different states and involves an amount in controversy that exceeds $75,000. See 28 U.S.C. §§ 1441(a), (b); see also 28 U.S.C. §§ 1331, 1332(a). Only state court actions that could originally have been filed in federal court can be removed. 28 U.S.C. § 1441(a); see Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988).
The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction," and "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988), Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985), and Libhart, 592 F.2d at 1064). "The `strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990); Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)). Doubts as to removability must be resolved in favor of remanding the case to state court. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).
Under 28 U.S.C. § 1332(a), "[t]he district courts . . . have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs, and is between . . . citizens of different states." 28 U.S.C. § 1332(a); see also Matheson v. Progressive Speciality Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) ("[J]urisdiction founded on [diversity] requires that the parties be in complete diversity and the amount in controversy exceed $75,000"). In any case where subject matter jurisdiction is premised on diversity, there must be complete diversity, i.e., all plaintiffs must have citizenship different than all defendants. See Strawbridge v. Curtis, 7 U.S. (3 Cranch) 267 (1806); see also Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 n. 3 (1996).
Plaintiffs argue that the court lacks subject matter jurisdiction under § 1332(a).
Although the parties do not dispute that complete diversity exists, the court nonetheless evaluates the citizenship of the parties. As an initial matter, plaintiffs do not allege their citizenship in the complaint.
SLS has also sufficiently alleged its own citizenship. SLS states that it is a "Delaware limited liability company, headquartered in Highlands Ranch, Colorado" and that it is a wholly-owned subsidiary of Specialized Loan Servicing Holdings LLC ("SLS Holdings"), which, in turn, is a wholly-owned subsidiary of Computershare Limited, an Australian corporation with its principal place of business in Australia.
SLS is a wholly-owned subsidiary of SLS Holdings; thus, SLS has the citizenship of its "member," SLS Holdings. SLS Holdings, in turn, is a limited liability company, wholly owned by Computershare Limited. Thus, SLS's citizenship is the same as Computershare Limited's. Because a corporation is a "citizen of any State by which it has been incorporated and of the State where it has its principal place of business," 28 U.S.C. § 1332(c)(1), Computershare Limited, SLS Holdings, and SLS are citizens of Australia. Because SLS is not a citizen of any state of which a plaintiff is a citizen, the complete diversity requirement is satisfied.
"[W]hen a complaint filed in state court alleges on its face an amount in controversy sufficient to meet the federal jurisdictional threshold, [the amount in controversy] requirement is presumptively satisfied unless it appears to a `legal certainty' that the plaintiff cannot actually recover that amount." Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). See also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938) (stating that "the sum claimed by the plaintiff controls if the claim is apparently made in good faith," and that "[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal"). Where, by contrast, "it is unclear or ambiguous from the face of a state-court complaint whether the requisite amount in controversy is pled[,] . . . [courts] apply a preponderance of the evidence standard." Guglielmino, 506 F.3d at 699. Finally, "when a state-court complaint affirmatively alleges that the amount in controversy is less than the jurisdictional threshold, the `party seeking removal must prove with legal certainty that [the] jurisdictional amount is met.'" Id. (quoting Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 1000 (9th Cir. 2007)).
When measuring the amount in controversy, a court must assume that the allegations of the complaint are true and that a jury will return a verdict for the plaintiff on all claims in the complaint. Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F.Supp.2d 993, 1001 (C.D. Cal.2002). Section 1332(a)'s amount in controversy requirement excludes only "interest and costs," and thus attorneys' fees are properly included in the calculation. Guglielmino, 506 F.3d at 700. "The ultimate inquiry is what amount is put `in controversy' by the plaintiff's complaint, not what a defendant will actually owe." Korn v. Polo Ralph Lauren Corp., 536 F.Supp.2d 1199, 1205 (E.D. Cal. 2008); Rippee v. Boston Market Corp., 408 F.Supp.2d 982, 986 (S.D. Cal.2005).
To determine whether the removing party has met its burden of showing that the amount in controversy requirement is satisfied, the court can consider the contents of the notice of removal and "summary-judgment-type evidence" relevant to the amount in controversy at the time of removal. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir.2004). The court can also consider supplemental evidence later proffered by the removing defendant, i.e., evidence that was not originally included in the notice of removal. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n. 1 (9th Cir. 2002). A court cannot base a finding of jurisdiction on a defendant's speculation and conjecture; "[r]ather, [the] defendant must set forth the underlying facts supporting its assertion that the amount in controversy exceeds the statutory minimum." Fong v. Regis Corp., No. C 13-04497 RS, 2014 WL 26996, *2 (N.D. Cal. Jan. 2, 2014).
Each plaintiff affirmatively alleges that the amount in controversy on his or her claims does not exceed $75,000.
Plaintiffs argue that the amount in controversy requirement is not satisfied because each of them explicitly disclaims damages exceeding $75,000 in the complaint, and each seeks no additional forms of relief, i.e., injunctive or declaratory relief.
SLS counters that "plaintiffs have ple[d] themselves into the Court's jurisdiction despite trying to be sly with their purported `careful' pleading."
In its notice of removal and its opposition, SLS argues that the "matter in controversy" under §1332(a) is at least $900,000, and thus far exceeds the $75,000 jurisdictional threshold, "because plaintiffs each seek $75,000 in damages."
"Aggregation is appropriate only where a defendant `owes an obligation to the group of plaintiffs as a group and not to the individuals severally.'" Gibson v. Chrysler Corp., 261 F.3d 927, 944 (9th Cir. 2001) (citing Morrison v. Allstate Indemnity Co., 228 F.3d 1255, 1262 (11th Cir. 2000) (in turn citing Eagle v. American Tel. & Tel. Co., 769 F.2d 541, 547 (9th Cir. 1984))). "[M]ultiple plaintiffs who assert separate and distinct claims are precluded from aggregating them to satisfy the amount in controversy requirement." Urbino v. Orkin Services of California, Inc., 726 F.3d 1118, 1122 (9th Cir. 2013) (citing Troy Bank v. G.A. Whitehead & Co., 222 U.S. 39, 40 (1911)); see also Gibson, 261 F.3d at 943 ("The rule against aggregating the claims of multiple plaintiffs for purposes of determining the amount in controversy dates back at least to 1832. . . . `[W]hen two or more plaintiffs, having separate and distinct demands, unite for convenience and economy in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount,'" quoting Troy Bank, 222 U.S. at 40); Pagel v. Dairy Farmers of America, Inc., 986 F.Supp.2d 1151, 1155-56 (C.D. Cal. 2013) ("The federal courts have long accepted the general rule that multiple plaintiffs who join together in a single lawsuit to enforce their rights as individuals may not aggregate their claims to satisfy a jurisdictional threshold for the amount in controversy. This anti-aggregation rule has also long been applied to cases filed in federal court on the ground of diversity jurisdiction," citing Oliver v. Alexander, 31 U.S. 143 (1832); Thomas v. Aetna Health of California, Inc., No. 1:10-CV-01906-AWI-SKO, 2011 WL 2173715, *14 (E.D. Cal. June 2, 2011)); id. at 1156 ("`The settled rule is that when two or more plaintiffs having separate and distinct demands unite in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount; but when several plaintiffs unite to enforce a single title or right in which they have a common and undivided interest, it is enough if their interests collectively equal the jurisdictional amount,'" quoting Pinel v. Pinel, 240 U.S. 594, 596 (1916)); Pulera v. F & B, Inc., No. 2:08-CV-00275 MCE-DAD, 2008 WL 3863489, *3 (E.D. Cal. Aug. 19, 2008) ("Historically, aggregated claims of multiple claimants cannot form the basis of the amount in controversy," citing Troy Bank, 222 U.S. at 40).
Although "the distinction between `separate and distinct' claims which cannot be aggregated, and `common and undivided' claims which can, is not always crystal clear," Gibson, 261 F.3d at 945 (citing Morrison, 228 F.3d at 1262; 14B Charles A. Wright et al., FEDERAL PRACTICE AND PROCEDURE § 3704, at 127 (3d ed. 1998)), it is well settled that "simply because claims may have `questions of fact and law common to the group' does not mean they have a common and undivided interest,'" Urbino, 726 F.3d at 1122 (citing Potrero Hill Cmty. Action Comm. v. Housing Authority, 410 F.2d 974, 977 (9th Cir. 1969)).
Here, plaintiffs assert that each was a victim of SLS's purportedly fraudulent collection of home loan payments. The presence of a common fraudulent scheme does not suffice to establish that plaintiffs have a "common and undivided interest" where each plaintiff has a separate mortgage loan and the claims of each arises out of his or her individual transactions with SLS. See Bogan v. JPMorgan Chase Bank, N.A., 2:14-CV-01484 CAS (VBKx), 2014 WL 1315891, *2 (C.D. Cal. Apr. 2, 2014) (concluding, in an action where plaintiffs alleged that "the securitization of [their] mortgages deprived defendants of the authority to collect mortgage[ ] payments," that defendants could not aggregate the relief sought by each plaintiff to satisfy the jurisdictional threshold because "each plaintiff's claims arises out of different mortgages" and therefore were "separate and distinct"); Alex v. JP Morgan Chase & Co., 2:14-CV-01402-CAS (VBKx), 2014 WL 1325740, *2 (C.D. Cal. Apr. 2, 2014) (same); Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F.Supp.2d 993, 1001-02 (C.D. Cal. 2002) ("Here, plaintiff's class allegations clearly give rise to an inference that each class member individually purchased his or her [Certificate of Deposit] from Morgan Stanley. Consequently, like the claims in Kanter and Borgeson, the claims here do not derive from common and undivided rights, and cannot be aggregated" (emphasis added)); Borgeson v. Archer-Daniels Midland Co., 909 F.Supp. 709, 719 (C.D. Cal. 1995) (no aggregation of individual plaintiff's claims allowed where plaintiffs individually purchased product from the defendant); see also Snyder v. Harris, 394 U.S. 332, 335 (1969) ("Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest."); Pinel, 240 U.S. at 596 ("The settled rule is that when two or more plaintiffs having separate and distinct demands unite in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount").
Because plaintiffs' claims are "separate and distinct," they cannot be aggregated to satisfy the jurisdictional amount in controversy. SLS thus has not carried its burden of showing that the amount in controversy required is met under an aggregation theory.
SLS next argues that the jurisdictional amount is satisfied for each individual plaintiff because the relief each seeks places the amount of his or her mortgage loan in controversy.
Notwithstanding plaintiffs' disclaimer, SLS asserts that granting their requested relief, i.e., damages for its purported fraud and conversion, will necessitate that the court "declare that the mortgages and deeds of trust are invalid," would "impact SLS's right[ ] to enforce the twelve deeds of trust at issue," and would impair its ability to collect the unpaid balance on each loan.
It is axiomatic that plaintiffs are "master[s] of [their] complaint," Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1106 (9th Cir. 2000). "[I]f [plaintiffs] do[ ] not desire to try [their] case in the federal court, [they] may resort to the expedient of suing for less than the jurisdictional amount, and though [they] would be justly entitled to more, the defendant cannot remove." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 284 (1938); see Patel v. Nike Retail Services, Inc., ___ F.Supp.2d ___, 2014 WL 3611096, *3 (C.D. Cal. July 21, 2014) ("`[F]ederal courts permit individual plaintiffs, who are the masters of their complaints, to avoid removal to federal court, and to obtain a remand to state court, by stipulating to amounts at issue that fall below the federal jurisdictional requirement,'" citing Standard Fire Ins. Co., 133 S.Ct. at 1350 (citing Red Cab Co., 303 U.S. at 294)); Jones v. ADT Sec. Services, Inc., No. CV 11-7750 PSG (JCGx), 2012 WL 12744, *3 (C.D. Cal. Jan. 3, 2012) ("Plaintiffs, as masters of their Complaint, have appropriately chosen to unambiguously limit their potential recovery in order to avoid federal jurisdiction," citing Lowdermilk, 479 F.3d at 999 ("[I]t is well established that the plaintiff is `master of her complaint' and can plead to avoid federal jurisdiction")); Padgett v. Cigna Corp., Civil No. 07-00200 DAE-LEK, 2008 WL 639165, *6 (D. Haw. Mar. 6, 2008) ("In the present case, the Complaint alleges that Defendants knew that Plaintiff is disabled and terminated his disability benefits on a pretextual ground. It also alleges that Defendants conspired to deprive him of benefits due him under the Policy, and that they refuse to comply with the terms of the Policy. The Complaint, however, does not request the reinstatement of benefits under the Policy. Subject to a good faith requirement, as the master of his complaint, Plaintiff was free to sue for less than he may be entitled to recover in order to stay in state court. Plaintiff apparently chose to forego seeking the reinstatement of benefits to avoid federal jurisdiction. Defendants have not pointed to any evidence which indicates that Plaintiff did so in bad faith"); Tangletown, LLC v. Underwriters at Lloyd's, London, No. C06-846C, 2006 WL 2781329, *2 (W.D. Wash. Sept. 25, 2006) ("Since the plaintiff is the master of her complaint, she can avoid having her case heard in federal court by demanding less than $75,000, or choosing defendants with diversity in mind"). Plaintiffs' ability to avoid federal jurisdiction is not absolute, however. A plaintiff cannot allege the amount in controversy in bad faith. Horton v. Liberty Mut. Ins. Co., 367 U.S. 348, 353 (1961) ("The general federal rule has long been to decide what the amount in controversy is from the complaint itself, unless it appears or is in some way shown that the amount stated in the complaint is not claimed `in good faith'"); Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010) ("The amount in controversy alleged by the proponent of federal jurisdiction — typically the plaintiff in the substantive dispute — controls so long as the claim is made in good faith"); Crum v. Circus Circus Enterprises, 231 F.3d 1129, 1131 (9th Cir. 2000) ("Generally, the amount in controversy is determined from the face of the pleadings. The sum claimed by the plaintiff controls so long as the claim is made in good faith" (citations omitted)). A removing defendant, moreover, can overcome a plaintiff's by proffering "summary judgment-type evidence relevant to the amount in controversy at the time of removal." Singer v. State Farm Mutual Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997) (citing Allen v. R&H Oil & Gas Co., 63 F.3d 1326, 1335-36 (5th Cir. 1995)).
It is also "well-settled . . . that whatever the collateral effects a decree or judgment might have by virtue of stare decisis, collateral estoppel, or any other impact on the rights or interests" of the parties to the action or third parties "cannot be taken into account in calculating the amount in controversy." 14 AA Wright, FEDERAL PRACTICE & PROCEDURE, Jurisdiction § 3702.5; see Healy v. Ratta, 292 U.S. 263, 267 (1934) ("[T]he collateral effect of the decree, by virtue of stare decisis, upon other and distinct controversies, may not be considered in ascertaining whether the jurisdictional amount is involved, even though their decision turns on the same question of law"); New England Mortg. Sec. Co. v. Gay, 145 U.S. 123, 130 (1892) ("It is well settled in this court that, when our jurisdiction depends upon the amount in controversy, it is determined by the amount involved in the particular case, and not by any contingent loss either one of the parties may sustain by the probative effect of the judgment, however certain it may be that such loss will occur" (emphasis added)); Hansen Beverage Co. v. DSD Distributors, Inc., No. 08CV0619 LAB (RBB), 2008 WL 5233180, *6 (S.D. Cal. Dec. 12, 2008) ("`[J]urisdiction depends upon the matter directly in dispute in the particular cause, and the court is not permitted, for the purpose of determining its sum or value, to estimate its collateral effect,'" quoting Quinault Tribe of Indians v. Gallagher, 368 F.3d 648, 655 (9th Cir. 1966) (citing City of Opelika v. Daniel, 109 U.S. 108 (1883); Town of Elgin v. Marshall, 106 U.S. 578 (1883))).
Given these controlling principles, the court concludes that SLS's argument is unavailing. As SLS recognizes,
Even if the court were to agree with SLS that plaintiffs' fraud allegations are tantamount to a request for injunctive and/or declaratory relief, it would still conclude that the case must be remanded because SLS has failed to establish to a legal certainty that the amount in controversy is satisfied with respect to each plaintiff's loan.
"In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Cohn v. Petsmart, 281 F.3d 837, 840 (9th Cir. 2002) (citing Hunt, 432 U.S. at 347). When a plaintiff seeks an equitable remedy, it is often difficult to place a monetary value on the "object of the litigation" viewed from the plaintiff's perspective, but relatively straightforward to ascertain the cost to the defendant of complying with the injunction. See Packard v. Banton, 264 U.S. 140, 142 (1924); Mississippi & M.R. Co. v. Ward, 67 U.S. 485, 492 (1862). Thus, in assessing the amount in controversy in such cases, federal courts employ the "either viewpoint" rule, which permits the "object of the litigation" to be valued either from the plaintiff's viewpoint or the defendant's viewpoint. See Smith v. Adams, 130 U.S. 167, 175 (1889) ("[T]he pecuniary value of the matter in dispute may be determined . . . by the pecuniary result to one of the parties immediately from the judgment"); In re Ford Motor Co./Citibank, 264 F.3d 952, 959 (9th Cir. 2001) ("Under the `either viewpoint' rule, the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce").
In actions seeking to invalidate or rescind a mortgage loan, "some district courts in the Ninth Circuit have relied on the amount of [the] indebtedness . . ., while others have looked to the fair market value of the property to determine whether the amount in controversy requirement is met." Reyes v. Wells Fargo Bank, N.A., No. C-10-01667 JCS, 2010 WL 2629785, *5 (N.D. Cal. June 29, 2010). When considering the amount of indebtedness, district courts in the circuit have disagreed as to whether the total value of the loan or the plaintiff's current indebtedness should be used to determine the amount in controversy. Compare Garcia v. Citibank, N.A., No. 2:09-CV-03387-JAM-DAD, 2010 WL 1658569, *2 (E.D. Cal. Apr. 23, 2010) ("Here, Plaintiff seeks declaratory and injunctive relief in the Complaint, requesting an injunction to prevent the foreclosure proceedings. In addition, Plaintiff seeks rescission of the contract and damages. The subject loan amount was originally $221,000.00, excluding interest. As such, if the contract were rescinded, the value of relief would be at least $221,000.00, which far exceeds the requisite amount in controversy") with Reyes, 2010 WL 2629785 at *6 ("[D]ocuments attached to the Complaint indicate that the amount of unpaid debt on the loan at the time of the trustee's sale was $460,946.68. Therefore, [the] method of valuing the litigation puts this case over the $75,000.00 amount in controversy threshold"); Henderson v. Nationstar Mortg. Co., LLC, No. C07-2039 JLR, 2008 WL 302374, *2 (W.D. Wash. Jan. 31, 2008) ("[T]he amount Plaintiff owes on the loan shall be included in the amount in controversy").
SLS contends that if plaintiffs prove that it has engaged in fraudulent collection activities, it will be unable to collect future payments on the mortgage loans.
SLS has failed to establish what this amount would be. SLS notes that plaintiffs' mortgage loans range in amounts from approximately $200,000 to $500,000.
Plaintiffs seek attorneys' fees under 28 U.S.C. § 1447(c). "Under 28 U.S.C. § 1447(c), `[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.'" Federal Home Loan Mortg. Corp. v. Lettenmaier, No. CV-11-165-HZ, 2011 WL 1297960, *1 (D. Or. Apr. 5, 2011) (quoting 28 U.S.C. § 1447(c)). "`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.'" Id. (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)).
"Removal is not objectively unreasonable solely because the removing party's arguments lack merit and the removal is ultimately unsuccessful." Id. (citing Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008)). "Rather, the court should assess `whether the relevant case law clearly foreclosed the defendant's basis of removal' by examining the `clarity of the law at the time of removal.'" Id. (quoting Lussier, 518 F.3d 1066); see also Patel v. Del Taco, Inc., 446 F.3d 996, 999-1000 (9th Cir. 2006) ("Del Taco's state court petition to confirm the arbitration award contained only one state law cause of action; it did not contain any federal claim that could provide the basis for a § 1441(c) removal. Joinder of a federal claim and a claim for removal of a state court action in a federal complaint cannot effect a § 1441(c) removal. There being no objectively reasonable basis for removal, the district court did not abuse its discretion in awarding attorney's fees under § 1447(c) to Del Taco").
Plaintiffs argue that SLS removed the action in bad faith and that they should be awarded attorneys' fees of $5,000.
For the reasons stated, the court grants plaintiffs' motion to remand, and directs the clerk to remand the action forthwith to Los Angeles Superior Court. Because it is remanding, the court denies SLS's motion to dismiss as moot. The court denies plaintiffs' request for attorneys' fees.
In Standard Fire Insurance Company v. Knowles, 133 S.Ct. 1345, 1347 (2013), plaintiff filed a class action, alleging that he and the "[c]lass stipulate[d] they [would] seek to recover total aggregate damages of less than [the CAFA jurisdictional threshold of] five million dollars." Defendant removed, invoking CAFA. Id. at 1348. The district court remanded. It found that although the amount in controversy would have exceeded $5,000,000 in the absence of the stipulation, it could not be met given the stipulation. Id. The Supreme Court held that the district court erred in relying on the stipulation because "a plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified." Id. at 1349.
In Rodriguez v. AT&T Mobility Services LLC, 728 F.3d 975 (9th Cir. 2013), the Ninth Circuit recognized that Standard Fire overruled Lowdermilk's "legal certainty" standard in CAFA cases. See id. at 977 ("Our reasoning there for imposing on defendants the burden to prove the amount in controversy to a legal certainty, rather than the ordinary preponderance of the evidence standard, is clearly irreconcilable with the Supreme Court's reasoning in Standard Fire"). The court held that the second principle informing the Lowdermilk rule — to "preserve the plaintiff's prerogative . . . to forgo a potentially larger recovery to remain in state court" — was "directly contradicted by Standard Fire[`s holding that] a plaintiff seeking to represent a putative class could not evade federal jurisdiction by stipulating that the amount in controversy fell below the jurisdictional minimum." Id. at 980, 981. The court also concluded that Standard Fire had overruled Lowdermilk's directive that district courts "need not look beyond the four corners of the complaint to determine whether the CAFA jurisdictional amount is met," and that § 1332(d) required district courts to evaluate the potential claims of absent class members rather than plaintiff's complaint. Id. at 981.
Since Rodriguez was decided, district courts in the Ninth Circuit have disagreed as to whether the legal certainty standard continues to apply in non-CAFA cases. Compare Stelzer v. CarMax Auto Superstores Cal., LLC, 13-CV-1788-LAB-JMA, 2013 WL 6795615, *5 & n. 2 (S.D. Cal. Dec. 20, 2013) (applying the legal certainty standard) with Cagle v. C&S Wholesale Grocers, Inc., No. 2:13-cv-02134-MCE-KJN, 2014 WL 651923, *7 (E.D. Cal. Feb. 19, 2014) (holding that the preponderance of the evidence standard applies).
The court believes that Standard Fire and Rodriguez leave the legal certainty rule intact in non-CAFA cases. The rationale underlying those decisions — i.e., that a plaintiff cannot bind absent class members before a class is certified — has no application outside the class action context. In contrast, the reasoning that underlies the Lowdermilk rule — i.e., that federal courts are courts of limited jurisdiction, and that a plaintiff is "master of her complaint" — applies with full force in non-CAFA cases. Moreover, the "legal certainty" test for cases such as this does not derive from Lowdermilk and rests on a distinct line of reasoning. The Ninth Circuit announced the rule in Sanchez v. Monumental Life Insurance Company, 102 F.3d 398, 402 (9th Cir. 1996). Accordingly, the court concludes that neither Knowles nor Rodriguez disturbs the "legal certainty" rule used to determine the amount in controversy in removal cases that are not class actions.
