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Shepard v. Bayview Loan Servicing, LLC

United States District Court, D. Nevada

July 24, 2018

BAYVIEW LOAN SERVICING, LLC, et al., Defendants.



         This case arises out of a foreclosure of real property. Now pending before the Court are a motion to remand, (ECF No. 6), a motion for recusal, (ECF No. 7), and two motions to quash service, (ECF Nos. 9, 10). For the reasons given herein, the Court grants the motion to remand and denies the remaining motions as moot.


         Plaintiff Jewel Shepard alleges she entered into an agreement with Defendant Akerman LLP, a law firm hired by Defendant Bayview Loan Servicing, LLC, to short sell her home at 2190 S. Marsh Avenue in Reno, Nevada ("the Property"). Ms. Shepard alleges she was punctual in filling out all related paperwork and was fully cooperative throughout the short sale approval process. Ultimately, however, Bayview foreclosed on the Property rather than approve Ms. Shepard's request for a short sale.

         As a result of the foreclosure, Ms. Shepard brought this action in state court against Bayview; prior loan servicer, Bank of America ("BANA"); BANA's predecessor, Countrywide; the initial trustee under the deed of trust, Recontrust; Bayview's attorneys, Akerman, LLP and Tenesa Scaturro; and two alleged "squatters" who were occupying the Property, Kevin Cloutier and Scott McDuffie.[1] She alleged causes of action arising under state law for breach of contract, conversion, "account stated," and unjust enrichment. (Compl. 7-10, ECF No. 2-2 at 8.)

         On April 26, 2018, Bayview timely removed the case to this Court under 28 U.S.C. § 1332. Bayview concedes that complete diversity does not exist among the named parties. However, Bayview argues that Countrywide, Recontrust, Akerman, and Scaturro are sham defendants, and their citizenship should be ignored for purposes of diversity jurisdiction.


         Generally, federal jurisdiction based on diversity of citizenship requires that the claim satisfy the jurisdictional amount, $75, 000, and that there be complete diversity among the parties, i.e., that no defendant shares citizenship with any plaintiff, and that no defendant is a citizen of the state in which the suit was filed. 28 U.S.C. § 1332. However, when suit is brought against a fraudulent or "sham" defendant for the purposes of defeating diversity jurisdiction, the citizenship of that defendant may be disregarded for purposes of establishing jurisdiction. Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998) ("It is a commonplace that fraudulently joined defendants will not defeat removal on diversity grounds.").

         A defendant is fraudulently joined if the plaintiff fails to state a claim against him and that failure is "obvious according to the settled rules of the state." McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Thus, the removing party bears the burden of proving, by clear and convincing evidence, that (1) plaintiff has not stated a claim against the non-diverse party, and (2) plaintiff cannot state a claim against the non-diverse party. See Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007); Greene v. Wyeth, 344 F.Supp.2d 674, 682 (D. Nev. 2004).

         The issue of whether removal was proper is generally determined on the pleadings as they existed at the time of removal. Eagle v. American Tel. & Tel. Co., 769 F.2d 541, 545 (9th Cir. 1985) (citing Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939)). In cases where there is a question of whether the non-diverse defendant was fraudulently joined, the district court is allowed to "pierce the pleadings" and consider additional evidence of a summary judgment nature. See Ritchey, 139 F.3d at 1318 (stating that "a defendant must have the opportunity to show that the individuals joined in the action cannot be liable on any theory"). Nevertheless, consideration of the legitimacy of removal should be limited to evidence available at the time of removal and "not on possible future evidence that may be obtained through further discovery." Kite v. Zimmer, 2006 WL 3386765, *1 (D. Nev. 2006) (Jones, J.). Examining this evidence, the court must resolve "all disputed questions of fact and all ambiguities in the controlling state law in favor of the non-removing party." Plute v. Roadway Package Sys., Inc., 141 F.Supp.2d 1005, 1008 (N.D. Cal. 2001) (internal citations omitted).

         a. Ms. Shepard Is a Citizen of Nevada, Not California

         The parties do not dispute the alleged citizenship of the various defendants. Bayview is a citizen of Delaware and Florida. (Resp. 2, ECF No. 14.) BANA is a citizen of North Carolina. (Id. at 3.) Countrywide and Recontrust are alleged to be citizens of California. (Am. Compl. ¶ 6, ECF No. 2-2 at 46; Resp. 4.) Lastly, Akerman is alleged to be a citizen of Florida, and Ms. Scaturro a citizen of Nevada. (Am. Compl. ¶ 7; Resp. 4 n.3.) The parties also do not dispute the alleged citizenship of Ms. Shepard, who claims in her Complaint and Amended Complaint to reside in California. However, a closer look at the pleadings and motion briefs reveals that Ms. Shepard cannot be treated as a citizen of California for purposes of determining diversity.

         It is very well established in the federal courts that "[r]esidence and citizenship are not the same thing." Mantin v. Broad. Music, Inc., 244 F.2d 204, 206 (9th Cir. 1957). A "natural person's state citizenship is ... determined by her state of domicile, not her state of residence. 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) (emphasis added). Here, Ms. Shepard's own filings make her intentions quite clear. In her original Complaint, filed March 20, 2018, she stated that she was residing "at various locations in Southern California, attempting to gain entrance to her home located at 2190 S. Marsh Ave., Reno, Nevada." (Compl. ¶ 2, ECF No. 2-2 at 3 (emphasis added).) When she filed her Amended Complaint on April 18, she changed this language slightly: "Plaintiff... resides at various locations in Southern California, and uses a mail drop in Burbank, California, due to issues arising from property located at 2190 S. Marsh Ave., Reno, Nevada 89509." (Am. Compl. ¶ 3, ECF No. 2-2 at 45.) Finally, in her motion to remand of May 3, Ms. Shepard represented that she has returned to Nevada and is once again occupying the Property. (Mot. Remand 16 ("Plaintiff has finally taken control of the Marsh property."), 18 ("Plaintiff is here at 2190 S. Marsh Ave."), ECF No. 6.)

         Therefore, because it is clear that Ms. Shepard does not have a permanent residence in California and always intended to return to her home in Reno, she must be considered domiciled in and a ...

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