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Choi v. Quality Loan Service Corp.

United States District Court, W.D. Washington, Seattle

February 14, 2017

BOYOON CHOI, Plaintiff,
v.
QUALITY LOAN SERVICE CORPORATION, et al, Defendants.

          ORDER OF REMAND

          JAMES L. ROBART, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the court is Plaintiff Boy oon Choi's motion for a temporary restraining order ("TRO"). (TRO Mot. (Dkt. # 28).) Defendants Ocwen Loan Servicing, LLC ("Ocwen"), and Wilmington Trust, N.A. ("Wilmington"), oppose the motion. (Ocwen/Wilmington Br. (Dkt. # 42).) Defendants Quality Loan Service Corporation ("QLS") and Bank of America, N.A. ("BANA") take no position on Ms. Choi's motion. (QLS Br. (Dkt. # 33); BANA Br. (Dkt. # 35).) In response to the court's order to show cause (2/9/17 Order (Dkt. # 32)), Ms. Choi filed additional briefing regarding subject matter jurisdiction (Choi Br. (Dkt. # 36)). Having considered the parties' briefing, the relevant portions of the record, and the applicable law, [1] the court REMANDS this case to Snohomish County Superior Court for lack of subject matter jurisdiction and DENIES the remainder of the pending motions as moot.

         II. BACKGROUND & ANALYSIS

         Ms. Choi filed this case in Snohomish County Superior Court on October 6, 2016.[2] (Compl.; St. Ct. Dkt. (Dkt. # 1-2).) Ms. Choi seeks to quiet title to the property at 2022 151st Way SE, Mill Creek, Washington ("the Property") and asserts violations of Washington's Deed of Trust Act ("DTA"), RC W ch. 61.24, and Consumer Protection Act ("CPA"), RCW ch. 19.86. (Compl. ¶¶ 24-51.) Ms. Choi asserts these state law claims j j against Defendants, each of which allegedly played a role in Ms. Choi's default on her mortgage and the imminent nonjudicial foreclosure. (See generally id.) QLS serves as the foreclosing trustee. (Id. ¶ 6.) QLS and Ms. Choi are both Washington domiciliaries.

(Id. ¶ 5-6, 12.)

         On November 10, 2016, BANA removed this case from Snohomish County Superior Court. (Not. of Rem. (Dkt. # 1).) BANA asserted that the court had subject I matter jurisdiction based on complete diversity between the parties. (Id. ¶ 5.) BANA acknowledged that Ms. Choi and QLS are both Washington domiciliaries. (Id. ¶ 5(c).) However, BANA contended that QLS's Washington domicile does not destroy complete diversity "because QLS has been named in this action solely in its capacity as Trustee under the Deed of Trust" and is therefore a nominal defendant. (Id. (citing S.E.C. v. Collello, 139 F.3d 674, 676 (9th Cir. 1998); Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir. 2000)).) To support this assertion, BANA posited that Ms. Choi "is not seeking money damages against QLS" and that Ms. Choi and QLS "have agreed that QLS is not required to participate in the litigation."[3] (Id.) Neither Ms. Choi nor Defendants objected to BANA's assertions.

         After BANA filed its notice of removal, however, several filings called into question the accuracy of the assertions on which BANA based its argument that QLS is a nominal defendant. (See Not. of Rem. ¶ 5(c).) First, QLS filed a motion to dismiss in which it argues that Ms. Choi fails to state a CPA claim against QLS. (QLS MTD (Dkt. # 12).) Second, in response to that motion, Ms. Choi argues that QLS violated the DTA and committed a CPA violation. (Resp. to QLS MTD (Dkt. # 16) at 4-5.) Third, in the section of her TRO motion addressing the likelihood of success on the merits, Ms. Choi argues that "QLS breached it [sic] duty of impartiality by failing to respond or provide any explanation to Plaintiffs demand letter, and thus did not exercise independent discretion as required by the DTA." (TRO Mot. at 11.) Ms. Choi further argues that QLS violated the CPA. (Id. at 11-12.)

         Based on those filings, the court ordered the parties to brief the court's basis for subject matter jurisdiction over this matter. (See 2/9/17 Order); see Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (placing the burden on the defendant to overcome the strong presumption against removal jurisdiction). QLS takes no position regarding subject matter jurisdiction. (QLS Br. at 1.) BANA responded by defending its initial notice of removal as proper based on the allegations in the complaint. (BANA Br. at 2-6.) However, BANA "does not oppose remand" to the extent "facts have come to light since the removal from which" the court determines that it lacks subject matter jurisdiction. (Id. at 7.) Ocwen and Wilmington join in BANA's response regarding subject matter jurisdiction. (Ocwen/Wilmington Br. at 2.)

         Ms. Choi responded to the court's order by invoking the court's equitable powers. (See Choi Br. at 1-2 ("[I]n the interest of justice and in order to afford Plaintiff an opportunity to prevent her home from unjust foreclosure, Plaintiff respectfully requests that the [c]ourt exercise its inherent powers of equity ...."); see also Ocwen/Wilmington Br. at 2 ("Plaintiff herself consents to this [c]ourt's jurisdiction ....").) Specifically, Ms. Choi asks the court to take one of three actions that would remedy the lack of subject matter jurisdiction: (1) allow Ms. Choi to amend her complaint to assert a Fair Debt Collection Practices Act ("FDCPA") claim against QLS (Choi Br. at 2-4); (2) grant QLS's motion to dismiss and afford Ms. Choi leave to amend the complaint to state an FDCPA claim (id. at 4); and (3) dismiss QLS as a defendant without prejudice (id. at 4-5). The first two options would confer federal question jurisdiction on the court, 28 U.S.C. § 1331, whereas the third would remedy the diversity deficiency, 28 U.S.C. § 1332; see also Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (explaining the complete diversity requirement).

         The court's subject matter jurisdiction inheres in Article III of the United States Constitution and the jurisdictional statutes that Congress has enacted. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982). The court has no authority to expand its subject matter jurisdiction based on equitable considerations. See Id. Ms. Choi does not dispute the court's inference that she seeks to recover monetary damages from QLS. (See Choi Br.) QLS is therefore not a nominal defendant in this action, as BANA asserted in its notice of removal. (See Not. of Rem. ¶ 5(c); see also Corr. Not. of Rem. ¶ 5(c).) Furthermore, the court rejects Ms. Choi's dilatory[4] and procedurally improper methods of curing the defect in subject matter jurisdiction by amending the complaint or dismissing QLS (see Choi Br. at 2-5) because "at [this] time, " 28 U.S.C. § 1447(c), QLS is a named defendant that destroys complete diversity and thereby deprives the court of subject matter jurisdiction, cf. Colello, 139 F.3d at 676; PPR Realty, 204 F.3d at 873. Lacking subject matter jurisdiction at this time, the court must remand the action to state court.[5] 28 U.S.C. § 1447(c).

         III. CONCLUSION

         Based on the foregoing analysis, the court ORDERS that:

1. Pursuant to 28 U.S.C. ยง 1447(c), all further proceedings in this case are REMANDED to the Snohomish ...

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