United States District Court, W.D. Washington
ORDER GRANTING PLAINTIFFS' MOTION TO REMAND AND
DENYING DEFENDANTS' MOTIONS TO DISMISS AS MOOT
BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE
matter comes before the Court on Defendants' motions to
dismiss (Dkts. 11, 15) and Plaintiffs' motion to remand
(Dkt. 19). The Court has considered the pleadings filed in
support of and in opposition to the motions and the remainder
of the file and, for the reasons stated below, hereby (1)
grants the motion to remand and (2) denies the motions to
dismiss as moot.
April 20, 2017, Plaintiffs filed a complaint against
Defendants in Clark County Superior Court. Dkt. 1 at 2. On
May 26, 2017, Defendants removed the action based on
diversity jurisdiction under 28 U.S.C. § 1332. Dkt. 1.
2, 2017, Defendants Federal Home Loan Mortgage Corporation,
Mortgage Electronic Registration Systems Inc., and U.S. Bank,
N.A. moved to dismiss. Dkt. 11. On June 8, 2017, Defendant
North Cascade Trustee Services Inc. (“NTCS”)
filed a motion joining in its codefendants' motion to
dismiss. Dkt. 15.
6, 2017, Plaintiffs moved to remand the case to Clark County
Superior Court. Dkt. 19. On July 10, 2017, Defendants
responded in opposition to Plaintiffs' motion for remand.
move to remand the proceedings to state court on the basis
that the presence of MTC Financial Inc. (“MTC”)
and NTCS in this case destroys the diversity necessary for
federal jurisdiction under 28 U.S.C. § 1332. The Court
agrees. Plaintiffs have shown that MTC and NTCS are
non-diverse parties and Defendants do not contend otherwise.
Instead, Defendants argue that diversity jurisdiction exists
because either: (1) MTC and NTCS are nominal defendants, or
(2) MTC and NTCS were fraudulently joined. The Court rejects
both of these arguments.
federal court must disregard nominal or formal parties and
rest jurisdiction only upon the citizenship of real parties
to the controversy.” Petheram v. Wells Fargo
Bank, C13-1016JLR, 2013 WL 4761049, at *2 (W.D. Wash.
Sept. 3, 2013) (quoting Navarro Sav. Ass' n v.
Lee, 446 U.S. 458, 461 (1980)). While trustees are often
treated as nominal parties, “[a] trustee has been found
to be a real party when a plaintiff's complaint asserts
claims against a trustee, including . . . allegations that
the trustee . . . was not the trustee authorized to initiate
non judicial foreclosure proceedings.” Beiermann v.
JP Morgan Chase Bank Nat. Ass'n,
3:11-CV-05952 RBL, 2012 WL 1377094, at *2 (W.D. Wash. Apr.
19, 2012). Such is the case here, where Plaintiffs assert
Washington Consumer Protection Act claims against MTC and
NTCS on the bases that they accepted appointments as
successor trustees that they knew were unlawful and
subsequently initiated non-judicial foreclosure proceedings
despite knowing that they were not properly authorized
trustees. See Dkt. 1-2 at 9, 14-15.
Plaintiff fraudulently joined MTC or NTCS. Joinder of a
resident defendant is fraudulent for the purpose of defeating
diversity jurisdiction only when: (1) the plaintiff fails to
state a cause of action against a resident defendant and (2)
the failure is obvious according to the settled rules of the
state. Ritchey v. Upjohn Drug Co., 139 F.3d 1313,
1318 (9th Cir. 1998). In this case, it very well may be that
Plaintiffs have failed to state a claim against MTC and NTCS.
Indeed, as argued in Defendants' motion to dismiss and
accompanying request for judicial notice, it appears likely
that U.S. Bank appointed successor trustees under its lawful
authority as the holder of the subject note. See
Dkts. 11, 11-1. However, the second prong of the fraudulent
joinder test states that “the non-diverse claim must
not only be unsuccessful, it must be untenable ab
initio.” Davis v. Prentiss Properties Ltd.,
Inc., 66 F.Supp.2d 1112, 1115 (C.D. Cal. 1999). This
reflects the fact that the Court's jurisdiction is a
threshold issue: the Court cannot decide the type of
arguments advanced in Defendants' motions to dismiss,
which require examining the merits of the claims in detail by
taking judicial notice of applicable loan documents, without
nothing but the allegations in the complaint that MTC and
NTCS accepted unlawful appointments as successor trustees and
subsequently proceeded to act on claims of default,
Plaintiffs have alleged a tenable claim against non-diverse
defendants under the CPA. See Knecht v. Fid. Nat. Title
Ins. Co., C12-1575RAJ, 2014 WL 4057148, at *8 (W.D.
Wash. Aug. 14, 2014). Whether Plaintiffs' allegations are
contradicted or unsupported by the very loan documents that
they necessarily incorporate, and therefore fail to state a
claim, is a question to be resolved by a court with
jurisdiction to hear the parties' dispute. That is not
it is hereby ORDERED that Plaintiffs'
motion to remand (Dkt. 19) is GRANTED.
Plaintiffs' motions to dismiss (Dkts. 11, 15) are
DENIED without prejudice as moot. The Clerk