FORBES v. WELLS FARGO BANK NATIONAL ASSOCIATION (2023)

ORDER DENYING MOTION TO REMAND

Re: Dkt. No. 23

Forbes's motion to remand is denied. This ruling assumes that the reader is familiar with the facts, the applicable legal standard, and the arguments made by the parties.

Trustee Corps filed a declaration of nonmonetary status in state court, which a trustee can do when it “maintains a reasonable belief that it has been named in the action or proceeding solely in its capacity as trustee.” Cal. Civ. Code. § 2924l(a). Since neither Forbes nor any other party filed an objection within fifteen days, Trustee Corps took on nonmonetary status. That means Trustee Corps is not required to participate in the litigation any further, is not subject to monetary damages, and is only required to respond to discovery as a nonparty. It will merely be bound by any order relating to the subject deed of trust. Cal. Civ. Code § 2924l(d).

In short, as a result of this state court process, Trustee Corps became a nominal party. And nominal parties are not considered for diversity jurisdiction purposes. Prudential Real Estate Affiliates, Inc. v. PPR Realty Inc., 204 F.3d 867, 873 (9th Cir. 2000). Because the remaining defendants are diverse from Forbes (and because the amount in controversy exceeds $75,000), removal was proper. This is so even if Forbes now takes the position, in response to the motion to remand, that Trustee Corps should not merely be a nominal defendant.

To understand why this outcome is required, imagine if Forbes had originally designated Trustee Corps as a nominal defendant in his state court suit. Obviously removal would be proper in that situation, because the only nondiverse defendant would be nominal, and nominal parties don't count for diversity purposes. In this case, Forbes failed to object to the declaration of nonmonetary status within the required timeframe, thereby effectively consenting to the designation of Trustee Corps as a nominal party. The two scenarios are the same for purposes of assessing diversity jurisdiction; if a defendant has, consistent with state procedural rules, properly been designated as nominal, then the defendant is not considered. Most district courts to consider this question have reached the same conclusion. See, e.g., Silva v. Wells Fargo Bank National Association, No. CV 11-3200 GAF (JCGx), 2011 WL 2437514, at *4 (C.D. Cal. June 16, 2011) (collecting references). But see Sublett v. NDEX West, LLC, No. 11cv185-L(WMC), 2011 WL 663745, at *2 (S.D. Cal. Feb. 14, 2011); Kendall v. Wells Fargo Bank National Association, No. CV 12-7229 DSF (PJWx), 2012 WL 10649162, at *1 (C.D. Cal. Aug. 30, 2012).¹

Forbes asserts in his briefs that he was never served with the nonmonetary status declaration. He thus argues that, since the fifteen days to object starts running from the date of service, nonmonetary status has not yet been conferred. See Cal. Civ. Code § 2924l(c). The Court may consider evidence to determine whether it has jurisdiction. GreenPoint, the removing defendant, submitted a Proof of Service that indicates that Forbes’ counsel was served with the declaration. Dkt. No. 26-1, Exhibit A. For his part, Forbes has provided only the assertions by counsel in the briefs. He does not attempt to account for or explain the Proof of Service filed by GreenPoint. He does not provide supporting declarations from counsel about what counsel learned and when. The Proof of Service states that the document was put in the mail on June 22, 2023. Dkt. No. 26-1, at 7. The Removal Notice was not filed until July 24, 2023. Given all this, the Court finds by a preponderance of the evidence that Forbes was served with the nonmonetary party status declaration over fifteen days before removal.²

If Forbes believes that nonmonetary status is inappropriate for Trustee Corps in this case, then he may, of course, move to change Trustee Corps’ status or to amend the complaint. The Court would apply all relevant federal procedural rules for joining a non-nominal, diversity-destroying defendant after proper removal. See 28 U.S.C. § 1447(e).

IT IS SO ORDERED.

FOOTNOTES

1.   As one court to consider this question has noted, the nonmonetary status declaration may sometimes be filed even in cases where the complaint contains detailed factual allegations of wrongdoing by the trustee. See Kendall, 2012 WL 10649162, at *1 n.1. That court suggested that it would be more appropriate for the federal court to look to the complaint or evidence to determine whether the trustee is actually nominal. But for the purposes of determining diversity jurisdiction, it does not matter that the declaration should not have been filed or that the state court has not ruled on the appropriateness of nonmonetary status. The key is that the defendant was properly designated as nominal in state court, according to the procedures prescribed by state law. After failing to timely object, the plaintiff would need a court order to reverse nominal status. Cal. Civ. Code. § 2924l(e). And thus, regardless of what the complaint says, the plaintiff has ceded their right to (for example) receive money damages from the trustee until a court says otherwise. And once the trustee has obtained nonmonetary status under state law, the trustee becomes a nominal party and stops counting for diversity purposes.

2.   GreenPoint averred in the Removal Notice that its counsel “contacted counsel for defendants Wells Fargo, SPS, and MERS to obtain consent for removal, and those defendants have no objection,” and the document was signed by the attorney of record. Dkt. No. 1, at 9. That is clearly sufficient to establish the consent of the other defendants in this circuit. Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208, 1225 (9th Cir. 2009).

VINCE CHHABRIA, United States District Judge