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Ibarra v. Kennedy Funding, Inc.

United States District Court, D. Arizona

September 2, 2014

Alberto Sanchez Ibarra and Martha Gayou Matiella, husband and wife; Alberto Martin Sanchez Gayou and Kristy Anne Shannon, husband and wife; and Luis Carlos Sanchez Gayou and Margot Padres Elias, husband and wife, Plaintiffs,
v.
Kennedy Funding, Inc., a foreign corporation; Fuentes, Gomez & Associates, LLC, an Arizona limited liability company; Ramon Alberto Fuentes and Lilia Lizeth Corrales, husband and wife; Efrain Corrales and Cecilia Corrales; husband and wife; and Jose Martin Fuentes and Jane Doe Fuentes, husband and wife, Defendants. Kennedy Funding, Inc., a foreign corporation, Counterclaimant
v.
Alberto Sanchez Ibarra and Martha Gayou Matiella, husband and wife; et al. Counterdefendants

REPORT AND RECOMMENDATION

LESLIE A. BOWMAN, Magistrate Judge.

Pending before the court is the plaintiffs' motion for attorneys' fees filed on July 7, 2014. (Doc. 44)

Also pending is the plaintiffs' motion to file under seal their attorneys' fee agreement. (Doc. 45)

This action arises out of a loan in the amount of $3.46 million made by the defendant, Kennedy Funding, Inc. (Kennedy), to the defendant, Fuentes, Gomez & Associates, LLC (FG&A). The loan was secured by a mortgage granted by the plaintiffs on certain property in Mexico. FG&A subsequently defaulted on the loan, and so far, Kennedy has been unable to foreclose on the Mexican property. On May 28, 2012, Kennedy sent the plaintiffs a letter accompanied by four documents dated June 15, 2004 - a Loan and Security Agreement, a Promissory Note, a Guaranty, and an Assignment of Licenses. Kennedy asserts that, pursuant to these documents, the plaintiffs are personally liable for FG&A's debt. The plaintiffs maintain these documents are forgeries, and they are not indebted to Kennedy for any amount.

In the pending motion, the plaintiffs move for an award of attorneys' fees resulting from Kennedy's unsuccessful attempt to remove this action from state court.

The case has been referred to Magistrate Judge Bowman for report and recommendation pursuant to the Local Rules of Practice. LRCiv 72.1.

The motion should be denied. Kennedy's motion to remove was not objectively unreasonable.

Background

This action was originally filed in Santa Cruz County Superior Court on October 29, 2013. (Doc. 1-4, p. 2) The complaint contains five counts, but only three of them are relevant to the pending motion. In Count 1, the plaintiffs seek a declaratory judgment stating that the documents that purport to hold them personally liable are forgeries that are "null, void, and of no effect against the [plaintiffs]." (Doc. 1-4, p. 8) In Count 3, the plaintiffs assert a claim for civil conspiracy against the individual defendants, Ramon Alberto Fuentes, Efrain Corrales, and Jose Martin Fuentes, who the plaintiffs believe procured the forged documents. (Doc. 1-4, p. 9) In Count 4, the plaintiffs claim the individual defendants have engaged in a pattern of unlawful activities. (Doc. 1-4, p. 9)

The lineup of parties is a bit unusual. The plaintiffs name as defendants not only Kennedy, the unpaid lender, but also their original partners and the defaulting joint venture.

The defendant, Kennedy, was served on November 21, 2013. (Doc. 7, p. 2) On December 19, 2013, Kennedy filed a notice of removal in this court pursuant to 28 U.S.C. § 1446 alleging diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Doc. 1, p. 1) Kennedy asserted that "all legitimately named Defendants to this action are diverse in citizenship from all Plaintiffs" and "[a]ny named Defendants that may be citizens of Arizona were fraudulently joined and must be disregarded for diversity jurisdiction purposes." (Doc. 1, p. 2) Kennedy believed the plaintiffs' original partners were named as defendants simply in order to destroy diversity.

On June 16, 2014, this court granted the plaintiffs' amended motion to remand. (Doc. 43) On July 7, 2014, the plaintiffs' filed the pending motion for attorneys' fees. (Doc. 44) They also filed the accompanying motion to file their fee agreement under seal. (Doc. 45)

Discussion

A civil action filed in state court may be removed if that action could have been filed in federal court originally. 28 U.S.C. § 1441. Removal proceeds pursuant to statute, which is strictly construed. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). If removal is ultimately unsuccessful, ...


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