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Forbes v. Bank of America NA

United States District Court, D. Arizona

November 30, 2017

Andrew K. Forbes, et al., Plaintiffs,
Bank of America NA, et al., Defendants.


          Honorable G. Murray Snow United States District Judge.

         Pending before the Court is the Motion to Remand of Plaintiffs Andrew and Julia Forbes. (Doc. 9). For the following reasons, the Court denies the motion.


         On August 22, 2017, Plaintiffs Andrew and Julia Forbes of Arizona filed a Complaint, pro se, in Maricopa County Superior Court against Defendants Bank of America, N.A. (BANA) and Leonard J. McDonald. (Doc. 1-1). In 2006, Plaintiffs executed a promissory note with BANA in the amount of $399, 900.00 in order to purchase real property in Wittmann, Arizona. This note was secured by a deed of trust on the land, with BANA as the beneficiary. Plaintiffs defaulted on the loan in 2009, and were unable to agree on loan modification programs with BANA. After default, the trustee sent notice to Plaintiffs of a sale of the property. Plaintiffs realized that BANA was foreclosing on the wrong property and informed the trustee of this mistake. Plaintiffs received no further correspondence from BANA or the trustee, causing them to believe the property has been foreclosed.

         A Notice of Substitution of Trustee was recorded on May 31, 2017 and Mr. McDonald was appointed the successor trustee. Plaintiffs then received a notice of trustee's sale referencing a renewed effort to foreclose on the property. Plaintiffs' Complaint asserts wrongful foreclosure, claiming that the statute of limitations has expired. Additionally, Plaintiffs allege that BANA breached their fiduciary duties of good faith and fair dealing. Plaintiff's Complaint seeks injunctive relief to stop the foreclosure and alleges injuries in excess of $150, 000.

         Defendant BANA removed the action to federal court on September 22, 2017. BANA, a citizen of North Carolina, alleges that Defendant McDonald, a citizen of Arizona, has been fraudulently joined to the lawsuit. BANA asserts that Arizona law and the Complaint provide no basis for relief against Defendant McDonald as Trustee. BANA also states that the amount in controversy exceeds $75, 000. Plaintiffs filed a Motion to Remand on October 17, 2017.


         I. Legal Standard

         “[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). A party may remove an action from state court only if the action could have been brought in the district court originally. Ramirez v. Fox Television Station, Inc., 998 F.2d 743, 747 (9th Cir. 1993). The party asserting federal jurisdiction has the burden of proof on a motion to remand to state court, and the removal statute is strictly construed against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (noting a “strong presumption” against removal jurisdiction, and stating that “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance”).

         II. Analysis

         Federal jurisdiction is proper in all cases that present a federal question on the face of the complaint. 28 U.S.C. § 1331. In addition, the Court has subject-matter jurisdiction to rule on cases in which defendants and plaintiffs are citizens of different states and the amount in controversy is greater than $75, 000. 28 U.S.C. § 1332. The Supreme Court has interpreted § 1332 to require complete diversity between parties, such that “the citizenship of each plaintiff is diverse from the citizenship of each defendant.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). However, if a plaintiff “fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state, ” the district court may claim that the party is fraudulently joined, and assert jurisdiction. McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).

         A. Diversity Jurisdiction

         1. Diversity of Citizenship

         Plaintiffs, Arizona citizens, have filed suit against BANA, a citizen of North Carolina, and Mr. McDonald, a citizen of Arizona. On its face, the presence of Mr. McDonald destroys diversity between the parties. However, if the “settled rules of the state” prevent Plaintiffs from “stat[ing] a cause of action” against Mr. McDonald, then Mr. McDonald is considered fraudulently joined and his presence would not preclude removal on diversity grounds. McCabe, 811 F.2d at 1339. Under Arizona law, the “trustee need only be joined as a party in legal actions pertaining to a breach of the trustee's obligation.” A.R.S. § 33-807(E). A court order “entered against the beneficiary [BANA] is binding upon the trustee with respect to any actions that the trustee is authorized to take by the trust deed or by this chapter. Id. A trustee joined in an action “is entitled to be immediately dismissed.” Id. Three elements must be established for a trustee to fall under § 33-807(E)'s protections: the trustee is a defendant in the action, the claim “relates to the ...

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