United States District Court, D. Hawaii
CHRISTOPHER CARPENTER, MARY T BULZOMI, DANIEL K. IWASAKI, BERNIE L. ACOBA, ROMAN GULLA BIBAT, ANGIE SIAPNO BIBAT, Plaintiffs,
PNC BANK, N.A., a National Banking Association; ROBERT WHITE; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; FIRST CALIFORNIA MORTGAGE COMPANY; GUINEVERE RAY STROMBERG; BANK OF AMERICA, N.A.; ENRIQUE PIANO PAA, JR.; JOYCE LAN KIM PAA; WELLS FARGO BANK, N.A.; and DOE DEFENDANTS 1-50, Defendants.
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS' MOTION FOR ORDER OF REMAND
E. Kobayashi, United Stares District Judge.
the Court is Plaintiffs Christopher Carpenter, Mary T.
Bulzomi, Daniel K. Iwasaki, Bernie L. Acoba, Roman Gulla
Bibat, and Angie Siapno Bibat's
(“Plaintiffs”) Motion for Order of Remand
(“Motion”), filed on February 28, 2019. [Dkt. no.
13.] Defendant PNC Bank, N.A. (“PNC”) filed its
memorandum in opposition on March 29, 2019, and Plaintiffs
filed their reply on April 5, 2019. [Dkt. nos. 21, 22.] This
matter came on for hearing on April 19, 2019. For the reasons
set forth below, Plaintiffs' Motion is hereby granted in
part and denied in part. The Motion is granted insofar as the
instant case is remanded to the state court because the
non-diverse defendants were not fraudulently joined. The
Motion is denied as to Plaintiffs' request for an award
of removal-related attorneys' fees and costs because,
although the removal was improper, PNC had an objectively
reasonable basis for attempting removal.
instant case arises out of the foreclosures of
Plaintiffs' respective properties. Plaintiffs filed their
Complaint in the State of Hawai'i Second Circuit Court
(“state court”) on December 21, 2018, and the
action was removed to federal court on January 30, 2019.
[Notice of Removal (dkt. no. 1), Decl. of Lauren K. Chun,
Exh. 1 (Complaint), Exh. 2 (First Amended Complaint, filed
to the First Amended Complaint: Plaintiffs Christopher
Carpenter (“Carpenter”) and Mary T. Bulzomi
(“Bulzomi”) are residents and citizens of New
Jersey; Plaintiffs Daniel K. Iwasaki (“Iwasaki”)
and Bernie L. Acoba (“Acoba”) are residents and
citizens of Hawai'i; and Plaintiffs Roman Gulla Bibat and
Angie Siapno Bibat (“Bibats”) are residents of
Nevada, but they are in the process of moving to Hawai'i,
which they intend to make their permanent residence. [First
Amended Complaint at ¶¶ 3-8.] PNC is the successor
by merger to National City Bank (“NCB”). PNC is
organized under United States law and Delaware law, and has
its principal place of business in Pennsylvania.
[Id. at ¶ 9.]
acknowledge their respective mortgages each gave the
mortgagee a power of sale, which authorized the mortgagee to
sell the property in the event of default. Plaintiffs contend
each mortgagee agreed to sell the property “in a manner
reasonably calculated to obtain the best possible price for
the” property. [Id. at ¶ 36.] According
to the First Amended Complaint, National City Mortgage
(“NCM”) and/or PNC asserted the right to use Haw.
Rev. Stat. Chapter 667, Part I (2008) for the power of sale
as the mortgagee and/or the assignee of each of
Plaintiffs' mortgages. [Id. at ¶ 37.]
2009 through 2011, PNC was represented by the law firm Routh
Crabtree Olson, which later became known as RCO Hawaii LLLC
(“RCO”), in PNC's nonjudicial foreclosures in
Hawai'i. [Id. at ¶ 21.] NCM and/or PNC,
acting through RCO, commenced nonjudicial foreclosure
proceedings against Plaintiffs, pursuant to the respective
mortgages and Haw. Rev. Stat. § 667-5 (2008).
[Id. at ¶ 38.]
allege that the foreclosure notices prepared for the
foreclosure of each of Plaintiffs' properties violated
Haw. Rev. Stat. § 667-7(a)(1) (2008) because none
contained an adequate description of the property to be sold.
[Id. at ¶ 43.] Plaintiffs also allege that, in
each foreclosure, only a quitclaim deed was offered.
[Id. at ¶ 44.] Offering and selling only a
quitclaim deed, Plaintiffs contend, breached the
mortgagee's duties because it was not reasonably
calculated to obtain the best price for the property.
[Id. at ¶ 46.]
in each foreclosure, the auction was held on a date other
than that specified on the respective foreclosure notice,
i.e. the actual auction date was unpublished, and no
notice of the postponement of the sale was published. Either
PNC or its nominee was the successful bidder at each auction;
the properties were conveyed to PNC or its nominee; and
foreclosure affidavits were recorded. In this manner,
Plaintiffs assert they were wrongfully deprived of their
properties, and these sales are either void or voidable
because of PNC's failure to comply with Chapter 667, Part
I and the applicable case law. [Id. at ¶¶
Robert White (“White”) claims current title to
Carpenter and Bulzomi's property, Defendant Guinevere Ray
Stromberg (“Stromberg”) claims current title to
Iwasaki and Acoba's property, and Defendants Enrique
Piano Paa, Jr. and Joyce Lan Kim Paa (“Paas”)
claim current title to the Bibats' property.
[Id. at ¶ 77.] White, Stromberg, and the Paas
(collectively “Purchaser Defendants”) are all
residents and citizens of Hawai'i. [Id. at
¶¶ 10, 12, 17.]
nutshell, Plaintiffs' claims against the Purchaser
Defendants arise out of the contention that the foreclosure
affidavits used to support the foreclosures of each of
Plaintiffs' properties constitute constructive or actual
notice of apparent defects in the chain of title. As a
result, Plaintiffs contend the Purchaser Defendants are not
bona fide purchasers (“BFPs”). Plaintiffs also
argue PNC's quitclaim deeds to its nominees were void
ab initio, and therefore the special warranty deed
from the nominees to each of the Purchaser Defendants is also
void. See, e.g., id. at ¶¶ 82-83.
assert they were all members of the putative class in
Fergerstrom v. PNC Bank, N.A., CV 13-00526 DKW-RLP
(“Fergerstrom”), which was originally
filed in the State of Hawai'i First Circuit Court on
September 9, 2013.Fergerstrom was removed to this
district court, and class certification was denied on
September 18, 2018. Thus, Plaintiffs argue the statute of
limitations on their claims was tolled starting September 9,
2013 until September 18, 2018, and therefore their claims
against PNC are timely. [Id. at ¶ 18.]
assert the following claims: a wrongful foreclosure claim
against PNC (“Count I”); unfair and deceptive
trade practices and unfair methods of competition, in
violation of Haw. Rev. Stat. Chapter 480, against PNC
(“Count II”); and quiet title and ejectment
against the Purchaser Defendants, and against: First
California Mortgage Company (“FCMC”) -
White's mortgagee; Defendant Bank of America, N.A.
(“Bank of America”) - Stromberg's mortgagee;
Defendant Wells Fargo Bank, N.A. - the Paas' mortgagee;
and Defendant Mortgage Electronic Registration Systems, Inc.
- FCMC and Bank of America's nominee (“Lienholder
Defendants” and “Count III”).
removed this case based on diversity jurisdiction. [Notice of
Removal at ¶ 10.] PNC contends Plaintiffs are either
citizens of Hawai'i or New Jersey, although the Bibats
may be citizens of Nevada. PNC is a Delaware citizen. Thus,
there is complete diversity between Plaintiffs and PNC. PNC
argues the citizenship of the Purchaser Defendants and
Lienholder Defendants need not be considered because they
were fraudulently joined.
now seek remand of this case: 1) because this Court lacks
subject matter jurisdiction under 28 U.S.C. §
1332; and/or 2) based on the forum defendant
rule, 28 U.S.C. § 1441(b)(2), and also seek an award of
attorneys' fees and costs, pursuant to 28 U.S.C. §
General Removal Principles
general statute governing removal, 28 U.S.C. § 1441, is
“strictly construe[d] . . . against removal
jurisdiction.” Hansen v. Grp. Health Coop.,
902 F.3d 1051, 1056 (9th Cir. 2018) (citations and quotation
If a district court determines at any time that less than a
preponderance of the evidence supports the right of removal,
it must remand the action to the state court. See
Geographic Expeditions, Inc. v. Estate of Lhotka ex rel.
Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010);
California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d
831, 838 (9th Cir. 2004). The removing defendant bears the
burden of overcoming the “strong presumption against
removal jurisdiction.” Geographic Expeditions,
599 F.3d at 1107 (citation omitted).
Id. at 1057. The “‘strong presumption
against removal jurisdiction means that the defendant always
has the burden of establishing that removal is proper,'
and that the court resolves all ambiguity in favor of remand
to state court.” Hunter v. Philip Morris USA,
582 F.3d 1039, 1042 (9th Cir. 2009) (quoting Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per
Diversity Jurisdiction and Fraudulent
removed this case pursuant to 28 U.S.C. § 1332(a), which
provides, in relevant part, that federal district courts
“shall have original jurisdiction of all civil actions
where the matter in controversy exceeds the sum or value of
$75, 000, exclusive of interest and costs, and is between -
(1) citizens of different States.” Diversity
jurisdiction requires complete diversity of citizenship,
i.e., that every plaintiff be a citizen of a
different state from every defendant. Grancare,
LLC v. Thrower ex rel. Mills, 889 F.3d 543, 548 (9th
Cir. 2018) (citing Caterpillar Inc. v. Lewis, 519
U.S. 61, 68, 117 S.Ct. 467, 136 L.E.2d 437 (1996)). However,
when determining if complete diversity exists, the court
disregards the citizenship of any fraudulently joined
defendants. Id. (citing Chesapeake &
Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 152, 34
S.Ct. 278, 58 L.Ed. 544 (1914)).
There are two ways to establish fraudulent joinder:
“(1) actual fraud in the pleading of jurisdictional
facts, or (2) inability of the plaintiff to establish a cause
of action against the non-diverse party in state
court.” Hunter v. Philip Morris USA, 582 F.3d
1039, 1044 (9th Cir. 2009) (quoting Smallwood v. Illinois
Cent. RR. Co., 385 F.3d 568, 573 (5th Cir. 2004)).
Fraudulent joinder is established the second way if a
defendant shows that an “individual joined in the
action cannot be liable on any theory.” Ritchey v.
Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998).
But “if there is a possibility that a
state court would find that the complaint states a cause of
action against any of the resident defendants, the federal
court must find that the joinder was proper and remand the
case to the state court.” Hunter, 582 F.3d at
1046 (quoting Tillman v. R.J. Reynolds Tobacco, 340
F.3d 1277, 1279 (11th Cir. 2003) (per curiam)) (emphasis
added). A defendant invoking federal court diversity
jurisdiction on the basis of fraudulent joinder bears a
“heavy burden” since there is a “general
presumption against [finding] fraudulent joinder.”
Id. (citations omitted).
. . . We have declined to uphold fraudulent joinder rulings
where a defendant raises a defense that requires a searching
inquiry into the merits of the plaintiff's case, even if
that defense, if successful, would prove fatal. See
Hunter, 582 F.3d at 1046 (holding that an implied
preemption affirmative defense was not a permissible ground
for finding fraudulent joinder).
Id. at 548-49 (emphasis and some alterations in