United States District Court, D. Hawaii
ORDER ADOPTING FINDINGS AND RECOMMENDATION TO GRANT
MOTION FOR ORDER OF REMAND
A. OTAKE UNITED STATES DISTRICT JUDGE.
the Court is Defendant PNC Bank N.A.'s
(“PNC”) Objections to Magistrate Judge
Mansfield's Findings and Recommendations to Deny Remand
[Dkt. 38]. ECF No. 40. After careful consideration of
the Magistrate Judge's Findings and Recommendation to
Grant Motion for Order of Remand (“F&R”), ECF
No. 38, the parties' submissions, and the applicable law,
the Court ADOPTS the F&R for the reasons set forth below.
instant action arises out of the allegedly wrongful
foreclosures of Plaintiffs Farzad and Kathryn Azad's
(collectively “the Azads”), Patricia Helen
Leilani Franco's (“Franco”), Robert
Kovach's (“Kovach”), and Nina Tanner-Smith
(“Tanner-Smith”), individually and as Trustee of
the Nina Tanner-Smith Revocable Trust dated May 18,
2001's (“the Trust”) (collectively
“Plaintiffs”) properties. Plaintiffs commenced
this action on December 12, 2018 in the Circuit Court of the
Second Circuit, State of Hawai'i. The Complaint asserts
the following causes of action: (1) wrongful deprivation of
real property (Count I); (2) unfair and deceptive trade
practices and unfair methods of competition under Hawai'i
Revised Statutes (“HRS”) Chapter 480 (Count II);
and (3) quiet title and ejectment (Count III).
January 22, 2019, PNC removed this action on the basis of
diversity jurisdiction. Notice of Removal
(“Notice”), ECF No. 1 at ¶ 14. PNC argues
that the citizenships of Defendants Charles and Meri Lynn
Fedak (collectively “the Fedaks”); Jesseca
Kaufman (“Kaufman”); Cari Todd Keenan
(“Keenan”); Bank of Hawaii (“BOH”);
Mortgage Electronic Registration Systems, Inc.
(“MERS”); Benjamin Kane (“Kane”);
First Hawaiian Bank (“FHB”); and John and Laurie
Trobough (collectively “the Troboughs”)
may be disregarded because they were fraudulently joined.
Id. at ¶¶ 16-17. Following removal,
Plaintiffs filed a Motion for Order of Remand (“Remand
Motion”). ECF No. 11.
Magistrate Judge recommended that the Remand Motion be
granted. He determined that Plaintiffs did not fraudulently
join the non-diverse Defendants because (1) “it is
possible that a Hawaii state court would find that Plaintiffs
state a case of action against the Non-Diverse Citizens for
quiet title and ejectment, ” F&R, ECF No. 38 at 20;
(2) “[w]ithout any discrete and indisputable facts
sufficient enough for this Court to conclude that Plaintiffs
cannot possibly sustain a theory that innocent purchasers may
be ejected from property because a wrongful foreclosure
renders any subsequent transfers void, not voidable, . . .
remand is proper, ” id. at 23-24; (3)
“[w]ithout making any conclusions about whether, under
Hunter [v. Phillip Morris USA, 582 F.3d 1039 (9th
Cir. 2009)], PNC's arguments definitively require the
district court to remand, this Court finds that
Hunter nonetheless provides persuasive guidance that
remand is proper in this case, ” id. at 26;
and (4) a state court could possibly conclude that a
twenty-year statute of limitations period, rather than the
shorter six-year limitations period, applies. Id. at
30. The Magistrate Judge declined to recommend an award of
attorneys' fees and costs because PNC had an objectively
reasonable basis for removing the action based on its
fraudulent joinder theory. Id. at 31.
20, 2019, PNC filed its Objections to the F&R. ECF No.
40. Plaintiffs filed a Response on July 2, 2019. ECF No. 42.
Court treats a motion to remand as a dispositive motion.
Keown v. Tudor Ins. Co., 621 F.Supp.2d 1025, 1029
(D. Haw. 2008); Bralich v. Sullivan, No. CV 17-00203
ACK-RLP, 2017 WL 4883221, at *4 (D. Haw. Oct. 30, 2017).
Magistrate judges may prepare findings and recommendations of
pretrial matters dispositive of a claim or defense.
Fed.R.Civ.P. 72(b)(1). Parties may object to a magistrate
judge's findings and recommendation. Id.; Local
Rule 74.2. “The district judge must determine de novo
any part of the magistrate judge's disposition that has
been properly objected to. The district judge may accept,
reject, or modify the recommended disposition; receive
further evidence; or return the matter to the magistrate
judge with instructions.” Fed.R.Civ.P. 72(b)(3); Local
Rule 74.2; 28 U.S.C. § 636(b)(1). Under a de novo
standard, there is no deference to the lower court's
ruling; rather, the Court “freely consider[s] the
matter anew, as if no decision had been rendered
below.” Dawson v. Marshall, 561 F.3d 930, 933
(9th Cir. 2009) (alteration in original); Freeman v.
DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006).
objects to the F&R on the following grounds: (1) the
Magistrate Judge erroneously concluded that the non-diverse
Defendants might not be bona fide purchasers even though
Plaintiffs never asserted their title claims prior to this
lawsuit; (2) recent Hawai'i Supreme Court cases establish
that if Plaintiffs establish wrongful foreclosure, their
remedies are limited to money damages against PNC once a bona
fide purchaser obtains the property; (3) the Magistrate Judge
incorrectly suggested that Hunter persuasively
supports remand; and (4) the Magistrate Judge erroneously
concluded that Plaintiffs' quiet title/ejectment claims
might be subject to a twenty-year statute of limitations.
Objections, ECF No. 40 at 3-4.
28 U.S.C. § 1441, a defendant may remove a civil action
brought in a state court to federal district court if the
district court has original jurisdiction. Abrego Abrego
v. The Dow Chemical Co., 443 F.3d 676, 679-80 (9th Cir.
2006). “Removal . . . statutes are ‘strictly
construed,' and a ‘defendant seeking removal has
the burden to establish that removal is proper and any doubt
is resolved against removability.'” Hawaii ex
rel. Louie v. HSBC Bank Nevada, N.A., 761 F.3d 1027,
1034 (9th Cir. 2014) (quoting Luther v. Countrywide Home
Loans Serv. LP, 533 F.3d 1031, 1034 (9th Cir. 2008));
Hunter, 582 F.3d at 1042 (quoting Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per
curiam)) (“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.”); Durham v. Lockheed Martin Corp., 445
F.3d 1247, 1252 (9th Cir. 2006). Courts should presume that a
case lies outside the limited jurisdiction of the federal
courts. Hunter, 582 F.3d at 1042.
Diversity of Citizenship
asserted diversity jurisdiction as the basis for removal.
Federal district courts have original jurisdiction over cases
where the amount in controversy exceeds $75, 000, exclusive
of interest and costs, and where the matter in controversy is
between citizens of different states. 28 U.S.C. §
1332(a)(1). Complete diversity of citizenship requires that
each of the plaintiffs be a citizen of a different state than
each of the defendants. Williams v. United Airlines,
Inc., 500 F.3d 1019, 1025 (9th Cir. 2007) (citing
Exxon Mobil Corp. v. Allapattah Servs., Inc., 545
U.S. 546, 553 (2005)); Morris v. Princess Cruises,
Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). Moreover,
actions based on diversity jurisdiction may only be removed
if none of the properly joined and served defendants is a
citizen of the state in which the action is brought. 28
U.S.C. § 1441(b). Thus, “[d]efendants may remove
an action on the basis of diversity of citizenship if there
is complete diversity between all named plaintiffs and all
named defendants, and no defendant is a citizen of the forum
State.” Lincoln Prop. Co. v. Roche, 546 U.S.
81, 84 (2005).
complete diversity is lacking because Plaintiffs and certain
Defendants share Hawai'i or California citizenship. With
respect to Plaintiffs, the Azads and Franco are citizens of
Hawai'i, Kovach is a citizen of Texas, and Tanner-Smith,
individually and as Trustee of the Trust, is a citizen of
California. Notice, ECF No. 1-2 at ¶¶ 3-7; see
Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894,
899 (9th Cir. 2006) (“A trust has the citizenship of
its trustee or trustees.”). PNC is a citizen of
Delaware, where it maintains it principal office. Notice, ECF
No. 1 at ¶ 14; Wachovia Bank v. Schmidt, 546
U.S. 303, 303 (2006) (“A national bank, for § 1348
purposes, is a citizen of the State in which its main office,
as set forth in its articles of association, is
located.”); Rouse v. Wachovia Mortg., FSB, 747
F.3d 707, 708 (9th Cir. 2014). Kaufman, Keenan, BOH, FHB, and
the Troboughs are citizens of Hawai'i. Notice, ECF No.
1-2 at ¶¶ 11-13, 17-19. Kane and the Fedaks are
citizens of California. Id. at ¶¶ 9-10,
16. PNC identified MERS as a Delaware corporation but did not
provide its complete citizenship. 28 U.S.C. § 1332(c)(1)
(Corporations are deemed to be citizens of “every State
. . . by which it has been incorporated and of the State . .
. where it has its principal place of business.”).