United States District Court, D. Hawaii
FRANCISCO M. APILADO, et al., Plaintiffs,
BANK OF AMERICA, N.A., et al., Defendants.
ORDER GRANTING PLAINTIFFS' MOTION FOR ORDER OF
A. OTAKE UNITED STATES DISTRICT JUDGE.
Bank of America, N.A. (“BANA”) removed this
action from the Circuit Court of the First Circuit, State of
Hawai‘i on the basis of diversity jurisdiction, arguing
that the Court may disregard the lack of complete diversity
between the parties because Plaintiff Randall K. Jim
(“Plaintiff Jim”) was fraudulently joined and/or
egregiously misjoined. Plaintiffs seek remand to state court.
After careful consideration of the parties' submissions,
the applicable law, and the arguments of counsel, the Court
GRANTS Plaintiffs' Motion for Order of Remand, ECF No.
13, for the reasons articulated below.
instant action arises out of BANA's allegedly wrongful
non-judicial foreclosures of Plaintiffs' properties.
Plaintiffs commenced this action on March 29, 2019 in state
court. Notice of Removal (“Notice”), ECF No. 1,
Ex. F. Plaintiffs filed a First Amended Complaint
(“FAC”) on April 3, 2019, id., Ex. G,
asserting the following causes of action: (1) wrongful
deprivation of real property (Count I) and (2) unfair and
deceptive trade practices and unfair methods of competition
under Hawai‘i Revised Statutes (“HRS”)
Chapter 480 (Count II). Id.
5, 2019, BANA removed this action. Notice, ECF No. 1. BANA
invoked diversity jurisdiction notwithstanding the fact that
it shares North Carolina citizenship with Plaintiff Jim.
Id. at ¶ 14. According to BANA, Plaintiff
Jim's citizenship may be ignored for diversity purposes
because his claims were fraudulently joined and egregiously
misjoined. Id. at ¶¶ 15, 26 The present
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 v. Phillip Morris USA, 582 F.3d 1039, 1042
(9th Cir. 2009) (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 Plaintiff Jim and BANA
share North Carolina citizenship. Notice, ECF No. 1 at
¶¶ 4, 12.
acknowledges that the parties lack complete diversity but
contends the Court may disregard Plaintiff Jim's
citizenship because he was fraudulently joined. Opp'n,
ECF No. 23 at 8. An exception to the requirement for
complete diversity exists when a non-diverse
defendant was fraudulently joined. Hunter,
582 F.3d at 1043. The Ninth Circuit “has explained that
under the fraudulent-joinder doctrine, ‘[j]oinder of a
non-diverse defendant is deemed fraudulent, and the
defendant's presence in the lawsuit is ignored for
purposes of determining diversity, [i]f the 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.'” Weeping Hollow Ave. Tr. v.
Spencer, 831 F.3d 1110, 1113 (9th Cir. 2016) (quoting
Morris, 236 F.3d at 1067; McCabe v. Gen. Foods
Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)) (alterations
in original) (internal quotations omitted).
defendants may “present the facts showing the joinder
to be fraudulent.” Ritchey v. Upjohn Drug Co.,
139 F.3d 1313, 1318 (9th Cir. 1998) (quoting McCabe,
811 F.2d at 1339); Morris, 236 F.3d at 1068
(“[F]raudulent joinder claims may be resolved by
‘piercing the pleadings' and considering summary
judgment-type evidence such as affidavits and deposition
testimony.”) (citations omitted). There is, however, a
“general presumption against fraudulent joinder,
” which the party asserting federal jurisdiction must
prove by “clear and convincing evidence.”
Hamilton Materials, Inc. v. Dow Chem. Corp., 494
F.3d 1203, 1206 (9th Cir. 2007). A defendant claiming
fraudulent joinder bears the heavy burden of facing both the
strong presumption against removal jurisdiction as well as
the general presumption against fraudulent joinder.
Hunter, 582 F.3d at 1046.
Ninth Circuit has clarified that the fraudulent joinder test
is not equivalent to the test used to assess the sufficiency
of a claim under Rule 12(b)(6). Grancare, LLC v. Thrower
by & through Mills, 889 F.3d 543, 549 (9th Cir.
2018). Equating the two “conflates a jurisdictional
inquiry with an adjudication on the merits.”
Id. “Because the purpose of the fraudulent
joinder doctrine is to allow a determination whether the
district court has subject matter jurisdiction, the standard
is similar to the ‘wholly insubstantial and
frivolous' standard for dismissing claims under Rule
12(b)(1) for lack of federal question jurisdiction.”
Id. (citations omitted). This standard
“accords with the presumption against removal
jurisdiction, under which [courts] ...