# Felisa Todd v. Rocket Mortgage, LLC

> District Court, C.D. California · February 15, 2023

URL: https://www.frixlaw.com/law-library/cases/9982468

## Case

- **Court:** District Court, C.D. California
- **Decided:** February 15, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9982468

## Opinion text

Case 5:23-cv-00031-JFW-KK Document 22 Filed 02/15/23 Page 1 of 4 Page ID #:310

UNITED STATES DISTRICT COURT JS-6
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES -- GENERAL
Case No. ED CV 23-31-JFW(KKx) Date: February 15, 2023
Title: Felisa Todd -v- Rocket Mortgage, LLC, et al.

PRESENT:
HONORABLE JOHN F. WALTER, UNITED STATES DISTRICT JUDGE
Shannon Reilly None Present
Courtroom Deputy Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:
None None
PROCEEDINGS (IN CHAMBERS): ORDER REMANDING ACTION TO SAN BERNARDINO
SUPERIOR COURT
On October 24, 2022, Plaintiff Felisa Todd (“Plaintiff”) filed a Complaint against Defendants
Rocket Mortgage, LLC (“Rocket Mortgage”) and Clear Recon Corp. (“(“Clear Recon”) (collectively,
“Defendants”) in San Bernardino Superior Court, alleging causes of action for: (1) violation of
California Civil Code § 2923.5; (2) negligence; (3) violation of California Business & Professions
Code § 17200; and (4) quiet title. On January 9, 2023, Rocket Mortgage filed a Notice of Removal,
alleging that this Court has jurisdiction pursuant to 28 U.S.C. § 1332(a).
Federal courts are courts of limited jurisdiction, having subject matter jurisdiction only over
matters authorized by the Constitution and Congress. See Bender v. Williamsport Area School
District, 475 U.S. 534, 541 (1986). “Because of the Congressional purpose to restrict the
jurisdiction of the federal courts on removal, the statute is strictly construed, and federal jurisdiction
must be rejected if there is any doubt as to the right of removal in the first instance.” Duncan v.
Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (citations and quotations omitted). There is a strong
presumption that the Court is without jurisdiction unless the contrary affirmatively appears. See
Fifty Associates v. Prudential Insurance Company of America, 446 F.2d 1187, 1190 (9th Cir. 1990).
As the party invoking federal jurisdiction, Rocket Mortgage bears the burden of demonstrating that
removal is proper. See, e.g., Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992); Emrich v. Touche
Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988).
Diversity jurisdiction founded under 28 U.S.C. § 1332(a) requires that (1) all plaintiffs be of
different citizenship than all defendants, and (2) the amount in controversy exceed $75,000. See 28
U.S.C. § 1332. In its Notice of Removal, Rocket Mortgage alleges that Plaintiff is a resident of
California. Notice of Removal, ¶ 7. However, “the diversity jurisdiction statute, 28 U.S.C. § 1332,
speaks of citizenship, not of residency.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir.
2001). To be a citizen of a state, a natural person must be a citizen of the United States and be
Page 1 of 4 Initials of Deputy Clerk sr
Case 5:23-cv-00031-JFW-KK Document 22 Filed 02/15/23 Page 2 of 4 Page ID #:311

domiciled in a particular state. Id. Persons are domiciled in the places they reside with the intent to
remain or to which they intend to return. Id. “A person residing in a given state is not necessarily
domiciled there, and thus is not necessarily a citizen of that state.” Id. As a result, Rocket Mortgage
has failed to allege the citizenship of Plaintiff.
In addition, Rocket Mortgage alleges in the Notice of Removal that the citizenship of Clear
Recon, a corporation existing under the laws of the State of California, is irrelevant to the diversity
analysis because Clear Recon, as the trustee of the Deed of Trust encumbering the property at
issue in this action, is a nominal defendant. Rocket Mortgage is correct that “courts should ‘ignore
the citizenship of nominal or formal parties who have no interest in the action, and are merely joined
to perform the ministerial act of conveying the title if adjudged to the complainant.’” Silva v. Wells
Fargo Bank NA, 2011 WL 2437514, *3 (C.D. Cal. June 16, 2011) (citing Prudential Real Estate
Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir.2000)); Wise, 2011 WL 1466153 at *4
(holding that an “exception to the complete diversity requirement applies to nominal parties.
‘Defendants who are nominal parties with nothing at stake may be disregarded in determining
diversity, despite the propriety of their technical joinder’”) (quoting Strotek Corp. v. Air Transport
Ass'n of America, 300 F.3d 1129, 1133 (9th Cir. 2002)); see also Daniels v. Wells Fargo Bank, N.A.,
2012 WL 10649202, *4 (C.D. Cal. Sept. 11, 2012) (“[A] federal court must disregard nominal or
formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy”)).
Moreover, California Civil Code § 2924l permits a trustee to file a declaration of non-monetary
status if it is named in an action concerning a deed of trust, and it has a reasonable belief that it has
been named solely in its capacity as trustee, and not as a result of any wrongful acts or omissions in
the performance of its duties. If no objection is served within fifteen days of the date of the
declaration being served, the trustee is not required to participate in the action and is not subject to
any damages award. Cal. Civ. Code § 2924l (c), (d). “District courts have recognized that
defendants who file a declaration of non-monetary status to which plaintiffs do not object are merely
nominal parties whose citizenship does not count for diversity jurisdiction purposes,” so long as the
fifteen-day period for objections passed prior to removal of the action to federal court and no timely
objection was filed. Silva, 2011 WL 2437514 at *4; see Chancellor v. OneWest Bank, 2012 WL
3834951, *2 (N.D. Cal. Sept.4, 2012) (concluding that a defendant trustee was “no longer
considered a party to this action” where it filed a declaration of non-monetary status in Alameda
Superior Court more than fifteen days prior to removal and no objection was asserted).
In this case, there is no evidence in the record that Clear Recon filed a declaration of non-
monetary status in San Bernardino Superior Court at least fifteen days prior to Rocket Mortgage’s
removal. To the contrary, it appears that Clear Recon filed a Declaration of Non-Monetary Status
on January 6, 2023, a mere three days before Rocket Mortgage filed its Notice of Removal.
However, because “[r]emoving [d]efendants must show that diversity of citizenship existed at the
time of removal” (Silva, 2011 WL 2437514 at *4), and a party filing a declaration of non-monetary
status does not become a nominal party until fifteen days have passed without objection by
plaintiffs, Rocket Mortgage has failed to demonstrate that Clear Recon is a nominal party and its
citizenship is irrelevant for diversity purposed based on Clear Recon’s filing of a Declaration of Non-
Monetary Status three days before the Notice of Removal was filed. See, e.g., Silva, 2011 WL
2437514 at *4 (“Here, Removing Defendants filed their notice of removal before the 15 days had
passed . . . Thus, at the time of removal, Cal–Western had not yet become a nominal party by
virtue of its declaration of non-monetary status. Removing Defendants must show that diversity of
citizenship existed at the time of removal. At the time of removal, the declaration of non-monetary
status had not rendered Cal–Western a nominal party whose citizenship was irrelevant for diversity
Page 2 of 4 Initials of Deputy Clerk sr
Case 5:23-cv-00031-JFW-KK Document 22 Filed 02/15/23 Page 3 of 4 Page ID #:312

purposes” (citations omitted)); Wise, 2011 WL 1466153 at *4 (“Here, Defendant alleges that as
trustee, Wolf Firm is a nominal defendant to this action because it filed a statement of non-monetary
status pursuant to California Civil Code § 2924l on March 18, 2011 . . . In this case, Wolf Firm had
not attained nominal party status at the time of removal. As noted above, a party gains
non-monetary status and is transformed into a nominal party only if no objection is served within the
15–day objection period. Cal. Civ. Code § 2924l. Sun Trust removed this action to federal court on
March 22, 2011, approximately 4 days after Wolf Firm filed its Declaration of Non–Monetary Status
and 11 days before the objection period expired. Accordingly, at the time of removal, Wolf Firm had
not yet attained non-monetary status and was not yet a nominal party for purposes of diversity
jurisdiction. Because the Court has found that Wolf Firm . . . was not a nominal party at the time of
removal, its presence in this action prevented removal based on diversity jurisdiction. Accordingly,
the Court finds that diversity jurisdiction was not a proper basis for removal of this action to federal
court”); Sun v. Bank of America Corp., 2010 WL 454720, *2–3 (C.D. Cal. Feb. 8, 2010)
(“Defendants argue that because ReconTrust filed a Declaration of Non-monetary Status with the
state court on December 22, ReconTrust is a nominal party and its citizenship should not be
considered for diversity. The Court disagrees. Federal diversity jurisdiction must exist ‘as of the
time the complaint is filed and removal is effected.’ See id.; see also Morongo Band of Mission
Indians v. California State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir.1988) (diversity is
determined by citizenship of parties as of filing of the original complaint); Newcombe v. Adolf Coors
Co., 157 F.3d 686, 690 (9th Cir.1998) (diversity must exist when action is removed). At the time of
removal, ReconTrust had not attained nominal party status. A party that files a declaration of
non-monetary status does not actually become a nominal party until 15 days pass without objection.
Cal. Civ. Code § 2924l (d), see also Kang v. Bank of Am. Home Loans Servicing, LP, No. 09–8890
(C.D. Cal. Jan. 5, 2010) (order denying reconsideration). Here, Defendants removed the action to
federal court on January 4, only 13 days after ReconTrust filed its Declaration of Non–Monetary
Status on December 22. Thus, at the time of removal ReconTrust did not have nominal status. The
nominal party status exception does not apply”).
Furthermore, despite Rocket Mortgage’s argument to the contrary, Clear Recon’s “status as
a trustee is not itself sufficient to render it a nominal party.” Natividad v. Ocwen Loan Servicing,
LLC, 2014 WL 6611054, *4 (E.D. Cal. Nov.19, 2014) (citing Couture v. Wells Fargo Bank, N.A.,
2011 WL 3489955, * 3 (S.D. Cal. Aug.9, 2011)). Although Rocket Mortgage contends in the Notice
of Removal that Plaintiff’s Complaint contains no substantive allegations against Clear Recon, the
Court disagrees. Plaintiff’s Complaint includes substantive allegations against Clear Recon.
Plaintiff alleges all causes of action against both Rocket Mortgage and Clear Recon jointly as
“defendants” and seeks damages against both Rocket Mortgage and Clear Recon. For example,
Plaintiff alleges that Defendants jointly “engaged in a campaign of misinformation and undermined
California’s housing security . . . by taking steps toward foreclosure against California homeowners,
such as Plaintiff” Complaint, ¶ 23. In addition, Plaintiff alleges that Defendants violated California
Civil Code §§ 2923.55 by attaching a “patently false” declaration of due diligence to the Notice of
Default recorded against her property. Complaint, ¶¶ 26-28. Plaintiff alleges that the declaration of
due diligence is false because neither of the Defendants “contacted Plaintiff by telephone or in
person, as required by code, assessed Plaintiff’s finances, or explored all non-foreclosure options
other than a COVID-related forbearance that was denied on extension,” despite the fact that she
had submitted a police report demonstrating that the loan against her property had been obtained
as a result of identity theft. Complaint, ¶ 28. Plaintiff also alleges that “Defendants breached their
duty of due care owed to Plaintiff to investigate her fraud claims” and “breached their duty of due
care owed to Plaintiff by failing to . . . first identify the validity of the individual taking out the Loan, by
Page 3 of 4 Initials of Deputy Clerk sr
Case 5:23-cv-00031-JFW-KK Document 22 Filed 02/15/23 Page 4 of 4 Page ID #:313

failing to look into the validity of the Loan and investigate Plaintiff’s claims of fraud against her sister
so as to mitigate damages.” Complaint, ¶¶ 62 and 64. In addition, Plaintiff alleges that Clear
Recon’s “conduct of signing off on a patently false declaration of due diligence was negligent.”
Complaint, ¶ 65. Courts have consistently found similar allegations sufficient to demonstrate that a
trustee is not a nominal party and that its citizenship must be considered in ascertaining whether
diversity jurisdiction exists. See, e.g., Alabastro, 2015 WL 138235 at *3 & n. 2 (concluding that “the
allegations in the Complaint are sufficient to preclude a finding that Cal–Western should be
disregarded from the jurisdictional analysis as a nominal party” where the complaint's “factual
allegations, when taken as whole, imply that Cal–Western may have conspired with other
defendants to improperly or fraudulently initiate foreclosure proceedings against the Milpitas
property); Raissian v. Quality Loan Service Corp., 2014 WL 6606802, *4 (C.D. Cal. Nov. 19, 2014)
(“Quality cannot be deemed a nominal defendant because the Complaint clearly demonstrates it is
not a mere stakeholder. This is because a court need not regard a trustee as a nominal party
where the complaint pleads substantive allegations against and seeks money damages from the
trustee. Plaintiff's Complaint alleges a claim under California Civil Code section 2923.55 against
both SPS and Quality. Under the statute, a mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent may not record a notice of default until the mortgage servicer sends certain
information and documentation to the borrower as required by subdivision (b)(1) . . . Plaintiff alleges
he did not receive any of the required documents. Plaintiff also alleges SPS and Quality
nevertheless recorded a notice of default on the subject property”); Pardo v. Sage Point Lender
Services LLC, 2014 WL 3503095, *3–4 (S.D. Cal. July 14, 2014) (“The Court concludes that
Defendants have not met their heavy burden of establishing that Sage Point is a nominal defendant
with no real interest in this lawsuit. First, Sage Point's status as trustee is only determinative if Sage
Point is being sued solely in its role as trustee and ‘merely to perform [a] ministerial act.’ There is no
rule that a party's status as a trustee renders him or her a nominal party . . . Second, Plaintiff is
actually suing Sage Point for wrongdoing, not merely as a formal party in order to facilitate
collection. Plaintiff notes at the outset of his Complaint that the four defendants would be
‘collectively referred to as Defendant,’ and Sage Point, along with RCS's other unnamed agents,
would be ‘collectively referred to as Defendants.’ Plaintiff makes several allegations against
Defendants collectively. For example, Plaintiff alleges that Defendants have ‘purposefully and
willfully harassed Plaintiff’ by ‘trespassing’ and putting the house up for sale, despite him qualifying
for a loan modification”). As a result, the Court concludes that Rocket Mortgage has failed to meet
the burden of establishing that diversity jurisdiction exists. See Harris v. Bankers Life and Cas. Co.,
425 F.3d 689, 694 (9th Cir. 2005).

Accordingly, this action is REMANDED to San Bernardino Superior Court for lack of subject
matter jurisdiction. See 28 U.S.C. § 1447(c).
IT IS SO ORDERED.
Page 4 of 4 Initials of Deputy Clerk sr

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9982468. Public record. Not legal advice.