Opinion
CASE NO. SACV 16-1203 AG (KESx)
2016-08-25
Martha WALTERS, Plaintiff, v. U.S. BANK, N.A. et al., Defendants.
Joseph Ernest Patton, Suzanne M. Rehmani, Rehmani and Associates PC, Irvine, CA, for Plaintiff. Alexandra Costanza Whitworth, Jonathan G. Fetterly, Bryan Cave LLP, San Francisco, CA, for Defendants.
Joseph Ernest Patton, Suzanne M. Rehmani, Rehmani and Associates PC, Irvine, CA, for Plaintiff.
Alexandra Costanza Whitworth, Jonathan G. Fetterly, Bryan Cave LLP, San Francisco, CA, for Defendants.
ORDER GRANTING MOTION TO REMAND AND VACATING MOTION TO DISMISS
Andrew J. Guilford, United States District Judge
Plaintiff Martha Walters, as trustee of The Walters Family Trust dated February 20, 2004, sued Defendants U.S. Bank, N.A. ("U.S. Bank:"), and Douglas Walters. Martha Walters asserted nine claims under California state law, all stemming from a family feud over trust assets. This lawsuit started off in Orange County Superior Court, was removed to the Southern District of California, and then was transferred to the Central District of California's Southern Division. Now there are two pending motions: a motion to dismiss ("Motion to Dismiss") filed by U.S. Bank and a motion to remand ("Motion to Remand") filed by Martha Walters. The Court GRANTS the Motion to Remand and VACATES the Motion to Dismiss.
1. LEGAL STANDARD
Before getting into an analysis of the facts of this case, it's important to understand subject matter jurisdiction generally and diversity jurisdiction specifically.
1.1 Subject Matter Jurisdiction Generally
Congress and the Constitution confine federal courts' power to certain specific subject matters. See U.S. Const. art. III, § 2. Federal courts themselves police their exercise of power. They take this sacred duty seriously and guard their limited jurisdiction jealously. See Abramson v. Marriott Ownership Resorts, Inc. , 155 F.Supp.3d 1056, 1060 (C.D.Cal.2016).
This jealousy gets expressed in a lot of ways. See Onsite Nurse Concierge LLC v. Myonsite Healthcare, LLC , No. SACV 16–0509 AG (PLAx), 2016 WL 2853504, at *1 (C.D.Cal. May 16, 2016). First, federal courts start off assuming that cases are outside of their power to rule. Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Courts require parties arguing for jurisdiction to establish otherwise. Id. Second, federal courts demand that parties arguing for jurisdiction address jurisdiction as soon as they get to the federal courthouse doors, in their complaints or notices of removal. See 28 U.S.C. § 1446(a) ; Fed. R. Civ. P. 8(a)(1). Third, federal courts raise jurisdiction whenever they think it's a question, at any point in a case, on their own without the parties' involvement. See Fed. R. Civ. P. 12(h)(3). Fourth, federal courts are particularly skeptical of cases removed from state court. Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir.1992).
Consistent with courts' jealousy, ties go to plaintiffs. The strong presumption against removal jurisdiction means that defendants always have the burden of establishing, by a preponderance of evidence, that removal is proper. See id. ; Naffe v. Frey , 789 F.3d 1030, 1040 (9th Cir.2015). Courts "strictly construe the removal statute against removal jurisdiction," so "[f]ederal jurisdiction must be rejected if there is any doubt" about jurisdiction. Gaus , 980 F.2d at 566.
1.2 Diversity Jurisdiction Specifically
One particular flavor of subject matter jurisdiction, diversity jurisdiction, is relevant here. Diversity jurisdiction allows federal courts to rule in civil actions between citizens of different states where the matter in controversy exceeds $75,000. See 28 U.S.C. § 1332(a). Diversity jurisdiction also requires that each plaintiff in a case be a citizen of a different state than each defendant—in other words, that there be complete diversity. See id. ; Abramson , 155 F.Supp.3d at 1060. Being a citizen in this context is more than just being a resident. "To show state citizenship for diversity purposes ... a party must ... be domiciled in the state." Kantor v. Wellesley Galleries, Ltd. , 704 F.2d 1088, 1090 (9th Cir.1983). "A person's domicile is her permanent home, where she resides with the intention to remain or to which she intends to return." Kanter v. Warner – Lambert Co. , 265 F.3d 853, 857 (9th Cir.2001).
2. ANALYSIS
2.1 Balancing the Evidence
When U.S. Bank removed this case, its only cited basis for federal court jurisdiction was diversity jurisdiction. The only disputed issue in the Motion to Remand is whether there is complete diversity here through U.S. Bank adequately establishing that Douglas Walters is a citizen of Oklahoma, rather than California.
U.S. Bank says that it has established that Douglas Walters is an Oklahoma citizen through several means. First, U.S. Bank looks to its own records. According to U.S. Bank, Douglas Walters was a U.S. Bank customer until April 2016. In February 2016, he changed his address on his accounts to an address in Oklahoma. Second, an investigative report commissioned by U.S. Bank also turned up the same Oklahoma address for Douglas Walters. Third, U.S. Bank's counsel called Douglas Walters, who refused to provide a new address but confirmed that he had gone to Oklahoma and wasn't planning to come back. Setting aside hearsay issues that might more strongly impede a party, like U.S. Bank, with the burden of proof, U.S. Bank's arguments have some superficial appeal.
But Martha Walters digs deep into these arguments. She did her own investigation, and found that the address identified by U.S. Bank—the only address U.S. Bank has for Douglas Walters—is actually the address of a church. Apparently Douglas Walters (who Martha Walters characterizes as having a "transient" lifestyle) stopped there to ask for help finding a place to stay. He also had his bank account statements sent there. But the church doesn't allow people to live there, and church personnel haven't seen or heard from Douglas Walters since April 2016. Further, Martha Walters notes that while Douglas Walters' bank records show debit card purchases in Oklahoma for a four-day period in February 2016, there's no indication of any purchases after that, including around the time the complaint was filed in May 2016 or removed in June 2016. Martha Walters' investigations have found no record of Douglas Walters holding an Oklahoma driver's license. Nor did these investigations find any record of Douglas Walters holding a job in Oklahoma. Martha Walters hasn't been able to successfully serve Douglas Walters in Oklahoma with papers in this case.
This case presents a close call. There's certainly evidence that Douglas Walters traveled to Oklahoma. There's even some evidence that he resided there. But on balance, U.S. Bank hasn't satisfied its burden to show by a preponderance of evidence that Douglas Walters is a citizen of Oklahoma, rather than a citizen of California. To this day, U.S. Bank cannot provide an address for him in Oklahoma. That, plus many of the other facts the Court considered but hasn't listed, tips the balance in favor of remand here.
2.2 Other Considerations
The Court reaches the conclusion of this order without examining other considerations favoring remand. Martha Walters cited some factors specific to this case, but there are broader issues too. These issues don't enter the analysis, but do confirm that the analysis has reached a just conclusion. First, some history is helpful.
The primary (and perhaps only) reason the Founders included diversity jurisdiction in the Constitution was to respond to the perceived biases of state courts. Evidence of this reason abounds. In the summer of 1778, several states continued to debate ratification and particular provisions of the Constitution. Alexander Hamilton addressed New Yorkers through The Federalist papers, arguing that the federal judiciary's jurisdiction should extend to "to all those [cases] in which the State tribunals cannot be supposed to be impartial and unbiased." The Federalist No. 80 (Alexander Hamilton). Around the same time, James Madison raised similar concerns justifying the diversity clause during Virginia's debates on the ratification of the Constitution. "It may happen that a strong prejudice may arise, in some states, against the citizens of others, who may have claims against them." James Madison, The Debates in the Convention of the Commonwealth of Virginia on the Adoption of the Federal Constitution, reprinted in 3 Debates on the Adoption of the Federal Constitution 533 (Jonathan Elliot ed., 2d ed., Philadelphia, J.B. Lippincott 1891).
Courts also recognized the underlying purpose of the diversity clause. In 1809, Chief Justice John Marshall of the U.S. Supreme Court discussed the potential for in-state biases, noting that "the constitution itself either entertains apprehensions on this subject, or views with such indulgence the possible fears and apprehensions of suitors, that it has established national tribunals for the decision of controversies ... between citizens of different states." Bank of U.S. v. Deveaux , 9 U.S. (5 Cranch) 61, 87, 3 L.Ed. 38 (1809), overruled in part on other grounds by Louisville, C. & C.R. Co. v. Letson , 43 U.S. (2 How.) 497, 11 L.Ed. 353 (1844). A few years later, Justice Joseph Story would express similar sentiments.
The constitution has presumed (whether rightly or wrongly we do not inquire) that state attachments, state prejudices, state jealousies, and state interests, might some times obstruct, or control, or be supposed to obstruct or control, the regular administration of justice. Hence, in controversies ... between citizens of different states ..., it enables the parties, under the authority of congress, to have the controversies heard, tried, and determined before the national tribunals. No other reason than that which has been stated can be assigned, why some, at least, of those cases should not have been left to the cognizance of the state courts.
Martin v. Hunter's Lessee , 14 U.S. (1 Wheat.) 304, 347, 4 L.Ed. 97 (1816). The Supreme Court recently re-acknowledged this rationale, noting that "the purpose of the diversity requirement ... is to provide a federal forum for important disputes where state courts might favor, or be perceived as favoring, home-state litigants." Exxon Mobil Corp. v. Allapattah Servs., Inc. , 545 U.S. 546, 553–54, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). This Court and others have similarly recognized this reasoning. See Padilla v. AT&T Corp. , 697 F.Supp.2d 1156 (C.D.Cal.2009).
What would Hamilton and Madison have to say about U.S. Bank's assertion of diversity jurisdiction here? In a nation where history and technology have reduced regionalism, the possibility of unfair prejudice by a state judge or jury is small. Indeed, after seeing the impact of the internet and interstate airline flights, Hamilton and Madison would perhaps point out that U.S. Bank might be more prejudiced by federal jurisdiction, particularly on appeal. An appellate panel composed of, for example, a judge from Arizona, a judge from Montana, and a judge from Idaho may not be ideal to apply California law when deciding an appeal from this case. See Abramson , 155 F.Supp.3d at 1062.
If anything, this case and many other diversity cases present problems predicted by those Founders who opposed an expansive federal judiciary. George Mason, the father of the Bill of Rights and one of the three delegates at the Constitutional Convention of 1787 who refused to sign the Constitution, cited his fear of an expansive federal judiciary that would diminish access to justice.
The Judiciary of the United States is so constructed and extended, as to absorb and destroy the judiciaries of the several States; thereby rendering law as tedious, intricate and expensive, and justice as unattainable, by a great part of the community, as in England, and enabling the rich to oppress and ruin the poor.
George Mason, Objections of the Hon. George Mason, reprinted in 1 Debates on the Adoption of the Federal Constitution 495 (Jonathan Elliot ed., 2d ed., Philadelphia, J.B. Lippincott 1891). Fellow Virginian Patrick Henry, of "Give me liberty or give me death!" fame, had similar concerns about the diminishment of state judiciaries in the face of diversity jurisdiction.
The citizens of bordering states have frequent intercourse with one another. From the proximity of the states to each other, a multiplicity of these suits will be instituted. I beg gentlemen to inform me of this—in what courts are they to go and by what law are they to be tried? Is it by a law of Pennsylvania or Virginia? Those judges must be acquainted with all the laws of the different states. I see arising out of that paper a tribunal that is to be recurred to in all cases, when the destruction of the state judiciaries shall happen; and, from the extensive jurisdiction of these paramount courts, the state courts must soon be annihilated.
Patrick Henry, The Debates in the Convention of the Commonwealth of Virginia on the Adoption of the Federal Constitution, reprinted in 3 Debates on the Adoption of the Federal Constitution 542 (Jonathan Elliot ed., 2d ed., Philadelphia, J.B. Lippincott 1901). While state courts have survived just fine, Mason and Henry might rightfully feel vindicated in their views if they saw how state court plaintiffs are now forced into an often more expensive and less familiar federal system to have their cases decided by federal judges who may be less versed in state law than their state court counterparts.
These issues shouldn't and didn't affect the Court's analysis here. But they do reinforce the correctness of the Court's conclusion. Further, these considerations underscore why courts should not continue to further expand the reach of the diversity clause, as other branches of government have. See Abramson , 155 F.Supp.3d at 1061–63 (discussing the Class Action Fairness Act of 2005).
3. FEES
Martha Walters asks the Court to award attorney fees related to the Motion to Remand under 28 U.S.C. § 1447(c) or 28 U.S.C. § 1927. The Court finds that a fee award is inappropriate here under the applicable legal standards, and denies this request.
4. THE PROBATE EXCEPTION
One more thing. After Martha Walters filed her reply supporting her Motion to Remand, U.S. Bank filed an objection to that reply brief. The objection—which is really a surreply—argues that Martha Walters brought up the probate exception as a basis for remand for the first time in her reply. U.S. Bank therefore believes the Court shouldn't consider that argument. U.S. Bank also says that this argument fails on the merits. The Court needn't reach this issue to decide the Motion to Remand, so it declines to rule on the objection, other than to note that the probate exception may provide further support for remand here.
5. MOTION TO DISMISS
Because the Court is remanding this case, it declines to rule on the Motion to Dismiss and accordingly vacates that matter.
6. DISPOSITION
The Court GRANTS the Motion to Remand and VACATES the Motion to Dismiss.